_________________________________________________________________
_________________________________________________________________
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) October 10, 1995
MERIDIAN BANCORP, INC.
(Exact name of registrant as specified in its charter)
Pennsylvania 0-12364 23-2237529
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Ident. No.)
35 North Sixth Street, Reading, Pennsylvania 19601
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (610) 655-2000
N/A
(Former name or former address, if changed since last report.)
_________________________________________________________________
_________________________________________________________________
<PAGE>
Item 5. Other Events.
On October 10, 1995, Meridian Bancorp, Inc. ("Meridian") and
CoreStates Financial Corp ("CoreStates") issued the press release
attached hereto as Exhibit 99.1, which is incorporated herein by
reference. The terms of the transaction described in the press
release are qualified in their entirety by reference to the
Agreement and Plan of Merger attached hereto as Exhibit 99.2 and
incorporated by reference herein (the "Agreement").
On October 10, 1995, Meridian and CoreStates entered into
the Agreement, pursuant to which Meridian will be merged into
CoreStates with CoreStates as the surviving corporation. In the
merger, each share of Meridian common stock will, subject to
certain adjustments, be exchanged for 1.225 shares of CoreStates
common stock. The merger is expected to be closed during the
second quarter of 1996, subject to the satisfaction of certain
conditions, including among others, approval of the merger by
Meridian and CoreStates' shareholders and receipts of required
regulatory approvals. The transaction will be accounted for as a
pooling of interests.
Concurrently with execution of the Agreement, Meridian
entered into a Stock Option Agreement with CoreStates pursuant to
which Meridian granted CoreStates an option to purchase up to
11,506,698 shares of Meridian common stock at a price of
$38-13/16 per share, exercisable only upon the occurrence of
certain events. CoreStates has also entered into a Stock Option
Agreement pursuant to which CoreStates granted Meridian an option
to purchase up to 27,643,009 shares of CoreStates common stock at
a price of $38-1/2 per share, exercisable only upon the
occurrence of certain events. Copies of forms of the stock
option agreements are attached as exhibits to the Agreement
attached hereto as Exhibit 99.2.
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
99.1 Press release of Meridian Bancorp, Inc. and
CoreStates Financial Corp, dated October 10, 1995.
99.2 Agreement and Plan of Merger, dated as of
October 10, 1995, by and between Meridian Bancorp,
Inc. and CoreStates Financial Corp
<PAGE>
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.
MERIDIAN BANCORP, INC.
Dated: October 11, 1995
By /s/Samuel A. McCullough
Samuel A. McCullough
Chairman and Chief Executive
Officer
<PAGE>
EXHIBIT INDEX
Exhibit Number
99.1 Press release of Meridian
Bancorp, Inc. and CoreStates Financial Corp, dated
October 10, 1995.
99.2 Agreement and Plan of Merger, dated as
of October 10, 1995, by and between
Meridian Bancorp, Inc. and CoreStates
Financial Corp
EXHIBIT 99.1
CoreStates and Meridian Agree to Combine;
Partnership Will Create a Regional Banking Power
Philadelphia, October 10, 1995 -- CoreStates Financial Corp
and Meridian Bancorp, Inc. today announced a definitive agreement
to merge. The combination would create a $45 billion asset
banking services power with leading geographic market positions
and specialized strengths in serving key regional, national and
global customer segments. It would also combine two strong-
performing banking companies, both of which reported record third
quarter earnings today. Specifically, the transaction would:
- Create a leading market position in a core region
blanketing the prime economic centers of eastern
Pennsylvania, northern Delaware and central New
Jersey;
- Extend the combined banks' total market reach to
47 counties in the three states;
- Create a company with $3.7 billion of equity and
with the capital ratios to support investments in
growth and in improved services to customers;
- Be accretive to earnings per share for 1997;
- Combine two companies recognized for their
community leadership in and commitment to their
markets.
"We are taking two organizations with deep historic roots in
this region and we are combining them into a single, focused
company with the knowledge, the commitment and the financial
resources to be an unparalleled resource to its customers and
communities," said Terrence A. Larsen, chairman and chief
executive of CoreStates.
"This is the time, this is the place, and this is the
specific opportunity to make a clear declaration: We will be the
'hometown' banking company for this region, offering local
decisions and local services with a global reach," he said.
"This combination will bring clear benefits to all stakeholders
of both organizations."
Samuel A. McCullough, chairman and chief executive of
Meridian, said, "The people of our two companies have worked
exceptionally hard and effectively to make us strong competitors
in our markets. This transaction will magnify the benefits of
those efforts for all of our stakeholders -- shareholders,
customers, employees and the communities we mutually serve. This
is the opening of an exciting new era for us."
The two leaders said each organization has long considered
the other as a key player and prime potential partner.
"It was quite natural for Meridian to explore a possible
combination with CoreStates as part of the Meridian Board's
strategic study," said McCullough. "This combination will work
best for our region. It will assure our ability to serve our
customers superbly, and as partners we can strengthen our overall
commitments in helping to build the future of our communities.
Terms of the Transaction
The transaction would be a tax-free exchange of 1.225 shares
of CoreStates stock for each share of Meridian stock. Based on
closing share prices of October 9, 1995, the transaction would be
valued at approximately $3.2 billion. Accordingly, Meridian
shareholders would receive $47.16 in CoreStates stock for each
Meridian share.
The deal is structured as an acquisition of Meridian by
CoreStates to be accounted for as a pooling of interests.
The merger, which is subject to approval by shareholders of
both companies and by regulators, is expected to close in the
second quarter of 1996.
As part of the agreement, Meridian and CoreStates gave each
other options to purchase 19.9% of their respective stock under
certain circumstances.
Management Team
Larsen, 49, will be chairman and chief executive officer of
the expanded CoreStates organization.
McCullough, 56, will be president and chief operating
officer of the corporation.
A new Office of the Chairman will also include:
- Rosemarie B. Greco, 49, president and chief
executive officer of CoreStates Bank, N.A.
- Charles L. Coltman III, 52, vice chairman of the
corporation.
- Charles P. Connolly, Jr., 46, senior executive
vice president and chief risk management officer.
- Robert N. Gilmore, 47, chief processing services
officer.
- David E. Sparks, 51, chief financial officer.
Corporate headquarters will be in Philadelphia.
Third Quarter Earnings
Both CoreStates and Meridian issued summary reports of
record earnings for the third quarter and major progress on
implementing their respective process redesign/performance
improvement projects.
CoreStates reported net income of $133,946,000 or 96 cents
per share for the third quarter and $315,283,000 or $2.23 per
share for the first nine months. The nine-month figure included
a net 47 cents per share restructuring charge for CoreStates'
BEST process redesign project.
Larsen said the record third quarter earnings, up 28% from a
year earlier and representing an operating return on average
assets of 1.85% and return on average equity of 22.91%, reflected
both continuing strength in the company's basic businesses and
the growing impact of BEST on expenses.
He said the company was running ahead of schedule in
achieving the projected ultimate financial benefits of BEST, an
annualized 90 cents per share difference by the fourth quarter of
1996. The impact on third quarter earnings was 10 cents per
share, mostly in cost savings. The expense ratio declined to
53.7% for the quarter.
Meridian reported net income of $54.4 million, or 96 cents
per fully diluted share, for the third quarter and $121.5 million
or $2.14 per fully diluted share for the first nine months. The
nine-month figure included a 37 cents per share restructuring
charge in the second quarter for the 59.9 program.
McCullough said the third quarter earnings, up 52% from 1994
on a per share basis and representing a return on average assets
of 1.48% and return on equity of 17.33%, "reflect the underlying
strength of our core banking operations and the success of our
previously-announced '59.9' program designed to improve
Meridian's operating performance.
"We are especially pleased that the expense savings
identified by the '59.9' program are being realized ahead of
schedule," he said. Meridian's projected ultimate benefit from
59.9 is an annualized earnings improvement of 78 cents per share.
The 59.9 impact on net income for the third quarter was 11 cents
per share, all from cost savings. The bank reached an expense
ratio of 59.8% for the quarter.
Larsen and McCullough said the two organizations' projects
would continue on their implementation plans and that as they
plan consolidation "we expect to find ideas each is implementing
that can be extended to the other."
Strategic Fit and Integration Plans
The combination will be basically an in-market merger with
significant market overlaps, but the geographic market strengths
of the two companies differ. For businesses that depend on
branch office support, Meridian's strengths in Berks County and
the Lehigh Valley areas of eastern Pennsylvania and in Delaware
will complement CoreStates' already strong lead in the
metropolitan Philadelphia region and parts of central New Jersey.
