SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): March 27, 2000
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HARRIS FINANCIAL, INC.
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(Exact Name of Registrant as Specified in Charter)
Pennsylvania 0-22399 23-2889833
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(State or Other Jurisdiction (Commission File No. (I.R.S. Employer
of Incorporation) Identification No.)
235 N. Second Street, Harrisburg, PA 17101
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (716) 236-4041
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Not Applicable
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(Former name or former address, if changed since last report)
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Items 1, 2, 3, 4 and 6: Not Applicable
Item 5. Other Events
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On March 27, 2000, Harris Financial, Inc. (the "Registrant") entered into
an Agreement and Plan of Reorganization by and Between Harris Financial, MHC,
Harris Financial, Inc., New Harris Financial, Inc. and Harris Savings Bank, and
York Financial Corp. and York Federal Savings and Loan Association.
Harris Financial, MHC is the mutual holding company of the Registrant, and
owns approximately 76% of the Registrant's outstanding shares of common stock.
Harris Savings Bank is the Registrant's wholly-owned subsidiary. York Financial
Corp. is the holding company of York Federal Savings and Loan Association. New
Harris Financial is a special-purpose subsidiary formed to facilitate the merger
of York Financial with and into the Registrant.
The Agreement provides for the merger of York Financial Corp. with and into
the Registrant, with the Registrant as the surviving entity. The merger
consideration will be stock, but in certain circumstances may include between
15% and 30% cash.
A copy of the Agreement and Plan of Reorganization and the press release
relating to the announcement of the transaction is filed as an exhibit to this
Form 8-K.
Item 7. Financial Statements, Pro Forma Financial Information, and Exhibits
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1. March 27, 2000, Agreement and Plan of Reorganization by and Between Harris
Financial, MHC, Harris Financial, Inc., New Harris Financial, Inc. and
Harris Savings Bank, and York Financial Corp. and York Federal Savings and
Loan Association.
2. Press release relating to the execution of the Agreement and Plan of
Reorganization.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
HARRIS FINANCIAL, INC.
DATE: April 5, 2000 By: /s/ James L. Durrell
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James L. Durrell
Executive Vice President and Chief
Financial Officer
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EXHIBIT 1
Agreement and Plan of Reorganization
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AGREEMENT AND PLAN OF REORGANIZATION
BY AND BETWEEN
HARRIS FINANCIAL, M.H.C.,
HARRIS FINANCIAL, INC.,
NEW HARRIS FINANCIAL, INC.,
HARRIS SAVINGS BANK
AND
YORK FINANCIAL CORP. AND
YORK FEDERAL SAVINGS AND LOAN ASSOCIATION
MARCH 27, 2000
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TABLE OF CONTENTS
AGREEMENT AND PLAN OF REORGANIZATION
ARTICLE I
CERTAIN DEFINITIONS
1.1 Certain Definitions..........................................1
ARTICLE II
THE MERGER
2.1 The Merger...................................................9
2.2 Effective Time...............................................9
2.4 Directors and Officers of Surviving Corporation..............9
2.5 Directors and Officers of New Harris Financial and
Harris Savings Bank..........................................9
2.6 Additional Actions..........................................10
2.7 Effects of the Merger.......................................11
2.8 The York Option Agreement...................................11
2.9 Possible Alternative Structures.............................11
ARTICLE III
CONVERSION OF SHARES
3.1 Merger Consideration........................................11
3.2 York Options................................................13
3.3 Dissenting Shares...........................................14
3.4 Procedures for Exchange of York Common Stock................14
3.5 Reservation of Shares.......................................16
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF YORK
4.1 Capital Structure...........................................17
4.2 Organization, Standing and Authority of York................17
4.3 Ownership of York Subsidiaries..............................17
4.4 Organization, Standing and Authority of York Subsidiaries...18
4.5 Authorized and Effective Agreement..........................18
4.6 Securities Documents and Regulatory Reports.................20
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4.7 Financial Statements........................................20
4.8 Material Adverse Change.....................................21
4.9 Environmental Matters.......................................21
4.10 Tax Matters.................................................22
4.11 Legal Proceedings...........................................22
4.12 Compliance with Laws........................................23
4.13 Certain Information.........................................23
4.14 Employee Benefit Plans......................................24
4.15 Certain Contracts...........................................27
4.16 Brokers and Finders.........................................28
4.17 Insurance...................................................28
4.18 Properties..................................................28
4.19 Labor.......................................................29
4.20 Certain Transactions........................................29
4.21 Disclosures.................................................29
4.22 Disclosure Schedule.........................................29
4.23 Pooling of Interests........................................29
4.24 Fairness Opinion............................................30
4.25 Loan Portfolio..............................................30
4.26 Required Vote; Inapplicability of Anti-takeover Statutes....30
4.27 Material Interests of Certain Persons.......................30
4.28 Joint Ventures..............................................30
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF HARRIS
5.1 Capital Structure...........................................31
5.2 Organization, Standing and Authority of the Mutual Company,
Harris Financial and New Harris Financial...................31
5.3 Ownership of Harris Financial Subsidiaries..................32
5.4 Organization, Standing and Authority of
Harris Financial Subsidiaries...............................32
5.5 Authorized and Effective Agreement..........................32
5.6 Securities Documents and Regulatory Reports.................34
5.7 Financial Statements........................................34
5.8 Material Adverse Change.....................................35
5.9 Environmental Matters.......................................35
5.10 Tax Matters.................................................36
5.11 Legal Proceedings...........................................37
5.12 Compliance with Laws........................................37
5.13 Certain Information.........................................38
5.14 Employee Benefit Plans......................................38
5.15 Certain Contracts...........................................40
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5.16 Brokers and Finders.........................................41
5.17 Insurance...................................................41
5.18 Properties..................................................42
5.19 Labor.......................................................42
5.20 Certain Transactions........................................42
5.21 Disclosures.................................................42
5.22 Disclosure Schedule.........................................43
5.23 Pooling of Interests........................................43
5.24 Fairness Opinion............................................43
5.25 Loan Portfolio..............................................43
5.26 Required Vote; Inapplicability of Anti-takeover Statutes....43
5.27 Material Interests of Certain Persons.......................44
5.28 Joint Ventures..............................................44
5.29 Ownership of York Common Stock..............................44
ARTICLE VI
COVENANTS OF YORK
6.1 Conduct of Business.........................................44
6.2 Current Information.........................................47
6.3 Access to Properties and Records............................48
6.4 Financial and Other Statements..............................48
6.5 Disclosure Supplements......................................49
6.6 Consents and Approvals of Third Parties.....................49
6.7 All Reasonable Efforts......................................49
6.8 Failure to Fulfill Conditions...............................49
6.9 No Solicitation.............................................49
6.10 Board of Directors and Committee Meetings...................50
ARTICLE VII
COVENANTS OF HARRIS FINANCIAL
7.1 Conduct.....................................................50
7.2 Current Information.........................................50
7.3 Access to Properties and Records............................51
7.4 Financial and Other Statements..............................51
7.5 Disclosure Supplements......................................52
7.6 Consents and Approvals of Third Parties.....................52
7.7 All Reasonable Efforts......................................52
7.8 Failure to Fulfill Conditions...............................52
7.9 Employee Benefits...........................................52
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7.10 Directors and Officers Indemnification and Insurance........55
7.12 Options.....................................................56
7.13 Registration of Shares Issuable Upon Exercise of Options....57
ARTICLE VIII
REGULATORY AND OTHER MATTERS
8.1 York and Harris Financial Special Meetings..................57
8.2 Proxy Statement-Prospectus..................................57
8.3 The Mutual Company Conversion from Mutual to Stock Form.....59
8.4 Regulatory Approvals........................................61
8.5 Affiliates; Publication of Combined Financial Results.......61
ARTICLE IX
CLOSING CONDITIONS
9.1 Conditions to Each Party's Obligations under
this Agreement..............................................61
9.2 Conditions to the Obligations of Harris Financial
under this Agreement........................................63
9.3 Conditions to the Obligations of York
under this Agreement........................................65
ARTICLE X
THE CLOSING
10.1 Time and Place..............................................67
10.2 Deliveries at the Pre-Closing and the Closing...............67
ARTICLE XI
TERMINATION, AMENDMENT AND WAIVER
11.1 Termination.................................................67
11.2 Effect of Termination.......................................69
11.3 Amendment, Extension and Waiver.............................70
ARTICLE XII
MISCELLANEOUS
12.1 Confidentiality.............................................71
12.2 Public Announcements........................................71
12.3 Survival....................................................71
12.4 Notices.....................................................71
12.5 Parties in Interest.........................................72
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12.6 Complete Agreement..........................................72
12.7 Counterparts................................................73
12.8 Severability................................................73
12.9 Governing Law...............................................73
12.10 Interpretation..............................................73
12.11 Specific Performance........................................73
Exhibit A Form of Stock Option Agreement ....................................A-1
Exhibit B Form of Voting Agreement ..........................................B-1
Exhibit C Form of Affiliates Agreement ......................................C-1
Exhibit D Form of Opinion of Breyer & Associates PC..........................D-1
Exhibit E Form of Opinion of Luse Lehman Gorman Pomerenk & Schick, P.C.......E-1
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AGREEMENT AND PLAN OF REORGANIZATION
This AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement"), is dated
as of March 27, 2000 by and between HARRIS FINANCIAL, M.H.C., a Pennsylvania
mutual holding company (the "Mutual Company"), its majority-owned subsidiary,
HARRIS FINANCIAL, INC., a Pennsylvania corporation ("Harris Financial"), HARRIS
SAVINGS BANK, a Pennsylvania savings bank ("Harris Savings Bank"), NEW HARRIS
FINANCIAL, INC., a Pennsylvania corporation ("New Harris Financial"), YORK
FINANCIAL CORP., a Pennsylvania corporation ("York"), and its wholly-owned
subsidiary, YORK FEDERAL SAVINGS AND LOAN ASSOCIATION, a federal savings
association ("York Fed").
WHEREAS, as a condition and inducement to Harris Financial's
willingness to enter into this Agreement, (i) immediately after the execution of
this Agreement York will enter into a Stock Option Agreement with Harris
Financial (the "York Option Agreement"), in the form attached hereto as Exhibit
A, pursuant to which York will grant to Harris Financial the option to purchase
shares of York Common Stock (as defined herein) under certain circumstances, and
(ii) all of the directors of York and York Fed are entering into voting
agreements in the form attached hereto as Exhibit B;
WHEREAS, in connection with the transactions described in this
Agreement, it is intended that the Mutual Company will convert from the mutual
form of organization to the capital stock form of organization, and that in
connection with such conversion New Harris Financial will conduct a subscription
offering of its common stock, and if necessary a community and/or syndicated
community offering, and an exchange offering to the existing public shareholders
of Harris Financial;
WHEREAS, the parties desire to make certain representations, warranties
and agreements in connection with the business transactions described in this
Agreement and to prescribe certain conditions thereto;
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements herein contained, and of other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
1.1 Certain Definitions. As used in this Agreement, the following terms
have the following meanings (unless the context otherwise requires, both here
and throughout this Agreement, references to Articles and Sections refer to
Articles and Sections of this Agreement).
"BHCA" shall mean the Bank Holding Company Act of 1956, as amended.
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"Bank Regulator" shall mean any Federal or state banking regulator,
including but not limited to the FDIC, the OTS, the Department, and the FRB,
which regulates Harris Savings Bank or York Fed, or any of their respective
holding companies or subsidiaries, as the case may be.
"Certificate" shall mean certificates evidencing shares of York Common
Stock.
"COBRA" shall mean the Consolidated Omnibus Budget Reconciliation Act
of 1985.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Confidentiality Agreements" shall mean the confidentiality agreements
referred to in Section 12.1 of this Agreement.
"Conversion" shall mean the conversion from mutual to stock form of the
Mutual Company, pursuant to the Plan of Conversion to be adopted by the Mutual
Company.
"Conversion Offering" shall mean the offering, in connection with the
Conversion, of shares of Harris Common Stock in a subscription offering and, if
necessary, a community offering and/or a syndicated community offering.
"Conversion Prospectus" shall mean a prospectus issued by New Harris
Financial in connection with the Offering, that meets all of the requirements of
the Securities Act, applicable state securities laws and banking laws and
regulations. The Conversion Prospectus may be combined with (i) the Proxy
Statement-Prospectus delivered to shareholders of York in connection with the
solicitation of their approval of this Agreement and the transactions
contemplated hereby and the offering of the New Harris Common Stock to them as
Merger Consideration, and (ii) the proxy statement delivered to Harris Financial
stockholders in connection with the solicitation of their approval of the
Conversion and the Plan of Conversion.
"Conversion Registration Statement" shall mean the registration
statement, together with all amendments, filed with the SEC under the Securities
Act for the purpose of registering shares of New Harris Common Stock to be
offered and issued in connection with the Offering. The Merger Registration
Statement and the Conversion Registration Statement may be separate registration
statements or may be combined in one registration statement that shall register
shares of New Harris Common Stock to be offered and issued in connection with
the Offering and to be offered to holders of York Common Stock in connection
with the Merger.
"Department" shall mean the Pennsylvania Department of Banking.
"Depositors" shall mean former or current depositors of Harris Savings
Bank that under the Plan of Conversion are given, as indicated by the context,
the opportunity to purchase New Harris Common Stock in the Conversion or the
opportunity to vote on the Plan of Conversion.
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"DOJ" shall mean the United States Department of Justice.
"Effective Date" shall mean the date on which the Effective Time
occurs. The Effective Date shall not occur until after the closing of the
Offering.
"Effective Time" shall mean the date and time specified pursuant to
Section 2.2 hereof as the effective time of the Merger.
"Environmental Claim" means any written notice from any Governmental
Entity or third party alleging potential liability (including, without
limitation, potential liability for investigatory costs, cleanup costs,
governmental response costs, natural resources damages, property damages,
personal injuries or penalties) arising out of, based on, or resulting from the
presence, or release into the environment, of any Materials of Environmental
Concern.
"Environmental Laws" 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 governmental
entity relating to (1) 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 (2) the use, storage,
recycling, treatment, generation, transportation, processing, handling,
labeling, production, release or disposal of Materials of Environment Concern.
The term Environmental Law includes without limitation (a) the Comprehensive
Environmental Response, Compensation and Liability Act, as amended, 42 U.S.C.
ss.9601, et seq; the Resource Conservation and Recovery Act, as amended, 42
U.S.C. ss.6901, et seq; the Clean Air Act, as amended, 42 U.S.C. ss.7401, et
seq; the Federal Water Pollution Control Act, as amended, 33 U.S.C.
ss.1251, et seq; the Toxic Substances Control Act, as amended, 15 U.S.C.
ss.9601, et seq; the Emergency Planning and Community Right to Know Act, 42
U.S.C. ss.1101, et seq; the Safe Drinking Water Act, 42 U.S.C. ss.300f, et seq;
and all comparable state and local laws, and (b) any common law (including
without limitation common law that may impose strict liability) that may impose
liability or obligations for injuries or damages due to the presence of or
exposure to any Materials of Environmental Concern.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Exchange Agent" shall mean a bank or trust company designated by
Harris Financial, reasonably acceptable to York, which shall act as agent for
New Harris Financial in connection with the exchange procedures for converting
Certificates into the Merger Consideration.
"Exchange Offering" shall mean the offer and issuance of New Harris
Common Stock, in connection with the Conversion, to the existing public
shareholders of Harris Financial.
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"Exchange Ratio" shall have the meaning set forth in Section 3.1.1.
"FDIA" shall mean the Federal Deposit Insurance Act, as amended.
"FDIC" shall mean the Federal Deposit Insurance Corporation or any
successor thereto.
"FHLB" shall mean the Federal Home Loan Bank of Pittsburgh.
"FRB" shall mean the Board of Governors of the Federal Reserve System
or any successor thereto.
"GAAP" shall mean Generally Accepted Accounting Principles.
"Governmental Entity" shall mean any federal or state court,
administrative agency or commission or other governmental authority or
instrumentality.
"Harris" shall mean the Mutual Company, New Harris Financial, Harris
Financial and/or any direct or indirect Subsidiary of Harris Financial.
"Harris Common Stock" shall mean the common stock, par value $.01 per
share, of Harris Financial.
"HARRIS DISCLOSURE SCHEDULE" shall mean a written, signed disclosure
schedule delivered by Harris Financial to York specifically referring to the
appropriate section of this Agreement and describing in reasonable detail the
matters contained therein.
"Harris Employee Plan(s)" shall mean all stock option, employee stock
purchase, stock bonus and any other stock-based plans, qualified pension or
profit-sharing plans, any deferred compensation, non-qualified plan or
arrangement, supplemental retirement, consultant, bonus or group insurance
contract or any other incentive, health and welfare or employee benefit plan or
agreement maintained for the benefit of any of the employees or former employees
or directors of Harris Financial or any Harris Financial Subsidiary, whether
written or oral.
"Harris Financial" shall mean Harris Financial, Inc., a Pennsylvania
corporation with its principal executive offices located at 235 North Second
Street, Harrisburg, Pennsylvania 17101, which owns 100% of the common stock of
Harris Savings Bank prior to the Conversion.
"Harris Financial Statements" shall mean the (i) unaudited balance
sheet of the Mutual Company as of December 31, 1999 and the unaudited income
statement of the Mutual Company for the year ended December 31, 1999, and (ii)
the audited consolidated statements of financial condition (including related
notes and schedules) of Harris Financial as of December 31, 1999 and 1998 and
the consolidated statements of operations, shareholders' equity and cash flows
(including related notes and schedules, if any) of Harris Financial for each of
the three years ended December
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31, 1999, 1998 and 1997, as set forth in Harris Financial's annual report for
the year ended December 31, 1999, and the unaudited interim consolidated
financial statements of Harris Financial as of the end of each quarter following
December 31, 1999, as filed by Harris Financial in its Securities Documents.
"Harris Savings Bank" shall mean Harris Savings Bank, a Pennsylvania
savings bank, with its principal offices located at 235 North Second Street,
Harrisburg, Pennsylvania 17101, which is a wholly-owned subsidiary of Harris
Financial.
"Harris Option Plans" shall mean the Harris Financial, Inc. 1999
Incentive Stock Option Plan, the 1999 Stock Option Plan for Outside Directors,
the Harris Savings Bank 1996 Incentive Stock Option Plan, the Harris Savings
Bank 1994 Incentive Stock Option Plan, and the 1994 Stock Option Plan for
Outside Directors.
"HOLA" shall mean the Home Owners' Loan Act of 1933, as amended.
"Independent Valuation" shall mean the appraised pro forma market value
of the New Harris Common Stock issued in the Conversion and the Merger, and any
updates, as determined by an independent valuation.
"Joint Venture" shall mean any limited partnership, joint venture,
corporation, or venture capital investment.
"Material Adverse Effect" shall mean, with respect to Harris Financial
or York, respectively, any effect that (i) is material and adverse to the
financial condition, results of operations or business of the Mutual Company and
Harris Financial and its Subsidiaries taken as a whole, or York and its
Subsidiaries taken as a whole, respectively, or (ii) materially impairs the
ability of either York, on the one hand, or Harris Financial, on the other hand,
to consummate the transactions contemplated by this Agreement; provided that
"Material Adverse Effect" shall not be deemed to include the impact of (a)
changes in laws and regulations affecting banks or thrift institutions
generally, (b) changes in GAAP or regulatory accounting principles generally
applicable to financial institutions and their holding companies, (c) actions
and omissions of a party (or any of its Subsidiaries) taken with the prior
written consent of the other party, (d) changes in interest rates, and (e) the
direct effects of compliance with this Agreement on the operating performance of
the parties including expenses incurred by the parties hereto in consummating
the transactions contemplated by this Agreement, including without limitation
the expenses associated with the termination of any of the York Employee Plans
as and to the extent contemplated herein.
"Materials of Environmental Concern" means pollutants, contaminants,
wastes, toxic substances, petroleum and petroleum products, and any other
materials regulated under Environmental Laws.
"Maximum Percentage" shall have the meaning set forth in Section
3.1.1(A) hereof.
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"Merger" shall mean the merger of York with and into New Harris
Financial pursuant to the terms hereof.
"Merger Consideration" shall mean the number of whole shares of New
Harris Common Stock and cash in lieu of fractional shares into which the shares
represented by a Certificate are converted pursuant to Section 3.1 and any cash
paid by New Harris Financial to holders of York Common Stock under Section
3.1.6.
"Merger Registration Statement" shall mean the registration statement,
together with all amendments, filed with the SEC under the Securities Act for
the purpose of registering shares of New Harris Common Stock to be offered to
holders of York Common Stock in connection with the Merger. The Merger
Registration Statement and the Conversion Registration Statement may be separate
registration statements or may be combined in one registration statement that
shall register shares of New Harris Common Stock to be offered and sold in
connection with the Offering and to be offered to holders of York Common Stock
in connection with the Merger.
"Minimum Percentage" shall have the meaning set forth in Section
3.1.1(B) hereof.
"Mutual Company" shall mean Harris Financial, M.H.C., a Pennsylvania
mutual holding company which owns a majority of the Harris Common Stock.
"NASD" shall mean the National Association of Securities Dealers, Inc.
"New Harris Common Stock" shall mean the common stock, par value $.01
per share, of New Harris Financial that will be issued and sold in the Offering
and the Merger.
"New Harris Financial" shall mean New Harris Financial, Inc., a
Pennsylvania corporation with its principal executive offices located at 235
North Second Street, Harrisburg, Pennsylvania 17101, which was organized in
connection with the Conversion and which will be the successor to Harris
Financial.
"Offering" shall mean the Conversion Offering and the Exchange
Offering.
"OTS" shall mean the Office of Thrift Supervision.
"PBC" shall mean the Pennsylvania Banking Code of 1965, as amended.
"PBGC" shall mean the Pension Benefit Guaranty Corporation, or any
successor thereto.
"PBCL" shall mean the Pennsylvania Business Corporation Law, as
amended.
"Person" shall mean any individual, corporation, partnership, joint
venture, association, trust or "group" (as that term is defined under the
Exchange Act).
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"Plan of Conversion" shall mean the Plan of Conversion and
Reorganization pursuant to which the Mutual Company will convert from the mutual
form of organization to the capital stock form of organization.
"Pre-Closing" shall have the meaning set forth in Section 10.1 hereof.
"Pre-Closing Date" shall be the date on which the Pre-Closing occurs.
"Proxy Statement-Prospectus" shall mean the proxy statement/prospectus,
as amended or supplemented, to be delivered to shareholders of York in
connection with the solicitation of their approval of this Agreement and the
transactions contemplated hereby and the offering of the New Harris Common Stock
to them as Merger Consideration. The Proxy Statement-Prospectus may be combined
with (i) the Conversion Prospectus delivered to offerees in the Conversion
Offering and Exchange Offering, and (ii) the proxy statement delivered to Harris
Financial stockholders in connection with the solicitation of their approval of
the Conversion and the Plan of Conversion.
"Rights" shall mean warrants, options, rights, convertible securities,
stock appreciation rights and other arrangements or commitments which obligate
an entity to issue or dispose of any of its capital stock or other ownership
interests or which provide for compensation based on the equity appreciation of
its capital stock.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Securities Documents" shall mean all reports, offering circulars,
proxy statements, registration statements and all similar documents filed, or
required to be filed, pursuant to the Securities Laws.
"Securities Laws" shall mean the Securities Act; the Exchange Act; the
Investment Company Act of 1940, as amended; the Investment Advisers Act of 1940,
as amended; the Trust Indenture Act of 1939, as amended, and the rules and
regulations of the SEC promulgated thereunder.
"Stock Exchange" shall mean the Nasdaq National Market.
"Subsidiary" shall have the meanings set forth in Rule 1-02 of
Regulation S-X of the SEC.
"Surviving Corporation" shall have the meaning set forth in Section 2.1
hereof.
"Termination Date" shall mean December 31, 2000, and may be extended to
March 31, 2001 by Harris Financial pursuant to Sections 11.1.11. and 11.2.2(c).
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"York" shall mean York Financial Corp., a Pennsylvania corporation,
with its principal offices located at 101 South George Street, York,
Pennsylvania 17401, which owns 100% of the common stock of York Fed.
"York Fed" shall mean York Federal Savings and Loan Association, a
federal savings association, with its principal offices located at 101 South
George Street, York, Pennsylvania 17401, which is a wholly-owned subsidiary of
York.
"York Common Stock" shall mean the common stock, par value $1.00 per
share, of York.
"York Employee Plan(s)" shall mean all stock option, employee stock
purchase, stock bonus and any other stock-based plans, qualified pension or
profit-sharing plans, any deferred compensation, non-qualified plan or
arrangement, supplemental retirement, consultant, bonus or group insurance
contract or any other incentive, health and welfare or employee benefit plan or
agreement maintained for the benefit of any of the employees or former employees
or directors of York or any York Subsidiary, whether written or oral.
"YORK DISCLOSURE SCHEDULE" shall mean a written, signed disclosure
schedule delivered by York to Harris Financial specifically referring to the
appropriate section of this Agreement and describing in reasonable detail the
matters described therein.
"York Financial Statements" shall mean (i) the audited consolidated
balance sheets (including related notes and schedules, if any) of York as of
June 30, 1999 and 1998 and the consolidated statements of income, changes in
stockholders' equity and cash flows (including related notes and schedules, if
any) of York for each of the three years ended June 30, 1999, 1998 and 1997 as
filed by York in its Securities Documents, and (ii) the unaudited interim
consolidated financial statements of York as of the end of each calendar quarter
following June 30, 1999 as filed by York in its Securities Documents.
"York Options" shall mean options to purchase shares of York Common Stock
granted pursuant to the York Option Plans or as otherwise set forth in Section
4.01 of the YORK DISCLOSURE SCHEDULE.
"York Option Plans" shall mean the 1984 York Financial Corp. Amended
Incentive Stock Option Plan, 1984 York Financial Corp. Non-Incentive Stock
Option Plan, 1992 York Financial Corp. Non-Incentive Stock Option Plan for
Directors, 1992 York Financial Corp. Stock Option and Incentive Plan, 1995 York
Financial Corp. Non-Qualified Stock Option Plan for Directors, and 1997 York
Financial Corp. Stock Option and Incentive Plan.
Other terms used herein are defined in the preamble and elsewhere in this
Agreement.
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ARTICLE II
THE MERGER
2.1 The Merger. As promptly as practicable following the satisfaction
or waiver of the conditions to each party's respective obligations hereunder,
and subject to the terms and conditions of this Agreement, at the Effective
Time: (a) unless previously done, York shall merge with and into New Harris
Financial with New Harris Financial as the resulting or surviving corporation
(the "Surviving Corporation"); and (b) the separate existence of York shall
cease and all of the rights, privileges, powers, franchises, properties, assets,
liabilities and obligations of York shall be vested in and assumed by New Harris
Financial. As part of the Merger, each share of York Common Stock will be
converted into and exchanged for a number of shares of New Harris Common Stock
pursuant to the terms of Article III hereof. Immediately after the Merger, York
Fed shall merge with and into Harris Savings Bank, with Harris Savings Bank as
the resulting institution.
2.2 Effective Time. The Merger shall be effected by the filing of
articles of merger with the Pennsylvania Department of State in accordance with
Pennsylvania law to become effective on the day of the closing ("Closing Date")
provided for in Article X hereof (the "Closing"). The "Effective Time" of the
Merger shall be the time on the Closing Date (or a subsequent date not later
than the opening of business on the next business day) when the Merger becomes
effective as set forth in the articles of merger. The Closing of the Merger
shall immediately follow the closing of the Offering.
2.3 Articles of Incorporation and Bylaws. The Articles of Incorporation
and Bylaws of New Harris Financial shall be the Articles of Incorporation and
Bylaws of the Surviving Corporation as in effect immediately prior to the
Effective Time, until thereafter amended as provided therein and by applicable
law.
2.4 Directors and Officers of Surviving Corporation. Subject to Section
2.5.1, the directors of New Harris Financial immediately prior to the Effective
Time shall be the initial directors of the Surviving Corporation, each to hold
office in accordance with the Articles of Incorporation and Bylaws of the
Surviving Corporation. The officers of New Harris Financial immediately prior to
the Effective Time shall be the initial officers of Surviving Corporation, in
each case until their respective successors are duly elected or appointed and
qualified.
2.5 Directors and Officers of New Harris Financial and Harris Savings Bank.
2.5.1 Each of the ten (10) directors of Harris Savings Bank
and the ten (10) directors of Harris Financial immediately prior to the
Effective Time shall continue as directors of Harris Savings Bank and New Harris
Financial, respectively, immediately after the Effective Time. Prior to or at
the Effective Time, the Board of Directors of Harris Savings Bank and New Harris
Financial shall increase the number of directors of Harris Savings Bank and New
Harris Financial, respectively, by seven (7) directors such that the total
number of directors on each board shall be
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seventeen (17). Each of the three classes of the Boards of Directors shall be
increased by two (2), and one of the classes shall be increased by three (3) so
that the number of directors serving in each class shall be as nearly equal as
possible. At the Effective Time, the Board of Directors of York shall identify
seven (7) persons who are directors of York on the date hereof and thereof, and
the Board of Directors of Harris Savings Bank and New Harris Financial shall
elect such persons to fill the vacancies created by the increase in the number
of directors on their respective Boards of Directors. The Boards of Directors of
Harris Savings Bank and New Harris Financial will use their best efforts to
nominate each of the seven directors for at least one additional term. After the
Effective Time, the nominating committees of New Harris Financial and Harris
Savings Bank shall fill any vacancy on the Boards of Directors of New Harris
Financial and Harris Savings Bank, respectively, that results during the initial
terms of the Boards of Directors of New Harris Financial and Harris Savings Bank
pursuant to the recommendations of: (i) the former directors of York in the case
of a vacancy in a New Harris Financial and Harris Savings Bank director position
held by a former York director; and (ii) the former directors of Harris
Financial in the case of a vacancy in a New Harris Financial and Harris Savings
Bank director position held by a former Harris Financial director. Section 2.5.1
of the HARRIS DISCLOSURE SCHEDULE sets forth New Harris Financial's intentions
with respect to the composition of certain of its committees following the
Merger.
2.5.2 At the Effective Time, (i) the Chairman, President and
Chief Executive Officer of Harris Financial will become the Co-Chairman,
President and Chief Executive Officer of Harris Financial, and (ii) the
President and Chief Executive Officer of York shall be appointed Co- Chairman of
the Board of Directors of New Harris Financial.
2.5.3 The officers of Harris Savings Bank immediately prior to
the Effective Time shall continue as officers of Harris Savings Bank immediately
after the Effective Time, each to hold office in accordance with the Articles of
Incorporation and Bylaws of Harris Savings Bank. The officers and employees of
York Fed immediately prior to the Effective Time shall continue as officers and
employees of Harris Savings Bank immediately after the Effective Time, except as
provided for in Section 7.9 of this Agreement.
2.6 Additional Actions. If, at any time after the Effective Time, the
Surviving Corporation shall consider or be advised that any further assignments
or assurances in law or any other acts are necessary or desirable (a) to vest,
perfect or confirm, of record or otherwise, in the Surviving Corporation, title
to and possession of any property or right of York acquired or to be acquired by
reason of, or as a result of, the Merger, or (b) otherwise to carry out the
purposes of this Agreement, York and its proper officers and directors shall be
deemed to have granted to the Surviving Corporation an irrevocable power of
attorney to execute and deliver all such proper deeds, assignments and
assurances in law and to do all acts necessary or proper to vest, perfect or
confirm title to and possession of such property or rights in the Surviving
Corporation and otherwise to carry out the purposes of this Agreement; and the
proper officers and directors of the Surviving Corporation are fully authorized
in the name of York or otherwise to take any and all such action.