Both companies are strong in the corporate "middle market,"
defined by CoreStates as companies from $15 to $250 million
sales. In combination, they will have a commanding market
position in their core southeastern Pennsylvania region.
Meridian's recognized small business strengths complement
CoreStates' recently increased emphasis on serving this segment.
CoreStates brings great strengths in transaction processing
and international specialty services, while Meridian has special
strengths in segments of the trust and investment business.
The companies project that they will achieve merger cost
efficiencies, in addition to the BEST and 59.9 savings, at an
annual rate of approximately $186 million pre tax, by the time
consolidation and conversion is completed in late 1996.
CoreStates will incur a restructuring charge in the quarter of
closing of approximately $175 million pre-tax.
These efforts will include a branch network review expected
to result in consolidation, closing or sale of approximately
115 branch offices of the combined total of 667. The companies
projected that less than 10% of the combined totals of
19,127 positions would be eliminated. To reduce the numbers of
potential layoffs associated with the staff position cuts, the
two companies froze hiring except for critical positions.
Assuming closing as anticipated, the companies said they
expected consolidations to occur within 1996. Meridian expects
to close its pending acquisition of United Counties Trust Company
in New Jersey in the current quarter, and CoreStates expects to
carry out its planned consolidation of its New Jersey and
Pennsylvania banks as planned in January of 1996.
Exhibit 99.2
AGREEMENT AND PLAN OF MERGER
dated as of October 10, 1995
by and between
MERIDIAN BANCORP, INC.
and
CORESTATES FINANCIAL CORP
<PAGE>
TABLE OF CONTENTS
I. THE MERGER; EFFECTS OF THE MERGER......................... 2
1.01. The Merger.................................... 2
II. CONSIDERATION............................................. 3
2.01. Merger Consideration............................... 3
2.02. Shareholder Rights; Stock Transfers................ 3
2.03. Fractional Shares.................................. 3
2.04. Exchange Procedures................................ 4
2.05. Anti-Dilution Provisions........................... 6
2.06. Treasury Shares.................................... 6
2.07. Options............................................ 6
III. ACTIONS PENDING MERGER................................... 7
3.01. Ordinary Course................................... 7
3.02. Capital Stock..................................... 7
3.03. Dividends; Changes in Stock....................... 8
3.04. Compensation; Employment Agreements; Etc.......... 8
3.05. Benefit Plans..................................... 8
3.06. Acquisitions and Dispositions..................... 9
3.07. Amendment......................................... 9
3.08. Accounting Methods................................ 9
3.09. Adverse Actions................................... 9
3.10. Indebtedness...................................... 10
3.11. Agreements........................................ 10
IV. REPRESENTATIONS AND WARRANTIES........................... 10
4.01. Disclosure Letters................................ 10
4.02. Standard.......................................... 10
4.03. Representations and Warranties.................... 10
V. COVENANTS................................................ 21
5.01. Reasonable Best Efforts........................... 21
5.02. Shareholder Approvals............................. 21
5.03. Registration Statement............................ 22
5.04. Press Releases.................................... 23
5.05. Access; Information............................... 23
5.06. Acquisition Proposals............................. 24
5.07. Affiliate Agreements.............................. 25
5.08. Certain Modifications............................. 25
5.09. Takeover Laws..................................... 25
5.10. Shares Listed..................................... 25
5.11. Regulatory Applications........................... 25
5.12. Indemnification................................... 26
5.13. Benefit Plans..................................... 28
5.14. Certain Director and Officer Positions............ 30
5.15. Notification of Certain Matters................... 31
5.16. Dividend Adjustment............................... 31
5.17. Post-Merger Operations............................ 31
VI. CONDITIONS TO CONSUMMATION OF THE MERGER................. 31
6.01. Shareholder Vote.................................. 31
6.02. Regulatory Approvals.............................. 32
6.03. Third Party Consents.............................. 32
6.04. No Injunction, Etc................................ 32
6.05. Pooling Letters................................... 32
6.06. Representations, Warranties and Covenants of
CoreStates.......................................... 32
6.07. Representations, Warranties and Covenants of
Meridian............................................ 33
6.08. Effective Registration Statement.................. 33
6.09. Blue-Sky Permits.................................. 33
6.10. Tax Opinion....................................... 33
6.11. NYSE Listing...................................... 33
6.12. Rights Agreements................................. 33
VII. TERMINATION............................................. 34
7.01. Termination....................................... 34
7.02. Effect of Termination and Abandonment............. 37
VIII. OTHER MATTERS.......................................... 37
8.01. Survival.......................................... 37
8.02. Waiver; Amendment................................. 37
8.03. Counterparts...................................... 37
8.04. Governing Law..................................... 37
8.05. Expenses.......................................... 37
8.06. Confidentiality................................... 38
8.07. Notices........................................... 38
8.08. Definitions....................................... 39
8.09. Entire Understanding; No Third Party
Beneficiaries....................................... 40
8.10. Headings.......................................... 41
<PAGE>
LIST OF EXHIBITS
A - Form of Meridian Stock Option Agreement
B - Form of CoreStates Stock Option Agreement
C - Amendment to Meridian Rights Agreement
D - Form of Meridian Affiliate Letter
E - Form of CoreStates Affiliate Letter
F - Section 5.13(a) Termination Agreement Term Sheet
G - Section 5.13(b) Termination Agreement
H - Meridian Severance Policy
Schedules
5.13(a) - Meridian employees to receive Meridian termination
agreements
5.13(b) - Meridian employees to receive CoreStates termination
agreements
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of the 10th day of
October, 1995 (this "Plan"), by and between MERIDIAN BANCORP,
INC. ("Meridian"), and CORESTATES FINANCIAL CORP ("CoreStates").
RECITALS:
A. Meridian. Meridian is a corporation duly organized and
existing in good standing under the laws of the Commonwealth of
Pennsylvania, with its principal executive offices located in
Reading, Pennsylvania. Meridian has 200,000,000 authorized
shares of common stock, each of $5.00 par value ("Meridian Common
Stock"), and 25,000,000 authorized shares of preferred stock,
each of $25.00 par value, of which, as of September 30, 1995,
515,434 shares of Meridian Common Stock were issued and held by
Meridian as treasury stock and 57,822,604 shares of Meridian
Common Stock were issued and outstanding. No shares of Meridian
preferred stock are issued and outstanding.
B. CoreStates. CoreStates is a corporation duly organized
and existing in good standing under the laws of the Commonwealth
of Pennsylvania, with its principal executive offices located in
Philadelphia, Pennsylvania. CoreStates has 200,000,000
authorized shares of common stock, each of $1.00 par value
("CoreStates Common Stock"), and 10,000,000 authorized shares of
preferred stock, no par value, of which, as of September 30,
1995, 138,909,597 shares of CoreStates Common Stock and no shares
of CoreStates preferred stock were issued and outstanding.
C. Stock Option Agreements. As a condition and inducement
to CoreStates's willingness to enter into this Plan, concurrently
with the execution and delivery of this Plan, Meridian has
executed and delivered a Stock Option Agreement with CoreStates
(the "Meridian Stock Option Agreement") in substantially the form
attached hereto as Exhibit A, pursuant to which Meridian is
granting to CoreStates an option to purchase, under certain
circumstances, shares of Meridian Common Stock. As a condition
and inducement to Meridian's willingness to enter into this Plan,
concurrently with the execution and delivery of this Plan,
CoreStates has executed and delivered a Stock Option Agreement
with Meridian (the "CoreStates Stock Option Agreement"; and,
together with the Meridian Stock Option Agreement, the "Stock
Option Agreements") in substantially the form attached hereto as
Exhibit B, pursuant to which CoreStates is granting to Meridian
an option to purchase, under certain circumstances, shares of
CoreStates Common Stock.
D. Intention of the Parties. It is the intention of the
parties to this Plan that the Merger (as defined in Section 1.01)
shall (i) be accounted for as a "pooling of interests" under
generally accepted accounting principles and (ii) qualify as a
reorganization under Section 368(a) of the Internal Revenue Code
of 1986, as amended (the "Code").
E. Approvals. The Board of Directors of each of Meridian
and CoreStates (i) has determined that this Plan and the
transactions contemplated hereby are consistent with, and in
furtherance of, its respective business strategies and (ii) has
approved, at meetings of each of such Boards of Directors, this
Plan.