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2.7 Effects of the Merger. At and after the Effective Time, the Merger
shall have the effects set forth in Section 1929 of the PBCL.
2.8 The York Option Agreement. The parties acknowledge that immediately
after the execution of this Agreement, York and Harris Financial will enter into
that certain York Option Agreement, dated as of even date herewith, pursuant to
which York will grant to Harris Financial the right to purchase certain shares
of York Common Stock upon terms and conditions specified in the York Option
Agreement.
2.9 Possible Alternative Structures. Notwithstanding anything to the
contrary contained in this Agreement, prior to the Effective Time Harris
Financial shall be entitled to revise the structure of the Merger described in
Section 2.1 hereof, provided that (i) there are no adverse federal or state
income tax consequences to York and its stockholders as a result of the
modification; (ii) the consideration to be paid to the holders of York Common
Stock under this Agreement is not thereby changed in kind, value or reduced in
amount; (iii) there are no adverse changes to the benefits and other
arrangements provided to or on behalf of York's directors, officers and other
employees; (iv) the Merger's qualifying for pooling of interests accounting
treatment will not be adversely affected thereby, unless Arthur Andersen LLP has
previously not been able to provide a letter to Harris Financial pursuant to the
terms of Section 3.1.6 hereof; and (v) such modification will not delay
materially or jeopardize receipt of any required regulatory approvals or other
consents and approvals relating to the consummation of the Merger. The Mutual
Company, Harris Financial, New Harris Financial, Harris Savings Bank, York and
York Fed agree to appropriately amend this Agreement and any related documents
in order to reflect any such revised structure.
ARTICLE III
CONVERSION OF SHARES
3.1 Merger Consideration. At the Effective Time, by virtue of the Merger
and without any action on the part of New Harris Financial, York or the holders
of any of the shares of York Common Stock:
3.1.1 Each share of York Common Stock issued and outstanding
immediately prior to the Effective Time (other than any shares to be canceled
pursuant to Section 3.1.4) shall, by virtue of the Merger and without any action
on the part of the holder thereof, be converted into and exchanged for 1.725
shares of Harris Common Stock (the "Exchange Ratio"), provided that:
(A) If, after giving effect to the issuance of shares
of Harris Common Stock to (i) purchasers in the Conversion Offering, (ii) Harris
Financial shareholders in the Exchange Offering, and (iii) York shareholders as
part of the Merger, the aggregate shares issued or issuable pursuant to (iii)
would represent more than 37.6% (the "Maximum Percentage") of the total shares
issued or issuable pursuant to (i) through (iii), then, subject to Sections
8.3.8 and 11.1.8, the Exchange Ratio shall be decreased such that the shares
issued or issuable pursuant to (iii) shall
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represent the Maximum Percentage of the total shares issued or issuable pursuant
to (i) through (iii); and
(B) If, after giving effect to the issuance of shares
of Harris Common Stock to (i) purchasers in the Conversion Offering, (ii) Harris
Financial shareholders in the Exchange Offering, and (iii) York shareholders as
part of the Merger, the aggregate shares issued or issuable pursuant to (iii)
would represent less than 33.8% (the "Minimum Percentage") of the total shares
issued or issuable pursuant to (i) through (iii), then the Exchange Ratio shall
be increased so that the shares issued or issuable pursuant to (iii) shall
represent the Minimum Percentage of the total shares issued or issuable pursuant
to (i) through (iii).
(C) Shares issued after the date of this Agreement
pursuant to the exercise of York Options or Harris Options or shares of New
Harris Common Stock issued in exchange for such shares shall be excluded from
all calculations pursuant to Subsections 3.1.1(A) and 3.1.1(B).
References in this Agreement to the "Exchange Ratio" shall
mean the Exchange Ratio as adjusted in accordance with subsections (A) and (B)
above.
3.1.2 The foregoing determination of the Exchange Ratio
assumes that shares of Harris Common Stock will be sold for $10.00 per share in
the Conversion Offering and that the shares of New Harris Common Stock will be
issued to all former York stockholders immediately following the completion of
the Conversion. If such shares are sold for an amount other than $10.00 per
share, the Exchange Ratio shall be proportionately adjusted to reflect the
actual offering price.
3.1.3 Shares of York Common Stock converted into New Harris
Common Stock pursuant to this Section 3.1 shall be no longer outstanding and
shall automatically be canceled and shall cease to exist, and each Certificate
previously representing any such share shall thereafter represent the right to
receive the Merger Consideration. Certificates previously representing shares of
York Common Stock shall be exchanged for certificates representing whole shares
of New Harris Common Stock and cash in lieu of fractional shares issued in
consideration therefor upon the surrender of such Certificates in accordance
with Section 3.4 hereof, without any interest thereon.
3.1.4 Each share held in the treasury of York and each share
of York Common Stock owned by the Mutual Company, Harris Financial or any direct
or indirect wholly owned subsidiary of Harris Financial or of York immediately
prior to the Effective Time (other than shares held in a fiduciary capacity or
in connection with debts previously contracted) shall, at the Effective Time,
cease to exist, and the certificates for such shares shall be canceled as
promptly as practicable thereafter, and no payment or distribution shall be made
in consideration therefor.
3.1.5 Cash Election. Harris Financial shall request a letter
from Arthur Andersen LLP, dated as of a date prior to the mailing of the Proxy
Statement-Prospectus, addressed to Harris Financial, to the effect that based on
the facts as of such date, the Merger will qualify for "pooling of interests"
accounting treatment. If Arthur Andersen LLP is not able to issue such letter,
then 15%
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to 30% of the aggregate Merger Consideration issued to former shareholders of
York shall be in the form of cash, and Harris Financial and York agree to amend
the Agreement to provide for the terms of such cash election, and to the extent
there are excess cash elections, all York stockholders electing to receive cash
will receive stock in lieu of cash on a pro rated basis so that in the aggregate
15% to 30% of the aggregate Merger Consideration will be in the form of cash. In
the event that cash elections are less than 15% of the aggregate consideration
then such shortfall shall be prorated among all shareholders electing to receive
stock resulting in such shareholder receiving a combination of cash and stock.
Harris Financial and York may mutually agree that the cash consideration issued
to former shareholders of York will exceed 15% to 30% of the aggregate Merger
Consideration. If cash is issued pursuant to this Section 3.1.6 to York
Shareholders, then: (i) each share of York Common Stock as to which such
election is made shall be converted into and exchanged for cash in an amount
equal to $10.00 multiplied by the Exchange Ratio; and (ii) the Exchange Ratio
and the percentage limitations set forth in Section 3.1.1(A) and (B) shall be
calculated assuming that all shareholders of York receive shares of Harris
Common Stock and no shareholder of York receives cash as part of his or her
Merger Consideration. In addition, Harris Financial and York may mutually agree
that more than 15% to 30% of the aggregate Merger Consideration issued to former
shareholders of York Financial may be in the form of cash regardless of whether
the Merger would otherwise qualify as a pooling of interests, and in such case
Harris Financial and York agree to amend the Agreement to provide for the terms
of such cash election.
3.2 York Options.
3.2.1 Except as set forth in Section 3.2.2, on the Effective
Date, each York Option which is then outstanding, whether or not exercisable,
shall cease to represent a right to acquire shares of York Common Stock and
shall be converted automatically into an option to purchase shares of New Harris
Common Stock, and New Harris Financial shall assume each York Option in
accordance with the terms of the applicable York Option Plan and stock option
agreement by which it is evidenced, except that from and after the Effective
Date, (i) New Harris Financial and its Board of Directors or a duly authorized
committee thereof shall be substituted for York and York's Board of Directors or
duly authorized committee thereof administering such York Option Plan, (ii) each
York Option assumed by New Harris Financial may be exercised solely for shares
of New Harris Common Stock, (iii) the number of shares of New Harris Common
Stock subject to such York Option shall be equal to the number of shares of York
Common Stock subject to such York Option immediately prior to the Effective Date
multiplied by the Exchange Ratio, provided that any fractional shares of New
Harris Common Stock resulting from such multiplication shall be rounded to the
nearest share, and (iv) the per share exercise price under each such York Option
shall be adjusted by dividing the per share exercise price under each such York
Option by the Exchange Ratio, provided that such exercise price shall be rounded
to the nearest cent. Notwithstanding clauses (iii) and (iv) of the preceding
sentence, each York Option which is an "incentive stock option" shall be
adjusted as required by Section 424 of the Code, and the regulations promulgated
thereunder, so as not to constitute a modification, extension or renewal of the
option within the meaning of Section 424(h) of the Code. New Harris Financial
and York agree to take all necessary steps to effect the foregoing provisions of
this Section 3.2.
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3.2.2 On the Effective Date, each York Option issued pursuant
to both of the York Financial Corp. Non-Incentive Stock Option Plan for
Directors and the York Financial Corp. 1995 Non-Qualified Stock Option Plan for
Directors, which is then outstanding (a "Director Option"), whether or not
exercisable, shall cease to represent a right to acquire shares of York Common
Stock and shall be converted automatically into the right to receive such number
of shares (rounded to the nearest whole share) of New Harris Common Stock as is
equal in value (based on the price for which New Harris Common Stock is sold in
the Conversion Offering) to the difference (if a positive amount) between (A)
the product of the Exchange Ratio, the price for which the shares of New Harris
Common Stock are sold in the Offering and the number of shares of York Common
Stock issuable upon exercise of the Director Options, and (B) the aggregate
exercise price of the Director Options; provided however, that this Section
3.2.2 shall be further modified if and to the extent necessary to enable the
Merger to qualify for pooling-of-interests accounting treatment. Prior to the
Effective Time, York shall take, or cause to be taken, all necessary action to
effect the intent of the provisions set forth in this Section 3.2.2. New Harris
Financial or, at the option of New Harris Financial, York, shall make such
payment at the Effective Time to each individual provided that the individual
delivers to New Harris Financial his written acceptance, in a form acceptable to
New Harris Financial, of such payment as full and complete consideration for the
cancellation of each York Option held by him.
3.3 Dissenting Shares. Stockholders of York shall not have dissenters'
rights of appraisal, unless the Merger Consideration includes cash. Stockholders
of Harris Financial shall not have dissenters' rights of appraisal.
3.4 Procedures for Exchange of York Common Stock.
3.4.1 New Harris Financial to Make Shares Available. Prior to
the Effective Time, New Harris Financial shall designate the Exchange Agent. New
Harris Financial shall take all steps necessary on and as of the Effective Time
to deliver to the Exchange Agent, for the benefit of the holders of
Certificates, for exchange in accordance with this Section 3.4, certificates
representing shares of New Harris Common Stock and cash in lieu of fractional
shares to be paid pursuant to this Section 3.4 (such cash and certificates for
shares of New Harris Common Stock, together with any dividends or distributions
with respect thereto being hereinafter referred to as the "Exchange Fund") to be
issued and paid in exchange for outstanding York Common Stock in accordance with
this Agreement.
3.4.2 Exchange of Certificates. Within five (5) business days
after the Effective Time, New Harris Financial shall take all steps necessary to
cause the Exchange Agent to mail to each holder of a Certificate or
Certificates, a form letter of transmittal for return to the Exchange Agent and
instructions for use in effecting the surrender of the Certificates for
certificates representing the New Harris Common Stock and cash in lieu of
fractional shares into which the York Common Stock represented by such
Certificates shall have been converted as a result of the Merger. The letter of
transmittal (which shall be subject to the reasonable approval of York) shall
specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only
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upon delivery of the Certificates to the Exchange Agent. Upon surrender of a
Certificate for exchange and cancellation to the Exchange Agent, together with
such letter of transmittal, duly executed, the holder of such Certificate shall
be entitled to receive in exchange therefor (x) a certificate for the number of
whole shares of New Harris Common Stock to which such holder of York Common
Stock shall have become entitled pursuant to the provisions of Section 3.1, and
(y) a check representing the amount of cash in lieu of the fractional shares, if
any, which such holder has the right to receive in respect of Certificates
surrendered pursuant to the provisions of this Section 3.4, and the Certificates
so surrendered shall forthwith be canceled. Certificates surrendered for
exchange by any person who is an "affiliate" of York for purposes of Rule 145(c)
under the Securities Act shall not be exchanged for certificates representing
shares of New Harris Common Stock until New Harris Financial or Harris Financial
has received the written agreement of such person contemplated by Section 8.5
hereof.
3.4.3 Rights of Certificate Holders after the Effective Time.
The holder of a Certificate that prior to the Merger represented issued and
outstanding York Common Stock shall have no rights, after the Effective Time,
with respect to such York Common Stock except to surrender the Certificate in
exchange for the Merger Consideration as provided in this Agreement. No
dividends or other distributions declared after the Effective Time with respect
to New Harris Common Stock shall be paid to the holder of any unsurrendered
Certificate until the holder thereof shall surrender such Certificate in
accordance with this Section 3.4. After the surrender of a Certificate in
accordance with this Section 3.4, the record holder thereof shall be entitled to
receive any such dividends or other distributions, without any interest thereon,
which theretofore had become payable with respect to shares of New Harris Common
Stock represented by such Certificate.
3.4.4 Fractional Shares. Notwithstanding anything to the
contrary contained herein, no certificates or scrip representing fractional
shares of New Harris Common Stock shall be issued upon the surrender for
exchange of Certificates, no dividend or distribution with respect to New Harris
Common Stock shall be payable on or with respect to any fractional share
interest, and such fractional share interests shall not entitle the owner
thereof to vote or to any other rights of a stockholder of New Harris Financial.
In lieu of the issuance of any such fractional share, New Harris Financial shall
pay to each former holder of York Common Stock who otherwise would be entitled
to receive a fractional share of New Harris Common Stock, an amount in cash
determined by multiplying the price for which the New Harris Common Stock is
sold in the Offering by the fraction of a share of Harris Common Stock which
such holder would otherwise be entitled to receive pursuant to Section 3.4.2
hereof. No interest will be paid on the cash which the holders of such
fractional shares shall be entitled to receive upon such delivery. For purposes
of determining any fractional share interest, all shares of York Common Stock
owned by a York shareholder shall be combined so as to calculate the maximum
number of whole shares of New Harris Common Stock issuable to such York
shareholder.
3.4.5 Surrender by Persons Other than Record Holders. If the
Person surrendering a Certificate and signing the accompanying letter of
transmittal is not the record holder thereof, then it shall be a condition of
the payment of the Merger Consideration that: (i) such Certificate is
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properly endorsed to such Person or is accompanied by appropriate stock powers,
in either case signed exactly as the name of the record holder appears on such
Certificate, and is otherwise in proper form for transfer, or is accompanied by
appropriate evidence of the authority of the Person surrendering such
Certificate and signing the letter of transmittal to do so on behalf of the
record holder; and (ii) the person requesting such exchange shall pay to the
Exchange Agent in advance any transfer or other taxes required by reason of the
payment to a person other than the registered holder of the Certificate
surrendered, or required for any other reason, or shall establish to the
satisfaction of the Exchange Agent that such tax has been paid or is not
payable.
3.4.6 Closing of Transfer Books. From and after the Effective
Time, there shall be no transfers on the stock transfer books of York of the
York Common Stock which were outstanding immediately prior to the Effective
Time. If, after the Effective Time, Certificates representing such shares are
presented for transfer to the Exchange Agent, they shall be exchanged for the
Merger Consideration and canceled as provided in this Section 3.4.
3.4.7 Return of Exchange Fund. At any time following the
twelve (12) -month period after the Effective Time, New Harris Financial shall
be entitled to require the Exchange Agent to deliver to it any portions of the
Exchange Fund which had been made available to the Exchange Agent and not
disbursed to holders of Certificates (including, without limitation, all
interest and other income received by the Exchange Agent in respect of all funds
made available to it), and thereafter such holders shall be entitled to look to
Harris Financial (subject to abandoned property, escheat and other similar laws)
with respect to any Merger Consideration that may be payable upon due surrender
of the Certificates held by them. Notwithstanding the foregoing, neither New
Harris Financial nor the Exchange Agent shall be liable to any holder of a
Certificate for any Merger Consideration delivered in respect of such
Certificate to a public official pursuant to any abandoned property, escheat or
other similar law.
3.4.8 Lost, Stolen or Destroyed Certificates. In the event any
Certificate shall have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the person claiming such Certificate to be lost,
stolen or destroyed and, if required by New Harris Financial, the posting by
such person of a bond in such amount as New Harris Financial may reasonably
direct as indemnity against any claim that may be made against it with respect
to such Certificate, the Exchange Agent will issue in exchange for such lost,
stolen or destroyed Certificate the Merger Consideration deliverable in respect
thereof.
3.5 Reservation of Shares. New Harris Financial shall reserve for
issuance a sufficient number of shares of the New Harris Common Stock for the
purpose of issuing shares of New Harris Common Stock to the York shareholders
and option holders in accordance with this Article III.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF YORK
York and York Federal represent and warrant to Harris Financial, New
Harris Financial and Harris Savings Bank that the statements contained in this
Article IV are correct and complete as of the date of this Agreement and will be
correct and complete as of the Closing Date (as though made then and as though
the Closing Date were substituted for the date of this Agreement throughout this
Article IV), except as set forth in the YORK DISCLOSURE SCHEDULE delivered by
York to Harris Financial on the date hereof, and except as to any representation
or warranty which specifically relates to an earlier date. York and York Federal
have made a good faith effort to ensure that the disclosure on each schedule of
the YORK DISCLOSURE SCHEDULE corresponds to the section referenced herein.
However, for purposes of the YORK DISCLOSURE SCHEDULE, any item disclosed on any
schedule therein is deemed to be fully disclosed with respect to all schedules
under which such item may be relevant.
4.1 Capital Structure. The authorized capital stock of York consists of
20,000,000 shares of common stock, par value $1.00 per share, and 10,000,000
shares of undesignated preferred stock, par value $1.00 per share. As of the
date of this Agreement, 10,107,267 shares of York Common Stock are issued and
outstanding, no shares of York Common Stock are directly or indirectly held by
York as treasury stock and no shares of York preferred stock are issued and
outstanding. All outstanding shares of York Common Stock have been duly
authorized and validly issued and are fully paid and nonassessable, and none of
the outstanding shares of York Common Stock has been issued in violation of the
preemptive rights of any person, firm or entity. Except for the York Option
Plans pursuant to which there are outstanding options to acquire 1,006,108
shares of York Common Stock, a schedule of which is set forth in Section 4.1 of
the YORK DISCLOSURE SCHEDULE which has been delivered to Harris Financial prior
to the execution of this Agreement, there are no Rights authorized, issued or
outstanding with respect to or relating to the capital stock of York.
4.2 Organization, Standing and Authority of York. York is a corporation
duly organized, validly existing and in good standing under the laws of the
Commonwealth of Pennsylvania with full corporate power and authority to own or
lease all of its properties and assets and to carry on its business as now
conducted, and is duly licensed or qualified to do business and is in good
standing in each jurisdiction in which its ownership or leasing of property or
the conduct of its business requires such licensing or qualification. York is
duly registered as a savings and loan holding company under the HOLA. York has
heretofore delivered to Harris Financial and has included as Section 4.2 of the
YORK DISCLOSURE SCHEDULE true and complete copies of the Articles of
Incorporation and Bylaws of York as in effect as of the date hereof.
4.3 Ownership of York Subsidiaries. Set forth in Section 4.3 of the
YORK DISCLOSURE SCHEDULE is the name, jurisdiction of incorporation and
percentage ownership of each direct or indirect York Subsidiary. Except for (x)
capital stock of the York Subsidiaries, (y) securities and other interests held
in a fiduciary capacity and beneficially owned by third parties or
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taken in consideration of debts previously contracted, and (z) securities and
other interests which are set forth in the YORK DISCLOSURE SCHEDULE, York does
not own or have the right or obligation to acquire, directly or indirectly, any
outstanding capital stock or other voting securities or ownership interests of
any corporation, bank, savings association, partnership, joint venture or other
organization, other than investment securities representing not more than 5% of
the outstanding capital stock of any entity. The outstanding shares of capital
stock or other ownership interests of each York Subsidiary that are owned by
York or any York Subsidiary have been duly authorized and validly issued, are
fully paid and nonassessable and are directly or indirectly owned by York free
and clear of all liens, claims, encumbrances, charges, pledges, restrictions or
rights of third parties of any kind whatsoever. No Rights are authorized, issued
or outstanding with respect to the capital stock or other ownership interests of
any York Subsidiary and there are no agreements, understandings or commitments
relating to the right of York to vote or to dispose of such capital stock or
other ownership interests.
4.4 Organization, Standing and Authority of York Subsidiaries. Each
York Subsidiary is a savings association, corporation or partnership duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which it is organized. Each York Subsidiary (i) has full power
and authority to own or lease all of its properties and assets and to carry on
its business as now conducted, and (ii) is duly licensed or qualified to do
business and is in good standing in each jurisdiction in which its ownership or
leasing of property or the conduct of its business requires such qualification.
York is authorized to own each York Subsidiary under the HOLA. The deposit
accounts of York Fed are insured by the FDIC to the maximum extent permitted by
the FDIA. York Fed has paid all premiums and assessments required by the FDIC.
York has heretofore delivered or made available to Harris Financial and has
included as Section 4.4 of the YORK DISCLOSURE SCHEDULE true and complete copies
of the Charter and Bylaws of York Fed as in effect as of the date hereof.
4.5 Authorized and Effective Agreement.
4.5.1 Each of York and York Fed has all requisite corporate
power and authority to enter into this Agreement and (subject to receipt of all
necessary governmental approvals and the approval of York's shareholders of this
Agreement) to perform all of its obligations under this Agreement. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized by all necessary
corporate action in respect thereof on the part of York and York Fed, except for
the approval of this Agreement by York's shareholders. This Agreement has been
duly and validly executed and delivered by York and York Fed and, assuming due
authorization and execution by Harris, constitutes the legal, valid and binding
obligations of York and York Fed, enforceable against York and York Fed in
accordance with its terms, subject, as to enforceability, to bankruptcy,
insolvency and other laws of general applicability relating to or affecting
creditors' rights and to general equity principles.
4.5.2 York has all requisite corporate power and authority to
enter the York Option Agreement. The execution and delivery of the York Option
Agreement and the consummation of the
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transactions contemplated thereby have been duly and validly authorized by all
necessary corporate action on the part of York. The York Option Agreement has
been duly and validly executed and delivered by York and constitutes the legal,
valid and binding obligation of York, enforceable against York in accordance
with its terms, subject, as to enforceability, to bankruptcy, insolvency and
other laws of general applicability relating to or affecting creditors' rights
and to general equity principles.
4.5.3 Except as set forth in Section 4.5.3 of the YORK
DISCLOSURE SCHEDULE, neither the execution and delivery of this Agreement or the
York Option Agreement, nor consummation of the transactions contemplated hereby
or thereby, nor compliance by York and York Fed with any of the provisions
hereof or by York with respect to the York Option Agreement (i) does or will
conflict with or result in a breach of any provisions of the Articles of
Incorporation or Bylaws of York or the equivalent documents of any York
Subsidiary, (ii) violate, conflict with or result in a breach of any term,
condition or provision of, or constitute a default (or an event which, with
notice or lapse of time, or both, would constitute a default) under, or give
rise to any right of termination, cancellation or acceleration with respect to,
or result in the creation of any lien, charge or encumbrance upon any property
or asset of York or any York Subsidiary pursuant to, any material note, bond,
mortgage, indenture, deed of trust, license, lease, agreement or other
instrument or obligation to which York or any York Subsidiary is a party, or by
which any of their respective properties or assets may be bound or affected, or
(iii) subject to receipt of all required governmental and shareholder approvals,
violate any order, writ, injunction, decree, statute, rule or regulation
applicable to York or any York Subsidiary.
4.5.4 Except for (i) the filing of applications and notices
with, and the consents and approvals of, as applicable, the Bank Regulators,
(ii) the filing of the Proxy Statement-Prospectus with the SEC, (iii) the
approval of this Agreement by the requisite vote of the shareholders of York,
(iv) the filing of Articles of Merger with the Secretary of State of the
Commonwealth of Pennsylvania pursuant to the PBCL in connection with the Merger,
and (v) review of the Merger by the DOJ under federal antitrust laws, no
consents or approvals of or filings or registrations with any Governmental
Entity or with any third party are necessary on the part of York or York Fed in
connection with the execution and delivery by York and York Fed of this
Agreement or the York Option Agreement and the consummation of the Merger by
York.
4.5.5 As of the date hereof, neither York nor York Fed is
aware of any reasons relating to York or York Fed (including without limitation
Community Reinvestment Act compliance) why all consents and approvals shall not
be procured from all regulatory agencies having jurisdiction over the Merger as
shall be necessary for (i) consummation of the Merger, and (ii) the continuation
by New Harris Financial after the Effective Time of the business of York and
York Fed as such business is carried on immediately prior to the Effective Time,
free of any conditions or requirements which, in the reasonable opinion of York,
could have a Material Adverse Effect on York or York Fed or materially impair
the value of York and York Fed to New Harris Financial.
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4.6 Securities Documents and Regulatory Reports.
4.6.1 Since January 1, 1995, York and any corporation that has
merged into or consolidated with York subsequent to such date have timely filed
with the SEC, the Bank Regulators and the NASD all Securities Documents required
by the Securities Laws and such Securities Documents as the same may have been
amended, complied in all material respects with the Securities Laws and did not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
4.6.2 Since January 1, 1995, each of York and York Fed, and
any financial institution or company that has merged into or consolidated with
York or York Fed, has duly filed with the Bank Regulators in correct form the
reports required to be filed under applicable laws and regulations and such
reports were in all material respects complete and accurate and in compliance
with the requirements of applicable laws and regulations. In connection with the
most recent examinations of York and York Fed by the OTS, neither York nor York
Fed was required to correct or change any action, procedure or proceeding which
York or York Fed believes has not been corrected or changed as required as of
the date hereof in all material respects.
4.7 Financial Statements.
4.7.1 York has previously delivered or made available to
Harris Financial accurate and complete copies of the York Financial Statements
which, in the case of audited York Financial Statements, are accompanied by the
audit reports of its independent public accountants. The York Financial
Statements referred to herein, as well as the York Financial Statements to be
delivered pursuant to Section 6.2 hereof, fairly present or will fairly present,
as the case may be, the consolidated financial condition of York as of the
respective dates set forth therein, and the consolidated results of operations,
shareholders' equity and cash flows of York for the respective periods or as of
the respective dates set forth therein.
4.7.2 Each of the York Financial Statements (including the
financial statements of any company or financial institution that has merged
into or consolidated with York or any York subsidiary) referred to in Section
4.7.1 has been or will be, as the case may be, prepared in accordance with
generally accepted accounting principles consistently applied during the periods
involved, except as stated therein or, in the case of unaudited interim York
Financial Statements, the absence of footnotes and customary year-end
adjustments. The audits of York and York Subsidiaries have been conducted in all
material respects in accordance with generally accepted auditing standards. The
books and records of York and the York Subsidiaries are being maintained in
material compliance with applicable legal and accounting requirements, and such
books and records accurately reflect in all material respects all dealings and
transactions in respect of the business, assets, liabilities and affairs of York
and its Subsidiaries. The minute books of York and each York Subsidiary contain
complete and accurate records of all meetings and other corporate actions of its
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stockholders and Board of Directors authorized at such meetings held or taken
since January 1, 1995 through the date of this Agreement.
4.7.3 Except (i) as set forth in Section 4.7.3 of the YORK
DISCLOSURE SCHEDULE, (ii) as reflected, disclosed or provided for in the
consolidated statement of financial condition of York as of June 30, 1999
(including related notes), (iii) for liabilities incurred since June 30, 1999 in
the ordinary course of business and (iv) liabilities incurred in connection with
this Agreement and the transactions contemplated hereby, neither York nor any
York Subsidiary has any liabilities, whether absolute, accrued, contingent or
otherwise, material to the financial condition, results of operations or
business of York on a consolidated basis that would be required to be reflected
on an audited consolidated balance sheet of York or the notes thereto.
4.8 Material Adverse Change. Since June 30, 1999 to the date hereof (i)
York and each York Subsidiary has conducted its respective business in the
ordinary and usual course (excluding the incurrence of expenses in connection
with this Agreement, and excluding the transactions contemplated hereby), and
(ii) no event has occurred or circumstance arisen that, individually or in the
aggregate, has had or is reasonably likely to have a Material Adverse Effect on
York.
4.9 Environmental Matters.
4.9.1 To the best of York's knowledge, York and each York
Subsidiary is in material compliance with all Environmental Laws. Neither York
nor any York Subsidiary has received any written communication during the last
three years alleging that York or any York Subsidiary is not in such compliance
and, to the best knowledge of York, there are no present circumstances that
would prevent or interfere with the continuation of such compliance.
4.9.2 To the actual knowledge of the senior management and
directors of York and York Fed, none of the properties presently or formerly
owned, leased or operated by York or any York Subsidiary, or in which York or
any York Subsidiary has a lien or other security interest, has been or is in
material violation of or materially liable under any Environmental Law.
4.9.3 To the best of York's knowledge, there are no past or
present actions, activities, circumstances, conditions, events or incidents that
could reasonably form the basis of any material Environmental Claim or other
claim or action or governmental investigation that could result in the
imposition of any material liability arising under any Environmental Law against
York or any York Subsidiary or against any person or entity whose liability for
any Environmental Claim York or any York Subsidiary has or may have retained or
assumed either contractually or by operation of law.
4.9.4 Except as set forth in Section 4.9.4 of the YORK
DISCLOSURE SCHEDULE, York has not conducted any environmental studies during the
past five years with respect to any properties owned by York or any York
Subsidiary as of the date hereof.
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4.10 Tax Matters.
4.10.1 York and each York Subsidiary has timely filed all
federal, state and local (and, if applicable, foreign) income, franchise, bank,
excise, real property, personal property and other tax returns required by
applicable law to be filed by them (including, without limitation, estimated tax
returns, income tax returns, information returns and withholding and employment
tax returns) and have paid, or where payment is not required to have been made,
have set up an adequate reserve or accrual for the payment of, all material
taxes required to be paid in respect of the periods covered by such returns and,
as of the Effective Time, will have paid, or where payment is not required to
have been made, will have set up an adequate reserve or accrual for the payment
of, all material taxes for any subsequent periods ending on or prior to the
Effective Time. To the best of York's knowledge, neither York nor any York
Subsidiary will have any material liability for any such taxes in excess of the
amounts so paid or reserves or accruals so established. As of the date hereof,
no audit, examination or deficiency or refund litigation with respect to any
federal, state and local (and, if applicable, foreign) income, franchise, bank,
excise, real property, personal property and other tax returns filed by York or
any York Subsidiary is pending or, to the best of York's knowledge, threatened.
4.10.2 All federal, state and local (and, if applicable,
foreign) income, franchise, bank, excise, real property, personal property and
other tax returns filed by York and its Subsidiaries are complete and accurate
in all material respects. Neither York nor any York Subsidiary is delinquent in
the payment of any tax, assessment or governmental charge, or has requested any
extension of time within which to file any tax returns in respect of any fiscal
year or portion thereof which have not since been filed. Except as set forth in
Section 4.10.2 of the YORK DISCLOSURE SCHEDULE, the federal, state and local
income tax returns of York and its Subsidiaries have been examined by the
applicable tax authorities (or are closed to examination due to the expiration
of the applicable statute of limitations) and no deficiencies for any tax,
assessment or governmental charge have been proposed, asserted or assessed
(tentatively or otherwise) against York or any York Subsidiary as a result of
such examinations or otherwise which have not been settled and paid. There are
currently no agreements in effect with respect to York or any York Subsidiary to
extend the period of limitations for the assessment or collection of any tax.
4.10.3 Except as set forth in Section 4.10.3 of the YORK
DISCLOSURE SCHEDULE, neither York nor any York Subsidiary (i) is a party to any
agreement providing for the allocation or sharing of taxes (other than a tax
allocation agreement between York and York Fed), (ii) is required to include in
income any adjustment pursuant to Section 481(a) of the Code by reason of a
voluntary change in accounting method initiated by York or any York Subsidiary
(nor does York have any knowledge that the Internal Revenue Service has proposed
any such adjustment or change of accounting method) or (iii) has filed a consent
pursuant to Section 341(f) of the Code or agreed to have Section 341(f)(2) of
the Code apply.
4.11 Legal Proceedings. Except as set forth in Section 4.11 of the
YORK DISCLOSURE SCHEDULE, there are no material actions, suits, claims,
governmental investigations or proceedings
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instituted, pending or, to the best knowledge of the senior officers and
directors of York or any York Subsidiary, threatened against York or any York
Subsidiary or against any asset, interest or right of York or any York
Subsidiary, or against any officer, director or employee of any of them, and
neither York nor any York Subsidiary is a party to any order, judgment or
decree.
4.12 Compliance with Laws.
4.12.1 Each of York and the York Subsidiaries has all permits,
licenses, certificates of authority, orders and approvals of, and has made all
filings, applications and registrations with, federal, state, local and foreign
governmental or regulatory bodies that are required in order to permit it to
carry on its business as it is presently being conducted; all such permits,
licenses, certificates of authority, orders and approvals are in full force and
effect; and to the best knowledge of York, no suspension or cancellation of any
of the same is threatened.
4.12.2 Except as set forth in Section 4.12.2 of the YORK
DISCLOSURE SCHEDULE, neither York nor any York Subsidiary is in violation of its
respective Articles of Incorporation, Charter or other chartering instrument or
Bylaws, or in material violation of any applicable federal, state or local law
or ordinance or any order, rule or regulation of any federal, state, local or
other governmental agency or body (including, without limitation, all banking
(including without limitation all regulatory capital requirements), municipal
securities, insurance, safety, health, environmental, zoning,
anti-discrimination, antitrust, and wage and hour laws, ordinances, orders,
rules and regulations), or in default with respect to any order, writ,
injunction or decree of any court, or in default under any order, license,
regulation or demand of any governmental agency and, to the best knowledge of
York, York along with its executive officers and directors is not in material
violation of any securities laws; and neither York nor any York Subsidiary has
received any written notice or communication from any federal, state or local
governmental authority asserting that York or any York Subsidiary is in
violation of any of the foregoing, which violation has not been corrected on a
prospective basis in all material respects. Neither York nor any York Subsidiary
is subject to any regulatory or supervisory cease and desist order, agreement,
written directive, memorandum of understanding or written commitment (other than
those of general applicability to all savings associations or holding companies
thereof), and none of them has received any written communication requesting
that it enter into any of the foregoing. Since January 1, 1995, no regulatory
agency has initiated any proceeding or, to the best knowledge of York,
investigation into the business or operations of York, or any York Subsidiary.
York has not received any objection from any regulatory agency to York's
response to any violation, criticism or exception with respect to any report or
statement relating to any examination of York or any of the York Subsidiaries.
4.13 Certain Information. None of the information relating to York and
its Subsidiaries to be included or incorporated by reference in (i) the
Conversion Prospectus will, at the time such prospectus is mailed to subscribers
and to the holders of Harris Common Stock (and at the time the related
Conversion Registration Statement becomes effective under the Securities Act),
contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, and (ii) the Proxy
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Statement-Prospectus, as of the date(s) such Proxy Statement-Prospectus is
mailed to shareholders of York (and at the time the related Merger Registration
Statement becomes effective under the Securities Act), and up to and including
the date of the meeting of shareholders to which such Proxy Statement-Prospectus
relates, will contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, provided that
information as of a later date shall be deemed to modify information as of an
earlier date. The Proxy Statement-Prospectus mailed by York to its shareholders
in connection with the meeting of shareholders at which this Agreement will be
considered by such shareholders will comply as to form in all material respects
with the Exchange Act and the rules and regulations promulgated thereunder.
4.14 Employee Benefit Plans.
4.14.1 York has set forth in Section 4.14.1 of the YORK
DISCLOSURE SCHEDULE all York Employee Plans, and York has previously furnished
or made available to Harris Financial accurate and complete copies of the same
together with (i) the actuarial and financial reports prepared with respect to
any qualified plans for the last three plan years, (ii) the annual reports filed
with any governmental agency for any qualified or non-qualified plans for the
last three plan years, and (iii) all rulings and determination letters and any
open requests for rulings or letters that pertain to any qualified plan.
4.14.2 None of York, any York Subsidiary, any pension plan
maintained by any of them and qualified under Section 401 of the Code or, to the
best of York's knowledge, any fiduciary of such plan has incurred any material
liability to the PBGC or the Internal Revenue Service with respect to any
employees of York or any York Subsidiary. To the best of York's knowledge, no
reportable event under Section 4043(b) of ERISA has occurred with respect to any
such pension plan, other than the transactions contemplated by this Agreement.
4.14.3 Except as set forth in Section 4.14.3 of the YORK
DISCLOSURE SCHEDULE: (a) neither York nor any York Subsidiary participates in or
has incurred any liability under Section 4201 of ERISA for a complete or partial
withdrawal from a multi-employer plan (as such term is defined in ERISA); (b) no
liability under Title IV of ERISA has been incurred by York or any York
Subsidiary with respect to any York Employee Plan which is subject to Title IV
of ERISA, or with respect to any "single-employer plan" (as defined in Section
4001(a) of ERISA) ("York Defined Benefit Plan") currently or formerly maintained
by York or any entity which is considered one employer with York under Section
4001(b)(1) of ERISA or Section 414 of the Code (an "ERISA Affiliate") since the
effective date of ERISA that has not been satisfied to the extent required by
ERISA from time to time; (c) no York Defined Benefit Plan had an "accumulated
funding deficiency" (as defined in Section 302 of ERISA), whether or not waived,
as of the last day of the end of the most recent plan year ending prior to the
date hereof that has not or will not be funded within the time provided under
Section 302(c)(10) of ERISA; (d) the fair market value of the assets of each
York Defined Benefit Plan exceeds the present value of the "benefit liabilities"
(as defined in Section 4001(a)(16) of ERISA) under such York Defined Benefit
Plan as of the end of
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the most recent plan year with respect to the respective York Defined Benefit
Plan ending prior to the date hereof, calculated on the basis of the actuarial
assumptions used in the most recent actuarial valuation for such York Defined
Benefit Plan as of the date hereof; (e) neither York nor any ERISA Affiliate has
provided, or is required to provide, security to any York Defined Benefit Plan
or to any single-employer plan of an ERISA Affiliate pursuant to Section
401(a)(29) of the Code; (f) neither York nor any ERISA Affiliate has contributed
to any "multiemployer plan," as defined in Section 3(37) of ERISA, on or after
September 26, 1980; (g) neither York, nor any ERISA Affiliate, nor any York
Employee Plan, including any York Defined Benefit Plan, nor any trust created
thereunder has engaged in a transaction in connection with which York, any ERISA
Affiliate, and any York Employee Plan, including any York Defined Benefit Plan
any such trust or any trustee or administrator thereof, is subject to either a
civil liability or penalty pursuant to Section 409, 502(i) or 502(l) of ERISA or
a tax imposed pursuant to Chapter 43 of the Code.
4.14.4 A favorable determination letter has been issued by the
Internal Revenue Service with respect to each York Employee Plan which is an
"employee pension benefit plan" (as defined in Section 3(2) of ERISA) (a "York
Pension Plan") which is intended to qualify under Section 401 of the Code to the
effect that such plan is qualified under Section 401 of the Code and the trust
associated with such employee pension plan is tax exempt under Section 501 of
the Code. No such letter has been revoked or, to the best of York's knowledge,
is threatened to be revoked and York does not know of any ground on which such
revocation may be based. Except as set forth in Section 4.14.4 of the YORK
DISCLOSURE SCHEDULE, neither York nor any York Subsidiary has any current
liability under any such plan that was required to be reflected as a liability
on the Financial Statements as of June 30, 1999 under GAAP, which was not
reflected on the consolidated statement of financial condition of York at June
30, 1999 included in the York Financial Statements.
4.14.5 No prohibited transaction (which shall mean any
transaction prohibited by Section 406 of ERISA and not exempt under Section 408
of ERISA or Section 4975 of the Code) has occurred with respect to any York
Employee Plan which would result in the imposition, directly or indirectly, of a
material excise tax on York under Section 4975 of the Code.
4.14.6 Except as specifically identified in Section 4.14.6 of
the YORK DISCLOSURE SCHEDULE, neither York nor any York Subsidiary has any
obligations for post- retirement or post-employment benefits under any York
Employee Plan that cannot be amended or terminated upon 60 or fewer days notice
without incurring any liability thereunder, except for coverage required by Part
6 of Title I of ERISA or Section 4980B of the Code, or similar state law, the
cost of which is borne by the insured individual. Full payment has been made (or
proper accruals have been established) of all contributions which are required
for periods prior to the date hereof, and full payment will be so made (or
proper accruals will be so established) of all contributions which are required
for periods after the date hereof and prior to the Effective Time, under the
terms of each York Employee Plan or ERISA; to the best of York's knowledge, no
accumulated funding deficiency (as defined in Section 302 of ERISA or Section
412 of the Code), whether or not waived, exists with respect to any York Pension
Plan, and there is no "unfunded current liability" (as defined in Section 412 of
the Code) with respect to any York Pension Plan.
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4.14.7 To the best of York's knowledge, the York Employee
Plans have been operated in compliance in all material respects with the
applicable provisions of ERISA, the Code, all regulations, rulings and
announcements promulgated or issued thereunder and all other applicable
governmental laws and regulations.
4.14.8 There are no pending or, to the best knowledge of York,
threatened claims (other than routine claims for benefits) by, on behalf of or
against any of the York Employee Plans or any trust related thereto or any
fiduciary thereof.
4.14.9. Section 4.14.9 of the YORK DISCLOSURE SCHEDULE sets
forth (i) any amounts payable by York or any York Subsidiary that is estimated
to be nondeductible for federal income tax purposes by Section 280G of the Code
(taking into account transactions contemplated by this Agreement); (ii) the
maximum amount that could be paid to each executive officer of York or any York
Subsidiary as a result of the transactions contemplated by this Agreement under
all employment, severance, and termination agreements, other compensation
arrangements and York Employee Plans currently in effect; and (iii) the "base
amount" (as such term is defined in section 280G(b)(3) of the Code) for each
such disqualified individual calculated as of the date of this Agreement.
4.14.10 No compensation payable by York or any York Subsidiary
to any of their employees under any York Employee Plan (including by reason of
the transactions contemplated hereby) will be subject to disallowance under
Section 162(m) of the Code.
4.14.11 Except as set forth in Section 4.14.11 of the YORK
DISCLOSURE SCHEDULE, with respect to any York Employee Plan which is an employee
welfare benefit plan (within the meaning of ERISA Section 3(1) (a "York Welfare
Plan"): (i) each such York Welfare Plan which is intended to meet the
requirements for tax-favored treatment under Subchapter B of Chapter 1 of the
Code meets such requirements; (ii) there is no disqualified benefit (as such
term is defined in Code Section 4976(b)) which would subject York to a tax under
Code Section 4976(a); (iii) to the best knowledge of York, each and every York
Welfare Plan which is a group health plan (as such term is defined in Code
Sections 162(i)(3)) complies and in each and every case has complied in all
material respects with the applicable requirements of Code Section 4980B; and
(iv) each such York Welfare Plan (including any such plan covering former
employees of York or any York Subsidiary) may be amended or terminated by York
or Harris Financial on or at any time after the Effective Date without incurring
liability thereunder except as required to satisfy the terms of the Plan.
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4.15 Certain Contracts.
4.15.1 Except as described in Section 4.15.1 of the YORK
DISCLOSURE SCHEDULE, neither York nor any York Subsidiary is in material default
or non-compliance under any contract, agreement, commitment, arrangement, lease,
insurance policy or other instrument to which it is a party or by which its
assets, business or operations may be bound or affected, whether entered into in
the ordinary course of business or otherwise and whether written or oral, and
there has not occurred any event that with the lapse of time or the giving of
notice, or both, would constitute such a material default or non-compliance.
4.15.2 Except as set forth in Section 4.15.2 of the YORK
DISCLOSURE SCHEDULE, as of the date hereof, neither York nor any York Subsidiary
is a party to, is bound or affected by, receives, or is obligated to pay
benefits under:
(a) any agreement, arrangement or commitment, including
without limitation any agreement, indenture or other instrument, relating to the
borrowing of money by York or any York Subsidiary (other than in the case of
York Fed deposits, FHLB advances, federal funds purchased and securities sold
under agreements to repurchase in the ordinary course of business) or the
guarantee by York or any York Subsidiary of any obligation;
(b) any agreement or commitment relating to the employment of
a consultant or the employment, election or retention in office of any present
or former director, officer or employee of York or any York Subsidiary;
(c) any agreement, arrangement or understanding pursuant to
which any payment (whether of severance pay or otherwise) became or may become
due to any director, officer or employee of York or any York Subsidiary upon
execution of this Agreement or upon or following consummation of the
transactions contemplated by this Agreement (either alone or in connection with
the occurrence of any additional acts or events);
(d) any agreement, arrangement or understanding pursuant to
which York or any York Subsidiary is obligated to indemnify any director,
officer, employee or agent of York or any York Subsidiary;
(e) any agreement, arrangement or understanding to which York
or any York Subsidiary is a party or by which any of the same is bound which
limits the freedom of York or any York Subsidiary to compete in any line of
business or with any person;
(f) any assistance agreement, supervisory agreement,
memorandum of understanding, consent order, cease and desist order or condition
of any regulatory order or decree with or by any
Bank Regulator;
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(g) any agreement (other than any agreement with a banking
customer for the provision of banking services entered into by any York
Subsidiary in the ordinary course of business) that involves a payment or series
of payments of more than $100,000 in any one year from or to York or any York
Subsidiary (unless such agreement is cancellable by York upon payment of a
termination fee of not more than $50,000); or
(h) any other agreement, arrangement or understanding which
would be required to be filed as an exhibit to York's Annual Report on Form10-K
under the Exchange Act and which has not been so filed.
4.16 Brokers and Finders. Except as set forth in Section 4.16 of the
YORK DISCLOSURE SCHEDULE, neither York nor any York Subsidiary nor any of their
respective directors, officers or employees, has employed any broker or finder
or incurred any liability for any broker or finder fees or commissions in
connection with the transactions contemplated hereby.
4.17 Insurance. York and each York Subsidiary is insured for reasonable
amounts with financially sound and reputable insurance companies against such
risks as companies engaged in a similar business would, in accordance with good
business practice, customarily be insured and has maintained all insurance
required by contracts currently in effect and applicable laws and regulations.
Section 4.17 of the YORK DISCLOSURE SCHEDULE sets forth all policies of
insurance maintained by it or any York Subsidiary as of the date hereof and any
claims thereunder in excess of $25,000 since January 1, 1998. Since January 1,
1995, neither York nor any York Subsidiary has received any notice of
termination of any such insurance coverage or material increase in the premiums
therefor or has any reason to believe that any such insurance coverage will be
terminated or the premiums therefor materially increased.
4.18 Properties. All material real and personal property owned by York
or any York Subsidiary or presently used by any of them in its respective
business are in good condition (ordinary wear and tear excepted) and are
sufficient to carry on its business in the ordinary course of business
consistent with their past practices. York and each York Subsidiary have good
and marketable title free and clear of all liens, encumbrances, charges,
defaults or equities (other than equities of redemption under applicable
foreclosure laws) to all of the material properties and assets, real and
personal, reflected on the consolidated statement of financial condition of York
as of June 30, 1999 included in the York Financial Statements or acquired,
through merger of otherwise, after such date (other than those disposed of for
fair value after such date), except (i) liens for current taxes not yet due or
payable, (ii) pledges to secure deposits and other liens incurred in the
ordinary course of its banking business, (iii) such imperfections of title,
easements and encumbrances, if any, as are not material in character, amount or
extent, and (iv) as reflected on the consolidated statement of financial
condition of York as of June 30, 1999 included in the York Financial Statements.
All real and personal property which are material to York's business on a
consolidated basis and leased or licensed by York or any York Subsidiary are
held pursuant to leases or licenses which are valid and enforceable in
accordance with their respective terms and no such real property lease will
terminate or lapse prior to the Effective Time.
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4.19 Labor. No work stoppage involving York or any York Subsidiary is
pending or, to the best knowledge of York, threatened. Neither York nor any York
Subsidiary is involved in, or to the best knowledge of York, threatened with or
affected by, any labor dispute, arbitration, lawsuit or administrative
proceeding involving its employees, which would have Material Adverse Effect on
York. Employees of York and the York Subsidiaries are not represented by any
labor union nor are any collective bargaining agreements otherwise in effect
with respect to such employees, and to the best of York's knowledge, there have
been no efforts to unionize or organize any employees of York or any York
Subsidiary during the past five years.
4.20 Certain Transactions. Since June 30, 1999, neither York, any York
Subsidiary nor any company or financial institution that shall have merged with
and into York or any York Subsidiary subsequent to June 30, 1999, has been a
party to any material off-balance-sheet transactions involving interest rate and
currency swaps, options and futures contracts, or any other similar derivative
transactions, except as set forth in Section 4.20 of the YORK DISCLOSURE
SCHEDULE.
4.21 Disclosures. None of the representations and warranties of York
and York Fed or any of the written information or documents furnished or to be
furnished by York and York Fed to Harris Financial in connection with or
pursuant to this Agreement or the consummation of the transactions contemplated
hereby, when considered as a whole, contains or will contain any untrue
statement of a material fact, or omits or will omit to state any material fact
required to be stated or necessary to make any such information or document, in
light of the circumstances, not misleading.
4.22 Disclosure Schedule. The YORK DISCLOSURE SCHEDULE sets forth,
among other things, disclosures with respect to or exceptions to York's and York
Fed's representations and warranties in this Article IV. The mere inclusion of
an exception in the YORK DISCLOSURE SCHEDULE shall not be deemed an admission by
York or York Fed that such exception represents a material fact, event or
circumstance.
4.23 Pooling of Interests. As of the date of this Agreement, York knows
of no reason relating to it why the Merger would not qualify as a "pooling of
interests" for accounting purposes or a tax free reorganization under Section
368 of the Code. Except as set forth in Section 4.23 of the YORK DISCLOSURE
SCHEDULE, since January 1, 1998, neither York nor York Fed has (A) issued or
permitted to be issued any shares of capital stock, or securities exercisable
for or convertible into shares of capital stock, of York, York Fed or any York
Subsidiaries, other than pursuant to and as required by the terms of any York
Options that were issued and outstanding on such date; (B) repurchased, redeemed
or otherwise acquired, or authorized the repurchase, redemption or other
acquisition of, directly or indirectly through one or more of its Subsidiaries,
any shares of capital stock of York, York Fed or any York Subsidiary; or (C)
declared, set aside, made or paid to the stockholders of York or York Fed
dividends or other distributions on the outstanding shares of capital stock of
York or York Fed. For purposes of clause (B) above, York and York Fed shall be
deemed to include any person that York or York Fed has caused to purchase such
shares.
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4.24 Fairness Opinion. York has received a written opinion from Advest,
Inc. to the effect that, subject to the terms, conditions and qualifications set
forth therein, as of the date thereof, the Merger Consideration to be received
by the stockholders of York pursuant to this Agreement is fair to such
stockholders from a financial point of view.
4.25 Loan Portfolio. Section 4.25 of the YORK DISCLOSURE SCHEDULE sets
forth all of the loans in original principal amount in excess of $100,000 of
York or any York Subsidiary that as of the date of this Agreement are classified
by York or any Bank Regulator as "Special Mention," "Substandard," "Doubtful,"
"Loss" or "Classified," together with the aggregate principal amount of and
accrued and unpaid interest on all such loans by category, it being understood
that no representation is being made that the OTS or any other Bank Regulator
would agree with the loan classifications of York. The allowance for loan losses
reflected, and to be reflected, in York's regulatory reports, and shown, and to
be shown, on the balance sheets contained in the York Financial Statements and
any financial statements of any company or financial institution that shall have
merged into York or any York Subsidiary subsequent to June 30, 1999 have been,
and will be, established in accordance with the requirements of GAAP and all
applicable regulatory criteria.
4.26 Required Vote; Inapplicability of Anti-takeover Statutes.
4.26.1 The affirmative vote of a majority of votes cast by all
holders of shares of York Common Stock entitled to vote is necessary to approve
this Agreement and the transactions contemplated hereby on behalf of York.
4.26.2 No "fair price," "moratorium," "control share
acquisition" or other form of antitakeover statute or regulation is applicable
to this Agreement and the transactions contemplated hereby.
4.27 Material Interests of Certain Persons. Except as set forth in
Section 4.27 of the YORK DISCLOSURE SCHEDULE, to the knowledge of York, no
officer or director of York, or any "associate" (as such term is defined in Rule
14a-1 under the Exchange Act) of any such officer or director, (i) has any
material interest in any material contract or property (real or personal),
tangible or intangible, used in or pertaining to the business of York or any of
the York Subsidiaries, or (ii) is indebted to, or has the right under a line of
credit to borrow from, York or any York Subsidiary in an amount exceeding
$50,000.
4.28 Joint Ventures. Section 4.28 of the YORK DISCLOSURE SCHEDULE sets
forth (i) the identities of all Joint Ventures in which York or any York
Subsidiary is participating, (ii) the agreements relating to such Joint
Ventures, (iii) the identities of the other participants in the Joint Venture,
(iv) the percentage of the Joint Venture owned by each participant, (v) copies
of the most recent available financial statements (on an audited basis if
available) of such Joint Ventures, and (vi) the amount of the investment or
contractually binding commitment of York or any York Subsidiary to invest in
such Joint Venture.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF HARRIS
Harris Financial, New Harris Financial and Harris Savings Bank
represent and warrant to York and York Fed that the statements contained in this
Article V are correct and complete as of the date of this Agreement and will be
correct and complete as of the Closing Date (as though made then and as though
the Closing Date were substituted for the date of this Agreement throughout this
Article V), except as set forth in the HARRIS DISCLOSURE SCHEDULE delivered by
Harris Financial to York on the date hereof. Unless otherwise specified, any
reference to Harris in this Article V shall include the Mutual Company, Harris
Financial, New Harris Financial and any direct or indirect Subsidiary of Harris
Financial. Harris Financial, New Harris Financial and Harris Savings Bank have
made a good faith effort to ensure that the disclosure on each schedule of the
HARRIS DISCLOSURE SCHEDULE corresponds to the section referenced herein.
However, for purposes of the HARRIS DISCLOSURE SCHEDULE, any item disclosed on
any schedule therein is deemed to be fully disclosed with respect to all
schedules under which such item may be relevant.
5.1 Capital Structure. The authorized capital stock of Harris Financial
consists of 100,000,000 shares of common stock, par value $.01 per share, and
10,000,000 shares of preferred stock, par value $.01 per share. As of the date
of this Agreement, 33,574,325 shares of Harris Common Stock are issued and
outstanding, 449,300 shares of Harris Common Stock are directly or indirectly
held by Harris Financial as treasury stock and no shares of Harris Financial
preferred stock are issued and outstanding. All outstanding shares of Harris
Common Stock have been duly authorized and validly issued and are fully paid and
nonassessable, and none of the outstanding shares of Harris Common Stock has
been issued in violation of the preemptive rights of any person, firm or entity.
Except for the Harris Option Plans pursuant to which there are outstanding or
authorized options to acquire 1,301,375 shares of Harris Common Stock, a
schedule of which is set forth in Section 5.1 of the HARRIS DISCLOSURE SCHEDULE
which has been delivered to York concurrently herewith, there are no Rights
authorized, issued or outstanding with respect to or relating to the capital
stock of Harris Financial.
5.2 Organization, Standing and Authority of the Mutual Company, Harris
Financial and New Harris Financial. Each of the Mutual Company Harris Financial
and New Harris Financial is a corporation duly organized, validly existing and
in good standing under the laws of the Commonwealth of Pennsylvania with full
corporate power and authority to own or lease all of its properties and assets
and to carry on its business as now conducted, and is duly licensed or qualified
to do business and is in good standing in each jurisdiction in which its
ownership or leasing of property or the conduct of its business requires such
licensing or qualification. Each of the Mutual Company and Harris Financial is
duly registered as a bank holding company under the BHCA, and on the Effective
Date New Harris Financial will be a duly registered bank holding company under
the BHCA. Section 5.2 of the HARRIS DISCLOSURE SCHEDULE contains true and
complete
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copies of the Articles of Incorporation and Bylaws of Harris Financial and New
Harris Financial as in effect as of the date hereof.
5.3 Ownership of Harris Financial Subsidiaries. Section 5.3 of the
HARRIS DISCLOSURE SCHEDULE sets forth each direct or indirect Harris Financial
Subsidiary. The outstanding shares of capital stock of each Harris Financial
Subsidiary have been duly authorized and validly issued, are fully paid and
nonassessable and are directly or indirectly owned by Harris Financial free and
clear of all liens, claims, encumbrances, charges, pledges, restrictions or
rights of third parties of any kind whatsoever. No Rights are authorized, issued
or outstanding with respect to the capital stock or other ownership interests of
any Harris Financial Subsidiary and there are no agreements, understandings or
commitments relating to the right of Harris Financial to vote or to dispose of
said shares or other ownership interests.
5.4 Organization, Standing and Authority of Harris Financial
Subsidiaries. Each Harris Financial Subsidiary is a bank, corporation or
partnership duly organized, validly existing and in good standing under the laws
of the jurisdiction in which it is organized. Each Harris Financial Subsidiary
(i) has full power and authority to own or lease all of its properties and
assets and to carry on its business as now conducted, and (ii) is duly licensed
or qualified to do business and is in good standing in each jurisdiction in
which its ownership or leasing of property or the conduct of its business
requires such qualification. Harris Financial is authorized to own each Harris
Financial Subsidiary under the BHCA. The deposit accounts of Harris Savings Bank
are insured by the FDIC to the maximum extent permitted by the FDIA. Harris
Savings Bank has paid all premiums and assessments required by the FDIC. Harris
Financial has heretofore delivered or made available to York and has included in
Section 5.4 of the HARRIS DISCLOSURE SCHEDULE, true and complete copies of the
Articles and Bylaws of Harris Savings Bank as in effect on the date hereof.
5.5 Authorized and Effective Agreement.
5.5.1 Each of Harris Savings Bank, Harris Financial, New
Harris Financial and the Mutual Company has all requisite corporate power and
authority to enter into this Agreement and (subject to receipt of all necessary
governmental approvals and the approval of the Depositors and Harris Financial's
and New Harris Financial's stockholders) to perform all of its obligations under
this Agreement. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action in respect thereof on the part of
Harris Savings Bank, Harris Financial, New Harris Financial, and the Mutual
Company except for the approval by Harris Financial's and New Harris Financial's
stockholders and approval of the Conversion and/or the Plan of Conversion by
Harris Financial's stockholders and the Depositors. This Agreement has been duly
and validly executed and delivered by Harris Savings Bank, Harris Financial, New
Harris Financial, and the Mutual Company, and, assuming due authorization,
execution and delivery by York, constitutes the legal, valid and binding
obligation of Harris Savings Bank, Harris Financial, and New Harris Financial,
and the Mutual Company, enforceable against each of Harris Savings Bank, Harris
Financial, New Harris Financial, and the Mutual Company in accordance with its
terms, subject, as to enforceability, to bankruptcy,
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insolvency and other laws of general applicability relating to or affecting
creditors' rights and to general equity principles.
5.5.2 Neither the execution and delivery of this Agreement,
nor consummation of the transactions contemplated hereby (including the
Conversion) nor compliance by Harris Savings Bank, Harris Financial, New Harris
Financial, and the Mutual Company with any of the provisions hereof (i) does or
will conflict with or result in a breach of any provisions of the Articles of
Incorporation or Bylaws of Harris Savings Bank, Harris Financial, New Harris
Financial, and the Mutual Company or the equivalent documents of any Harris
Financial Subsidiary, (ii) violate, conflict with or result in a breach of any
term, condition or provision of, or constitute a default (or an event which,
with notice or lapse of time, or both, would constitute a default) under, or
give rise to any right of termination, cancellation or acceleration with respect
to, or result in the creation of any lien, charge or encumbrance upon any
property or asset of Harris pursuant to, any material note, bond, mortgage,
indenture, deed of trust, license, lease, agreement or other instrument or
obligation to which Harris is a party, or by which any of their respective
properties or assets may be bound or affected, or (iii) subject to receipt of
all required governmental, Depositor and shareholder approvals, violate any
order, writ, injunction, decree, statute, rule or regulation applicable to
Harris.
5.5.3 Except for (i) the filing of applications and notices
with, and the consents and approvals of, the applicable Bank Regulators, (ii)
the filing and effectiveness of the Conversion Registration Statement and the
Merger Registration Statement with the SEC in connection with the Conversion and
the Merger, (iii) the approval of the transactions contemplated by this
Agreement by the requisite vote of stockholders of Harris Financial and approval
of the Conversion and/or the Plan of Conversion by the requisite vote of the
Depositors and the stockholders of Harris Financial, (iv) the filing of Articles
of Merger with the Secretary of State of the Commonwealth of Pennsylvania
pursuant to the PBCL in connection with the Merger, (v) review of the Merger by
the DOJ under federal antitrust laws, and (vi) compliance with applicable state
securities or "blue sky" laws, and except for such filings, registrations,
consents or approvals as are set forth in Section 5.5.3 of the HARRIS DISCLOSURE
SCHEDULE, no consents or approvals of or filings or registrations with any
Governmental Entity or with any third party are necessary on the part of Harris
in connection with the execution and delivery of this Agreement by Harris and
the consummation of the Merger by New Harris Financial.
5.5.4 As of the date hereof, Harris is not aware of any
reasons relating to Harris (including without limitation (a) Community
Reinvestment Act and (b) FRB compliance) why all consents and approvals shall
not be procured from all regulatory agencies having jurisdiction over the
transactions contemplated by this Agreement as shall be necessary for (i)
consummation of the transactions contemplated by this Agreement and (ii) the
continuation by New Harris Financial after the Effective Time of the business of
York as such business is carried on immediately prior to the Effective Time,
free of any conditions or requirements which, in the reasonable opinion of
Harris Financial, could have a Material Adverse Effect on Harris Financial or
materially impair the value of York and York Fed to New Harris Financial.
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5.6 Securities Documents and Regulatory Reports.
5.6.1 Since January 1, 1995, Harris Financial and Harris
Savings Bank have timely filed with the SEC, the Bank Regulators and the NASD
all Securities Documents required by the Securities Laws and such Securities
Documents as the same may have been amended, complied in all material respects
with the Securities Laws and did not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading.