NOW, THEREFORE, in consideration of their mutual promises
and obligations, the parties hereto approve, adopt and make this
Plan and prescribe the terms and conditions hereof and the manner
and basis of carrying it into effect, which shall be as follows:
I. THE MERGER; EFFECTS OF THE MERGER.
1.01. The Merger. At the Effective Time (as defined in
Section 1.02):
(A) The Continuing Corporation. Meridian shall merge
with and into CoreStates (the "Merger"), the separate existence
of Meridian shall cease and CoreStates shall survive and continue
to exist as a Pennsylvania corporation (CoreStates sometimes
being referred to herein as the "Continuing Corporation" after
the Effective Time).
(B) Effective Time of the Merger. Subject to the
provisions of this Plan, articles of merger (the "Articles of
Merger") shall be duly prepared, executed and acknowledged by
CoreStates and Meridian, and thereafter filed with the office of
the Secretary of the Commonwealth of Pennsylvania, as provided in
the Pennsylvania Business Corporation Law (the "BCL"), on the
Closing Date (as defined in Section 1.01(C)). The Merger shall
become effective upon the filing of the Articles of Merger with
the Secretary of the Commonwealth of Pennsylvania or at such time
thereafter as is provided in the Articles of Merger (the
"Effective Time"), in accordance with Section 1928 of the Pennsylvania
Business Corporation Law (the "BCL"). The Merger shall have the
effects prescribed in Section 1929 of the BCL.
(C) Closing. The closing of the Merger (the
"Closing") will take place at 10:00 a.m. on a date to be
specified by the parties, which shall be the first day which is
at least two business days after satisfaction or waiver (subject
to applicable law) of the conditions (excluding conditions that,
by their terms, cannot be satisfied until the Closing Date) set
forth in Article VI (the "Closing Date"), unless another time or
date is agreed to in writing by the parties hereto. The Closing
shall be held at such location as is agreed to in writing by the
parties hereto.
(D) Articles of Incorporation and By-laws. The
articles of incorporation and by-laws of the Continuing
Corporation shall be those of CoreStates, as in effect
immediately prior to the Effective Time and as further amended as
of the Effective Time as contemplated by this Plan.
II. CONSIDERATION.
2.01. Merger Consideration. Subject to the provisions of
this Plan, at the Effective Time, automatically by virtue of the
Merger and without any action on the part of any shareholder:
(A) Outstanding CoreStates Common Stock. Each share
of CoreStates Common Stock issued and outstanding immediately
prior to the Effective Time shall be unchanged and shall remain
issued and outstanding common stock of the Continuing
Corporation. Shares of CoreStates Common Stock owned by Meridian
(other than shares held in trust, managed, custodial or nominee
accounts and the like or held by mutual funds for which a
subsidiary of Meridian acts as investment advisor, that in any
such case are beneficially owned by third parties (any such
shares, "trust account shares") and shares acquired in respect of
debts previously contracted (any such shares, "DPC shares"))
shall become treasury stock of CoreStates.
(B) Outstanding Meridian Common Stock. Each share
(excluding shares held by Meridian or any of its wholly-owned
subsidiaries (as defined in Section 8.08) ("Treasury Shares") or
by CoreStates or any of its wholly-owned subsidiaries, in each
case other than trust account shares or DPC shares) of Meridian
Common Stock (including each attached right (a "Meridian Right")
issued pursuant to the Rights Agreement, dated as of July 25,
1989 (as amended, the "Meridian Rights Agreement"), between
Meridian and Meridian Bank, as Rights Agent) issued and
outstanding immediately prior to the Effective Time shall become
and be converted into the right to receive 1.225 shares (subject
to possible adjustment as set forth in Sections 2.05 and 7.01(D),
the "Exchange Ratio") of CoreStates Common Stock. All shares of
Meridian Common Stock owned by Meridian as Treasury Shares and
all shares of Meridian Common Stock owned by CoreStates or a
wholly-owned subsidiary of CoreStates or of Meridian (other than
trust account shares or DPC shares) shall be cancelled and
retired and shall cease to exist and no shares of CoreStates or
other consideration shall be deliverable in exchange therefor.
2.02. Shareholder Rights; Stock Transfers. At the
Effective Time, holders of Meridian Common Stock shall cease to
be, and shall have no rights as, shareholders of Meridian, other
than to receive the consideration provided under this Article II.
After the Effective Time, there shall be no transfers on the
stock transfer books of Meridian or the Continuing Corporation of
shares of Meridian Common Stock.
2.03. Fractional Shares. Notwithstanding any other
provision hereof, no fractional shares of CoreStates Common Stock
and no certificates or scrip therefor, or other evidence of
ownership thereof, will be issued in the Merger; instead,
CoreStates shall pay to each holder of Meridian Common Stock who
would otherwise be entitled to a fractional share an amount in
cash determined by multiplying such fraction by the average of
the last sale prices of CoreStates Common Stock, as reported by
the New York Stock Exchange (the "NYSE") Composite Transactions
reporting system (as reported in The Wall Street Journal or, if
not reported therein, in another authoritative source), for the
five NYSE trading days immediately preceding the Effective Date.
2.04. Exchange Procedures.
(A) As of the Effective Time, CoreStates shall, or
shall cause to be deposited, with First Chicago Trust Company of
New York (or another bank selected by CoreStates and reasonably
acceptable to Meridian) (the "Exchange Agent"), for the benefit
of the holders of shares of Meridian Common Stock, for exchange
in accordance with Sections 2.01 and 2.03, certificates
representing the shares of CoreStates Common Stock and the cash
in lieu of fractional shares (such cash and certificates for
shares of CoreStates Common Stock, together with any dividends or
distributions with respect thereto, being hereinafter referred to
as the "Exchange Fund") to be issued in exchange for outstanding
shares of Meridian Common Stock.
(B) Promptly after the Effective Time, CoreStates
shall cause the Exchange Agent to mail to each holder of record
of a certificate or certificates previously representing shares
of Meridian Common Stock (each a "Certificate") the following:
(i) a letter of transmittal specifying that delivery shall be
effected, and risk of loss and title to the Certificates shall
pass, only upon delivery of the Certificates to the Exchange
Agent, which shall be in a form and contain any other provisions
as are mutually agreeable to CoreStates and Meridian; and
(ii) instructions for use in effecting the surrender of the
Certificates in exchange for certificates representing shares of
CoreStates Common Stock and cash in lieu of fractional shares.
Upon the proper surrender of a Certificate to the Exchange Agent,
together with a properly completed and duly executed letter of
transmittal, the holder of such Certificate shall be entitled to
receive in exchange therefor (x) a certificate representing that
number of whole shares of CoreStates Common Stock and (y) a check
representing the amount of cash in lieu of any fractional shares
and unpaid dividends and distributions, if any, which such holder
has the right to receive in respect of the Certificate
surrendered pursuant to the provisions of Sections 2.01 and 2.03,
and the Certificate so surrendered shall forthwith be canceled.
No interest will be paid or accrued on the cash in lieu of
fractional shares and unpaid dividends and distributions, if any,
payable to holders of Certificates. In the event of a transfer
of ownership of any shares of Meridian Common Stock not
registered in the transfer records of Meridian, a certificate
representing the proper number of shares of CoreStates Common
Stock, together with a check for the cash to be paid in lieu of
fractional shares, may be issued to the transferee if the
Certificate representing such Meridian Common Stock is presented
to the Exchange Agent, accompanied by documents sufficient (1) to
evidence and effect such transfer and (2) to evidence that all
applicable stock transfer taxes have been paid.
(C) Whenever a dividend or other distribution is
declared by CoreStates on the CoreStates Common Stock, the record
date for which is at or after the Effective Time, the declaration
shall include dividends or other distributions on all shares
issuable pursuant to this Plan; provided that after the 30th day
following the Effective Date no dividend or other distribution
declared or made on the CoreStates Common Stock shall be paid to
the holder of any unsurrendered Certificate with respect to the
shares of CoreStates Common Stock represented thereby until the
holder of such Certificate shall duly surrender such Certificate
in accordance with this Section 2.04. Following such surrender
of any such Certificate, there shall be paid to the holder of the
certificates representing whole shares of CoreStates Common Stock
issued in exchange therefor, without interest, (i) at the time of
such surrender, the amount of dividends or other distributions
having a record date after the Effective Time theretofore payable
with respect to such whole shares of CoreStates Common Stock and
not yet paid and (ii) at the appropriate payment date, the amount
of dividends or other distributions having (x) a record date
after the Effective Time but prior to surrender and (y) a payment
date subsequent to surrender payable with respect to such whole
shares of CoreStates Common Stock.