5.6.2 Since January 1, 1995, each of the Mutual Company,
Harris Financial and Harris Savings Bank has duly filed with the Bank
Regulators, in correct form the reports required to be filed under applicable
laws and regulations and such reports were in all material respects complete and
accurate and in compliance with the requirements of applicable laws and
regulations. In connection with the most recent examinations of Harris Financial
and Harris Savings Bank by the FRB, the FDIC or the Department, neither Harris
Financial nor Harris Savings Bank was required to correct or change any action,
procedure or proceeding which Harris Financial or Harris Savings Bank believes
has not been corrected or changed as required as of the date hereof in all
material respects.
5.7 Financial Statements.
5.7.1 Harris Financial has previously delivered or made
available to York accurate and complete copies of the Harris Financial
Statements which, in the case of audited Harris Financial Statements, are
accompanied by the audit reports of Arthur Andersen LLP, independent public
accountants with respect to Harris Financial. The Harris Financial Statements
referred to herein, as well as the Harris Financial Statements to be delivered
pursuant to Section 7.2 hereof, fairly present or will fairly present, as the
case may be, the consolidated financial condition of Harris Financial as of the
respective dates set forth therein, and the consolidated results of operations,
shareholders' equity and cash flows of Harris Financial for the respective
periods or as of the respective dates set forth therein.
5.7.2 Each of the Harris Financial Statements referred to in
Section 5.7.1 has been or will be, as the case may be, prepared in accordance
with generally accepted accounting principles consistently applied during the
periods involved, except as stated therein, or in the case of unaudited interim
Harris Financial Statements the absence of footnotes and customary year-end
adjustments. The audits of Harris Financial and Harris Financial Subsidiaries
have been conducted in all material respects in accordance with generally
accepted auditing standards. The books and records of the Mutual Company, New
Harris Financial, Harris Financial and Harris Financial Subsidiaries are being
maintained in material compliance with applicable legal and accounting
requirements, and all such books and records accurately reflect in all material
respects all dealings and transactions in respect of the business, assets,
liabilities and affairs of the Mutual Company, New Harris Financial, Harris
Financial and Harris Financial Subsidiaries. The minute books of the Mutual
Company, New Harris Financial, Harris Financial and each Harris Financial
Subsidiary contain complete and accurate
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records of all meetings and other corporate actions of its stockholders and the
Board of Directors authorized at such meetings held or taken since January 1,
1995 through the date of this Agreement.
5.7.3 Except (i) as reflected, disclosed or provided for in
the consolidated statement of financial condition of Harris Financial as of
December 31, 1999 (including related notes), (ii) liabilities incurred since
December 31, 1999 in the ordinary course of business, and (iii) liabilities
incurred in connection with this Agreement and the transactions contemplated
hereby, neither Harris Financial nor any Harris Financial Subsidiary has any
liabilities, whether absolute, accrued, contingent or otherwise, material to the
financial condition, results of operations or business of Harris Financial on a
consolidated basis that would be required to be reflected on an audited
consolidated balance sheet of Harris Financial or the notes thereto.
5.8 Material Adverse Change. Since December 31, 1999 to the date
hereof, (i) the Mutual Company, Harris Financial and each Harris Financial
Subsidiary has conducted its respective business in the ordinary and usual
course (excluding the incurrence of expenses in connection with this Agreement,
and excluding the transactions contemplated hereby) and (ii) no event has
occurred or circumstance arisen that, individually or in the aggregate, has had
or is reasonably likely to have a Material Adverse Effect on Harris Financial.
5.9 Environmental Matters. Except as set forth in Section 5.9 of the
HARRIS DISCLOSURE SCHEDULE:
5.9.1 To the best of Harris Financial's knowledge, Harris
Financial and Harris Financial Subsidiaries are in material compliance with all
Environmental Laws. Neither Harris Financial nor any Harris Financial Subsidiary
has received any written communication during the last three (3) years alleging
that Harris Financial or any Harris Financial Subsidiary is not in such
compliance and, to the best knowledge of Harris Financial, there are no present
circumstances that would prevent or interfere with the continuation of such
compliance.
5.9.2 To the actual knowledge of the senior management and
directors of Harris Financial and Harris Savings Bank, none of the properties
presently or formerly owned, leased or operated by Harris Financial or any
Harris Financial Subsidiary, or in which Harris Financial or any Harris
Financial Subsidiary has a lien or other security interest, has been or is in
material violation of or materially liable under any Environmental Law.
5.9.3 To the best of Harris Financial's knowledge, there are
no past or present actions, activities, circumstances, conditions, events or
incidents that could reasonably form the basis of any material Environmental
Claim or other claim or action or governmental investigation that could result
in the imposition of any material liability arising under any Environmental Law
against Harris Financial or any Harris Financial Subsidiary or against any
person or entity whose liability for any Environmental Claim Harris Financial or
any Harris Financial Subsidiary has or may have retained or assumed either
contractually or by operation of law.
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5.9.4 Harris Financial has not conducted any environmental
studies during the past five years with respect to any properties owned by
Harris Financial or any Harris Financial Subsidiary as of the date hereof.
5.10 Tax Matters.
5.10.1 Except as set forth in Section 5.10.1 of the HARRIS
DISCLOSURE SCHEDULE, the Mutual Company, Harris Financial and Harris Financial
Subsidiaries have timely filed all federal, state and local (and, if applicable,
foreign) income, franchise, bank, excise, real property, personal property and
other tax returns required by applicable law to be filed by them (including,
without limitation, estimated tax returns, income tax returns, information
returns and withholding and employment tax returns) and have paid, or where
payment is not required to have been made, have set up an adequate reserve or
accrual for the payment of, all material taxes required to be paid in respect of
the periods covered by such returns and, as of the Effective Time, will have
paid, or where payment is not required to have been made, will have set up an
adequate reserve or accrual for the payment of, all material taxes for any
subsequent periods ending on or prior to the Effective Time. To the best of
Harris Financial's knowledge, none of the Mutual Company, Harris Financial or
any Harris Financial Subsidiary will have any material liability for any such
taxes in excess of the amounts so paid or reserves or accruals so established.
Except as set forth in Section 5.10.1 of the HARRIS DISCLOSURE SCHEDULE, as of
the date hereof, no audit, examination or deficiency or refund litigation with
respect to any federal, state and local (and, if applicable, foreign) income,
franchise, bank, excise, real property, personal property and other tax returns
filed by the Mutual Company, Harris Financial or any Harris Financial Subsidiary
is pending or, to the best of Harris Financial's knowledge, threatened.
5.10.2 All federal, state and local (and, if applicable,
foreign) income, franchise, bank, excise, real property, personal property and
other tax returns filed by the Mutual Company, Harris Financial or any Harris
Subsidiary are complete and accurate in all material respects. None of the
Mutual Company, Harris Financial or any Harris Financial Subsidiary is
delinquent in the payment of any tax, assessment or governmental charge, or has
requested any extension of time within which to file any tax returns in respect
of any fiscal year or portion thereof which have not since been filed. Except as
set forth in Section 5.10.2 of the HARRIS DISCLOSURE SCHEDULE, the federal,
state and local income tax returns of the Mutual Company, Harris Financial and
the Harris Subsidiaries have been examined by the applicable tax authorities (or
are closed to examination due to the expiration of the applicable statute of
limitations) and no deficiencies for any tax, assessment or governmental charge
have been proposed, asserted or assessed (tentatively or otherwise) against the
Mutual Company, Harris Financial or any Harris Financial Subsidiary as a result
of such examinations or otherwise which have not been settled and paid. There
are currently no agreements in effect with respect to the Mutual Company, Harris
Financial or any Harris Financial Subsidiary to extend the period of limitations
for the assessment or collection of any tax.
5.10.3 None of the Mutual Company, Harris Financial or any
Harris Financial Subsidiary (i) is a party to any agreement providing for the
allocation or sharing of taxes (other than
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a tax allocation agreement between the Mutual Company, Harris Financial and
Harris Savings Bank), (ii) is required to include in income any adjustment
pursuant to Section 481(a) of the Code by reason of a voluntary change in
accounting method initiated by the Mutual Company, Harris Financial or any
Harris Financial Subsidiary (nor does Harris Financial have any knowledge that
the Internal Revenue Service has proposed any such adjustment or change of
accounting method) or (iii) has filed a consent pursuant to Section 341(f) of
the Code or agreed to have Section 341(f)(2) of the Code apply.
5.11 Legal Proceedings. Except as set forth in Section 5.11 of the
HARRIS DISCLOSURE SCHEDULE, there are no material actions, suits, claims,
governmental investigations or proceedings instituted, pending or, to the best
knowledge of the senior officers and directors of Harris Financial or any Harris
Financial Subsidiary, threatened against Harris or against any asset, interest
or right of Harris, or against any officer, director or employee of Harris, and
Harris is not a party to any order, judgment or decree.
5.12 Compliance with Laws.
5.12.1 Harris has all permits, licenses, certificates of
authority, orders and approvals of, and has made all filings, applications and
registrations with, federal, state, local and foreign governmental or regulatory
bodies that are required in order to permit it to carry on its business as it is
presently being conducted; all such permits, licenses, certificates of
authority, orders and approvals are in full force and effect; and to the best
knowledge of Harris, no suspension or cancellation of any of the same is
threatened.
5.12.2 Except as set forth in Section 5.12.2 of the HARRIS
DISCLOSURE SCHEDULE, none of the Mutual Company, Harris Financial or any Harris
Financial Subsidiary is in violation of its respective Articles of
Incorporation, Charter or other chartering instrument or Bylaws, or in material
violation of any applicable federal, state or local law or ordinance or any
order, rule or regulation of any federal, state, local or other governmental
agency or body (including, without limitation, all banking (including without
limitation all regulatory capital requirements), insurance, municipal
securities, safety, health, environmental, zoning, anti-discrimination,
antitrust, and wage and hour laws, ordinances, orders, rules and regulations),
or in default with respect to any order, writ, injunction or decree of any
court, or in default under any order, license, regulation or demand of any
governmental agency and, to the best knowledge of Harris Financial, Harris
Financial along with its executive officers and directors is not in material
violation of any securities laws; and none of the Mutual Company, Harris
Financial or any Harris Financial Subsidiary has received any written notice or
communication from any federal, state or local governmental authority asserting
that the Mutual Company, Harris Financial or any Harris Financial Subsidiary is
in violation of any of the foregoing, which violation has not been corrected on
a prospective basis in all material respects. None of the Mutual Company, Harris
Financial or any Harris Financial Subsidiary is subject to any regulatory or
supervisory cease and desist order, agreement, written directive, memorandum of
understanding or written commitment (other than those of general applicability
to all banks or holding companies thereof), and none of them has received any
written communication
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requesting that it enter into any of the foregoing. Since January 1, 1995, no
regulatory agency has initiated any proceeding or, to the best knowledge of
Harris Financial, investigation into the business or operations of the Mutual
Company, Harris Financial or any Harris Financial Subsidiary. None of them has
received any objection from any regulatory agency to its response to any
violation, criticism or exception with respect to any report or statement
relating to any examinations of the Mutual Company, Harris Financial or any
Harris Financial Subsidiary.
5.13 Certain Information. None of the information relating to Harris to
be included or incorporated by reference in (i) the Conversion Prospectus will,
at the time such prospectus is mailed to subscribers and to the holders of
Harris Common Stock (and at the time the related Conversion Registration
Statement becomes effective under the Securities Act), contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading, and (ii) the Proxy Statement- Prospectus, as of the
date(s) such Proxy Statement-Prospectus is mailed to shareholders of York (and
at the time the related Merger Registration Statement becomes effective under
the Securities Act), and up to and including the date of the meeting of
shareholders to which such Proxy Statement- Prospectus relates, will contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading, provided that information as of a later date shall be
deemed to modify information as of an earlier date. The Proxy
Statement-Prospectus mailed by Harris to its stockholders in connection with the
meeting of shareholders will comply as to form in all material respects with the
Securities Laws.
5.14 Employee Benefit Plans.
5.14.1 Harris Financial has set forth in Section 5.14.1 of the
HARRIS DISCLOSURE SCHEDULE all Harris Employee Plans.
5.14.2 None of the Mutual Company, Harris Financial, any
Harris Financial Subsidiary, any pension plan maintained by any of them and
qualified under Section 401 of the Code or, to the best of Harris Financial's
knowledge, any fiduciary of such plan has incurred any material liability to the
PBGC or the Internal Revenue Service with respect to any employees of Harris
Financial or any Harris Financial Subsidiary. To the best of Harris Financial's
knowledge, no reportable event under Section 4043(b) of ERISA has occurred with
respect to any such pension plan.
5.14.3 Neither Harris Financial nor any Harris Financial
Subsidiary participates in or has incurred any liability under Section 4201 of
ERISA for a complete or partial withdrawal from a multi-employer plan (as such
term is defined in ERISA).
5.14.4 A favorable determination letter has been issued by the
Internal Revenue Service with respect to each Harris Financial Employee Plan
which is an "employee pension benefit plan" (as defined in Section 3(2) of
ERISA) (an "Harris Financial Pension Plan") which is intended
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to qualify under Section 401 of the Code to the effect that such plan is
qualified under Section 401 of the Code and the trust associated with such
employee pension plan is tax exempt under Section 501 of the Code. No such
letter has been revoked or, to the best of Harris Financial's knowledge, is
threatened to be revoked and Harris Financial does not know of any ground on
which such revocation may be based. Neither Harris Financial nor any Harris
Financial Subsidiary had any liability under any such plan that was required to
be reflected as a liability on the Harris Financial Statements as of December
31, 1999, under GAAP, which was not reflected on the consolidated statement of
financial condition of Harris Financial at December 31, 1999 included in the
Harris Financial Statements.
5.14.5 No prohibited transaction (which shall mean any
transaction prohibited by Section 406 of ERISA and not exempt under Section 408
of ERISA or Section 4975 of the Code) has occurred with respect to any Harris
Financial Employee Plan which would result in the imposition, directly or
indirectly, of a material excise tax under Section 4975 of the Code.
5.14.6 Except for as specifically described in Section 5.14.6
of the HARRIS DISCLOSURE SCHEDULE, Harris does not have any obligations for
post-retirement benefits under any Harris Employee Plan that cannot be amended
or terminated upon sixty (60) or fewer days notice without incurring any
liability thereunder, except for coverage required by Part 6 of Title I of ERISA
or Section 4980B of the Code, or similar state law, the cost of which is borne
by the insured individual. Full payment has been made (or proper accruals have
been established) of all contributions which are required for periods prior to
the date hereof, and full payment will be so made (or proper accruals will be so
established) of all contributions which are required for periods after the date
hereof and prior to the Effective Time, under the terms of each Harris Financial
Employee Plan or ERISA; to the best of Harris Financial's knowledge, no
accumulated funding deficiency (as defined in Section 302 of ERISA or Section
412 of the Code), whether or not waived, exists with respect to any Harris
Financial Pension Plan, and there is no "unfunded current liability" (as defined
in Section 412 of the Code) with respect to any Harris Financial Pension Plan.
5.14.7 To the best of Harris Financial's knowledge, the Harris
Employee Plans have been operated in compliance in all material respects with
the applicable provisions of ERISA, the Code, all regulations, rulings and
announcements promulgated or issued thereunder and all other applicable
governmental laws and regulations.
5.14.8 There are no pending or, to the best knowledge of
Harris Financial, threatened claims (other than routine claims for benefits) by,
on behalf of or against any of the Harris Employee Plans or any trust related
thereto or any fiduciary thereof.
5.14.9. Section 5.14.9 of the HARRIS DISCLOSURE SCHEDULE sets
forth (i) any amounts payable by the Mutual Company, Harris Financial or any
Harris Financial Subsidiary that is estimated to be nondeductible for federal
income tax purposes by Section 280G of the Code (taking into account
transactions contemplated by this Agreement); (ii) the maximum amount that could
be paid to each executive officer of the Mutual Company, Harris Financial or any
Harris
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Financial Subsidiary as a result of the transactions contemplated by this
Agreement under all employment, severance, and termination agreements, other
compensation arrangements and Harris Employee Plans currently in effect and
(iii) the "base amount" (as such term is defined in section 280G(b)(3) of the
Code) for each such disqualified individual calculated as of the date of this
Agreement.
5.14.10 No compensation payable by the Mutual Company, Harris
Financial or any Harris Financial Subsidiary to any of their employees under any
Harris Employee Plan (including by reason of the transactions contemplated
hereby) will be subject to disallowance under Section 162(m) of the Code.
5.14.11 Except as set forth in Section 5.14.11 of the HARRIS
DISCLOSURE SCHEDULE, with respect to any Harris Employee Plan which is an
employee welfare benefit plan (within the meaning of ERISA Section 3(1) (a
"Harris Welfare Plan"): (i) each such Harris Welfare Plan which is intended to
meet the requirements for tax-favored treatment under Subchapter B of Chapter 1
of the Code meets such requirements; (ii) there is no disqualified benefit (as
such term is defined in Code Section 4976(b)) which would subject York or Harris
Financial to a tax under Code Section 4976(a); (iii) to the best knowledge of
Harris each and every Harris Welfare Plan which is a group health plan (as such
term is defined in Code Sections 162(i)(3)) complies and in each and every case
has complied in all material respects with the applicable requirements of Code
Section 4980B; and (iv) each such Harris Welfare Plan (including any such plan
covering former employees of Harris Financial or any Harris Financial
Subsidiary) may be amended or terminated by York or Harris Financial on or at
any time after the Effective Date without incurring liability thereunder except
as required to satisfy the terms of the Plan.
5.15 Certain Contracts.
5.15.1 Except as described in Section 5.15.1 of the HARRIS
DISCLOSURE SCHEDULE, Harris is not in material default or non-compliance under
any contract, agreement, commitment, arrangement, lease, insurance policy or
other instrument to which it is a party or by which its assets, business or
operations may be bound or affected, whether entered into in the ordinary course
of business or otherwise and whether written or oral, and there has not occurred
any event that with the lapse of time or the giving of notice, or both, would
constitute such a material default or non-compliance.
5.15.2 Except as set forth in Section 5.15.2 of the HARRIS
DISCLOSURE SCHEDULE, as of the date hereof, Harris is not a party to, is not
bound or affected by, nor receives, or is obligated to pay, benefits under:
(a) any agreement, arrangement or commitment, including
without limitation any agreement, indenture or other instrument, relating to the
borrowing of money by Harris (other than in the case of Harris Savings Bank
deposits, FHLB advances, federal funds purchased and securities
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sold under agreements to repurchase in the ordinary course of business) or the
guarantee by Harris of any obligation;
(b) any agreement or commitment relating to the employment of
a consultant or the employment, election or retention in office of any present
or former director, officer or employee of Harris;
(c) any agreement, arrangement or understanding pursuant to
which any payment (whether of severance pay or otherwise) became or may become
due to any director, officer or employee of Harris upon execution of this
Agreement or upon or following consummation of the transactions contemplated by
this Agreement (either alone or in connection with the occurrence of any
additional acts or events);
(d) any agreement, arrangement or understanding pursuant to
which Harris is obligated to indemnify any director, officer, employee or agent
of Harris;
(e) any agreement, arrangement or understanding to which
Harris is a party or by which any of the same is bound which limits the freedom
of Harris to compete in any line of business or with any person;
(f) any assistance agreement, supervisory agreement,
memorandum of understanding, consent order, cease and desist order or condition
of any regulatory order or decree with or by any Bank Regulator;
(g) any agreement (other than any agreement with a banking
customer for the provision of banking services entered into by any Harris in the
ordinary course of business) that involves a payment or series of payments of
more than $100,000 in any one year from or to Harris (unless such agreement is
cancellable by Harris upon payment of a termination fee of not more than
$50,000); or
(h) any other agreement, arrangement or understanding which
would be required to be filed as an exhibit to Harris Financial's Annual Report
on Form10-K under the Exchange Act and which has not been so filed.
5.16 Brokers and Finders. Except as set forth in Section 5.16 of the
HARRIS DISCLOSURE SCHEDULE, neither Harris Financial nor any Harris Financial
Subsidiary, nor any of their respective directors, officers or employees, has
employed any broker or finder or incurred any liability for any broker or finder
fees or commissions in connection with the transactions contemplated hereby.
5.17 Insurance. Harris Financial and each Harris Financial Subsidiary
is insured for reasonable amounts with financially sound and reputable insurance
companies against such risks as companies engaged in a similar business would,
in accordance with good business practice,
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customarily be insured and has maintained all insurance required by applicable
laws and regulations. Section 5.17 of the HARRIS DISCLOSURE SCHEDULE sets forth
all policies of insurance maintained by Harris as of the date hereof and any
claims thereunder in excess of $25,000 since January 1, 1998. Since January 1,
1995, Harris has not received any notice of termination of any such insurance
coverage or material increase in the premiums therefor, and Harris has no reason
to believe that any such insurance coverage will be terminated or the premiums
therefor materially increased.
5.18 Properties. All material real and personal property owned by
Harris Financial or any Harris Financial Subsidiary or presently used by any of
them in its respective business is in good condition (ordinary wear and tear
excepted) and is sufficient to carry on its business in the ordinary course of
business consistent with their past practices. Harris Financial has good and
marketable title free and clear of all liens, encumbrances, charges, defaults or
equities (other than equities of redemption under applicable foreclosure laws)
to all of the material properties and assets, real and personal, reflected on
the consolidated statement of financial condition of Harris Financial as of
December 31, 1999 included in the Harris Financial Statements or acquired after
such date (other than those disposed of for fair value after such date), except
(i) liens for current taxes not yet due or payable, (ii) pledges to secure
deposits and other liens incurred in the ordinary course of its banking
business, (iii) such imperfections of title, easements and encumbrances, if any,
as are not material in character, amount or extent and (iv) as reflected on the
consolidated statement of financial condition of Harris Financial as of December
31, 1999 included in the Harris Financial Statements.
All real and personal property which are material to Harris Financial's business
on a consolidated basis and leased or licensed by Harris are held pursuant to
leases or licenses which are valid and enforceable in accordance with their
respective terms and no such real property lease will terminate or lapse prior
to the Effective Time.
5.19 Labor. No work stoppage involving the Mutual Company, Harris
Financial or any Harris Financial Subsidiary is pending or, to the best
knowledge of Harris Financial, threatened. Neither Harris Financial nor any
Harris Financial Subsidiary is involved in, or to the best knowledge of Harris
Financial, threatened with or affected by, any labor dispute, arbitration,
lawsuit or administrative proceeding involving its employees, which would have a
Material Adverse Effect on Harris. Employees of Harris are not represented by
any labor union nor are any collective bargaining agreements otherwise in effect
with respect to such employees, and to the best of Harris Financial's knowledge,
there have been no efforts to unionize or organize any employees of Harris
during the past five years.
5.20 Certain Transactions. Since December 31, 1999, Harris has not been
a party to any material off-balance-sheet transactions involving interest rate
and currency swaps, options and futures contracts, or any other similar
derivative transactions, except as set forth in Section 5.20 of the HARRIS
DISCLOSURE SCHEDULE.
5.21 Disclosures. None of the representations and warranties of the
Mutual Company, Harris Financial, New Harris Financial or Harris Savings Bank or
any of the written information or
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documents furnished or to be furnished by the Mutual Company, Harris Financial,
New Harris Financial or Harris Savings Bank to York in connection with or
pursuant to this Agreement or the consummation of the transactions contemplated
hereby, when considered as a whole, contains or will contain any untrue
statement of a material fact, or omits or will omit to state any material fact
required to be stated or necessary to make any such information or document, in
light of the circumstances, not misleading.
5.22 Disclosure Schedule. The HARRIS DISCLOSURE SCHEDULE sets forth,
among other things, disclosures with respect to or exceptions to the
representations and warranties of the Mutual Company, Harris Financial, New
Harris Financial and Harris Savings Bank in this Article V. The mere inclusion
of an exception in HARRIS DISCLOSURE SCHEDULE shall not be deemed an admission
by the Mutual Company, Harris Financial, New Harris Financial or Harris Savings
Bank that such exception represents a material fact, event or circumstance.
5.23 Pooling of Interests. As of the date of this Agreement, Harris
Financial knows of no reason relating to it why the Merger would not qualify as
a "pooling of interests" for accounting purposes or a tax free reorganization
under Section 368 of the Code.
5.24 Fairness Opinion. Harris Financial has received a written opinion
from Ryan, Beck & Co., to the effect that, subject to the terms, conditions and
qualifications set forth therein, as of the date thereof, the Conversion and the
Merger pursuant to this Agreement, is fair to Harris Financial stockholders,
including the Mutual Company, from a financial point of view.
5.25 Loan Portfolio. Section 5.25 of the HARRIS DISCLOSURE SCHEDULE
sets forth all of the loans in original principal amount in excess of $100,000
of Harris or any Harris Subsidiary that as of the date of this Agreement are
classified by Harris or any Bank Regulator as "Special Mention," "Substandard,"
"Doubtful," "Loss" or "Classified," together with the aggregate principal amount
of and accrued and unpaid interest on all such loans by category, it being
understood that no representation is being made that the Department or any other
Bank Regulator would agree with the loan classifications of Harris. The
allowance for loan losses reflected, and to be reflected, in Harris Financial's
regulatory reports, and shown, and to be shown, on the balance sheets contained
in the Harris Financial Statements and any financial statements of any company
or financial institution that shall have merged into Harris Financial or any
Harris Financial Subsidiary subsequent to January 1, 1999 have been, and will
be, established in accordance with the requirements of GAAP and all applicable
regulatory criteria.
5.26 Required Vote; Inapplicability of Anti-takeover Statutes.
5.26.1 The affirmative vote of a majority of votes cast by all
holders of shares of Harris Financial Common Stock entitled to vote is necessary
to approve the transactions contemplated hereby on behalf of Harris Financial.
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5.26.2 No "fair price," "moratorium," "control share
acquisition" or other form of antitakeover statute or regulation is applicable
to this Agreement and the transactions contemplated hereby.
5.27 Material Interests of Certain Persons. Except as set forth in
Section 5.27 of the HARRIS DISCLOSURE SCHEDULE, to the knowledge of Harris
Financial, no officer or director of Harris Financial, or any "associate" (as
such term is defined in Rule 14a-1 under the Exchange Act) of any such officer
or director, (i) has any material interest in any material contract or property
(real or personal), tangible or intangible, used in or pertaining to the
business of Harris or (ii) is indebted to, or has the right under a line of
credit to borrow from, Harris in an amount exceeding $50,000.
5.28 Joint Ventures. Section 5.28 of the HARRIS DISCLOSURE SCHEDULE
sets forth (i) the identities of all Joint Ventures in which the Mutual Company,
Harris Financial or any Harris Financial Subsidiary is participating, (ii) the
agreements relating to such Joint Ventures, (iii) the identities of the other
participants in the Joint Venture, (iv) the percentage of the Joint Venture
owned by each participant, (v) copies of the most recent available financial
statements (on an audited basis if available) of such Joint Ventures, and (vi)
the amount of the investment or contractually binding commitment of Harris to
invest in such Joint Venture.
5.29 Ownership of York Common Stock. As of the date hereof, neither
Harris Financial nor, to its best knowledge, any of its affiliates or associates
(as such terms are defined under the Exchange Act), (i) beneficially own,
directly or indirectly, or (ii) are parties to any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or disposing of, in
each case, shares of York Common Stock which in the aggregate represent 5% or
more of the outstanding shares of York Common Stock (other than shares held in a
fiduciary capacity and beneficially owned by third parties, shares taken in
consideration of debts previously contracted or in the case of Harris Financial
shares which may be acquired pursuant to the York Option Agreement).
ARTICLE VI
COVENANTS OF YORK
6.1 Conduct of Business.
6.1.1 Affirmative Covenants. During the period from the date
of this Agreement to the Effective Time, except with the written consent of
Harris Financial, which consent will not be unreasonably withheld, York will
operate its business, and it will cause each of the York Subsidiaries to operate
its business, only in the usual, regular and ordinary course of business; use
reasonable efforts to preserve intact its business organization and assets and
maintain its rights and franchises; and voluntarily take no action which would
(i) adversely affect the ability of Harris Financial or York to obtain any
necessary approvals of governmental authorities required for the transactions
contemplated hereby or materially increase the period of time necessary to
obtain such
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approvals, or (ii) adversely affect its ability to perform its covenants and
agreements under this Agreement.
6.1.2 Negative Covenants. York agrees that from the date of
this Agreement to the Effective Time, except as otherwise specifically permitted
or required by this Agreement, or consented to by Harris Financial in writing
(which consent shall not be unreasonably withheld), York will not, and will
cause each of the York Subsidiaries not to:
(a) change or waive any provision of its Articles of Incorporation,
Charter or Bylaws, except as required by law;
(b) change the number of shares of its authorized or issued capital
stock (except for the issuance of York Common Stock pursuant to the York Option
Agreement or upon the exercise of outstanding York Options under the York Option
Plans, as contemplated by Section 4.1 hereof);
(c) issue or grant any option, warrant, call, commitment, subscription,
right to purchase or agreement of any character relating to the authorized or
issued capital stock of York or any of the York Subsidiaries, or any securities
convertible into shares of such stock; except that (i) York may issue shares of
York Common Stock or permit treasury shares to become outstanding to satisfy
presently outstanding options under and in accordance with the terms of the York
Option Plans, and (ii) York may issue shares of York Common Stock to Harris
Financial in accordance with the terms of the York Option Agreement;
(d) effect any recapitalization, reclassification, stock dividend,
stock split or like change in capitalization, or redeem, repurchase or otherwise
acquire any shares of its capital stock;
(e) declare or pay any dividends or other distributions with respect to
its capital stock except for dividends paid by any York Subsidiary to York, and
except for a quarterly cash dividend not in excess of $0.13 per share, which
amount may be increased consistent with past practice subject to Section
6.1.2(q). The Board of Directors of York shall cause its last quarterly dividend
record date, prior to the Effective Time to occur on the day immediately
preceding the Closing Date with the dividend amount to be calculated on a
pro-rata basis from the previous dividend record date, and York shall not issue
any additional shares (including treasury shares) of York Common Stock in
connection with York's dividend reinvestment plan (it being understood that York
may purchase shares of York Common Stock in the open market to fund its dividend
reinvestment plan).
(f) enter into, amend in any material respect or terminate any contract
or agreement (including without limitation any settlement agreement with respect
to litigation) except in the ordinary course of business;
(g) except in the ordinary course of business consistent with past
practice, incur any material liabilities or material obligations, whether
directly or by way of guaranty, including any obligation for borrowed money
whether or not evidenced by a note, bond, debenture or similar instrument
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(other than borrowings not exceeding 120% of the December 31, 1999 level), or
acquire any equity, debt, or except in the ordinary course of business
consistent with past practice, other investment securities;
(h) make any capital expenditures in excess of $50,000 individually or
$500,000 in the aggregate, other than pursuant to binding commitments existing
on the date hereof and/or pursuant to a budget previously provided to Harris
Financial and as set forth in Section 6.1.2(h) of the YORK DISCLOSURE SCHEDULE
or expenditures reasonable and necessary to maintain assets in good repair;
(i) make or commit to make any commercial or commercial real estate
loan in an amount in excess of $5,000,000 or loans to one borrower (including
such borrower's related interests) in an aggregate principal amount (or with an
aggregate commitment) of $7,500,000 or more;
(j) grant any increase in rates of compensation to its employees other
than in the ordinary course of business consistent with past practice; grant any
increase in rates of compensation to, or pay or agree to pay any bonus or
severance to, or provide any other new employee benefit or incentive to its
directors or to its officers except for nondiscretionary payments required by
such agreements and increases and bonuses in the ordinary course of business
consistent with past practice other than cash bonuses that are reasonable and
necessary to compensate York or York Fed employees in lieu of option grants
between July 1, 2000 through the Closing Date, in consultation with the Chief
Executive Officer of Harris Financial; enter into any employment, severance or
similar agreements or arrangements with any director or employee; adopt or amend
in any material respect or terminate any employee benefit plan, pension plan or
incentive plan except as required by law or the terms of such plan or as
provided in Section 6.1.2, or permit the vesting of any material amount of
benefits under any such plan other than pursuant to the provisions thereof as in
effect on the date of this Agreement; or make any contributions to York's
deferred compensation plans, supplemental executive retirement plans, grantor
trust, defined benefit Pension Plan or 401(k) Plan not in the ordinary course of
business consistent with past practice; or make any contributions to York's
Employee Stock Ownership Plan, other than contributions, based on York's accrual
levels in effect for 1999 on the date of this Agreement, for the period ending
on the Effective Time; provided notwithstanding anything herein to the contrary,
York or York Fed shall be permitted to make contributions to the York ESOP on a
monthly basis.
(k) other than as set forth in Section 6.1.2(k) of the YORK DISCLOSURE
SCHEDULE, make application for the opening or closing of any, or open or close
any, branch or automated banking facility;
(l) other than as set forth in Section 6.1.2(l) of the YORK DISCLOSURE
SCHEDULE, make any equity investment or commitment to make such an investment in
real estate or in any real estate development project, other than in connection
with foreclosures, settlements in lieu of foreclosure or troubled loan or debt
restructurings in the ordinary course of business consistent with customary
banking practices;
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(m) subject to Section 6.9 hereof, merge into, consolidate with,
affiliate with, or be purchased or acquired by, any other Person, or permit any
other Person to be merged, consolidated or affiliated with it or be purchased or
acquired by it, or, except to realize upon collateral in the ordinary course of
its business, acquire a significant portion of the assets of any other Person,
or sell a significant portion of its assets;
(n) make any material change in its accounting methods or practices,
except changes as may be required by GAAP or by law or regulatory requirements;
(o) enter into any off-balance sheet transaction involving interest
rate and currency swaps, options and futures contracts, or any other similar
derivative transactions other than to hedge forward commitments in the ordinary
course of business consistent with past practices;
(p) knowingly take any action that would result in the representations
and warranties of York and York Fed contained in this Agreement not being true
and correct on the date of this Agreement or at any future date on or prior to
the Closing Date;
(q) voluntarily take or cause to be taken any action which would
disqualify the Merger as a "pooling of interests" for accounting purposes or a
tax free reorganization under Section 368 of the Code, including, without
limitation, cashing out or accelerating any York Options, except for automatic
acceleration in accordance with the terms of such York Options;
(r) invest in or commit to invest in, or otherwise increase, decrease
or alter its investment in, any existing or new Joint Venture other than
pursuant to commitments outstanding at the date of this Agreement which are set
forth in Section 4.28;
(s) make any material change in policies with regard to the extension
of credit, the establishment of reserves with respect to the possible loss
thereon or the charge off of losses incurred thereon, investment,
asset/liability management or other material banking policies, except as may be
required by changes in applicable law or regulations or in GAAP; or
(t) agree to do any of the foregoing.
6.2 Current Information. During the period from the date of this
Agreement to the Effective Time, York will cause one or more of its
representatives to confer with representatives of Harris Financial and report
the general status of its ongoing operations at such times as Harris Financial
may reasonably request. York will promptly notify Harris Financial of any
material change in the normal course of its business or in the operation of its
properties and, to the extent permitted by applicable law, of any governmental
complaints, investigations or hearings (or communications indicating that the
same may be contemplated), or the institution or the threat of material
litigation involving York or any York Subsidiary. York will also provide Harris
Financial such information with respect to such events as Harris Financial may
reasonably request from time to time. As soon as reasonably available, but in no
event more than 45 days after the end of each calendar quarter
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ending after the date of this Agreement (other than the last quarter of each
fiscal year ending June 30), York will deliver to Harris Financial its quarterly
report on Form 10-Q under the Exchange Act and as soon as reasonably available,
but in no event more than 90 days after the end of the fiscal year, York will
deliver to Harris Financial its Annual Report on Form 10-K. Within 25 days after
the end of each month, York will deliver to Harris Financial a consolidated
balance sheet and a consolidated statement of operations, without related notes,
for such month prepared in accordance with current financial reporting
practices.
6.3 Access to Properties and Records. Subject to Section 12.1 hereof,
York shall permit Harris Financial reasonable access upon reasonable notice to
its properties and those of the York Subsidiaries, and shall disclose and make
available to Harris Financial during normal business hours all of its books,
papers and records relating to the assets, properties, operations, obligations
and liabilities, including, but not limited to, all books of account (including
the general ledger), tax records, minute books of directors' (other than minutes
that discuss any of the transactions contemplated by this Agreement or other
strategic alternatives) and stockholders' meetings, organizational documents,
Bylaws, material contracts and agreements, filings with any regulatory
authority, litigation files, plans affecting employees, and any other business
activities or prospects in which Harris Financial may have a reasonable
interest; provided, however, that York shall not be required to take any action
that would provide access to or to disclose information where such access or
disclosure would violate or prejudice the rights or business interests or
confidences of any customer or other person or would result in the waiver by it
of the privilege protecting communications between it and any of its counsel.
York shall provide and shall request its auditors to provide Harris Financial
with such historical financial information regarding it (and related audit
reports and consents) as Harris Financial may reasonably request for securities
disclosure purposes.
6.4 Financial and Other Statements.
6.4.1 Promptly upon receipt thereof, York will furnish to
Harris Financial copies of each annual, interim or special audit of the books of
York and the York Subsidiaries made by its independent accountants and copies of
all internal control reports submitted to York by such accountants in connection
with each annual, interim or special audit of the books of York and the York
Subsidiaries made by such accountants.
6.4.2 As soon as practicable, York will furnish to Harris
Financial copies of all such financial statements and reports as it or any York
Subsidiary shall send to its stockholders, the SEC, the FDIC, the OTS or any
other regulatory authority, except as legally prohibited thereby.
6.4.3 York will advise Harris Financial promptly of the
receipt of any examination report of any Bank Regulator with respect to the
condition or activities of York or any of the York Subsidiaries.
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6.4.4 With reasonable promptness, York will furnish to Harris
Financial such additional financial data as Harris Financial may reasonably
request, including without limitation, detailed monthly financial statements and
loan reports.
6.5 Disclosure Supplements. From time to time prior to the Effective
Time, York and York Fed will promptly supplement or amend the YORK DISCLOSURE
SCHEDULE delivered in connection herewith with respect to any material matter
hereafter arising which, if existing, occurring or known at the date of this
Agreement, would have been required to be set forth or described in such YORK
DISCLOSURE SCHEDULE or which is necessary to correct any information in such
YORK DISCLOSURE SCHEDULE which has been rendered inaccurate thereby. No
supplement or amendment to such YORK DISCLOSURE SCHEDULE shall have any effect
for the purpose of determining satisfaction of the conditions set forth in
Article IX.
6.6 Consents and Approvals of Third Parties. York shall use all
reasonable efforts to obtain as soon as practicable all consents and approvals
of any other persons necessary or desirable for the consummation of the
transactions contemplated by this Agreement. Without limiting the generality of
the foregoing, York shall utilize the services of a professional proxy
soliciting firm to help obtain the shareholder vote required to be obtained by
it hereunder.
6.7 All Reasonable Efforts. Subject to the terms and conditions herein
provided, York agrees to use all reasonable efforts to take, or cause to be
taken, all action and to do, or cause to be done, all things necessary, proper
or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement.
6.8 Failure to Fulfill Conditions. In the event that York determines
that a condition to its obligation to complete the Merger cannot be fulfilled
and that it will not waive that condition, it will promptly notify Harris
Financial.
6.9 No Solicitation. Unless and until this Agreement shall have been
properly terminated by either party pursuant to Section 11.1 hereof, neither
York nor any York Subsidiary shall (and York and York Fed shall use all
commercially reasonable efforts to cause its representatives, including, but not
limited to, investment bankers, attorneys and accountants, not to), directly or
indirectly, encourage, solicit, initiate or participate in any discussions or
negotiations with, or, provide any information to, any corporation, partnership,
person or other entity or group (other than Harris Financial and its affiliates
or representatives) concerning any merger, tender offer, sale of substantial
assets, sale of shares of capital stock or debt securities or similar
transaction involving York or York Fed (an "Acquisition Transaction").
Notwithstanding the foregoing, nothing contained in this Section 6.9 shall
prohibit York or its Board of Directors from taking and disclosing to York's
stockholders a position with respect to a tender offer by a third party pursuant
to Rules 14d-9 and 14e-2(a) promulgated under the Exchange Act or from such
action in response to an unsolicited Acquisition Transaction which, in the
judgment of the Board of Directors, may be required under applicable law or is
necessary in order to comply with its fiduciary obligations. York will
immediately communicate to Harris Financial the terms of any proposal or inquiry
relating to an
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Acquisition Transaction and the identity of the party making such proposal or
inquiry which it may receive in respect of any such transaction (which shall
mean that any such communication shall be delivered no less promptly than by
telephone within 24 hours of York's receipt of any such proposal or inquiry) or
its receipt of any request for information from the Bank Regulator, or any other
governmental agency or authority with respect to a proposed Acquisition
Transaction. York shall continue to consult with Harris Financial after receipt
of such proposal.
6.10 Board of Directors and Committee Meetings. York and York Fed shall
permit a representative of Harris Financial to attend any meeting of the Board
of Directors of York and/or York Fed or the Executive Committees thereof
(provided that neither York nor York Fed shall be required to permit the Harris
Financial representative to remain present during any confidential discussion of
this Agreement and the transactions contemplated hereby or any third party
proposal to acquire control of York or York Fed).
ARTICLE VII
COVENANTS OF HARRIS FINANCIAL
7.1 Conduct of Business. During the period from the date of this
Agreement to the Effective Time, except with the written consent of York, which
consent will not be unreasonably withheld, none of the Mutual Company, New
Harris Financial, Harris Financial or Harris Savings Bank will engage in any
significant transactions outside the ordinary course of business and consistent
with past practices (it being understood that the purchase or sale of any branch
office shall not be considered outside the ordinary course of business) or take
any action which would: (i) adversely affect the ability of any party to obtain
any necessary approvals of Governmental Entities required for the transactions
contemplated hereby or materially increase the period of time necessary to
obtain such approvals; (ii) adversely affect its ability to perform its
covenants and agreements under this Agreement; (iii) disqualify the Merger as a
"pooling of interests" for accounting purposes or a tax free reorganization
under Section 368 of the Code; or (iv) result in the representations and
warranties contained in Article V of this Agreement not being true and correct
on the date of this Agreement or at any future date on or prior to the Closing
Date, provided that nothing herein contained shall preclude Harris Financial
from exercising its rights under the York Option Agreement or taking any action
previously disclosed. Provided further, that nothing herein shall preclude the
Mutual Company and Harris Savings Bank from electing, and the Mutual Company and
Harris Savings Bank shall be permitted to, convert their charters to a federal
mutual holding company charter and federal savings bank charter, respectively,
subject to applicable law and regulation and the consent of York.
7.2 Current Information. During the period from the date of this
Agreement to the Effective Time, Harris Financial will cause one or more of its
representatives to confer with representatives of York and report the general
status of its ongoing operations at such times as York may reasonably request.
Harris Financial will promptly notify York of any material change in the normal
course of its business or in the operation of its properties and, to the extent
permitted by
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applicable law, of any governmental complaints, investigations or hearings (or
communications indicating that the same may be contemplated), or the institution
or the threat of material litigation involving Harris Financial. Harris
Financial will also provide York such information with respect to such events as
York may reasonably request from time to time. As soon as reasonably available,
but in no event more than 45 days after the end of each calendar quarter ending
after the date of this Agreement (other than the last quarter of each fiscal
year ending December 31), Harris Financial will deliver to York its quarterly
report on Form 10-Q under the Exchange Act and, as soon as reasonably available,
but in no event more than 90 days after the end of the fiscal year, Harris
Financial will deliver to York its Annual Report on Form 10-K. Within 25 days
after the end of each month, Harris Financial will deliver to York a
consolidated balance sheet and a consolidated statement of operations, without
related notes, for such month prepared in accordance with current financial
reporting practices.
7.3 Access to Properties and Records. Subject to Section 12.1 hereof,
Harris Financial shall permit York reasonable access upon reasonable notice to
its properties and those of the Harris Financial Subsidiaries, and shall
disclose and make available to York during normal business hours all of its
books, papers and records relating to the assets, stock ownership, properties,
operations, obligations and liabilities, including, but not limited to, all
books of account (including the general ledger), tax records, minute books of
directors' (other than minutes that discuss any of the transactions contemplated
by this Agreement or other strategic alternatives) and stockholders' meetings,
organizational documents, Bylaws, material contracts and agreements, filings
with any regulatory authority, litigation files, plans affecting employees, and
any other business activities or prospects in which York may have a reasonable
interest; provided, however, that Harris Financial shall not be required to take
any action that would provide access to or to disclose information where such
access or disclosure would violate or prejudice the rights or business interests
or confidences of any customer or other person or would result in the waiver by
it of the privilege protecting communications between it and any of its counsel.
Harris Financial shall provide and shall request its auditors to provide York
with such historical financial information regarding it (and related audit
reports and consents) as York may reasonably request for securities law
disclosure purposes.
7.4 Financial and Other Statements.
7.4.1 Promptly upon receipt thereof, Harris Financial will
furnish to York copies of each annual, interim or special audit of the books of
Harris Financial and the Harris Financial Subsidiaries made by its independent
accountants and copies of all internal control reports submitted to Harris
Financial by such accountants in connection with each annual, interim or special
audit of the books of Harris Financial and the Harris Financial Subsidiaries
made by such accountants.
7.4.2 As soon as practicable, Harris Financial will furnish to
York copies of all such financial statements and reports as it or any Harris
Financial Subsidiary shall send to its stockholders, the SEC, the Department,
the FDIC, the FRB or any other regulatory authority, except as legally
prohibited thereby.
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7.4.3 Harris Financial will advise York promptly of the
receipt of any examination report of any Bank Regulator with respect to the
condition or activities of Harris Financial or any of the Harris Financial
Subsidiaries.
7.4.4 With reasonable promptness, Harris Financial will
furnish to York such additional financial data as York may reasonably request,
including without limitation, detailed monthly financial statements and loan
reports.
7.5 Disclosure Supplements. From time to time prior to the Effective
Time, the Mutual Company, New Harris Financial, Harris Financial and Harris
Savings Bank will promptly supplement or amend the HARRIS DISCLOSURE SCHEDULE
delivered in connection herewith with respect to any material matter hereafter
arising which, if existing, occurring or known at the date of this Agreement,
would have been required to be set forth or described in such HARRIS DISCLOSURE
SCHEDULE or which is necessary to correct any information in such HARRIS
DISCLOSURE SCHEDULE which has been rendered inaccurate thereby. No supplement or
amendment to such HARRIS DISCLOSURE SCHEDULE shall have any effect for the
purpose of determining satisfaction of the conditions set forth in Article IX.
7.6 Consents and Approvals of Third Parties. The Mutual Company, New
Harris Financial, Harris Financial and Harris Savings Bank shall use all
reasonable efforts to obtain as soon as practicable all consents and approvals
of any other Persons, including the Depositors and stockholders of Harris
Financial necessary or desirable for the consummation of the transactions
contemplated by this Agreement, including the Conversion.
7.7 All Reasonable Efforts. Subject to the terms and conditions herein
provided, the Mutual Company, New Harris Financial, Harris Financial and Harris
Savings Bank agree to use all reasonable efforts to take, or cause to be taken,
all action and to do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations to consummate and make effective
the transactions contemplated by this Agreement, including the Conversion.
7.8 Failure to Fulfill Conditions. In the event that Harris Financial
determines that a condition to its obligation to complete the Merger cannot be
fulfilled and that it will not waive that condition, it will promptly notify
York.
7.9 Employee Benefits.
7.9.1 All employees of York and the York Subsidiaries as of
the Effective Time shall become employees of New Harris Financial or a Harris
Financial Subsidiary as of the Effective Time. New Harris Financial shall use
its best reasonable efforts consistent with the objectives of the Merger, to
place former employees of York and its Subsidiaries in comparable positions with
New Harris Financial or a Harris Financial Subsidiary, provided that except as
set forth in Section 7.9.1 of the HARRIS DISCLOSURE SCHEDULE and as set forth in
a separate letter between York and Harris Financial of even date herewith
nothing in this Agreement shall give any employee of York
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or its Subsidiaries any right to any severance payment or continuing employment
with Harris Financial or any Subsidiary thereof after the Effective Time, or any
termination benefit in the event of a change in control of New Harris Financial
after the Effective Time.
7.9.2 Except as otherwise provided in Section 7.9 of this
Agreement or as agreed to in writing between Harris Financial and York, as of or
after the Effective Time, and at New Harris Financial's election and subject to
the requirements of the Code, the York Employee Plans may continue to be
maintained separately, or consolidated or terminated. Employees of York and the
York Subsidiaries who continue employment with New Harris Financial or any
Harris Financial Subsidiary ("Continuing Employees") shall receive credit for
service with York and the York Subsidiaries under any existing Harris benefit
plan or any Harris benefit plan in which such employees would be eligible to
enroll, which, in the aggregate, are no less favorable than those generally
afforded to other employees of Harris holding similar positions, subject to the
terms and conditions under which those employee benefits are made available to
such employees; provided, however, that (i) for purposes of determining
eligibility, participation, vesting and accrual of such employee benefits
(provided that employees of York and the York Subsidiaries shall not receive
credit for benefit accrual purposes under any Harris defined benefit pension
plan), service with York or any York Subsidiary prior to the Effective Time
shall be treated as service with Harris, (ii) this Section 7.9 shall not be
construed to limit the ability of Harris to terminate the employment of any
employee or to review employee benefits programs from time to time and to make
such changes as they deem appropriate, (iii) to the extent that any comparable
employee benefit or welfare plan for York or any York Subsidiary is continued
after the Effective Time (other than the York ESOP) and while such plan is
continuing, there shall be no requirements to include Continuing Employees in
the comparable plan of Harris, (iv) Harris shall honor any and all vacation
leave (and sick leave) accrued by employees of York and the York Subsidiaries,
except to the extent of any duplication of benefits, and (v) Harris agrees that
any pre-existing condition, limitation, or exclusion in its health plans shall
not apply to Continuing Employees or their covered dependents who are covered
under a medical or hospitalization indemnity plan maintained by York or any York
Subsidiary immediately prior to the Effective Time and who then change that
coverage to Harris' medical or hospitalization indemnity health plan at the time
such Continuing Employees are first given the option to enroll in Harris' health
plans, and there shall be no duplications of deductions or co-payments.
7.9.3 Section 7.9.3 of the YORK DISCLOSURE SCHEDULE contains
all employment and change of control, severance and similar agreements with any
employee or director of York or any York Subsidiary ("Benefit Agreements").
Following the Effective Time, Harris Financial shall honor or cause its
Subsidiaries to honor in accordance with their terms all such previously
disclosed Benefit Agreements and assume or cause its Subsidiaries to assume all
duties, liabilities and obligations under such agreements and arrangements.
7.9.4 If New Harris Financial implements a stock option plan
pursuant to which awards of options to purchase shares of New Harris Common
Stock will be made to officers, key employees and directors of New Harris
Financial or its Subsidiaries within two years of the Effective Date, then 10%
of such awards shall be determined by a committee consisting of at least two (2)
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directors that are outside directors as such term applies under Section 162(m)
of the Code ("Outside Directors") that is selected by the Board of Directors of
New Harris Financial, 40% of such awards shall be determined by a committee of
at least two (2) Outside Directors selected by directors of York on the date
hereof who are also directors of New Harris Financial on the date of the
determination of the award, and 60% of such awards shall be determined by a
committee of at least two (2) Outside Directors selected by directors of Harris
Financial on the date hereof who are also directors of New Harris Financial on
the date of the determination of the award. Any forfeited options may be
reawarded by the committee selected by the Board of Directors of New Harris
Financial. No Continuing Employee shall receive awards that are materially
greater than awards under such plan to other employees of similar job title and
responsibilities (other than awards to reflect superior performance) who are not
Continuing Employees. Any such option plan shall provide that awards under the
plan shall vest in the event of retirement of the recipient of the award, and
upon such other events as shall be determined by the committee making the award.
No option plan shall be implemented and awards shall not be made under any new
option plan unless the plan is approved by New Harris Financial shareholders.
7.9.5 If New Harris Financial implements a restricted stock
plan pursuant to which awards of shares of New Harris Common Stock restricted by
the terms of such plan will be made to officers, key employees and directors of
New Harris Financial or its Subsidiaries within two years of the Effective Date,
then 10% of such awards shall be determined by a committee consisting of at
least two (2) Outside Directors that is selected by the Board of Directors of
New Harris Financial, 40% of such awards shall be determined by a committee of
at least two (2) Outside Directors selected by directors of York on the date
hereof who are also directors of New Harris Financial on the date of the
determination of the award, and 60% of such awards shall be determined by a
committee of at least two (2) Outside Directors selected by directors of Harris
Financial on the date hereof, who are also directors of New Harris Financial on
the date of the determination of the award. Any forfeited shares may be
reawarded by the committee selected by the Board of Directors of New Harris
Financial. Any such restricted stock plan shall provide that awards under the
plan shall vest in the event of retirement of the recipient of the award, and
upon such other events as shall be determined by the committee making the award.
No restricted stock plan shall be implemented and awards shall not be made under
any new restricted stock plan unless the plan is approved by New Harris
Financial shareholders.
7.9.6 In the event that either New Harris Financial or any New
Harris Financial Subsidiary or any of its successors or assigns (i) consolidates
with or merges into any other person and shall not be the continuing or
surviving bank or entity of such consolidation or merger, or (ii) transfers all
or substantially all of its properties and assets to any person, then, and in
each such case, proper provision shall be made so that the successors and
assigns of New Harris Financial or a Harris Financial Subsidiary shall assume
the obligations set forth in Sections 7.9.4 and 7.9.5.
7.9.7 For purposes of this Section 7.9, the term York
Subsidiary shall include only subsidiaries that are wholly-owned by York.
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7.10 Directors and Officers Indemnification and Insurance.
7.10.1 New Harris Financial shall maintain, or shall cause
Harris Savings Bank to maintain, in effect for three years following the
Effective Time, the current directors' and officers' liability insurance
policies maintained by York and the York Subsidiaries (provided, that New Harris
Financial may substitute therefor policies of at least the same coverage
containing terms and conditions which are not materially less favorable) with
respect to matters occurring prior to the Effective Time; provided, however,
that in no event shall New Harris Financial be required to expend pursuant to
this Section 7.10.1 more than 135% of the annual cost currently expended by York
with respect to such insurance. In connection with the foregoing, York agrees to
provide such insurer or substitute insurer with such representations as such
insurer may request with respect to the reporting of any prior claims.
7.10.2 New Harris Financial shall, or shall cause Harris
Savings Bank or the appropriate New Harris Financial Subsidiary to, indemnify,
defend and hold harmless each person who is now, or who has been at any time
before the date hereof or who becomes before the Effective Time, an officer or
director of York or a York Subsidiary (the "Indemnified Parties") against all
losses, claims, damages, costs, expenses (including attorney's fees),
liabilities or judgments or amounts that are paid in settlement (which
settlement shall require the prior written consent of New Harris Financial,
which consent shall not be unreasonably withheld) of or in connection with any
claim, action, suit, proceeding or investigation, whether civil, criminal, or
administrative (each a "Claim"), in which an Indemnified Party is, or is
threatened to be made, a party or witness in whole or in part on or arising in
whole or in part out of the fact that such person is or was a director, officer
or employee of York or a York Subsidiary if such Claim pertains to any matter of
fact arising, existing or occurring before the Effective Time (including,
without limitation, the Merger and the other transactions contemplated hereby),
regardless of whether such Claim is asserted or claimed before, or after, the
Effective Time (the "Indemnified Liabilities"), to the fullest extent permitted
under applicable state or federal law and under York's Articles of Incorporation
or Charter and Bylaws. New Harris Financial shall pay expenses in advance of the
final disposition of any such action or proceeding to each Indemnified Party to
the full extent permitted by applicable state or federal law upon receipt of an
undertaking to repay such advance payments if he shall be adjudicated or
determined to be not entitled to indemnification in the manner set forth below.
Any Indemnified Party wishing to claim indemnification under this Section 7.10.2
upon learning of any Claim, shall notify New Harris Financial (but the failure
so to notify New Harris Financial shall not relieve it from any liability which
it may have under this Section 7.10.2, except to the extent such failure
materially prejudices New Harris Financial) and shall deliver to New Harris
Financial the undertaking referred to in the previous sentence. In the event of
any such Claim (whether arising before or after the Effective Time) (1) New
Harris Financial shall have the right to assume the defense thereof (in which
event the Indemnified Parties will cooperate in the defense of any such matter)
and upon such assumption New Harris Financial shall not be liable to any
Indemnified Party for any legal expenses of other counsel or any other expenses
subsequently incurred by any Indemnified Party in connection with the defense
thereof, except that if New Harris Financial elects not to assume such defense,
or counsel for the Indemnified Parties reasonably advises the
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Indemnified Parties that there are or may be (whether or not any have yet
actually arisen) issues which raise conflicts of interest between New Harris
Financial and the Indemnified Parties, the Indemnified Parties may retain
counsel reasonably satisfactory to them, and New Harris Financial shall pay the
reasonable fees and expenses of such counsel for the Indemnified Parties, (2)
New Harris Financial shall be obligated pursuant to this paragraph to pay for
only one firm of counsel for all Indemnified Parties whose reasonable fees and
expenses shall be paid promptly as statements are received unless there is a
conflict of interest that necessitates more than one law firm, (3) New Harris
Financial shall not be liable for any settlement effected without its prior
written consent (which consent shall not be unreasonably withheld), and (4) no
Indemnified Party shall be entitled to indemnification hereunder with respect to
a matter as to which (x) he shall have been adjudicated in any proceeding not to
have acted in good faith and in a manner he reasonably believed to be in, or not
opposed to, the best interests of York or any York Subsidiary, or (y) in the
event that a proceeding is compromised or settled so as to impose any liability
or obligation upon an Indemnified Party, if there is a determination that with
respect to said matter said Indemnified Party did not act in good faith and in a
manner he reasonably believed to be in, or not opposed to, the best interests of
York or any York Subsidiary. The determination shall be made by a majority vote
of a quorum consisting of the Directors of New Harris Financial who are not
involved in such proceeding.
7.10.3 In the event that either Harris Financial, New Harris
Financial or Harris Savings Bank or any of its successors or assigns (i)
consolidates with or merges into any other person and shall not be the
continuing or surviving bank or entity of such consolidation or merger or (ii)
transfers all or substantially all of its properties and assets to any person,
then, and in each such case, proper provision shall be made so that the
successors and assigns of Harris Financial, New Harris Financial or Harris
Savings Bank shall assume the obligations set forth in this Section 7.10.
7.10.4 The obligations of Harris provided under this Section
7.10 are intended to be enforceable against Harris directly by the Indemnified
Parties and shall be binding on all respective successors and permitted assigns
of Harris.
7.11 Stock Listing. New Harris Financial agrees to list on the Stock
Exchange (or such other national securities exchange on which the shares of the
New Harris Common Stock shall be listed as of the date of consummation of the
Merger), subject to official notice of issuance, the shares of New Harris Common
Stock to be issued in the Merger.
7.12 Options. Harris Financial agrees that from the date of this
Agreement until the Effective Time it will not issue or grant any option,
warrant, call, commitment, subscription, right to purchase or agreement of any
character relating to the authorized or issued capital stock of Harris Financial
or any of the Harris Financial Subsidiaries, or any securities convertible into
shares of such stock; except that (i) Harris Financial may issue shares of
Harris Common Stock or permit treasury shares to become outstanding to satisfy
presently outstanding options under and in accordance with the terms of the
Harris Option Plans, and (ii) New Harris Financial may issue shares of New
Harris Common Stock in connection with the Offering.
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7.13 Registration of Shares Issuable Upon Exercise of Options. New
Harris Financial agrees to register under the Securities Act all shares of New
Harris Common Stock issuable upon the exercise of York Options that will be
converted into options to acquire New Harris Common Stock upon the Effective
Time.
ARTICLE VIII
REGULATORY AND OTHER MATTERS
8.1 York and Harris Financial Special Meetings.
8.1.1 York will (i) as promptly as practicable after the
Merger Registration Statement is declared effective by the SEC, take all steps
necessary to duly call, give notice of, convene and hold a meeting of its
stockholders (the "York Stockholders Meeting"), for the purpose of considering
this Agreement and the Merger, and for such other purposes as may be, in York's
reasonable judgment, necessary or desirable, (ii) subject to the fiduciary
responsibility of the Board of Directors of York as advised by counsel,
recommend to its stockholders the approval of the aforementioned matters to be
submitted by it to its stockholders, and (iii) cooperate and consult with Harris
Financial and New Harris Financial with respect to each of the foregoing
matters. The York Stockholders Meeting shall not be held until the Conversion
Registration Statement has been declared effective by the SEC.
8.1.2 Harris Financial will (i) as promptly as practicable
after the Merger Registration Statement is declared effective by the SEC, take
all steps necessary to duly call, give notice of, convene and hold a meeting of
its stockholders (the "Harris Financial Stockholders Meeting"), which shall not
be held until the Conversion Registration Statement has been declared effective
by the SEC, for the purpose of approving the transactions contemplated by this
Agreement, and for such other purposes as may be, in Harris Financial's
reasonable judgment, necessary or desirable, (ii) subject to the fiduciary
responsibility of the Board of Directors of Harris Financial as advised by
counsel, recommend to its stockholders the approval of the aforementioned
matters to be submitted by it to its stockholders, and (iii) cooperate and
consult with York with respect to each of the foregoing matters.
8.2 Proxy Statement-Prospectus.
8.2.1 For the purposes (x) of registering New Harris Common
Stock to be offered to holders of York Common Stock in connection with the
Merger with the SEC under the Securities Act and applicable state securities
laws and (y) of holding the York Stockholders Meeting and Harris Financial
Stockholders Meeting, New Harris Financial shall draft and prepare, and York
shall cooperate in the preparation of, the Merger Registration Statement,
including a combined proxy statement and prospectus or statements satisfying all
applicable requirements of applicable state securities and banking laws, and of
the Securities Act and the Exchange Act, and the rules and regulations
thereunder (such proxy statement/prospectus in the form mailed by York to the
York
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stockholders and by Harris Financial to the Harris Financial stockholders,
together with any and all amendments or supplements thereto, being herein
referred to as the "Proxy Statement-Prospectus"). New Harris Financial shall
file the Merger Registration Statement, including the Proxy Statement-
Prospectus, with the SEC. Each of New Harris Financial and York shall use their
best efforts to have the Merger Registration Statement declared effective under
the Securities Act as promptly as practicable after such filing, and each of
York and New Harris Financial shall thereafter promptly mail the Proxy
Statement-Prospectus to its stockholders. New Harris Financial shall also use
its best efforts to obtain all necessary state securities law or "Blue Sky"
permits and approvals required to carry out the transactions contemplated by
this Agreement, and York shall furnish all information concerning York and the
holders of York Common Stock as may be reasonably requested in connection with
any such action.