(D) Any portion of the Exchange Fund (including the
proceeds of any investments thereof and any CoreStates Common
Stock) that remains unclaimed by the shareholders of Meridian for
six months after the Effective Time shall be repaid to
CoreStates. Any shareholders of Meridian who have not
theretofore complied with this Section 2.04 shall thereafter look
only to CoreStates for payment of their shares of CoreStates
Common Stock, cash in lieu of fractional shares and any unpaid
dividends and distributions on the CoreStates Common Stock
deliverable in respect of each share of Meridian Common Stock
such shareholder holds as determined pursuant to this Plan, in
each case, without any interest thereon. If outstanding
certificates for shares of the Meridian Common Stock are not
surrendered or the payment for them not claimed prior to the date
on which such payments would otherwise escheat to or become the
property of any governmental unit or agency, the unclaimed items
shall, to the extent permitted by abandoned property and any
other applicable law, become the property of CoreStates (and to
the extent not in its possession shall be paid over to it), free
and clear of all claims or interest of any person previously
entitled to such claims. Notwithstanding the foregoing, none of
CoreStates, the Exchange Agent or any other person shall be
liable to any former holder of the Meridian Common Stock for any
amount delivered to a public body or official pursuant to
applicable abandoned property, escheat or similar laws.
(E) 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 CoreStates, the posting by such
person of a bond in such amount as CoreStates may direct as
indemnity against any claim that may be made against it with
respect to such Certificate, the Exchange Agent will issue in
exchange for such lost, stolen or destroyed Certificate the
shares of CoreStates Common Stock and cash in lieu of fractional
shares (and unpaid dividends and distributions thereon)
deliverable in respect thereof pursuant to this Plan.
(F) Notwithstanding anything in this Plan to the
contrary, for a period of 90 days after the Effective Date
holders of Certificates shall be entitled to vote the number of
whole shares of CoreStates Common Stock into which their Meridian
Common Stock was converted in the Merger as holders of such
shares of CoreStates Common Stock notwithstanding that such
Certificates shall not have been exchanged.
2.05. Anti-Dilution Provisions. In the event CoreStates
changes (or establishes a record date for changing) the number of
shares of CoreStates Common Stock issued and outstanding prior to
the Effective Date as a result of a stock split, stock dividend,
recapitalization or similar transaction with respect to the
outstanding CoreStates Common Stock and the record date therefor
shall be prior to the Effective Date, the Exchange Ratio shall be
proportionately adjusted.
2.06. Treasury Shares. Each of the shares of Meridian
Common Stock held as Treasury Shares immediately prior to the
Effective Time shall be canceled and retired at the Effective
Time and no consideration shall be issued in exchange therefor.
2.07. Options. Notwithstanding any provision to the
contrary in Meridian's stock option plan, from and after the
Effective Time, all stock options to purchase shares of Meridian
Common Stock (each, a "Meridian Stock Option"), which are then
outstanding and unexercised, shall be converted into and become
options to purchase shares of CoreStates Common Stock, and
CoreStates shall assume each such Meridian Stock Option in
accordance with the terms of the plan and agreement by which it
is evidenced; provided, however, that from and after the
Effective Time (i) each such Meridian Stock Option assumed by
CoreStates may be exercised solely to purchase shares of
CoreStates Common Stock, (ii) the number of shares of CoreStates
Common Stock purchasable upon exercise of such Meridian Stock
Option shall be equal to the number of shares of Meridian Common
Stock that were purchasable under such Meridian Stock Option
immediately prior to the Effective Time multiplied by the
Exchange Ratio and rounding up to the nearest whole share, and
(iii) the per share exercise price under each such Meridian Stock
Option shall be adjusted by dividing the per share exercise price
of each such Meridian Stock Option by the Exchange Ratio, and
rounding up to the nearest cent. The terms of each Meridian
Stock Option shall, in accordance with its terms, be subject to
further adjustment as appropriate to reflect any stock split,
stock dividend, recapitalization or other similar transaction
with respect to CoreStates Common Stock on or subsequent to the
Effective Date. It is intended that the foregoing assumption
shall be effected in a manner which is consistent with the
requirements of Section 424 of the Code, as to any Meridian Stock
Option that is an "incentive stock option" (as defined in
Section 422 of the Code).
III. ACTIONS PENDING MERGER.
From the date hereof until the Effective Time, except as
expressly contemplated in this Plan, (i) without the prior
written consent of CoreStates (which consent shall not be
unreasonably withheld or delayed) Meridian will not, and will
cause each of its subsidiaries not to, and (ii) without the prior
written consent of Meridian (which consent shall not be
unreasonably withheld or delayed) CoreStates will not, and will
cause each of its subsidiaries not to:
3.01. Ordinary Course. Conduct the business of it and its
subsidiaries other than in the ordinary and usual course or, to
the extent consistent therewith, fail to use reasonable efforts
to preserve intact their business organizations and assets and
maintain their rights, franchises and existing relations with
customers, suppliers, employees and business associates, or
knowingly take any action that would, or might reasonably be
expected to (unless such action is required by law or sound
banking practice) (i) adversely affect the ability of any party
to obtain any necessary approvals of any Regulatory Authorities
(as defined in Section 4.03(I)) required for the transactions
contemplated hereby without the imposition of any burdensome
condition of the type referred to in Section 6.02 or
(ii) adversely affect its ability to perform any of its material
obligations under this Plan, provided that nothing in this Plan
shall be deemed to restrict the ability of a party to exercise
its rights under the applicable Stock Option Agreement.
3.054 Capital Stock. Other than (i) as Previously
Disclosed in Section 4.03(C) of its Disclosure Letter (as defined
in Section 4.01), (ii) pursuant to the exercise of stock options
outstanding on the date hereof or thereafter issued as permitted
by this Section 3.02, (iii) in connection with acquisitions of
businesses permitted in Section 3.06, (iv) in the case of
CoreStates, pursuant to employee benefit plans or programs in
effect on the date of this Plan or as permitted by Section
4.03(P)(4), or (v) under the relevant Stock Option Agreement,
(x) issue, sell or otherwise permit to become outstanding any
additional shares of capital stock, any stock appreciation
rights, or any Rights (as defined in Section 8.08), (y) enter
into any agreement with respect to the foregoing, or (z) permit
additional shares of capital stock to become subject to new
grants of employee stock options, stock appreciation rights, or
similar stock-based employee rights prior to the Effective Time.
3.03. Dividends; Changes in Stock. (1) Make, declare or
pay any dividend on or in respect of, or declare or make any
distribution on any shares of its capital stock, except
(A) Meridian may continue the declaration and payment of regular
quarterly cash dividends of $.37 per share of Meridian Common
Stock, and CoreStates may continue the declaration and payment of
regular quarterly cash dividends not in excess of $.34 per share
of CoreStates Common Stock (provided, however, that commencing
with the first dividend paid in 1996, CoreStates may increase the
amount of regular quarterly cash dividends per share, and in such
case the limit on cash dividends payable by Meridian on Meridian
Common Stock shall increase by an amount proportionate to the
increase in cash dividends actually paid or payable by
CoreStates), in each case with usual record and payment dates for
such dividends in accordance with such parties' past dividend
practice, and (B) for dividends by a wholly-owned subsidiary of
such party, and (2) except as Previously Disclosed in
Section 3.03 of its Disclosure Letter, directly or indirectly
combine, redeem, reclassify, purchase or otherwise acquire, any
shares of its capital stock (other than acquisition of trust
account shares or DPC shares in the ordinary course of business).
3.04. Compensation; Employment Agreements; Etc. In the
case of Meridian and its subsidiaries, except as permitted by
Section 5.13, enter into or amend any written employment,
severance or similar agreements or arrangements with any of its
directors, officers or employees, or grant any salary or wage
increase or increase any employee benefit (including incentive or
bonus payments), except for (i) normal individual increases in
compensation to employees in the ordinary course of business
consistent with past practice (including taking into account
deferred increases) or (ii) other changes as may be required by
law or to satisfy contractual obligations existing as of the date
hereof consistent with past practice, which to the extent
practicable have been Previously Disclosed in Section 3.04 of its
Disclosure Letter.
3.05. Benefit Plans. In the case of Meridian and its
subsidiaries, enter into or modify (except as may be required by
applicable law or to satisfy contractual obligations existing as
of the date hereof, which have been Previously Disclosed in
Section 3.05 of its Disclosure Letter) any pension, retirement,
stock option, stock purchase, savings, profit sharing, deferred
compensation, consulting, bonus, group insurance or other
employee benefit, incentive or welfare contract, plan or
arrangement, or any trust agreement related thereto, in respect
of any of its directors, officers or other employees, including
without limitation taking any action that accelerates the vesting
or exercise of any benefits payable thereunder.