8.2.2 York shall provide New Harris Financial with any
information concerning itself that Harris Financial may reasonably request in
connection with the drafting and preparation of the Proxy Statement-Prospectus,
and Harris Financial shall notify York promptly of the receipt of any comments
of the SEC with respect to the Proxy Statement-Prospectus and of any requests by
the SEC for any amendment or supplement thereto or for additional information
and shall provide to York promptly copies of all correspondence between New
Harris Financial, Harris Financial or any of their representatives and the SEC.
New Harris Financial and Harris Financial shall give York and its counsel the
opportunity to review and comment on the Proxy Statement-Prospectus prior to its
being filed with the SEC and shall give York and its counsel the opportunity to
review and comment on all amendments and supplements to the Proxy
Statement-Prospectus and all responses to requests for additional information
and replies to comments prior to their being filed with, or sent to, the SEC.
Each of Harris Financial, New Harris Financial and York agrees to use all
reasonable efforts, after consultation with the other party hereto, to respond
promptly to all such comments of and requests by the SEC and to cause the Proxy
Statement-Prospectus and all required amendments and supplements thereto to be
mailed to the holders of York Common Stock and Harris Common Stock entitled to
vote at the York Stockholders Meeting and Harris Financial Stockholders Meeting,
respectively, referred to in Section 8.1 hereof at the earliest practicable
time.
8.2.3 York and Harris Financial shall promptly notify the
other party if at any time it becomes aware that the Proxy Statement-Prospectus
or the Merger Registration Statement 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 contained therein, in light of the
circumstances under which they were made, not misleading. In such event, York
shall cooperate with Harris Financial and New Harris Financial in the
preparation of a supplement or amendment to such Proxy Statement- Prospectus
which corrects such misstatement or omission, and New Harris Financial shall
file an amended Merger Registration Statement with the SEC, and each of York,
Harris Financial and New Harris Financial shall mail an amended Proxy
Statement-Prospectus to York's and Harris Financial's stockholders,
respectively. York, Harris Financial and New Harris Financial shall each provide
to the other a "comfort" letter from its independent certified public
accountant, dated as of the date of the Proxy Statement-Prospectus and updated
as of the date of consummation of the Merger, with respect to certain financial
information regarding York and Harris Financial and New Harris
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Financial, respectively, each in form and substance which is customary in
transactions such as the Merger.
8.3 The Mutual Company Conversion from Mutual to Stock Form. Commencing
promptly after the date of this Agreement, the Mutual Company, Harris Financial,
New Harris Financial and Harris Savings Bank will take all reasonable steps
necessary to effect the Conversion. In addition, without limiting the generality
of the foregoing, the Mutual Company shall cause the following to be done:
8.3.1 The Harris Financial Stockholders Meeting. Harris
Financial will (i) as promptly as practicable after the Conversion Registration
Statement is declared effective by the SEC, take all steps necessary to duly
call, give notice of, convene and hold the Harris Financial Stockholders Meeting
for the purpose of approving the Conversion and/or the Plan of Conversion, and
for such other purposes as may be, in the reasonable judgment of Harris
Financial, necessary or desirable, and (ii) subject to the fiduciary
responsibility of the Board of Directors of Harris Financial as advised by
counsel, recommend to its stockholders the approval of the aforementioned
matters to be submitted by it to its stockholders.
8.3.2 The Mutual Company Special Meeting. The Mutual Company
will (i) as promptly as practicable after the Conversion Registration Statement
is declared effective by the SEC, take all steps necessary to duly call, give
notice of, convene and hold a meeting of Depositors (the "Depositors Meeting")
for the purpose of approving the Plan of Conversion, and for such other purposes
as may be, in the reasonable judgment of the Mutual Company, necessary or
desirable, (ii) subject to the fiduciary responsibility of the Board of Trustees
of the Mutual Company as advised by counsel, recommend to Depositors the
approval of the aforementioned matters to be submitted by it to Depositors, and
(iii) cooperate and consult with York with respect to each of the foregoing
matters.
8.3.3 The Mutual Company will use all reasonable efforts to
prepare and file all required regulatory applications required in connection
with the Conversion, including, without limitation, filing applications with the
Department, the FDIC (if necessary) and the FRB.
8.3.4 Harris Financial and New Harris Financial shall prepare
as promptly as practicable, and York shall co-operate in the preparation of, the
Conversion Prospectus. Such Conversion Prospectus shall be incorporated into the
Conversion Registration Statement. New Harris Financial shall file the
Conversion Registration Statement with the SEC. New Harris Financial shall use
its reasonable best efforts to have the Conversion Registration Statement
declared effective under the Securities Act as promptly as practicable after
such filing.
8.3.5 York shall provide Harris Financial and New Harris
Financial with any information concerning it that Harris Financial or New Harris
Financial may reasonably request in connection with the Conversion Prospectus,
and Harris Financial shall notify York promptly of the receipt of any comments
of the SEC, the FRB, the FDIC or the Department with respect to the
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Conversion Prospectus and of any requests by the SEC, the FRB, the FDIC or the
Department for any amendment or supplement thereto or for additional
information, and shall provide to York promptly copies of all correspondence
between New Harris Financial or any representative of New Harris Financial and
the SEC, the FRB, the FDIC or the Department. New Harris Financial shall give
York and its counsel the opportunity to review and comment on the Conversion
Prospectus prior to its being filed with the SEC, the FRB, the FDIC or the
Department and shall give York and its counsel the opportunity to review and
comment on all amendments and supplements to the Conversion Prospectus and all
responses to requests for additional information and replies to comments prior
to their being filed with, or sent to, the SEC, the FRB, the FDIC or the
Department. Each of Harris Financial, New Harris Financial and York agrees to
use all reasonable efforts, after consultation with the other party hereto, to
respond promptly to all such comments of and requests by the SEC, the FRB, the
FDIC or the Department and to cause the Conversion Prospectus and all required
amendments and supplements thereto to be mailed to Depositors at the earliest
practicable time.
8.3.6 York shall promptly notify Harris Financial if at any
time it becomes aware that the Conversion Prospectus or the Conversion
Registration Statement 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 contained therein, in light of the circumstances under which they
were made, not misleading. In such event, York shall cooperate with Harris
Financial and New Harris Financial in the preparation of a supplement or
amendment to such Conversion Prospectus, which corrects such misstatement or
omission, and New Harris Financial shall file an amended Conversion Registration
Statement with the SEC. York shall provide to New Harris Financial, Harris
Financial and the placement agent for the sale of New Harris Common Stock in the
Conversion Offering a "comfort" letter from the independent certified public
accountants for York, dated as of the date of the Conversion Prospectus and
updated as of the date of consummation of the Conversion, with respect to
certain financial information regarding York, each in form and substance which
is customary in transactions such as the Conversion, and shall cause its counsel
to deliver to the placement agent for the Conversion such opinions as Harris
Financial and New Harris Financial may reasonably request.
8.3.7 The aggregate price for which the shares of Harris
Common Stock are sold to purchasers in the Conversion Offering shall be based on
the Independent Valuation. The Independent Valuation shall be expressed as a
range (the "Valuation Range"), the maximum and minimum of which shall vary 15%
above and below the midpoint of such range, and the maximum of such range may be
increased by an additional 15%.
8.3.8 If any shares of New Harris Common Stock that are
offered for sale in the subscription offering that is conducted as part of the
Conversion Offering remain unsold then, subject to the consent of York which
consent shall not be unreasonably withheld, such shares may be issued to York
shareholders as part of the Merger Consideration. In such event, the unsold
shares of New Harris Common Stock that are issued to York shareholders shall be
assumed to have also been issued in the Conversion Offering for purposes of
calculating the Maximum Percentage.
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8.4 Regulatory Approvals. Each of York, New Harris Financial and Harris
Financial will cooperate with the other and use all reasonable efforts to
promptly prepare all necessary documentation, to effect all necessary filings
and to obtain all necessary permits, consents, approvals and authorizations of
all third parties and governmental bodies necessary to consummate the
transactions contemplated by this Agreement, including without limitation the
Merger and the Conversion. York and Harris Financial will furnish each other and
each other's counsel with all information concerning themselves, their
subsidiaries, directors, officers and stockholders and such other matters as may
be necessary or advisable in connection with the Conversion Prospectus, the
Proxy Statement-Prospectus and any application, petition or any other statement
or application made by or on behalf of York, New Harris Financial or Harris
Financial to any governmental body in connection with the Conversion, the
Merger, and the other transactions contemplated by this Agreement. York shall
have the right to review and approve in advance all characterizations of the
information relating to York and any of its Subsidiaries, which appear in any
filing made in connection with the transactions contemplated by this Agreement
with any governmental body. In addition, York, Harris Financial and New Harris
Financial shall each furnish to the other for review a copy of each such filing
made in connection with the transactions contemplated by this Agreement with any
governmental body prior to its filing.
8.5 Affiliates; Publication of Combined Financial Results.
8.5.1 York shall use all reasonable efforts to cause each
director, executive officer and other person who is an "affiliate" (for purposes
of Rule 145 under the Securities Act and for purposes of qualifying the Merger
for "pooling of interests" accounting treatment) of York to deliver to Harris
Financial, as soon as practicable after the date of this Agreement, and at least
thirty (30) days prior to the date of the shareholders meeting called by York to
approve this Agreement, a written agreement, in the form of Exhibit C hereto,
providing that such person will not sell, pledge, transfer or otherwise dispose
of any shares of New Harris Common Stock or York Common Stock now or hereafter
held by such "affiliate," including, without limitation, the shares of New
Harris Common Stock to be received by such "affiliate" in the Merger: (1)
otherwise than in compliance with the applicable provisions of the Securities
Act and the rules and regulations thereunder; or (2) during the period
commencing thirty (30) days prior to the consummation of the Merger and ending
at the time of the publication of financial results covering at least thirty
(30) days of combined operations of New Harris Financial and York, except that
the restriction set forth in clause (2) above, and the restriction set forth in
Section A of such letter, shall not apply if the Merger is accounted for as a
purchase transaction.
ARTICLE IX
CLOSING CONDITIONS
9.1 Conditions to Each Party's Obligations under this Agreement. The
respective obligations of each party under this Agreement shall be subject to
the fulfillment at or prior to the Pre-Closing Date of the following conditions,
none of which may be waived:
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9.1.1 Stockholder and Depositor Approval.
(A) This Agreement and the transactions contemplated
hereby shall have been approved by the requisite vote of the stockholders of
York and Harris Financial.
(B) The Conversion and the Plan of Conversion shall
have been approved by the requisite vote of Depositors and stockholders of
Harris Financial.
9.1.2 Injunctions. None of the parties hereto shall be subject
to any order, decree or injunction of a court or agency of competent
jurisdiction which enjoins or prohibits the consummation of the transactions
contemplated by this Agreement.
9.1.3 Regulatory Approvals. All necessary approvals,
authorizations and consents of all Governmental Entities required to consummate
the transactions contemplated by this Agreement shall have been obtained and
shall remain in full force and effect and all waiting periods relating to such
approvals, authorizations or consents shall have expired; and no such approval,
authorization or consent shall include any condition or requirement, excluding
standard conditions that are normally imposed by the regulatory authorities in
bank merger transactions or in mutual-to- stock conversions, that would, in the
good faith reasonable judgment of the Board of Directors of Harris Financial or
York, materially and adversely affect the business, operations, financial
condition, property or assets of the combined enterprise of York, York Fed and
Harris or otherwise materially impair the value of York or York Fed to Harris,
it being understood that any regulatory approval requiring the divestiture of
one or more Harris Savings Bank branches or York Fed branches as a condition to
such approval shall not be deemed to materially impair the value of York or York
Fed to Harris.
9.1.4 Effectiveness of Merger Registration Statement. The
Merger Registration Statement shall have become effective under the Securities
Act and no stop order suspending the effectiveness of the Merger Registration
Statement shall have been issued, and no proceedings for that purpose shall have
been initiated or threatened by the SEC and, if the offer and sale of New Harris
Common Stock in the Merger is subject to the blue sky laws of any state, shall
not be subject to a stop order of any state securities commissioner.
9.1.5 Stock Exchange Listing. The shares of New Harris Common
Stock to be issued in the Merger shall have been authorized for listing on the
Stock Exchange, subject to official notice of issuance.
9.1.6 Tax Opinion. On the basis of facts, representations and
assumptions which shall be consistent with the state of facts existing at the
Pre-Closing date, Harris Financial, New Harris Financial and York shall have
received an opinion of Luse Lehman Gorman Pomerenk & Schick, P.C. reasonably
acceptable in form and substance to Harris Financial, New Harris Financial and
York dated as of the Pre-Closing Date, substantially to the effect that, for
federal income tax purposes:
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(a) The Merger, when consummated in accordance with the terms hereof,
either will constitute a reorganization within the meaning of Section 368(a) of
the Code or will be treated as part of a reorganization within the meaning of
Section 368(a) of the Code;
(b) None of the Conversion, the Exchange Offer, or the merger of York
Fed into Harris Savings Bank will adversely affect the Merger qualifying as a
Reorganization within the meaning of Section 368(A) of the Code.
(c) No gain or loss will be recognized by Harris Financial, New Harris
Financial, Harris Savings, York or York Fed by reason of the Merger;
(d) The exchange of York Common Stock to the extent exchanged for New
Harris Common Stock will not give rise to recognition of gain or loss for
federal income tax purposes to the shareholders of York;
(e) The basis of the New Harris Common Stock to be received (including
any fractional shares deemed received for tax purposes) by a York shareholder
will be the same as the basis of the York Common Stock surrendered pursuant to
the Merger in exchange therefor; and
(f) The holding period of the shares of New Harris Common Stock to be
received by a shareholder of York will include the period during which the
shareholder held the shares of York Common Stock surrendered in exchange
therefor, provided the York Common Stock surrendered is held as a capital asset
at the Effective Time.
Each of Harris Financial, New Harris Financial and York shall provide a
letter setting forth the facts, assumptions and representations on which such
counsel may rely in rendering its opinion.
9.1.7 Conversion. New Harris Financial shall have received and
accepted orders to purchase and/or shall be prepared to issue as Merger
Consideration at least the minimum number of shares of New Harris Common Stock
offered for sale in the Conversion Offering, and the proceeds of such sale are
sufficient to enable Harris Savings Bank to remain "well-capitalized" under
applicable federal banking law and otherwise to meet regulatory capital
requirements, in each case after giving effect to the Merger.
9.2 Conditions to the Obligations of Harris Financial under this
Agreement. The obligations of Harris Financial and New Harris Financial under
this Agreement shall be further subject to the satisfaction of the conditions
set forth in Sections 9.2.1 through 9.2.7 at or prior to the Pre-Closing, and
the satisfaction of the condition set forth in Section 9.2.8 at or prior to the
Closing:
9.2.1 Representations and Warranties. Except as otherwise
contemplated by this Agreement or consented to in writing by Harris Financial,
the representations and warranties of York set forth in Article IV hereof shall
be true and correct in all material respects as of the date of this Agreement
and as of the Pre-Closing date as though made on and as of the Pre-Closing Date
(or on
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the date when made in the case of any representation and warranty which
specifically relates to an earlier date); provided, however, that (i) in
determining whether or not the condition contained in this Section 9.2.1 shall
be satisfied, no effect shall be given to any exceptions in such representations
and warranties relating to materiality or Material Adverse Effect, and (ii) the
condition contained in this Section 9.2.1 shall be deemed to be satisfied unless
the failure of such representations and warranties to be so true and correct
constitute, individually or in the aggregate, a Material Adverse Effect on York
and the York Subsidiaries, taken as a whole; and York shall have delivered to
Harris Financial a certificate of York to such effect signed by the Chief
Executive Officer and the Chief Financial Officer of York as of the Effective
Time.
9.2.2 Agreements and Covenants. As of the Pre-Closing Date,
York and each York Subsidiary shall have performed in all material respects all
obligations and complied in all material respects with all agreements or
covenants to be performed or complied with by each of them at or prior to the
Effective Date under this Agreement, except to the extent that any failure to
perform or comply shall not individually, or in the aggregate, have a Material
Adverse Effect on York and the York Subsidiaries, taken as a whole, or
materially adversely affect consummation of the Merger and other transactions
contemplated hereby, and Harris Financial shall have received a certificate
signed on behalf of York by the Chief Executive Officer and Chief Financial
Officer of York to such effect dated as of the Effective Time.
9.2.3 Permits, Authorizations, Etc. York and the York
Subsidiaries shall have obtained any and all material permits, authorizations,
consents, waivers, clearances or approvals required for the lawful consummation
of the Merger by York, the failure to obtain which would have a Material Adverse
Effect on York and the York Subsidiaries, taken as a whole.
9.2.4 Accountants' Letter. Harris Financial shall have
received a "comfort" letter from the independent certified public accountants
for York, dated (i) the effective date of the Merger Registration Statement and
(ii) the Pre-Closing Date, with respect to certain financial information
regarding York, each in form and substance which is customary in transactions of
the nature contemplated by this Agreement.
9.2.5 Legal Opinion. Harris Financial shall have received an
opinion, dated the Pre- Closing Date, from counsel reasonably acceptable to
Harris Financial, in the form attached hereto as Exhibit D.
9.2.6 Updated Fairness Opinion. Harris Financial shall have
received an update of the written opinion that it received from Ryan, Beck & Co.
pursuant to Section 5.24 of this Agreement, dated as of the date the proxy
statement is mailed to Harris Financial stockholders in connection with the
solicitation of their approval of the Conversion and the Plan of Conversion, to
the effect that, subject to the terms, conditions and qualifications set forth
therein, as of the date thereof, the Conversion and Merger is fair to Harris
Financial stockholders, including the Mutual Company, from a financial point of
view.
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9.2.7 Pooling of Interests. If Harris Financial shall have
received a letter from Arthur Andersen LLP pursuant to Section 3.1.6, to the
effect that the Merger will qualify for "pooling of interests" accounting
treatment and Harris Financial and York shall not have mutually agreed that the
Merger will be accounted for as a purchase transaction, then Harris Financial
shall also have received a letter from Arthur Andersen LLP, dated as of the
Closing Date addressed to Harris Financial, to the effect that the Merger will
qualify for "pooling of interests" accounting treatment.
9.2.8 No Material Adverse Effect. Since June 30, 1999, no
event has occurred or circumstance arisen that, individually or in the
aggregate, has had or is reasonably likely to have a Material Adverse Effect on
York.
York will furnish Harris Financial with such certificates of its
officers or others and such other documents to evidence fulfillment of the
conditions set forth in this Section 9.2 as Harris Financial may reasonably
request.
9.3 Conditions to the Obligations of York under this Agreement. The
obligations of York under this Agreement shall be further subject to the
satisfaction of the conditions set forth in Sections 9.3.1 through 9.3.7 at or
prior to the Pre-Closing, and the satisfaction of the condition set forth in
Section 9.3.8 at or prior to the Closing:
9.3.1 Representations and Warranties. Except as otherwise
contemplated by this Agreement or consented to in writing by York, the
representations and warranties of the Mutual Company, New Harris Financial,
Harris Savings Bank and Harris Financial set forth in Article V hereof shall be
true and correct in all material respects as of the date of this Agreement and
as of the Pre-Closing Date as though made on and as of the Pre-Closing Date (or
on the date when made in the case of any representation and warranty which
specifically relates to an earlier date); provided, however, that (i) in
determining whether or not the condition contained in this Section 9.3.1 shall
be satisfied, no effect shall be given to any exceptions in such representations
and warranties relating to materiality or Material Adverse Effect, and (ii) the
condition contained in this Section 9.3.1 shall be deemed to be satisfied unless
the failure of such representations and warranties to be so true and correct
constitute, individually or in the aggregate, a Material Adverse Effect on
Harris Financial and the Harris Financial Subsidiaries, taken as a whole; and
Harris Financial shall have delivered to York a certificate of Harris Financial
to such effect signed by the Chief Executive Officer and the Chief Financial
Officer of Harris Financial as of the Effective Time;
9.3.2 Agreements and Covenants. As of the Pre-Closing Date,
Harris Financial and New Harris Financial shall have performed in all material
respects all obligations and complied in all material respects with all
agreements or covenants of Harris Financial and New Harris Financial to be
performed or complied with by it at or prior to the Effective Date under this
Agreement except to the extent that any failure to perform or comply shall not
individually, or in the aggregate, have a Material Adverse Effect on Harris
Financial, New Harris Financial and Harris Financial Subsidiaries, taken as a
whole, or materially adversely affect consummation of the Merger and other
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transactions contemplated hereby, and York shall have received a certificate
signed on behalf of Harris Financial and New Harris Financial by the Chief
Executive Officer and Chief Financial Officer of Harris Financial and New Harris
Financial to such effect dated as of the Effective Time.
9.3.3 Permits, Authorizations, Etc. The Mutual Company, New
Harris Financial, Harris Financial and its Subsidiaries shall have obtained any
and all material permits, authorizations, consents, waivers, clearances or
approvals required for the lawful consummation of the Merger by Harris Financial
and New Harris Financial, the failure to obtain which would have a Material
Adverse Effect on Harris Financial and its Subsidiaries, taken as a whole.
9.3.4 Accountants' Letter. York shall have received a
"comfort" letter from the independent certified public accountants for Harris
Financial and New Harris Financial, dated (i) the effective date of the Merger
Registration Statement and (ii) the Pre-Closing Date, with respect to certain
financial information regarding Harris Financial and New Harris Financial, each
in form and substance which is customary in transactions of the nature
contemplated by this Agreement.
9.3.5 Legal Opinion. York shall have received an opinion from
Luse Lehman Gorman Pomerenk & Schick, counsel to Harris Financial and New Harris
Financial, dated the Pre- Closing Date, in the form attached hereto as Exhibit
E.
9.3.6 Updated Fairness Opinion. York shall have received an
update of the written opinion that it received from Advest, Inc. pursuant to
Section 4.24 of this Agreement, dated as of the date of the Proxy
Statement-Prospectus, to the effect that, subject to the terms, conditions and
qualifications set forth therein, as of the date thereof, the Merger
Consideration to be received by the stockholders of York pursuant to this
Agreement is fair to such stockholders from a financial point of view.
9.3.7 Payment of Merger Consideration. New Harris Financial
shall have delivered the Exchange Fund to the Exchange Agent on or before the
Closing Date and the Exchange Agent shall provide York with a certificate
evidencing such delivery.
9.3.8 No Material Adverse Effect. Since December 31, 1999, no
event has occurred or circumstance arisen that, individually or in the
aggregate, has had or is reasonably likely to have a Material Adverse Effect on
Harris Financial.
Harris Financial and New Harris Financial will furnish York with such
certificates of their officers or others and such other documents to evidence
fulfillment of the conditions set forth in this Section 9.3 as York may
reasonably request.
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ARTICLE X
THE CLOSING
10.1 Time and Place. Subject to the provisions of Articles IX and XI
hereof, the Closing of the transactions contemplated hereby shall take place at
the offices of Luse Lehman Gorman Pomerenk & Schick, 5335 Wisconsin Avenue,
Suite 400, Washington, D.C. at 10:00 a.m. on the date determined by Harris
Financial, in its sole discretion, upon five (5) days prior written notice to
York, but in no event later than thirty days (30) after the last condition
precedent pursuant to this agreement has been fulfilled or waived (including the
expiration of any applicable waiting period), or at such other place, date or
time upon which Harris Financial and York mutually agree. A pre-closing of the
transactions contemplated hereby (the "Pre-Closing") shall take place at the
offices of Luse Lehman Gorman Pomerenk & Schick, 5335 Wisconsin Avenue, Suite
400, Washington, D.C. at 10:00 a.m.
on the day prior to the Closing Date.
10.2 Deliveries at the Pre-Closing and the Closing. At the Pre-Closing
there shall be delivered to Harris Financial, New Harris Financial and York the
opinions, certificates, and other documents and instruments required to be
delivered at the Pre-Closing under Article IX hereof. At the Closing there shall
be delivered to York the Merger Consideration required to be delivered at the
Closing under Section 9.3.7 hereof.
ARTICLE XI
TERMINATION, AMENDMENT AND WAIVER
11.1 Termination. This Agreement may be terminated at any time prior
to the Pre-Closing Date, whether before or after approval of the Merger by the
stockholders of York:
11.1.1 At any time by the mutual written agreement of Harris
Financial and York;
11.1.2 By either York or Harris Financial (provided, that the
terminating party is not then in material breach of any representation,
warranty, covenant or other agreement contained herein) if there shall have been
a material breach of any of the representations or warranties set forth in this
Agreement on the part of the other party, which breach by its nature cannot be
cured prior to the Pre-Closing Date or shall not have been cured within 30
business days after written notice by Harris Financial to York (or by York to
Harris Financial) of such breach (for purposes of this Section 11.1.2 a material
breach shall be deemed to be a breach which has, either individually or in the
aggregate, a Material Adverse Effect on the party making such representations or
warranties (provided, that no effect shall be given to any qualification
relating to materiality or a Material Adverse Effect in such representations and
warranties) or a Material Adverse Effect on the business, operations, financial
condition, property or assets of the combined enterprise or which materially
adversely affects the consummation of the Merger and the other transactions
contemplated hereby, including the Conversion);
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11.1.3 By either York or Harris Financial (provided, that the
terminating party is not then in material breach of any representation,
warranty, covenant or other agreement contained herein) if there shall have been
a material failure to perform or comply with any of the covenants or agreements
set forth in this Agreement on the part of the other party, which failure by its
nature cannot be cured prior to the Pre-Closing Date or shall not have been
cured within 30 business days after written notice by Harris Financial to York
(or by York to Harris Financial) of such failure (for purposes of this Section
11.1.3 a material failure to perform or comply shall be deemed to be a failure
which has, either individually or in the aggregate, a Material Adverse Effect on
the party so failing or on the business, operations, financial condition,
property or assets of the combined enterprise or which materially adversely
affects consummation of the Merger and the other transactions contemplated
hereby, including the Conversion);
11.1.4 Subject to Section 11.1.11, at the election of either
Harris Financial or York, if the Closing shall not have occurred by the
Termination Date, or such later date as shall have been agreed to in writing by
Harris Financial and York; provided, that no party may terminate this Agreement
pursuant to this Section 11.1.4 if the failure of the Closing to have occurred
on or before said date was due to such party's breach of any of its obligations
under this Agreement;
11.1.5 By either York or Harris Financial if (i) the
stockholders of York shall have voted at the York stockholders meeting on the
transactions contemplated by this Agreement and such vote shall not have been
sufficient to approve such transactions, or (ii) the stockholders of Harris
Financial or the Depositors shall have voted on the Conversion and/or the Plan
of Conversion at a meeting of such stockholders or Depositors and such vote
shall not have been sufficient to approve the Conversion and/or the Plan of
Conversion;
11.1.6 By either York or Harris Financial if (i) final action
has been taken by a regulatory authority whose approval is required in
connection with this Agreement and the transactions contemplated hereby,
including the Conversion, which final action (x) has become unappealable and (y)
does not approve this Agreement or the transactions contemplated hereby,
including the Conversion, (ii) any regulatory authority whose approval or
nonobjection is required in connection with this Agreement and the transactions
contemplated hereby has stated in writing that it will not issue the required
approval or nonobjection, or (iii) any court of competent jurisdiction or other
governmental authority shall have issued an order, decree, ruling or taken any
other action restraining, enjoining or otherwise prohibiting the Merger or
Conversion and such order, decree, ruling or other action shall have become
final and nonappealable;
11.1.7 By the Board of Directors of Harris Financial, provided
that it is not then in material breach of any representation, warranty, covenant
or other agreement contained herein, if at the conclusion of the Conversion the
appraised value of the shares issued in the Offering (based upon the Independent
Valuation) is less than the $260,000,000.
11.1.8 By the Board of Directors of York, provided that it is
not then in material breach of any representation, warranty, covenant or other
agreement contained herein, if at the
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conclusion of the Conversion the appraised value of the shares issued in the
Offering (based upon the Independent Valuation) is less than the $260,000,000
and Harris Financial shall not have agreed to maintain the Exchange Ratio at
1.550.
11.1.9 By the Board of Directors of either party (provided,
that the terminating party is not then in material breach of any representation,
warranty, covenant or other agreement contained herein) in the event that any of
the conditions precedent to the obligations of such party to consummate the
Merger cannot be satisfied or fulfilled by the date specified in Section 11.1.4
of this Agreement.
11.1.10 By the Board of Directors of Harris Financial or York,
provided that the terminating party is not then in material breach of any
representation, warranty, covenant or other agreement contained herein, if
either of the fairness opinions required by Sections 9.2.6 and 9.3.6 shall not
have been obtained.
11.1.11 If Harris Financial shall have extended the
Termination Date to March 31, 2001, then at the election of either Harris
Financial or York if the Closing shall not have occurred by March 31, 2001;
provided, that no party may terminate this Agreement pursuant to this Section
11.1.11 if the failure of the Closing to have occurred on or before said date
was due to such party's breach of any of its obligations under this Agreement;
It is the intention of the parties that following completion of the
Pre-Closing, which completion will be acknowledged in writing by the parties at
such time, neither party shall have the right to terminate this Agreement at any
time thereafter. If, after the Pre-Closing Date, any party hereto shall attempt
to terminate this Agreement or shall fail to take any action necessary to effect
the consummation of the Merger (including, without limitation, Harris
Financial's obligation to satisfy the condition set forth in Section 9.3.6), the
other party shall be entitled to injunctive relief to enforce this Agreement,
and the first party hereby agrees not to contest any judicial proceeding seeking
the granting of such an injunction.
11.2 Effect of Termination.
11.2.1 In the event of termination of this Agreement pursuant
to any provision of Section 11.1, this Agreement shall forthwith become void and
have no further force, except that (i) the provisions of Sections 1.1, 11.3,
12.1, 12.2, 12.6, 12.9, 12.10, this Section 11.2, and any other Section which,
by its terms, relates to post-termination rights or obligations, shall survive
such termination of this Agreement and remain in full force and effect.
11.2.2 If this Agreement is terminated, expenses and damages
of the parties hereto shall be determined as follows:
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(a) Except as provided in paragraph (b) and (c) below, termination of
this Agreement pursuant to Section 11.1 shall be without liability, cost or
expense on the part of any party to the other.
(b) In the event of a termination of this Agreement pursuant to Section
11.1.2 or 11.1.3 hereof resulting from the willful breach of any provision of
this Agreement by a party, such party shall be obligated to pay the other party
$1,500,000, and up to $500,000 of out-of-pocket costs and expenses, including,
without limitation, reasonable legal, accounting and investment banking fees and
expenses, incurred by the other party in connection with the entering into of
this Agreement and the carrying out of any and all acts contemplated hereunder,
which payments shall be an exclusive remedy.