3.06. Acquisitions and Dispositions. Except as Previously
Disclosed in Section 3.06 of its Disclosure Letter and except for
dispositions and acquisitions of assets in the ordinary and usual
course of business consistent with past practice, dispose of or
discontinue any portion of its assets, business or properties,
which is material to it and its subsidiaries taken as a whole, or
merge or consolidate with, or acquire (other than by way of
foreclosures or acquisitions of control in a bona fide fiduciary
capacity or in satisfaction of debts previously contracted in
good faith, in each case in the ordinary and usual course of
business consistent with past practice) all or any portion of,
the business or property of any other entity (any of the
foregoing, a "Business Combination Transaction"), except that
(i) Meridian may complete its pending Business Combination
Transaction with United Counties Bancorporation in accordance
with the terms of the Agreement and Plan of Merger dated May 23,
1995, and (ii) CoreStates may enter into an agreement or
agreements for, and may consummate, Business Combination
Transactions in which the aggregate purchase price or prices paid
by CoreStates and/or its subsidiaries does not exceed
$1.0 billion or the aggregate number of shares of CoreStates
Common Stock issuable does not exceed 20% of the number of such
shares outstanding on September 30, 1995 (the "20% Limit").
Notwithstanding the foregoing, with the prior consent of a
majority of the Meridian Board of Directors, CoreStates may enter
into an agreement or agreements for Business Combination
Transactions in which the aggregate purchase price or prices paid
exceeds $1.0 billion or includes shares of CoreStates Common
Stock in excess of the 20% Limit.
3.07. Amendment. Amend its articles of incorporation or
by-laws (or similar constitutive documents) (except that
CoreStates may amend its Articles of Incorporation to increase
its authorized Common Stock from 200,000,000 shares to a greater
amount at least sufficient to consummate the Merger) or, except
as contemplated in Section 4.03(P)(2), the Meridian Rights
Agreement, redeem the Meridian Rights, or adopt any plan or
arrangement similar to or as a substitute for the Meridian Rights
Agreement except as otherwise permitted by Section 4.03(P)(4).
3.08. Accounting Methods. Implement or adopt any change in
its accounting principles, practices or methods, other than as
may be required by generally accepted accounting principles.
3.09. Adverse Actions. (1) Knowingly take any action that
would, or is reasonably likely to, prevent or impede the Merger
from qualifying (i) for pooling-of-interests accounting treatment
or (ii) as a reorganization within the meaning of Section 368(a)
of the Code; or (2) knowingly take any action that is intended or
is reasonably likely to result in (w) any of its representations
and warranties set forth in this Plan being or becoming untrue in
any material respect at any time prior to the Effective Time,
(x) any of the conditions to the Merger set forth in Article VI
not being satisfied, (y) a material violation of any provision of
either Stock Option Agreement, or (z) a material violation of any
provision of this Plan except, in every case, as may be required
by applicable law; provided, however, that nothing contained in
this Agreement shall limit the ability of Meridian or CoreStates
to exercise its rights under either Stock Option Agreement.
3.10. Indebtedness. No party shall, or shall permit any of
its subsidiaries to, incur any long-term indebtedness for
borrowed money or guarantee any such long-term indebtedness or
issue or sell any long-term debt securities or warrants or rights
to acquire any long-term debt securities of such party or any of
its subsidiaries or guarantee any long-term debt securities of
such party or any of its subsidiaries or guarantee any long-term
debt securities of others other than (i) in replacement for
existing or maturing debt, (ii) indebtedness of any subsidiary of
a party to such party or another subsidiary of such party or
(iii) in the ordinary course of business consistent with prior
practice.
3.11. Agreements. Agree or commit to do anything
prohibited by Sections 3.01 through 3.10.
IV. REPRESENTATIONS AND WARRANTIES.
4.01. Disclosure Letters. Concurrently herewith,
CoreStates has delivered to Meridian and Meridian has delivered
to CoreStates a letter (as the case may be, its "Disclosure
Letter") setting forth certain items of disclosure with respect
to the representations and warranties set forth below. The mere
inclusion of an item in a Disclosure Letter shall not be deemed
an admission by a party that such item represents a material
exception or fact, event or circumstance or that such item is
reasonably likely to result in a Material Adverse Effect (as
defined in Section 8.08).
4.02. Standard. No representation or warranty of
CoreStates or Meridian contained in Section 4.03 (other than the
representations and warranties contained in (i) Sections 4.03(A)
(with respect to the facts set forth in Recitals A and B), (C),
and (U)(ii), which shall be true and correct (except for
inaccuracies which are de minimis in amount) and (ii) Sections
4.03(D)(1)(i)-(iv), (E), (F), M(1)-(2), (P), (Q) and (U)(i) which
shall be true and correct in all material respects) shall be
deemed untrue or incorrect, and no party hereto shall be deemed
to have breached a representation or warranty, as a consequence
of the existence or absence of any fact, circumstance or event if
such fact, circumstance or event, individually or taken together
with all other facts, circumstances or events inconsistent with
any paragraph of Section 4.03 is not reasonably likely to have a
Material Adverse Effect.
4.03. Representations and Warranties. Subject to
Sections 4.01 and 4.02, Meridian hereby represents and warrants
to CoreStates, and CoreStates hereby represents and warrants to
Meridian, as follows:
(A) Recitals. In the case of the representations and
warranties of Meridian, the facts set forth in Recitals A, C, D
and E of this Plan with respect to it are true and correct. In
the case of the representations and warranties of CoreStates, the
facts set forth in Recitals B, C, D and E of this Plan with
respect to it are true and correct.
(B) Organization, Standing, and Authority. It is duly
qualified to do business and is in good standing in the states of
the United States and foreign jurisdictions where its ownership
or leasing of property or the conduct of its business requires it
to be so qualified. It has in effect all federal, state, local,
and foreign governmental authorizations, licenses and approvals
necessary for it to own or lease its properties and assets and to
carry on its business as it is now conducted. The Articles of
Incorporation and by-laws of it, copies of which were furnished
to (i) CoreStates, in the case of Meridian, and (ii) Meridian, in
the case of CoreStates, are true, correct and complete copies of
such documents as in effect on the date of this Agreement.
(C) Shares.
(1) The outstanding shares of its capital stock
have been duly authorized and are validly issued and outstanding,
fully paid and nonassessable, and subject to no preemptive rights
(and were not issued in violation of any preemptive rights).
Except as Previously Disclosed in Section 4.03(C) of its
Disclosure Letter or, in the case of CoreStates, as may be
permitted by Section 3.06 or 4.03(P)(4), there are no shares of
its capital stock authorized and reserved for issuance, it does
not have any Rights issued or outstanding with respect to its
capital stock, and it does not have any commitment to authorize,
issue, sell, repurchase or redeem any such shares or Rights,
except pursuant to this Plan, the relevant Stock Option Agreement
and, in the case of Meridian, the Meridian Rights Agreement, and
the pending Business Combination Transaction with United Counties
Bancorporation pursuant to the Agreement and Plan of Merger dated
May 23, 1995. Between September 30, 1995 and the date of this
Plan, it has issued no shares of its capital stock or Rights
except pursuant to commitments Previously Disclosed in
Section 4.03(C) of its Disclosure Letter.
(2) In the case of the representations and
warranties of Meridian, the number of shares of Meridian Common
Stock which are issuable upon exercise of Meridian Stock Options
granted (and the related exercise price), or to be granted prior
to the Effective Date as permitted by this Plan, are Previously
Disclosed in Section 4.03(C) of Meridian's Disclosure Letter.
(3) In the case of the representations and
warranties of CoreStates, the shares of CoreStates Common Stock
to be issued in exchange for shares of Meridian Common Stock in
the Merger, when issued in accordance with the terms of this Plan
will be duly authorized, validly issued, fully paid and
nonassessable.
(D) Subsidiaries.
(1) (i) It has Previously Disclosed in
Section 4.03(D) of its Disclosure Letter a list of all its
subsidiaries as of the date of this Plan together with the state
or other jurisdiction of incorporation for each such subsidiary
and the percentage of the issued and outstanding voting
securities owned by it, (ii) no equity securities of any of its
significant subsidiaries (as defined in Section 8.08) are or may
become required to be issued (other than to it or a subsidiary of
it) by reason of any Rights, (iii) it owns 100% of the issued and
outstanding voting securities of each significant subsidiary
(except for directors' qualifying shares, if any), (iv) there are
no contracts, commitments, understandings or arrangements by
which any of its significant subsidiaries is or may be bound to
sell or otherwise transfer any shares of the capital stock of any
such significant subsidiary (other than to it or a subsidiary of
it), (v) there are no contracts, commitments, understandings or
arrangements relating to its rights to vote or to dispose of
shares of any significant subsidiary (other than to it or a
subsidiary of it), and (vi) all of the shares of capital stock of
each such significant subsidiary held by it or its subsidiaries
are fully paid and (except pursuant to 12 U.S.C. Section 55 or
equivalent state statutes in the case of banking subsidiaries)
nonassessable and are owned by it or its subsidiaries free and
clear of any charge, mortgage, pledge, security interest,
restriction, claim, lien or encumbrance ("Liens").
(2) In the case of the representations and
warranties of Meridian, except as Previously Disclosed in
Section 4.03(D) of its Disclosure Letter, it does not own (other
than trust account shares and DPC shares) beneficially, directly
or indirectly, any shares of any equity securities or similar
interests of any person, or any interest in a partnership or
joint venture of any kind.
(3) Each of its significant subsidiaries has been
duly organized and is validly existing in good standing under the
laws of the jurisdiction in which it is incorporated or
organized, is duly qualified to do business and in good standing
in the jurisdictions where its ownership or leasing of property
or the conduct of its business requires it to be so qualified,
and has in effect all federal, state, local and foreign
governmental authorizations, licenses and approvals necessary for
it to own or lease its properties and assets and to carry out its
business as it is now conducted.
(E) Corporate Power. It and each of its significant
subsidiaries has the corporate power and authority to carry on
its business as it is now being conducted and to own all its
properties and assets; and it has the corporate power and
authority to execute, deliver and perform its obligations under
this Plan and the Stock Option Agreements.
(F) Corporate Authority. Subject, in the case of this
Plan, to receipt of the requisite approval of its shareholders
referred to in Section 6.01, the execution and delivery of this
Plan and the Stock Option Agreements and the consummation of the
transactions contemplated hereby and thereby have been authorized
by all necessary corporate action on its part, and this Plan and
the Stock Option Agreements have been duly executed and delivered
by it, and each is a valid and binding agreement of it,
enforceable in accordance with its terms (except as may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer and similar laws of general
applicability relating to or affecting creditors rights or by
general equity principles).
:\ No Defaults. Except as Previously Disclosed in
Section 4.03(G) of its Disclosure Letter, subject to receipt of
the Regulatory Approvals, and expiration of the waiting periods,
referred to in Section 6.02 and the required filings under
federal and state securities laws, the execution, delivery and
performance of this Plan and the Stock Option Agreements and the
completion of the transactions contemplated hereby and thereby by
it, do not and will not (i) constitute a breach or violation of,
or a default under, any law, rule or regulation or any judgment,
decree, order, governmental permit or license, or agreement,
indenture or instrument of it or of any of its significant
subsidiaries or to which it or any of its significant
subsidiaries or properties is subject or bound, (ii) constitute a
breach or violation of, or a default under, its Articles of
Incorporation or by-laws, or (iii) require any consent or
approval under any such law, rule, regulation, judgment, decree,
order, governmental permit or license agreement, indenture or
instrument.
(H) Financial Reports and SEC Documents. Its Annual
Report on Form 10-K for the fiscal year ended December 31, 1994,
and all other reports, registration statements, definitive proxy
statements or information statements filed or to be filed by it
or any of its subsidiaries subsequent to December 31, 1994 under
the Securities Act of 1933, as amended (together with the rules
and regulations thereunder, the "Securities Act"), or under
Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange
Act of 1934, as amended (together with the rules and regulations
thereunder, the "Exchange Act"), in the form filed, or to be
filed (collectively, its "SEC Documents"), with the Securities
and Exchange Commission (the "SEC") (i) complied or will comply
as of the date of filing thereof in all material respects as to
form with the applicable requirements under the Exchange Act and
(ii) did not and will not contain as of the date of filing
thereof any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to
make the statements made therein, in light of the circumstances
under which they were made, not misleading; and each of the
balance sheets in or incorporated by reference into any such SEC
Document (including the related notes and schedules thereto)
fairly presents and will fairly present the financial position of
the entity or entities to which it relates as of its date and
each of the statements of income and changes in shareholders'
equity and cash flows or equivalent statements in such report and
documents (including any related notes and schedules thereto)
fairly presents and will fairly present the results of
operations, changes in shareholders' equity and changes in cash
flows, as the case may be, of the entity or entities to which it
relates for the periods set forth therein, in each case in
accordance with generally accepted accounting principles
consistently applied during the periods involved, except in each
case as may be noted therein, subject to normal and recurring
year-end audit adjustments in the case of unaudited statements.
All material agreements, contracts and other documents required
to be filed by it as exhibits to any SEC Document have been so
filed.
(I) Litigation; Regulatory Action. Except as
Previously Disclosed in Section 4.03(I) of its Disclosure Letter:
(1) no litigation or proceeding before any court
or governmental agency is pending against it or any of its
subsidiaries and, to the best of its knowledge, no such
litigation, proceeding or controversy has been threatened;
(2) neither it nor any of its subsidiaries or
properties is a party to or is subject to any order, decree,
agreement, memorandum of understanding or similar arrangement
with, or a commitment letter or similar submission to, or has
adopted any board resolution at the request of, any federal or
state governmental agency or authority charged with the
supervision or regulation of financial institutions or their
holding companies or the issuance of securities or engaged in the
insurance of deposits (including, without limitation, the Office
of the Comptroller of the Currency, the Board of Governors of the
Federal Reserve System and the Federal Deposit Insurance
Corporation) or the supervision or regulation of it or any of its
subsidiaries (collectively, the "Regulatory Authorities"); and
(3) neither it nor any of its subsidiaries has
been advised by any Regulatory Authority that such Regulatory
Authority is contemplating issuing or requesting (or is
considering the appropriateness of issuing or requesting) any
such order, decree, agreement, memorandum of understanding,
commitment letter or similar submission or any such resolutions.
(J) Compliance with Laws. Except as Previously
Disclosed in Section 4.03(J) of its Disclosure Letter, it and
each of its subsidiaries:
(1) is in compliance, in the conduct of its
business, with all applicable federal, state, local and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders
or decrees applicable thereto or to the employees conducting such
businesses, including, without limitation, the Equal Credit
Opportunity Act, the Fair Housing Act, the Community Reinvestment
Act, the Home Mortgage Disclosure Act and all other applicable
fair lending laws and other laws relating to discriminatory
business practices;
(2) has all permits, licenses, authorizations,
orders and approvals of, and has made all filings, applications
and registrations with, all Regulatory Authorities that are
required in order to permit them to conduct their businesses
substantially as presently conducted; all such permits, licenses,
certificates of authority, orders and approvals are in full force
and effect and, to the best of its knowledge, no suspension or
cancellation of any of them is threatened; and
(3) has received, since December 31, 1994, no
notification or communication from any Regulatory Authority
(i) asserting that it or any of its subsidiaries is not in
compliance with any of the statutes, regulations, or ordinances
which such Regulatory Authority enforces or (ii) threatening to
revoke any license, franchise, permit, or governmental
authorization or (iii) threatening or contemplating revocation or
limitation of, or which would have the effect of revoking or
limiting, federal deposit insurance (nor, to its knowledge, do
any grounds for any of the foregoing exist).
(K) Defaults; Properties.
(1) Except as Previously Disclosed in
Section 4.03(K) of its Disclosure Letter, neither it nor any of
its subsidiaries is in default under any contract, agreement,
commitment, arrangement, lease, insurance policy, or other
instrument to which it is a party, by which its respective
assets, business, or operations may be bound or affected, or
under which it or its respective assets, business, or operations
receives benefits, and there has not occurred any event that,
with the lapse of time or the giving of notice or both, would
constitute such a default.
(2) Except as disclosed or reserved against in
its SEC Documents, it and its subsidiaries have good and
marketable title, free and clear of all Liens (other than Liens
for current taxes not yet delinquent or pledges to secure
deposits) to all of the properties and assets, tangible or
intangible, reflected in its SEC Documents as being owned by it
or its subsidiaries as of the dates thereof. To its knowledge,
all buildings and all fixtures, equipment and other property and
assets are held under valid leases or subleases by it or its
subsidiaries enforceable in accordance with their respective
terms (except as may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer and
similar laws of general applicability affecting creditors' rights
or by general equity principles).
(L) No Brokers. All negotiations relative to this
Plan and the transactions contemplated hereby have been carried
on by it directly with the other party hereto and no action has
been taken by it that would give rise to any valid claim against
the other party hereto for a brokerage commission, finder's fee
or other like payment, other than in the case of Meridian, a fee
to be paid to Goldman, Sachs & Co., Morgan Stanley & Co.,
Incorporated and Lehman Brothers Inc., and, in the case of
CoreStates, a fee to be paid to J.P. Morgan & Co. Incorporated
and Keefe Bruyette & Woods, Inc., which, in each case, has been
previously disclosed to the other party.