(c) In the event of a termination of this Agreement pursuant to Section
11.1.7, 11.1.8, or 11.1.10 hereof, Harris Financial shall be obligated to
reimburse York for up to $500,000 of out-of- pocket costs and expenses,
including, without limitation, reasonable legal, accounting and investment
banking fees and expenses, incurred by York in connection with the entering into
of this Agreement and the carrying out of any and all acts contemplated
hereunder. Except as set forth in the following sentence, the payment of such
out-of-pocket costs shall be the exclusive remedy. In the event of termination
of this Agreement pursuant to Section 11.1.7, 11.1.8, or 11.1.10 hereof, and
Harris Financial shall have extended the Termination Date to March 31, 2001,
then Harris Financial shall be obligated to pay to an additional $500,000 to
York. The payment of such $500,000 in addition to the out-of-pocket costs and
expenses set forth in the first sentence of this Section 11.2.2(c) shall be the
exclusive remedy.
11.2.3 Except as provided in Section 11.2.2, whether or not
the Merger is consummated, all Costs incurred in connection with this Agreement
and the transactions contemplated hereby shall be borne by the party incurring
such costs and expenses.
11.2.4 In no event shall any officer, agent or director of
York, any York Subsidiary, Harris Financial or any Harris Financial Subsidiary,
be personally liable thereunder for any default by any party in any of its
obligations hereunder unless any such default was intentionally caused by such
officer, agent or director.
11.3 Amendment, Extension and Waiver. Subject to applicable law, at
any time prior to the Effective Time (whether before or after approval thereof
by the stockholders of York), the parties hereto by action of their respective
Boards of Directors, may (a) amend this Agreement, (b) extend the time for the
performance of any of the obligations or other acts of any other party hereto,
(c) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto, or (d) waive compliance
with any of the agreements or conditions contained herein; provided, however,
that after any approval of this Agreement and the transactions contemplated
hereby by the stockholders of York, there may not be, without further approval
of such stockholders, any amendment of this Agreement which reduces the amount,
value or changes the form of consideration to be delivered to York's
stockholders pursuant to this Agreement. This
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Agreement may not be amended except by an instrument in writing signed on behalf
of each 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 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.
ARTICLE XII
MISCELLANEOUS
12.1 Confidentiality. Except as specifically set forth herein, Harris
Financial and York mutually agree to be bound by the terms of the
confidentiality agreements dated November 1, 1999 and November 2, 1999
(collectively, the "Confidentiality Agreement") previously executed by the
parties hereto, which Confidentiality Agreement is hereby incorporated herein by
reference. The parties hereto agree that such Confidentiality Agreements shall
continue in accordance with their respective terms, notwithstanding the
termination of this Agreement.
12.2 Public Announcements. York and Harris Financial shall cooperate
with each other in the development and distribution of all news releases and
other public information disclosures with respect to this Agreement, except as
may be otherwise required by law, and neither York nor Harris Financial shall
issue any joint news releases with respect to this Agreement unless such news
releases have been mutually agreed upon by the parties hereto, except as
required by law.
12.3 Survival. All representations, warranties and covenants in this
Agreement or in any instrument delivered pursuant hereto or thereto shall expire
on and be terminated and extinguished at the Effective Date, other than those
covenants set forth in Sections 2.5, 7.9, 7.10 and 7.13 and in that certain
letter from Harris Financial to York of even date herewith, which shall survive
or be performed after the Effective Date.
12.4 Notices. All notices or other communications hereunder shall be in
writing and shall be deemed given if delivered by receipted hand delivery or
mailed by prepaid registered or certified mail (return receipt requested) or by
cable, telegram, telex or fax addressed as follows:
If to York or York Fed, to:
101 South George Street
York, Pennsylvania 17401
Attention: President
Fax: (717) 846-5590
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With required copies to each of:
John F. Breyer, Jr. Esq.
Breyer & Associates PC
1100 New York Avenue, N.W.
Washington, D.C. 20005-3934
Fax: (202) 737-7979
If to Harris Financial or to Harris Savings Bank, to:
235 North Second Street
Harrisburg, Pennsylvania 17101
Attention: President
Fax: (717) 231-2950
With required copies to each of:
Eric Luse, Esq.
Kenneth R. Lehman, Esq.
Luse Lehman Gorman Pomerenk & Schick, P.C.
5335 Wisconsin Avenue, N.W., Suite 400
Washington, D.C. 20015
Fax: (202) 362-2902
or such other address as shall be furnished in writing by any party, and any
such notice or communication shall be deemed to have been given as of the date
so mailed.
12.5 Parties in Interest. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and assigns; provided, however, that neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any party hereto
without the prior written consent of the other party, and that (except as
otherwise expressly provided in this Agreement) nothing in this Agreement is
intended to confer upon any other person any rights or remedies under or by
reason of this Agreement.
12.6 Complete Agreement. This Agreement, including the Exhibits and
Disclosure Schedules hereto and the documents and other writings referred to
herein or therein or delivered pursuant hereto or thereto, together with that
certain letter from Harris Financial to York of even date herewith, the Stock
Option Agreement and the Confidentiality Agreement, as amended, referred to in
Section 12.1, contains the entire agreement and understanding of the parties
with respect to its subject matter. There are no restrictions, agreements,
promises, warranties, covenants or undertakings between the parties other than
those expressly set forth herein or therein. This Agreement supersedes all prior
agreements and understandings (other than the Confidentiality
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Agreements referred to in Section 12.1 hereof) between the parties, both written
and oral, with respect to its subject matter.
12.7 Counterparts. This Agreement may be executed in one or more
counterparts all of which shall be considered one and the same agreement and
each of which shall be deemed an original.
12.8 Severability. In the event that any one or more provisions of this
Agreement shall for any reason be held invalid, illegal or unenforceable in any
respect, by any court of competent jurisdiction, such invalidity, illegality or
unenforceability shall not affect any other provisions of this Agreement and the
parties shall use their reasonable efforts to substitute a valid, legal and
enforceable provision which, insofar as practical, implements the purposes and
intents of this Agreement.
12.9 Governing Law. This Agreement shall be governed by the laws of
Pennsylvania, without giving effect to its principles of conflicts of laws.
12.10 Interpretation. When a reference is made in this Agreement to
Sections or Exhibits, such reference shall be to a Section of or Exhibit to this
Agreement unless otherwise indicated. The recitals hereto constitute an integral
part of this Agreement. References to Sections include subsections, which are
part of the related Section (e.g., a section numbered "Section 5.5.1" would be
part of "Section 5.5" and references to "Section 5.5" would also refer to
material contained in the subsection described as "Section 5.5.1"). The table of
contents, index and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. Whenever the words "include", "includes" or "including" are used
in this Agreement, they shall be deemed to be followed by the words "without
limitation". The phrases "the date of this Agreement", "the date hereof" and
terms of similar import, unless the context otherwise requires, shall be deemed
to refer to the date set forth in the Recitals to this Agreement.
12.11 Specific Performance. The parties hereto agree that irreparable
damage would occur in the event that the provisions contained in this Agreement
were not performed in accordance with its specific terms or was otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions thereof in any court of the United States
or any state having jurisdiction, this being in addition to any other remedy to
which they are entitled at law or in equity.
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IN WITNESS WHEREOF, the Mutual Company, Harris Financial, New Harris
Financial, Harris Savings Bank, York and York Fed have caused this Agreement to
be executed under seal by their duly authorized officers as of the date first
set forth above.
Harris Financial, MHC
Dated: March 27, 2000 By: /s/ Charles C. Pearson, Jr.
------------------------- ---------------------------
Charles C. Pearson, Jr.
Chairman, President
and Chief Executive Officer
Harris Financial, Inc.
Dated: March 27, 2000 By: /s/ Charles C. Pearson, Jr.
------------------------- ---------------------------
Charles C. Pearson, Jr.
Chairman, President
and Chief Executive Officer
New Harris Financial, Inc.
Dated: March 27, 2000 By: /s/ Charles C. Pearson, Jr.
------------------------- ---------------------------
Charles C. Pearson, Jr.
Chairman, President
and Chief Executive Officer
Harris Savings Bank
Dated: March 27, 2000 By: /s/ Charles C. Pearson, Jr.
------------------------- ---------------------------
Charles C. Pearson, Jr.,
Chairman, President
and Chief Executive Officer
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York Financial Corp.
Dated: March 27, 2000 By: /s/ Robert W. Pullo
-------------------------- ---------------------------------
Robert W. Pullo,
President and Chief Executive Officer
York Federal Savings and Loan
Association
Dated: March 27, 2000 By: /s/ Robert W. Pullo
-------------------------- ---------------------------------
Robert W. Pullo
President and Chief Executive Officer
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EXHIBIT A
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated March 27, 2000, between York Financial
Corp., a Pennsylvania corporation ("Issuer") and Harris Financial, Inc., a
Pennsylvania corporation ("Grantee"). Capitalized terms used herein without
definition have the meanings specified in the Reorganization Agreement (as
hereinafter defined).
W I T N E S S E T H:
WHEREAS, Grantee and Issuer have entered into an Agreement and Plan of
Reorganization dated March 27, 2000 (the "Reorganization Agreement"), which
agreement has been executed by the parties hereto prior to this Agreement; and
WHEREAS, as a condition to Grantee's entering into the Reorganization
Agreement and in consideration therefor, Issuer has agreed to grant Grantee the
Option (as hereinafter defined):
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth herein and in the Reorganization Agreement,
the parties hereto agree as follows:
1.(a) Issuer hereby grants to Grantee an unconditional, irrevocable
option (the "Option") to purchase, subject to the terms hereof, up to 2,011,346
fully paid and nonassessable shares of its common stock, par value $1.00 per
share ("Common Stock"), at a price of $12 1/4 per share (such price, as adjusted
if applicable, the "Option Price"); provided, however, that in the event Issuer
issues or agrees to issue any shares of Common Stock (other than as permitted
under the Reorganization Agreement) at a price less than $12 1/4 per share, such
Option Price shall be equal to such lesser price. The number of shares of Common
Stock that may be received upon the exercise of the Option and the Option Price
are subject to adjustment as herein set forth.
(b) In the event that any additional shares of Common Stock are issued
or otherwise become outstanding after the date of this Agreement (other than
pursuant to this Agreement), the number of shares of Common Stock subject to the
Option shall be increased so that, after such issuance, it equals 19.9% of the
number of shares of Common Stock then issued and outstanding without giving
effect to any shares subject or issued pursuant to the Option. Nothing contained
in this Section 1(b) or elsewhere in this Agreement shall be deemed to authorize
Issuer or Grantee to breach any provision of the Reorganization Agreement.
2.(a) The holder or holders of the Option (including Grantee or any
subsequent transferee(s)) (the "Holder") may exercise the Option, in whole or
part, if, but only if, both an Initial Triggering Event (as hereinafter defined)
and a Subsequent Triggering Event (as hereinafter defined) shall have occurred
prior to the occurrence of an Exercise Termination Event (as hereinafter
defined), provided that the Holder shall have sent the written notice of such
exercise (as provided
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in subsection (e) of this Section 2) within 180 days following the first such
Subsequent Triggering Event. Each of the following shall be an Exercise
Termination Event: (i) the Effective Time (as defined in the Reorganization
Agreement); (ii) termination of the Reorganization Agreement in accordance with
the provisions thereof if such termination occurs prior to the occurrence of an
Initial Triggering Event; (iii) the termination of the Reorganization Agreement
under Section 11.1.1, 11.1.6 or 11.1.7 thereof, or by Issuer under Section
11.1.2 or 11.1.3 thereof, or by reason of Grantee failing to secure any
necessary approval or consent (including but not limited to any governmental,
stockholder or depositor approval of the Conversion, the Exchange Offering, the
Merger and the other transactions contemplated by the Reorganization Agreement);
(iv) the commencement of any action by Grantee against Issuer for relief under
Section 11.2.2(b) of the Reorganization Agreement; or (v) the passage of
eighteen months after termination of the Reorganization Agreement if such
termination follows or occurs at the same time as the occurrence of an Initial
Triggering Event. The Grantee acknowledges that in the event any Holder
exercises any rights to acquire shares pursuant to the Option or any Substitute
Option (as hereinafter defined) or Issuer repurchases the Option, or any part
thereof, or any Option Shares pursuant to this Agreement, then in any such event
the Grantee shall have no rights to pursue any relief against Issuer under
Section 11.2.2(b) of the Reorganization Agreement.
(b) The term "Initial Triggering Event" shall mean any of the following
events or transactions occurring after the date hereof:
(i) Issuer or any Significant Subsidiary (as defined in
Rule1-02 of Regulation S-X promulgated by the Securities and Exchange
Commission (the "SEC")) of Issuer (each an "Issuer Subsidiary"),
without having received Grantee's prior written consent, shall have
entered into an agreement to engage in an Acquisition Transaction (as
hereinafter defined) with any person (the term "person" for purposes of
this Agreement having the meaning assigned thereto in Sections 3(a)(9)
and 13(d)(3) of the Securities Exchange Act of 1934, and the rules and
regulations thereunder (the "1934 Act")) other than Grantee or any of
its subsidiaries (each a "Grantee Subsidiary"). For purposes of this
Agreement, "Acquisition Transaction" shall mean (x) a merger or
consolidation, or any similar transaction, involving Issuer or an
Issuer Subsidiary, (y) a purchase, lease or other acquisition of all or
substantially all of the assets of Issuer or an Issuer Subsidiary, or
(z) a purchase or other acquisition (including by way of merger,
consolidation, share exchange or otherwise) of beneficial ownership of
securities representing 15% or more of the voting power of Issuer or an
Issuer Subsidiary, provided that the term "Acquisition Transaction"
does not include any internal merger or consolidation involving only
Issuer and/or Issuer Subsidiaries;
(ii) Any person other than Grantee or any Grantee Subsidiary,
alone or together with such person's affiliates and associates (as such
terms are defined in Rule 12b-2 under the 1934 Act) shall have acquired
beneficial ownership or the right to acquire beneficial ownership of
15% or more of the outstanding shares of Common Stock (the term
"beneficial ownership" for purposes of this Option Agreement having the
meaning assigned thereto in Section 13(d) of the 1934 Act, and the
rules and regulations thereunder);
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(iii) The Board of Directors of Issuer shall have failed to
recommend to its stockholders the adoption or approval of the
Reorganization Agreement or shall have withdrawn, modified or changed
its recommendation in a manner adverse to Grantee;
(iv) After a publicly announced or publicly disclosed proposal
is made by a third party (other than Grantee or a Grantee Subsidiary)
to Issuer to engage in an Acquisition Transaction, either (A) Issuer
shall have intentionally and knowingly breached any representation,
warranty, covenant or agreement contained in the Reorganization
Agreement and such breach shall not have been cured prior to the Notice
Date (as defined below) or (B) the York stockholders shall have voted
and failed to approve the Reorganization Agreement; or
(v) Any person other than Grantee or any Grantee Subsidiary,
other than in connection with a transaction to which Grantee has given
its prior written consent, shall have filed an application or notice
with any federal or state bank regulatory authority ("Regulatory
Authority"), for approval to engage in an Acquisition Transaction.
(c) The term "Subsequent Triggering Event" shall mean either of the
following events or transactions occurring after the date hereof:
(i) The acquisition by any person other than Grantee or a
Grantee Subsidiary of beneficial ownership of 25% or more of the then
outstanding Common Stock; or
(ii) The occurrence of the Initial Triggering Event described
in subparagraph (i) of subsection (b) of this Section 2, except that
the percentage referred to in clause (z) of the second sentence thereof
shall be 25%.
(d) Issuer shall notify Grantee promptly in writing of the occurrence
of any Initial Triggering Event or Subsequent Triggering Event (together, a
"Triggering Event"), it being understood that the giving of such notice by
Issuer shall not be a condition to the right of the Holder to exercise the
Option.
(e) In the event the Holder is entitled to and wishes to exercise the
Option, it shall send to Issuer a written notice (the date of which is herein
referred to as the "Notice Date") specifying (i) the total number of shares it
will purchase pursuant to such exercise and (ii) a place and date not earlier
than three business days nor later than 60 business days from the Notice Date
for the closing of such purchase (the "Closing Date"); provided that if prior
notification to or approval of any Regulatory Authority is required in
connection with such purchase, the Holder shall promptly file the required
notice or application for approval, shall promptly notify Issuer of such filing,
and shall expeditiously process the same and the period of time that otherwise
would run pursuant to this sentence shall run instead from the date on which any
required notification periods have expired or been terminated or such approvals
have been obtained and any requisite waiting period or periods shall have
passed. Any exercise of the Option shall be deemed to occur on the Notice Date
relating thereto.
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(f) At each closing referred to in subsection (e) of this Section 2,
the Holder shall pay to Issuer the aggregate purchase price for the shares of
Common Stock purchased pursuant to the exercise of the Option in immediately
available funds by wire transfer to a bank account designated by Issuer,
provided that failure or refusal of Issuer to designate such a bank account
shall not preclude the Holder from exercising the Option.
(g) At such closing, simultaneously with the delivery of immediately
available funds as provided in subsection (f) of this Section 2, Issuer shall
deliver to the Holder a certificate or certificates representing the number of
shares of Common Stock purchased by the Holder and, if the Option should be
exercised in part only, a new Option evidencing the rights of the Holder thereof
to purchase the balance of the shares purchasable hereunder.
(h) Certificates for Common Stock delivered at a closing hereunder may
be endorsed with a restrictive legend that shall read substantially as follows:
"The transfer of the shares represented by this certificate is
subject to certain provisions of an agreement between the
registered holder hereof and Issuer and to resale restrictions
arising under the Securities Act of 1933, as amended. A copy
of such agreement is on file at the principal office of Issuer
and will be provided to the holder hereof without charge upon
receipt by Issuer of a written request therefor."
It is understood and agreed that: (i) the reference to the resale
restrictions of the Securities Act of 1933, as amended (the "1933 Act") in the
above legend shall be removed by delivery of substitute certificate(s) without
such reference if the Holder shall have delivered to Issuer a copy of a letter
from the staff of the SEC, or an opinion of counsel, in form and substance
reasonably satisfactory to Issuer, to the effect that such legend is not
required for purposes of the 1933 Act; (ii) the reference to the provisions of
this Agreement in the above legend shall be removed by delivery of substitute
certificate(s) without such reference if the shares have been sold or
transferred in compliance with the provisions of this Agreement and under
circumstances that do not require the retention of such reference in the opinion
of counsel to the Holder; and (iii) the legend shall be removed in its entirety
if the conditions in the preceding clauses (i) and (ii) are both satisfied. In
addition, such certificates shall bear any other legend as may be required by
law.
(i) Upon the giving by the Holder to Issuer of the written notice of
exercise of the Option provided for under subsection (e) of this Section 2 and
the tender of the applicable purchase price in immediately available funds, the
Holder shall be deemed subject to the receipt of any necessary regulatory
approvals to be the holder of record of the shares of Common Stock issuable upon
such exercise, notwithstanding that the stock transfer books of Issuer shall
then be closed or that certificates representing such shares of Common Stock
shall not then be actually delivered to the Holder. Issuer shall pay all
expenses, and any and all United States federal, state and local taxes and other
charges that may be payable in connection with the preparation, issue and
delivery of stock certificates under this Section 2 in the name of the Holder or
its assignee, transferee or designee.
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3. Issuer agrees: (i) that it shall at all times maintain, free from
preemptive rights, sufficient authorized but unissued or treasury shares of
Common Stock so that the Option may be exercised without additional
authorization of Common Stock after giving effect to all other options,
warrants, convertible securities and other rights to purchase Common Stock; (ii)
that it will not, by charter amendment or through reorganization, consolidation,
merger, dissolution or sale of assets, or by any other voluntary act, avoid or
seek to avoid the observance or performance of any of the covenants,
stipulations or conditions to be observed or performed hereunder by Issuer;
(iii) promptly to take all action as may from time to time be required
(including (x) complying with all premerger notification, reporting and waiting
period requirements specified in 15 U.S.C. Section 18a and regulations
promulgated thereunder and (y) in the event, under the Change in Bank Control
Act of 1978, as amended, or any other federal or state banking law or
regulation, prior approval of or notice to any Regulatory Authority is necessary
before the Option may be exercised, cooperating fully with the Holder in
preparing such applications or notices and providing such information to the any
Regulatory Authority as they may require) in order to permit the Holder to
exercise the Option and Issuer duly and effectively to issue shares of Common
Stock pursuant hereto; and (iv) promptly to take all action provided herein to
protect the rights of the Holder against dilution.
4. This Agreement (and the Option granted hereby) are exchangeable,
without expense, at the option of the Holder, upon presentation and surrender of
this Agreement at the principal office of Issuer, for other Agreements providing
for Options of different denominations entitling the holder thereof to purchase,
on the same terms and subject to the same conditions as are set forth herein, in
the aggregate the same number of shares of Common Stock purchasable hereunder.
The terms "Agreement" and "Option" as used herein include any Stock Option
Agreements and related Options for which this Agreement (and the Option granted
hereby) may be exchanged. Upon receipt by Issuer of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this
Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement if mutilated, Issuer will execute and deliver a new Agreement of like
tenor and date. Any such new Agreement executed and delivered shall constitute
an additional contractual obligation on the part of Issuer, whether or not the
Agreement so lost, stolen, destroyed or mutilated shall at any time be
enforceable by anyone.
5. In addition to the adjustment in the number of shares of Common
Stock that are purchasable upon exercise of the Option pursuant to Section 1 of
this Agreement (but not in duplication thereof), in the event of any change in
Common Stock by reason of stock dividends, split-ups, mergers,
recapitalizations, combinations, subdivisions, conversions, exchanges of shares,
distributions, or the like, the type and number, and/or the price, of shares of
Common Stock purchasable upon exercise hereof shall be appropriately adjusted,
and proper provision shall be made in the agreements governing such transaction
so that the Holder shall receive, upon exercise of the Option (at the aggregate
exercise price calculated in accordance with Section 1 of this Agreement), the
number and class of shares or other securities or property that Holder would
have received in respect of the Common Stock if the Option had been exercised
immediately prior to such event, or the record date therefor, as applicable.
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6.(a) In the event that prior to an Exercise Termination Event, Issuer
shall enter into an agreement (i) to consolidate with or merge into any person,
other than Grantee or a Grantee Subsidiary, and shall not be the continuing or
surviving corporation of such consolidation or merger, (ii) to permit any
person, other than Grantee or a Grantee Subsidiary, to merge into Issuer and
Issuer shall be the continuing or surviving corporation, but, in connection with
such merger, the then outstanding shares of Common Stock shall be changed into
or exchanged for stock or other securities of any other person or cash or any
other property or the then outstanding shares of Common Stock shall after such
merger represent less than 50% of the outstanding shares and share equivalents
of the merged company, or (iii) to sell or otherwise transfer all or
substantially all of its assets to any person, other than Grantee or a Grantee
Subsidiary, then, and in each such case, the agreement governing such
transaction shall make proper provision so that the Option shall, upon the
consummation of any such transaction and upon the terms and conditions set forth
herein, be converted into, or exchanged for, an option (the "Substitute
Option"), at the election of the Holder, of either (x) the Acquiring Corporation
(as hereinafter defined) or (y) any person that controls the Acquiring
Corporation.
(b) The following terms have the meanings indicated:
(1) "Acquiring Corporation" shall mean (i) the continuing or
surviving corporation of a consolidation or merger with Issuer (if
other than Issuer), (ii) Issuer in a merger in which Issuer is the
continuing or surviving person, and (iii) the transferee of all or
substantially all of Issuer's assets.
(2) "Substitute Common Stock" shall mean the shares of capital
stock (or similar equity interest) with the greatest voting power with
respect of the election of directors (or other persons similarly
responsible for direction of the business and affairs) of the issuer of
the Substitute Option.
(3) "Assigned Value" shall mean the highest of (i) the price
per share of Common Stock at which a tender offer or exchange offer
therefor has been made, (ii) the price per share of Common Stock to be
paid by any third party pursuant to an agreement with Issuer, or (iii)
in the event of a sale of all or substantially all of Issuer's assets,
the sum of the price paid in such sale for such assets and the current
market value of the remaining assets of Issuer as determined by a
nationally recognized investment banking firm selected by the Holder
plus the exercise price of all of the outstanding in-the-money options
to acquire Common Stock less the aggregate of the income taxes payable
by Issuer with respect to the purchase price paid for the sale of
assets and the income tax that would be paid on the remaining assets as
if they were sold for cash at the current market value, divided by the
aggregate of the number of shares of Common Stock outstanding at the
time of such sale and the number of shares of Common Stock subject to
in-the-money outstanding options at the time of such sale. In
determining the Assigned Value, the value of consideration other than
cash shall be determined by a nationally recognized investment banking
firm selected by the Holder.
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(4) "Average Price" shall mean the average closing price of a
share of the Substitute Common Stock for the six months immediately
preceding the consolidation, merger or sale in question, but in no
event higher than the closing price of the shares of Substitute Common
Stock on the day preceding such consolidation, merger or sale; provided
that if Issuer is the issuer of the Substitute Option, the Average
Price shall be computed with respect to a share of common stock issued
by the person merging into Issuer or by any company which controls or
is controlled by such person, as the Holder may elect.
(c) The Substitute Option shall have the same terms and conditions as
the Option, provided, that if any term or condition of the Substitute Option
cannot, for legal reasons, be the same as the Option, such term or condition
shall be as similar as possible and in no event less advantageous to the Holder.
The issuer of the Substitute Option shall also enter into an agreement with the
then Holder or Holders of the Substitute Option in substantially the same form
as this Agreement, which shall be applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for such number of
shares of Substitute Common Stock as is equal to (i) the product of (A) the
Assigned Value and (B) the number of shares of Common Stock for which the Option
was exercisable immediately prior to the event described in Section 6(a)(i),
6(a)(ii) or 6(a)(iii), divided by (ii) the Average Price. The exercise price of
the Substitute Option per share of Substitute Common Stock shall then be equal
to the Option Price multiplied by a fraction the numerator of which shall be the
number of shares of Common Stock for which the Option was exercisable
immediately prior to the event described in Section 6(a)(i), 6(a)(ii) or
6(a)(iii) and the denominator of which shall be the number of shares of
Substitute Common Stock for which the Substitute Option is exercisable.
(e) In no event, pursuant to any of the foregoing paragraphs, shall the
Substitute Option be exercisable for more than 19.9% of the shares of Substitute
Common Stock outstanding prior to exercise of the Substitute Option.
(f) Issuer shall not enter into any transaction described in Section
6(a)(i), 6(a)(ii) or 6(a)(iii) unless the Acquiring Corporation and any person
that controls the Acquiring Corporation assume in writing all the obligations of
Issuer hereunder.
7. The 180-day period for exercise of certain rights under Section 2
shall be extended: (i) to the extent necessary to obtain all regulatory
approvals for the exercise of such rights, and for the expiration of all
statutory waiting periods; and (ii) to the extent necessary to avoid liability
under Section 16(b) of the 1934 Act by reason of such exercise.
8. Repurchase at the Option of Holder.
(a) At the request of Holder at any time commencing upon the first
occurrence of a Repurchase Event (as defined in Section 8(d)) and ending 12
months immediately thereafter, Issuer shall repurchase from Holder (i) the
Option and (ii) all shares of Common Stock purchased by
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Holder pursuant hereto with respect to which Holder then has beneficial
ownership. The date on which Holder exercises its rights under this Section 8 is
referred to as the "Request Date". Such repurchase shall be at an aggregate
price (the "Section 8 Repurchase Consideration") equal to the sum of: (i) the
Applicable Price (as defined below) for any shares of Common Stock acquired
pursuant to the Option with respect to which Holder then has beneficial
ownership; and (ii) the excess, if any, of (x) the Applicable Price for each
share of Common Stock over (y) the Option Price (subject to adjustment pursuant
to Sections 1 and 5), multiplied by the number of shares of Common Stock with
respect to which the Option has not been exercised or has been exercised but the
Closing Date has not occurred.
(b) If Holder exercises its rights under this Section 8, Issuer shall
subject to any required regulatory notice or approval, within 10 business days
after the Request Date, pay the Section 8 Repurchase Consideration to Holder in
immediately available funds, and contemporaneously with such payment, Holder
shall surrender to Issuer the Option and the certificates evidencing the shares
of Common Stock purchased thereunder with respect to which Holder then has
beneficial ownership, and Holder 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. Notwithstanding the foregoing, to the extent that prior notification
to or approval of any Regulatory Authority is required in connection with the
payment of all or any portion of the Section 8 Repurchase Consideration, Holder
shall have the ongoing option to revoke its request for repurchase pursuant to
Section 8, in whole or in part, or to require that Issuer deliver from time to
time that portion of the Section 8 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 (and each party shall cooperate
with the other in the filing of any such notice or application and the obtaining
of any such approval). If any Regulatory Authority disapproves of any part of
Issuer's proposed repurchase pursuant to this Section 8, Issuer shall promptly
give notice of such fact to Holder. If any Regulatory Authority prohibits the
repurchase in part but not in whole, then Holder shall have the right (i) to
revoke the repurchase request or (ii) to the extent permitted by such Regulatory
Authority, determine whether the repurchase should apply to the Option and/or
Option Shares and to what extent to each, and Holder 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 8(a)(ii) and the number of shares covered by the portion of the Option
(if any) that has been repurchased. Holder shall notify Issuer of its
determination under the preceding sentence within five (5) business days of
receipt of notice of disapproval of the repurchase.
Notwithstanding anything herein to the contrary, all of Holder's rights
under this Section 8 shall terminate on the date of termination of this Option
pursuant to Section 2(a).
(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 groups described in Section 8(d)(i); (ii) the price per
share of Common Stock received by holders of Common Stock in connection with any
merger or other business combination transaction described in Section 6(a)(i),
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6(a)(ii) or 6(a)(iii); (iii) the highest closing bid price per share of Issuer
Common Stock quoted on the Nasdaq System (or if Issuer Common Stock is not
quoted on the Nasdaq System, the highest bid price per share as quoted on the
principal trading market or securities exchange on which such shares are traded
as reported by a recognized source chosen by Holder) during the 40 business days
preceding the Request Date; or (iv) in the event of a sale of all or
substantially all of the assets of Issuer, the Applicable Price shall be the
Assigned Value. If the consideration to be offered, paid or received pursuant to
either of the foregoing clauses (i), (ii) or (iv) 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 Holder and
reasonably acceptable to Issuer, which determination shall be conclusive for all
purposes of this Agreement.
(d) As used herein, "Repurchase Event" shall occur if, prior to an
Exercise Termination Event, (i) any person (other than Grantee or a Grantee
Subsidiary) shall have acquired beneficial ownership of (as such term is defined
in Rule 13d-3 promulgated under the Exchange Act), or the right to acquire
beneficial ownership of 50% or more of the then outstanding shares of Issuer
Common Stock, or (ii) any of the transactions described in Section 6(a)(i),
6(a)(ii) or 6(a)(iii) shall be consummated.
9. Limitation of Value of Option. (a) Notwithstanding any other
provision of this Agreement, in no event shall the Grantee's Total Profit (as
hereinafter defined) exceed $5.5 million and, if it otherwise would exceed such
amount, the Grantee, at its sole election, shall either (a) reduce the number of
shares of Common Stock subject to the Option or any Substitute Option, (b)
deliver to Issuer for cancellation Option Shares previously purchased by
Grantee, (c) pay cash to Issuer, or (d) any combination thereof, so that
Grantee's actually realized Total Profit shall not exceed $5.5 million after
taking into account the foregoing actions.
(b) Notwithstanding any other provision of this Agreement, this Option
may not be exercised for a number of shares as would, as of the date of
exercise, result in a Notional Total Profit (as defined below) of more than $5.5
million; provided that nothing in this sentence shall restrict any exercise of
the Option permitted hereby on any subsequent date.