(M) Employee Benefit Plans.
In the case of the representations and warranties
of Meridian:
(1) Section 4.03(M) of Meridian's Disclosure
Letter contains a complete list of all bonus, vacation, deferred
compensation, pension, retirement, profit-sharing, thrift,
savings, employee stock ownership, stock bonus, stock purchase,
restricted stock and stock option plans, all employment or
severance contracts, all medical, dental, disability, health and
life insurance plans, all other employee benefit and fringe
benefit plans, contracts or arrangements and any applicable
"change of control" or similar provisions in any plan, contract
or arrangement maintained or contributed to by it or any of its
subsidiaries for the benefit of officers, former officers,
employees, former employees, directors, former directors, or the
beneficiaries of any of the foregoing ("Compensation and Benefit
Plans").
(2) True and complete copies of its Compensation
and Benefit Plans, including, but not limited to, any trust
instruments and/or insurance contracts, if any, forming a part
thereof, and all amendments thereto have been supplied to the
other party.
(3) Each of its Compensation and Benefit Plans
has been administered in compliance with the terms thereof. All
"employee benefit plans" within the meaning of Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), other than "multiemployer plans" within the meaning of
Section 3(37) of ERISA ("Multiemployer Plans"), covering
employees or former employees of it and its subsidiaries (its
"Plans"), to the extent subject to ERISA, are in compliance in
all material respects with ERISA, the Code, the Age
Discrimination in Employment Act and other applicable laws. Each
Plan of it or its subsidiaries which is an "employee pension
benefit plan" within the meaning of Section 3(2) of ERISA
("Pension Plan") and which is intended to be qualified under
Section 401(a) of the Code has received (or has applied for) a
favorable determination letter from the Internal Revenue Service,
and it is not aware of any circumstances reasonably likely to
result in the revocation or denial of any such favorable
determination letter. Except as Previously Disclosed in
Section 4.03(M) of its Disclosure Letter, there is no pending or,
to its knowledge, threatened litigation or governmental audit,
examination or investigation relating to the Plans. Neither it
nor any of its subsidiaries has engaged in a transaction with
respect to any Plan that, assuming the taxable period of such
transaction expired as of the date hereof, could subject it or
any of its subsidiaries to a tax or penalty imposed by either
Section 4975 of the Code or Section 502(i) of ERISA.
(4) No liability under Subtitle C or D of
Title IV of ERISA has been or is expected to be incurred by it or
any of its subsidiaries with respect to any ongoing, frozen or
terminated "single-employer plan," within the meaning of
Section 4001(a)(15) of ERISA, currently or formerly maintained by
any of them, or the single-employer plan of any entity which is
considered one employer with it under Section 4001(a)(15) of
ERISA or Section 414 of the Code (an "ERISA Affiliate"). Neither
it nor any of its subsidiaries presently contributes to a
Multiemployer Plan, nor have they contributed to such a plan
within the past five calendar years. No notice of a "reportable
event," within the meaning of Section 4043 of ERISA for which the
30-day reporting requirement has not been waived, has been
required to be filed for any Pension Plan of it or any of its
subsidiaries or by any ERISA Affiliate within the past 12 months.
(5) All contributions, premiums and payments
required to be made under the terms of any Plan of it or any of
its subsidiaries have been made. Neither any Pension Plan of it
or any of its subsidiaries nor any single employer plan of an
ERISA Affiliate of it or any of its subsidiaries has an
accumulated funding deficiency (whether or not waived) within the
meaning of Section 412 of the Code or Section 302 of ERISA.
Neither it nor any of its subsidiaries has provided, or is
required to provide, security to any Pension Plan or to any
single-employer plan of an ERISA Affiliate pursuant to
Section 401(a)(29) of the Code.
(6) Under each Pension Plan of it or any of its
subsidiaries which is a single-employer plan, as of the last day
of the most recent plan year ended prior to the date hereof, the
actuarially determined present value of all benefit liabilities,
within the meaning of Section 4001(a)(16) of ERISA (as determined
on the basis of the actuarial assumptions contained in the Plan's
most recent actuarial valuation), did not exceed the then current
value of the assets of such Plan, and there has been no adverse
change in the financial condition of such Plan (with respect to
either assets or benefits) since the last day of the most recent
Plan year.
(7) Neither it nor any of its subsidiaries has
any obligations for retiree health and life benefits under any
plan, except as Previously Disclosed in Section 4.03(M) of its
Disclosure Letter.
(8) Each Compensation and Benefit Plan which is a
group health plan provides continuation coverage for separating
employees and "qualified beneficiaries" in accordance with the
provisions of Section 4980B(f) of the Code. Such group health
plans are in compliance with Section 1862(b)(1) of the Social
Security Act.
(9) In the case of the representations and
warranties of Meridian, except as Previously Disclosed in
Section 4.03(M) of Meridian's Disclosure Letter, neither the
execution and delivery of this Plan nor the consummation of the
transactions contemplated hereby will (i) result in any payment
(including, without limitation, severance, unemployment
compensation, golden parachute or otherwise) becoming due to any
director or any employee of Meridian or any of its subsidiaries
under any Compensation and Benefit Plan or otherwise from
Meridian or any of its subsidiaries, (ii) increase any benefits
otherwise payable under any Compensation and Benefit Plan or
(iii) result in any acceleration of the time of payment or
vesting of any such benefit.
(N) Labor Matters. Neither it nor any of its
subsidiaries is a party to, or is bound by, any collective
bargaining agreement, contract or other agreement or
understanding with a labor union or labor organization, nor is it
or any of its subsidiaries the subject of a proceeding asserting
that it or any such subsidiary has committed an unfair labor
practice (within the meaning of the National Labor Relations Act)
or seeking to compel it or such subsidiary to bargain with any
labor organization as to wages and conditions of employment, nor
is there any strike or other labor dispute involving it or any of
its subsidiaries, pending or, to the best of its knowledge,
threatened, nor is it aware of any activity involving it or any
of its subsidiaries' employees seeking to certify a collective
bargaining unit or engaging in any other organization activity.
(O) Insurance. It and its subsidiaries have taken all
requisite action (including without limitation the making of
claims and the giving of notices) pursuant to its directors' and
officers' liability insurance policy or policies in order to
preserve all rights thereunder with respect to all matters (other
than matters arising in connection with this Plan and the
transactions contemplated hereby) that are known to it.
(P) Takeover Laws; Rights Plans.
(1) It has taken all action required to be taken
by it in order to opt out or exempt this Plan and the relevant
Stock Option Agreement, and the transactions contemplated hereby
and thereby, from, and this Plan and the relevant Stock Option
Agreement and the transactions contemplated hereby and thereby
are exempt from, the requirements of any "business combination,"
"moratorium," "disgorgement," "control share," or other
applicable antitakeover laws and regulations (collectively,
"Takeover Laws") of the Commonwealth of Pennsylvania, including
Chapter 25 of the BCL. In the case of the representations and
warranties of Meridian, the Plan has been approved by greater
than 66-2/3% of the members of the Meridian Board of Directors,
and the provisions of Articles Eleventh and Sixteenth of
Meridian's Articles of Incorporation requiring a supermajority
vote do not and will not apply to this Plan or the Meridian Stock
Option Agreement, the Merger or the transactions contemplated
hereby or thereby.
(2) In the case of the representations and
warranties of Meridian, it has (i) duly entered into an amendment
to the Meridian Rights Agreement in substantially the form of
Exhibit C, and (ii) taken all other action necessary or
appropriate so that, the entering into of this Plan and the Stock
Option Agreements and the completion of the transactions
contemplated hereby and thereby (including without limitation the
Merger and the exercise of the Option (as defined in the relevant
Stock Option Agreement)) do not and will not result in the
ability of any person to exercise any rights under the Meridian
Rights Agreement, or enable or require the Meridian Rights to
separate from the shares of common stock to which they are
attached or to be triggered or become exercisable.
(3) In the case of the representations and
warranties of Meridian, no "Distribution Date," "Stock
Acquisition Date" or "Triggering Event" (as such terms are
defined in the Meridian Rights Agreement) has occurred.
(4) In the case of the representations and
warranties of CoreStates, CoreStates has not entered into any
agreement of similar effect as the Meridian Rights Agreement;
provided, however, that CoreStates may enter into an agreement of
similar effect as the Meridian Rights Agreement if (i) provision
is made so that each share of CoreStates Common Stock issued in
the Merger has attached to it the same number of rights as are
attached to then-outstanding shares of CoreStates Common Stock,
and (ii) CoreStates takes actions with respect to such rights
plan substantially equivalent to those specified in
paragraphs (1), (2) and (3) above.