(c) As used herein, the term "Notional Total Profit" with respect to
any number of shares as to which Grantee may propose to exercise this Option
shall be the Total Profit (as defined below) determined as of the date of such
proposed exercise assuming that this Option were exercised on such date for such
number of shares and assuming that such shares, together with all other Option
Shares held by Grantee and its affiliates as of such date, were sold for cash at
the closing market price for the Issuer Common Stock as of the close of business
on the preceding trading day (less customary brokerage commissions).
(d) As used herein, the term "Total Profit" shall mean the aggregate
amount (before taxes) of the following: (i) the amount received by Grantee
pursuant to Issuer's repurchase of the Option (or any portion thereof) pursuant
to Section 8; (ii) the amount received by Grantee pursuant to Issuer's
repurchase of Option Shares (or any portion thereof) pursuant to Section 8, less
the
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Grantee's purchase price for such Option Shares; (iii) the net cash amounts
received by Grantee pursuant to the sale of Option Shares (or any other
securities into which such Option Shares are converted or exchanged) to any
unaffiliated party, less (y) the Grantee's purchase price of such Option Shares;
(iv) any amounts received by Grantee on the transfer of the Option or any
Substitute Option (or in either case any portion thereof) to any unaffiliated
party; and (v) any amount equivalent to the foregoing with respect to the
Substitute Option.
10. Issuer hereby represents and warrants to Grantee as follows:
(a) Issuer has full corporate power and authority to execute and
deliver this Agreement and subject to any required regulatory notices or
approvals, to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly and validly authorized by the Board of Directors of Issuer
and no other corporate proceedings on the part of Issuer are necessary to
authorize this Agreement or to consummate the transactions so contemplated. This
Agreement has been duly and validly executed and delivered by Issuer. This
Agreement is the valid and legally binding obligation of Issuer.
(b) Issuer has taken all necessary corporate action to authorize and
reserve and to permit it to issue, and at all times from the date hereof through
the termination of this Agreement in accordance with its terms will have
reserved for issuance upon the exercise of the Option, that number of shares of
Common Stock equal to the maximum number of shares of Common Stock at any time
and from time to time issuable hereunder, and all such shares, upon issuance
pursuant hereto, will be duly authorized, validly issued, fully paid,
nonassessable, and will be delivered free and clear of all claims, liens,
encumbrance and security interests and not subject to any preemptive rights.
(c) Issuer has taken all necessary action to exempt this Agreement, and
the transactions contemplated hereby and thereby from, and this Agreement and
the transactions contemplated hereby and thereby are exempt from, (i) any
applicable state takeover laws, (ii) any state laws limiting or restricting the
voting rights of stockholders and (iii) any provision in its articles of
incorporation or bylaws restricting or limiting stock ownership or the voting
rights of stockholders.
(d) The execution, delivery and subject to any required regulatory
notices or approvals, performance of this Agreement does not or will not, and
the consummation by Issuer of any of the transactions contemplated hereby will
not, constitute or result in (i) a breach or violation of, or a default under,
its articles of incorporation or bylaws, or the comparable governing instruments
of any of its subsidiaries, or (ii) a breach or violation of, or a default
under, any agreement, lease, contract, note, mortgage, indenture, arrangement or
other obligation of it or any of its subsidiaries (with or without the giving of
notice, the lapse of time or both) or under any law, rule, ordinance or
regulation or judgment, decree, order, award or governmental or nongovernmental
permit or license to which it or any of its subsidiaries is subject, that would,
in any case referred to in this clause (ii), give any other person the ability
to prevent or enjoin Issuer's performance under this Agreement in any material
respect.
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11. Grantee hereby represents and warrants to Issuer that:
(a) Grantee has full corporate power and authority to enter into this
Agreement and, subject to any required regulatory notices or approvals, to
consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Grantee. This Agreement has been duly executed
and delivered by Grantee.
(b) This Option is not being acquired with a view to the public
distribution thereof and neither this Option nor any Option Shares will be
transferred or otherwise disposed of except in a transaction registered or
exempt from registration under applicable federal and state securities laws and
regulations.
12. Neither of the parties hereto may assign any of its rights or
obligations under this Option Agreement or the Option created hereunder to any
other person, without the express written consent of the other party, except (i)
to any wholly-owned Subsidiary or (ii) that in the event a Subsequent Triggering
Event shall have occurred prior to an Exercise Termination Event, Grantee,
subject to the express provisions hereof, may assign in whole or in part its
rights and obligations hereunder to one or more transferees.
13. Each of Grantee and Issuer will use its best efforts to make all
filings with, and to obtain consents of all third parties and governmental
authorities necessary to the consummation of the transactions contemplated by
this Agreement.
14. Grantee may, at any time following a Repurchase Event and prior to
the occurrence of an Exercise Termination Event (or such later period as
provided in Section 7), relinquish the Option (together with any Option Shares
issued to and then owned by Grantee) to Issuer in exchange for a cash fee equal
to the Surrender Price; provided, however, that Grantee may not exercise its
rights pursuant to this Section 14 if Issuer has repurchased the Option (or any
portion thereof) or any Option Shares pursuant to Section 8. The "Surrender
Price" shall be equal to $5.5 million (i) plus, if applicable, Grantee's
purchase price with respect to any Option Shares and (ii) minus, if applicable,
the excess of (B) the net cash amounts, if any, received by Grantee pursuant to
the arms' length sale of Option Shares (or any other securities into which such
Option Shares were converted or exchanged) to any unaffiliated party, over (b)
Grantee's purchase price of such Option Shares.
15. Notwithstanding anything to the contrary herein, in the event that
the Holder or any Related Person thereof is a person making an offer or proposal
to engage in an Acquisition Transaction (other than the transactions
contemplated by the Reorganization Agreement), then in the case of a Holder or
any Related Person thereof, the Option held by it shall immediately terminate
and be of no further force or effect. A Related Person of a Holder means any
Affiliate (as defined in Rule 12b-2 of the rules and regulations under the 1934
Act) of the Holder and any person that is the beneficial owner of 20% or more of
the voting power of the Holder.
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16. The parties hereto acknowledge that damages would be an inadequate
remedy for a breach of this Agreement by either party hereto and that the
obligations of the parties hereto shall be enforceable by either party hereto
through injunctive or other equitable relief.
17. If any term, provision, covenant or restriction contained in this
Agreement is held by a court or a federal or state regulatory agency of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions and covenants and restrictions contained in this Agreement
shall remain in full force and effect, and shall in no way be affected, impaired
or invalidated. If for any reason such court or regulatory agency determines
that the Holder is not permitted to acquire the full number of shares of Common
Stock provided in Section 1(a) hereof (as adjusted pursuant to Section 1(b) or
Section 5 hereof), it is the express intention of Issuer to allow the Holder to
acquire such lesser number of shares as may be permissible, without any
amendment or modification hereof.
18. All notices, requests, claims, demands and other communications
hereunder shall be deemed to have been duly given when delivered in person, by
cable, telegram, telecopy or telex, or by registered or certified mail (postage
prepaid, return receipt requested) at the respective addresses of the parties
set forth in the Reorganization Agreement.
19. This Agreement shall be governed by and construed in accordance
with the laws of the Commonwealth of Pennsylvania, regardless of the laws that
might otherwise govern under applicable principles of conflicts of laws thereof.
20. This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original, but all of which shall constitute one
and the same agreement.
21. Except as otherwise expressly provided herein, each of the parties
hereto shall bear and pay all costs and expenses incurred by it or on its behalf
in connection with the transactions contemplated hereunder, including fees and
expenses of its own financial consultants, investment bankers, accountants and
counsel.
22. Except as otherwise expressly provided herein, or in the
Reorganization Agreement, this Agreement contains the entire agreement between
the parties with respect to the transactions contemplated hereunder and
supersedes all prior arrangements or understandings with respect thereof,
written or oral. The terms and conditions of this Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns. Nothing in this Agreement, expressed or
implied, is intended to confer upon any party, other than the parties hereto,
and their respective successors and, as permitted herein, assignees, any rights,
remedies, obligations or liabilities under or by reason of this Agreement,
except as expressly provided herein.
23. Capitalized terms used in this Agreement and not defined herein shall
have the meanings assigned thereto in the Reorganization Agreement.
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers, all as of the date first above written.
YORK FINANCIAL CORP.
Dated: March 27, 2000 BY:/s/ Robert W. Pullo
----------------------- --------------------------
Robert W. Pullo
President and Chief Executive
Officer
HARRIS FINANCIAL, INC.
Dated: March 27, 2000 BY:/s/ Charles C. Pearson, Jr.
----------------------- ----------------------------
Charles C. Pearson, Jr.
President and Chief Executive
Officer
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EXHIBIT B
FORM OF VOTING AGREEMENT
March __, 2000
Harris Financial, Inc.
235 North Second Street
Harrisburg, Pennsylvania 17101
Ladies and Gentlemen
The undersigned is a director of York Financial Corp. ("York") and is
the beneficial holder of shares of common stock of York ("York Common Stock").
York and Harris Financial, Inc. ("Harris Financial") are considering
the execution of an Agreement And Plan of Reorganization ("Agreement")
contemplating the merger of York with and into Harris Financial or a successor
thereto (collectively referred to as Harris Financial), with Harris Financial as
the surviving corporation of the merger (the "Merger"), such execution being
subject in the case of Harris Financial to the execution and delivery of this
letter agreement ("letter agreement"). In consideration of the substantial
expenses that Harris Financial will incur in connection with the transactions
contemplated by the Agreement and in order to induce Harris Financial to execute
the Agreement and to proceed to incur such expenses, the undersigned agrees and
undertakes, in his capacity as a shareholder of York and not in his capacity as
a director of York, as follows:
1. The undersigned, while this letter agreement is in effect, shall
vote or cause to be voted all of the shares of York Common Stock that the
undersigned shall be entitled to so vote, whether such shares are beneficially
owned by the undersigned on the date of this letter agreement or are
subsequently acquired, whether pursuant to the exercise of stock options or
otherwise, at the special meeting of York's stockholders to be called and held
following the date hereof, to consider the Agreement and the Merger.
2. The undersigned acknowledges and agrees that any remedy at law for
breach of the foregoing provisions shall be inadequate and that, in addition to
any other relief which may be available, Harris Financial shall be entitled to
temporary and permanent injunctive relief without the necessity of proving
actual damages.
3. The foregoing restrictions shall not apply to shares with respect to
which the undersigned may have voting power as a fiduciary for others. In
addition, this letter agreement shall only apply to actions taken by the
undersigned in his capacity as a shareholder of York and shall not in any way
limit or affect actions the undersigned may take in his capacity as a director
of York.
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4. This letter agreement shall automatically terminate if the Agreement
is not entered into by the parties thereto or upon termination of the Agreement
on or before March 31, 2000 in accordance with its terms.
IN WITNESS WHEREOF, the undersigned has executed this Agreement as of
the date first above written.
Very truly yours,
Signature
------------------------------
Name (please print)
Accepted and agreed to as of
the date first above written:
Harris Financial, Inc.
By: ________________________________
Title: ________________________________
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EXHIBIT C
AFFILIATES AGREEMENT
March __, 2000
Harris Financial, Inc.
235 North Second Street
Harrisburg, Pennsylvania 17101
Gentlemen:
I have been advised that I might be considered to be an "affiliate" of
York Financial Corp., a Pennsylvania corporation ("York"), for purposes of
paragraphs (c) and (d) of Rule 145 of the Securities and Exchange Commission
(the "SEC") under the Securities Act of 1933, as amended (the "Securities Act")
and for purposes of generally accepted accounting principles ("GAAP") as such
term relates to pooling of interests accounting treatment for certain business
combinations under GAAP and the interpretations of the SEC or its staff,
including, without limitation, Section 201.01 of the SEC's Codification of
Financial Reporting Policies ("Section 201.01") and the SEC's Staff Accounting
Bulletin No. 65.
Harris Financial, Inc. ("Harris Financial") and York have entered into
an Agreement and Plan of Reorganization, dated as of March __, 2000 (the
"Agreement"). Upon consummation of the merger contemplated by the Agreement (the
"Merger"), I may receive shares of common stock of Harris Financial or any
successor thereto ("Harris Common Stock") in exchange for my shares of common
stock, par value $1.00 per share, of York ("York Common Stock"). This agreement
is hereinafter referred to as the "Letter Agreement."
A. I represent and warrant to, and agree with, Harris Financial as follows:
1. I have read this Letter Agreement and the Agreement and have
discussed their requirements and other applicable limitations upon my ability to
sell, pledge, transfer or otherwise dispose of share of the Harris Common Stock,
and any other capital stock of Harris Financial and York Common Stock, to the
extent I felt necessary, with my counsel or counsel for York.
2. I shall not make any offer, sale, pledge, transfer or other
disposition in violation of the Securities Act or the rules and regulations of
the SEC thereunder of the shares of the Harris Common Stock I receive pursuant
to the Merger.
3. Notwithstanding the foregoing and any other agreements on my
part in connection with the Harris Common Stock, any other capital stock of
Harris Financial, and York Common Stock, I hereby agree that, without the
consent of Harris Financial, I will not sell or otherwise reduce
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my risk relative to any shares of York Common Stock, the Harris Common Stock or
any other capital stock of Harris Financial during the period beginning thirty
days prior to the effective date of the Merger and continuing until financial
results covering at least thirty days of combined operations have been published
following the effective date of the Merger within the meaning of Section 201.01.
B. I understand and agree that:
1. I have been advised that any issuance of shares of the Harris
Common Stock to me pursuant to the Merger will be registered with the SEC. I
have also been advised, however, that, because I may be an "affiliate" of York
at the time the Merger will be submitted for a vote of the stockholders of York
and my disposition of such shares has not been registered under the Securities
Act, I must hold such shares indefinitely unless (i) such disposition of such
shares is subject to an effective registration statement and to the availability
of a prospectus under the Securities Act, (ii) a sale of such shares is made in
conformity with the provisions of Rule 145(d) under the Securities Act, (iii) a
sale of such shares is made following expiration of the restrictive period set
forth in Rule 145(d) or (iv) in an opinion of counsel, in form and substance
reasonably satisfactory to Harris Financial, some other exemption from
registration is available with respect to any such proposed disposition of such
shares.
2. Stop transfer instructions will be given to the transfer agents
of York and Harris Financial with respect to the shares of York Common Stock and
the shares of the Harris Common Stock and any other capital stock in connection
with the restrictions set forth herein, and there will be placed on the
certificate representing shares of the Harris Common Stock I receive pursuant to
the Merger, or any certificates delivered in substitution therefor, a legend
stating in substance:
The shares represented by this certificate were issued in a
transaction to which Rule 145 under the Securities Act applies. The shares
represented by this certificate may only be transferred in accordance with the
terms of an agreement between the registered holder hereof and Harris Financial,
a copy of which agreement is on file at the principal offices of Harris
Financial. A copy of such agreement shall be provided to the holder hereof
without charge upon receipt by Harris Financial of a written request.
3. Unless a transfer of my shares of the Harris Common Stock is a
sale made in conformity with the provisions of Rule 145(d), made following
expiration of the restrictive period set forth in Rule 145(d) or made pursuant
to any effective registration statement under the Securities Act, Harris
Financial reserves the right to put an appropriate legend on the certificate
issued to my transferee.
It is understood and agreed that this Letter Agreement shall
terminate and be of no further force and effect if the Agreement is terminated
in accordance with its terms. It is also understood and agreed that this Letter
Agreement shall terminate and be of no further force and effect and the stop
transfer instructions set forth in Paragraph B.2. above shall be lifted
forthwith
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upon the later of (i) such time as financial results covering at least thirty
days of combined operations following the effective date of the Merger have been
published within the meaning of Section 201.01 and (ii) delivery by the
undersigned to Harris Financial of a copy of a letter from the staff of the SEC,
an opinion of counsel in form and substance reasonably satisfactory to Harris
Financial, or other evidence reasonably satisfactory to Harris Financial, to the
effect that a transfer of my shares of the Harris Common Stock will not violate
the Securities Act or any of the rules and regulations of the SEC thereunder. In
addition, it is understood and agreed that the legend set forth in Paragraph
B.2. above shall be removed forthwith from the certificate or certificates
representing my shares of the Harris Common Stock upon expiration of the
restrictive period set forth in Rule 145(d) or if I shall have delivered to
Harris Financial a copy of a letter from the staff of the SEC, an opinion of
counsel in form and substance reasonably satisfactory to Harris Financial, or
other evidence satisfactory to Harris Financial that a transfer of my shares of
the Harris Common Stock represented by such certificate or certificates will be
a sale made in conformity with the provisions of Rule 145(d), or made pursuant
to an effective registration statement under the Securities Act.
4. I recognize and agree that the foregoing provisions also apply
to (i) my spouse, (ii) any relative of mine or my spouse's occupying my home,
(iii), any trust or estate in which I, my spouse or any such relative owns at
least 10% beneficial interest or of which any of us serves as trustee, executor
or in any similar capacity and (iv) any corporation or other organization in
which I, my spouse or any such relative owns at least 10% of any class of equity
securities or of the equity interest.
5. I further recognize that in the event I become a director or
officer of Harris Financial upon consummation of the Merger, any sale of Harris
Financial stock by me may be subject to liability pursuant to Section 16 (b) of
the Securities Exchange Act of 1934, as amended.
6. Execution of this Letter Agreement should not be construed as
an admission on my part that I am an "affiliate" of York as described in the
first paragraph of this Letter Agreement or as a waiver of any rights I may have
to object to any claim that I am such an affiliate on or after the date of this
Letter Agreement.
* * * * *
This Letter Agreement shall be binding on my heirs, legal
representative and successors.
Very truly yours,
Signature
------------------------------
Name (Please Print)
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<PAGE>
Accepted as of the date first above
written
Harris Financial, Inc.
By: _______________________
Name:
Title:
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EXHIBIT D
FORM OF OPINION OF BREYER & ASSOCIATES PC
(a) Each of York and York Fed is validly existing under the laws of the
Commonwealth of Pennsylvania, and York is duly registered as a savings and loan
holding company under the HOLA.
(b) The authorized capital stock of York consists of _______________
shares of common stock and ________________ shares of preferred stock. All of
the outstanding shares of York Common Stock have been duly authorized and are
nonassessable, and the shareholders of York have no preemptive rights with
respect to any shares of capital stock of York. All of the outstanding shares of
capital stock of York Fed and each other York Subsidiary have been duly
authorized and are nonassessable, and, to the actual knowledge of such counsel,
are directly or indirectly owned by York free and clear of all liens, claims,
encumbrances, charges, restrictions or rights of third parties of any kind
whatsoever.
(c) The Agreement has been duly authorized, executed and delivered by
York and York Fed and, assuming due authorization, execution and delivery by
Harris Financial, New Harris Financial, the Mutual Company and Harris Savings
Bank, constitutes a valid and binding obligation of York and York Fed
enforceable in accordance with its terms, except that the enforceability of the
obligations of York and York Fed may be limited by (i) bankruptcy, insolvency,
moratorium, reorganization or similar laws affecting the rights of creditors,
(ii) equitable principles limiting the right to obtain specific performance or
other similar equitable relief and (iii) considerations of public policy.
(d) York and York Fed have all requisite corporate power and authority
to execute and deliver the Agreement and to consummate the Merger. All corporate
actions required to be taken by York and York Fed by law and their respective
Charters and Bylaws to authorize the execution and delivery of the Agreement and
consummation of the Merger have been taken.
(e) All consents or approvals of or filings or registrations with any
federal or state banking agency which are necessary to be obtained by York and
York Fed to permit the execution of the Agreement and consummation of the Merger
have been obtained.
(f) Neither the execution of the Agreement nor consummation of the
Merger will (i) conflict with or result in a breach of any provision of the
Charter or Bylaws or similar governing instruments, of York or any of the York
Subsidiaries, or (ii) violate any Pennsylvania banking or corporate law or
federal banking law of the United States binding upon York or any of its
Subsidiaries, or any order, writ, injunction or decree of which we have actual
knowledge to which York or any of its Subsidiaries, is subject.
(g) We do not have actual knowledge of any actions, suits or
proceedings pending or threatened against York or any Subsidiary, at law or in
equity, before any court or governmental body which in any manner challenges or
seeks to prevent, enjoin, alter or materially delay consummation of the Merger.
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In rendering their opinion, such counsel may rely, to the extent such
counsel deems such reliance necessary or appropriate, upon certificates of
governmental officials, certificates or opinions of other counsel to York or an
York Subsidiary reasonably satisfactory to Harris Financial and, as to matters
of fact, certificates of officers of York or an York Subsidiary. The opinion of
such counsel need refer only to matters of Pennsylvania and federal law and may
add other qualifications and explanations of the basis of their opinion as may
be reasonably acceptable to Harris Financial.
Counsel may expressly exclude any opinions as to choice of law and
anti-trust matters and may add such other qualifications and explanations of the
basis of its opinions as are consistent with the Legal Opinion Accord prepared
by the Section of Business Law of the American Bar Association.
D-2
<PAGE>
EXHIBIT E
FORM OF OPINION OF LUSE LEHMAN GORMAN POMERENK & SCHICK, P.C.
(a) Each of the Mutual Company, Harris Financial and Harris Savings
Bank is validly existing under the laws of the Commonwealth of Pennsylvania, and
Harris Financial and the Mutual Company are duly registered as a bank holding
company under the BHCA.
(b) The Agreement has been duly authorized, executed and delivered by
the Mutual Company, Harris Financial, New Harris Financial and Harris Savings
Bank and, assuming due authorization, execution and delivery by York and York
Fed, constitutes a valid and binding obligation of the Mutual Company, Harris
Financial, New Harris Financial and Harris Savings Bank enforceable in
accordance with its terms, except that the enforceability of the obligations of
the Mutual Company, Harris Financial, New Harris Financial and Harris Savings
Bank may be limited by (i) bankruptcy, insolvency, moratorium, reorganization or
similar laws affecting the rights of creditors, (ii) equitable principles
limiting the right to obtain specific performance or other similar equitable
relief and (iii) considerations of public policy, and except that certain
remedies may not be available in the case of a nonmaterial breach of the
Agreement.
(c) the Mutual Company, Harris Financial, New Harris Financial and
Harris Savings Bank have all requisite corporate power and authority to execute
and deliver the Agreement and to consummate the Merger. All corporate actions
required to be taken by the Mutual Company, Harris Financial, New Harris
Financial and Harris Savings Bank by law and their respective Charters and
Bylaws to authorize the execution and delivery of the Agreement and consummation
of the Merger have been taken.
(d) All consents or approvals of or filings or registrations with any
federal or state banking agency which are necessary to be obtained by the Mutual
Company, Harris Financial, New Harris Financial and Harris Savings Bank to
permit the execution of the Agreement and consummation of the Merger have been
obtained.
(e) Neither the execution of the Agreement nor consummation of the
Merger will (i) conflict with or result in a breach of any provision of the
Charter or Bylaws or similar governing instruments of the Mutual Company, Harris
Financial, New Harris Financial or any Harris Financial Subsidiaries or (ii)
violate any Pennsylvania banking or corporate law or federal banking law of the
United States binding upon the Mutual Company, Harris Financial, New Harris
Financial or any Harris Financial Subsidiaries, or any order, writ, injunction
or decree of which we have actual knowledge to which the Mutual Company, Harris
Financial, New Harris Financial or any Harris Financial Subsidiaries, is
subject.
(f) We do not have actual knowledge of any actions, suits or
proceedings pending or threatened against the Mutual Company, Harris Financial,
New Harris Financial or any Harris Financial Subsidiary, at law or in equity,
before any court or governmental body which in any manner challenges or seeks to
prevent, enjoin, alter or materially delay consummation of the Merger.
(g) The authorized capital stock of Harris Financial consists of shares
of Harris Common Stock and shares of Preferred Stock. The shares of Harris
Common Stock to be issued to York
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shareholders in connection with the Merger will be, upon consummation of the
Merger in accordance with the terms of the Agreement, duly authorized, validly
issued, fully paid and non-assessable.
In rendering their opinion, such counsel may rely, to the extent such
counsel deems such reliance necessary or appropriate, upon certificates of
governmental officials and, as to matters of fact, certificates of officers of
the Mutual Company, Harris Financial, New Harris Financial or any the Harris
Financial Subsidiary. The opinion of such counsel need refer only to matters of
Pennsylvania and federal law, and may add other qualifications and explanations
of the basis of their opinion as may be reasonably acceptable to York.
Counsel may expressly exclude any opinions as to choice of law and
anti-trust matters and may add such other qualifications and explanations of the
basis of its opinions as are consistent with the Legal Opinion Accord prepared
by the Section of Business Law of the American Bar Association.
<PAGE>
EXHIBIT 2
Press Release
<PAGE>
Harris Financial, Inc. to Conduct Conversion Offering
and Merge with York Financial Corp.
Harrisburg, PA--March 28, 2000 -- Harris Financial, Inc. (Nasdaq/NMS:
HARS), Harrisburg, Pennsylvania, and York Financial Corp. (Nasdaq/NMS: YFED),
York, Pennsylvania, jointly announced today that they have entered into a
definitive agreement and plan of reorganization pursuant to which Harris
Financial will merge with York Financial. The merger consideration will be
stock, but in certain circumstances may include between 15% and 30% cash. The
merger received the unanimous approvals of both Boards of Directors.
Harris Financial is the holding company for Harris Savings Bank, and
York Financial is the holding company for York Federal Savings and Loan
Association. Approximately 76% of Harris Financial's outstanding shares of
common stock are owned by its mutual holding company, Harris Financial, MHC.
To accomplish the merger, the Board of Trustees of Harris Financial,
MHC has adopted a plan of conversion pursuant to which it will convert from the
mutual to the capital stock form of organization. The plan provides that Harris
Financial will conduct an offering of common stock to certain Harris Savings
Bank depositors. The number and price of shares to be issued in the conversion
offering will be based on an independent appraisal.
Under the terms of the agreement, the merger consideration will be
based, in part, on the independent appraisal. The pricing provisions of the
agreement include the following:
* If the independent appraisal of the common stock issued in the conversion
is between $289.5 million and $341.5 million, each York Financial share
will be exchanged for $17.25 of Harris Financial common stock based on the
price at which Harris Financial's shares are sold in the conversion
offering.
* If the appraisal of the common stock issued in the conversion is more than
$341.5 million or less than $289.5 million, the percentage of Harris
Financial shares outstanding immediately upon completion of the conversion
and merger that will be owned by former York Financial stockholders will be
fixed at 33.8% and 37.6%, respectively, subject to certain exceptions.
* At appraisal levels above $341.5 million, the merger consideration will
increase from $17.25 (based on the conversion offering share price) as a
result of the fixed percentage ownership.
<PAGE>
* At appraisal levels below $289.5 million, the merger consideration will
decrease from $17.25 (based on the conversion offering share price) as a
result of the fixed percentage ownership. York Financial or Harris
Financial will have the right to terminate in the event consideration is
less than $15.50 per share.
The merger is contemplated to be accounted for under the "pooling of
interests" method for business combinations. However, the agreement provides
that the parties may mutually elect to employ the "purchase" method of
accounting for the merger. In a "purchase", between 15% and 30% of the merger
consideration may be paid in cash. The merger is intended to be a tax free
exchange for York Financial stockholders, except to the extent that cash is
received as consideration.
Harris Savings Bank is a community bank that operates 37 branches in five
counties of south-central Pennsylvania and Washington County, Maryland. As of
December 31, 1999, Harris Financial had assets of $2.7 billion, deposits of $1.4
billion and equity of $169.3 million. York Federal Savings and Loan Association
is a community savings association that operates 25 full-service offices in four
counties in south central Pennsylvania and Harford County, Maryland. As of
December 31,1999, York Financial had assets of $1.7 billion, deposits of $1.1
billion and equity of $109.1 million.
As a result of the conversion and merger, York Federal Savings and Loan
will be merged with Harris Savings Bank. The resulting company will be wholly
owned by Harris Financial. Currently, Harris Savings is ranked fourth and York
Federal is ranked sixth in deposit market share, in the five county south
central region of Pennsylvania including Dauphin, York, Cumberland, Lancaster
and Lebanon. With 13.3% of deposits after the combination, Harris will rank
second in market share in the five county south central region. It will also
have six branches holding $164 million in deposits in two Maryland counties. Pro
forma for the merger and the expected second-step conversion indicate Harris
Financial will have assets of approximately $4.5 billion, deposits of $2.5
billion and equity of $480.0 million.
The merger is subject to the approval of York Financial's stockholders and
the conversion is subject to the approval of Harris Savings' depositors and
Harris Financial's minority stockholders. The transactions are also subject to
the approval of federal and state bank regulatory authorities, as well as other
customary conditions. The conversion and merger are expected to be completed in
the fourth quarter of 2000. The agreement provides for breakup fees and grants
Harris Financial an option to acquire 19.9% of York Financial's common stock if
the agreement is terminated under certain circumstances.
Charles Pearson, President and CEO of Harris, stated The merger represents
the combination of two successful community banks. It is a great opportunity for
two organizations with similar backgrounds and cultures that are both making
great strides to becoming full service financial providers to join together into
an even stronger organization. Economies of scale resulting from this merger
will help the two companies increase their competitive position while
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continuing to be locally managed and operated. I believe that the last ten years
have proven that the community owned-banks have a definite advantage in
delivering better local service over the regional and money center banks.
Together, we will continue to work closely with our local customers to provide
the best products and delivery systems available in our region. We look forward
to welcoming York Financial's stockholders and employees, and the addition of
York Financial's Directors to our Board of Directors.
Mr. Pullo, President and CEO of York Financial, noted "Our Board of
Directors and management team felt strongly that this union offered the best to
all of our constituencies. By blending the resources of York Financial and
Harris Financial we can keep pace with the rapidly changing banking environment
and provide the technological and product advantages required to remain
competitive. Most importantly, the merger provides us with sufficient resources
to transition from a bank to the type of financial services company that will
dominate in the new millenium. This union ensures our customers will still
receive the best products and services a community bank can offer while allowing
us to continue to provide our communities with access to a familiar and
sensitive management team with local decision making capabilities. Because
Harris Financial is a local organization, we will be able to carry on our
commitment to community banking for our customers, employees and communities."
The Boards of Directors of the two companies will be combined, as will the
management teams. Mr. Pearson will serve as Co-Chairman, President and CEO of
the combined company. Mr. Pullo will serve as Co-Chairman of the combined
company and also as the Chairman of the bank's Strategic Planning and
Development Committee.
This news release contains certain forward-looking statements about the
proposed merger of Harris Financial and York Financial. These include statements
regarding the anticipated closing date of the transactions, anticipated cost
savings, and anticipated future results. Forward-looking statements can be
identified by the fact that they do not relate strictly to historical or current
facts. They often include words like "believe," "expect," "anticipate,"
"estimate" and "intend" or future or conditional verbs such as "will," "would,"
"should," "could" or "may." Certain factors that could cause actual results to
differ materially from expected results include delays in completing the merger,
difficulties in achieving cost savings or in achieving such savings within the
expected time frame, difficulties in integrating Harris Financial and York
Financial, increased competitive pressures, changes in the interest rate
environment, general economic conditions or the securities market, and
legislative and regulatory changes that adversely affect the businesses in which
Harris Financial and York Financial are engaged.
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CONTACT:
Bob Gentry
Harris Financial, Inc.
(717) 909-2329
OR
Robert W. Pullo
York Financial Corp.
(717) 846-8777