(Q) Vote Required. In the case of the representations
and warranties of Meridian, the affirmative vote of the holders
of a majority of the shares of its Common Stock present and
voting at the meeting referred to in Section 5.02 is the only
vote of the holders of any class or series of its capital stock
necessary to approve this Plan and the transactions contemplated
hereby, and in the case of the representations and warranties of
CoreStates, the affirmative vote of the holders of a majority of
the shares of its Common Stock present and voting at the meeting
referred to in Section 5.02 is the only vote of the holders of
any class or series of its capital stock necessary to approve
(i) the amendment to its Articles of Incorporation referred to in
Section 3.07 and (ii) this Plan and the transactions contemplated
hereby.
(R) Environmental Matters. Other than as previously
disclosed in Section 4.03(R) of its Disclosure Letter, there are
no proceedings, claims, actions, or investigations of any kind,
pending or threatened, in any court, agency, or other government
authority or in any arbitral body, arising under any
Environmental Law; there is no reasonable basis for any such
proceeding, claim, action or investigation; there are no
agreements, orders, judgments, decrees, letters or memoranda by
or with any court, regulatory agency or other governmental
authority, or with any other entity, imposing any liability or
obligation; there are and have been no Materials of Environmental
Concern or other conditions at any property (whether or not
owned, operated, or otherwise used by, or the subject of a
security interest on behalf of, it or any of its subsidiaries);
and there are no reasonably anticipated future events,
conditions, circumstances, practices, plans, or legal
requirements that could give rise to obligations under any
Environmental Law. "Environmental Laws" means the statutes,
rules, regulations, ordinances, codes, orders, decrees, and any
other laws (including common law) of any foreign, federal, state,
local, and any other governmental authority, regulating, relating
to or imposing liability or standards of conduct concerning
pollution, or protection of human health-and-safety or of the
environment, as in effect on or prior to the date of this
Agreement. "Materials of Environmental Concern" means any
hazardous or toxic substances, materials, wastes, pollutants, or
contaminants, including without limitation those defined or
regulated as such under any Environmental Law, and any other
substance the presence of which may give rise to liability under
any Environmental Law.
(S) Tax Reports. Except as Previously Disclosed in
Section 4.03(S) of its Disclosure Letter: (i) all reports and
returns with respect to Taxes (as defined below) that are
required to be filed by or with respect to it or its
subsidiaries, including without limitation consolidated federal
income tax returns of it and its subsidiaries (collectively, the
"Tax Returns"), have been timely filed, or requests for
extensions have been timely filed and have not expired, and such
Tax Returns were true, complete and accurate; (ii) all taxes
(which shall include federal, state, local or foreign income,
gross receipts, windfall profits, severance, property,
production, sales, use, license, excise, franchise, employment,
withholding or similar taxes imposed on the income, properties or
operations of it or its subsidiaries, together with any interest,
additions, or penalties with respect thereto and any interest in
respect of such additions or penalties, collectively the "Taxes")
shown to be due on such Tax Returns have been paid in full;
(iii) all Taxes due with respect to completed and settled
examinations have been paid in full; (iv) no issues have been
raised by the relevant taxing authority in connection with the
examination of any of such Tax Returns; and (v) no waivers of
statutes of limitations (excluding such statutes that relate to
years currently under examination by the Internal Revenue
Service) have been given by or requested with respect to any
Taxes of it or any of its subsidiaries.
(T) Pooling; Reorganization. As of the date hereof,
it is aware of no reason why the Merger will fail to qualify
(i) for pooling-of-interests accounting treatment or (ii) as a
reorganization under Section 368(a) of the Code.
(U) No Material Adverse Effect. Since December 31,
1994, except as previously disclosed in its SEC Documents filed
with the SEC on or before the date hereof or in any Section of
its Disclosure Letter, (i) it and its subsidiaries have conducted
their respective businesses in the ordinary and usual course
(excluding the incurrence of expenses related to this Plan and
the transactions contemplated hereby) and (ii) no event has
occurred or circumstance arisen that, individually or taken
together with all other facts, circumstances and events
(described in any paragraph of Section 4.03 or otherwise), is
reasonably likely to have a Material Adverse Effect with respect
to it.
V. COVENANTS.
Meridian hereby covenants to and agrees with CoreStates, and
CoreStates hereby covenants to and agrees with Meridian, that:
5.01. Reasonable Best Efforts. Subject to the terms and
conditions of this Plan, it shall use its reasonable best efforts
in good faith to take, or cause to be taken, all actions, and to
do, or cause to be done, all things necessary, proper or
desirable, or advisable under applicable laws, so as to permit
consummation of the Merger as promptly as reasonably practicable
and to otherwise enable consummation of the transactions
contemplated hereby and shall cooperate fully with the other
party hereto to that end. Meridian shall, and shall cause its
officers, directors and employees to cooperate with and assist
CoreStates in the formulation of a plan or plans of integration
of the operation of Meridian with those of CoreStates.
5.02. Shareholder Approvals. Each of them shall take, in
accordance with applicable law, National Association of
Securities Dealers Automated Quotation ("Nasdaq") National Market
System ("NMS") rules, in the case of Meridian, and NYSE rules, in
the case of CoreStates, and its respective articles of
incorporation and by-laws, all action necessary to convene,
respectively, (i) an appropriate meeting of shareholders of
CoreStates to consider and vote upon (A) an amendment to the
articles of incorporation of CoreStates to increase the number of
authorized shares of CoreStates Common Stock in an amount at
least sufficient to consummate the Merger and the transactions
contemplated thereby and (B) the approval of this Plan (the
"CoreStates Meeting"), and (ii) an appropriate meeting of
shareholders of Meridian to consider and vote upon the approval
of this Plan (the "Meridian Meeting"; each of the CoreStates
Meeting and the Meridian meeting, a "Meeting"), respectively, as
promptly as practicable after the Registration Statement (as
defined in Section 5.03) is declared effective. The Board of
Directors of each of CoreStates and Meridian will recommend
approval of such matters, and each of CoreStates and Meridian
will take all reasonable lawful action to solicit such approval
by its respective shareholders. Notwithstanding the foregoing,
the Board of Directors of Meridian may determine not to recommend
or solicit approval of the Merger or may withdraw its
recommendation in favor of the Merger if it receives a written
opinion of counsel that recommending or soliciting approval of
the Merger, or failing to withdraw its recommendation, would
constitute a breach or failure on the part of the Meridian Board
of Directors to perform the duties of their office and any
liability for such breach or failure would not be covered under
Meridian's directors' and officers' liability insurance policy.
Meridian and CoreStates shall coordinate and cooperate with
respect to the timing of such meetings and shall use their best
efforts to hold such meetings on the same day.
5.03. Registration Statement.
(A) Each of CoreStates and Meridian agrees to
cooperate in the preparation of a registration statement on
Form S-4 (the "Registration Statement") to be filed by CoreStates
with the SEC in connection with the issuance of CoreStates Common
Stock in the Merger (including the joint proxy statement and
prospectus and other proxy solicitation materials of CoreStates
and Meridian constituting a part thereof (the "Joint Proxy
Statement")). Each of Meridian and CoreStates agrees to use all
reasonable efforts to cause the Registration Statement to be
declared effective under the Securities Act as promptly as
reasonably practicable after filing thereof. CoreStates also
agrees to use all reasonable efforts to obtain all necessary
state securities law or "Blue Sky" permits and approvals required
to carry out the transactions contemplated by this Agreement.
Meridian agrees to furnish to CoreStates all information
concerning Meridian, its subsidiaries, officers, directors and
shareholders as may be reasonably requested in connection with
the foregoing.
(B) Each of Meridian and CoreStates agrees, as to
itself and its subsidiaries, that none of the information
supplied or to be supplied by it for inclusion or incorporation
by reference in (i) the Registration Statement will, at the time
the Registration Statement and each amendment thereto, if any,
becomes effective under the Securities Act, contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading, and (ii) the Joint Proxy Statement and
any amendment or supplement thereto will, at the date of mailing
to shareholders and at the times of the CoreStates Meeting and
the Meridian Meeting, contain any statement which, in the light
of the circumstances under which such statement is made, is false
or misleading with respect to any material fact, or which will
omit to state any material fact necessary in order to make the
statements therein not false or misleading or necessary to
correct any statement in any earlier communication with respect
to the solicitation of any proxy for the same meeting in the
Joint Proxy Statement or any amendment or supplement thereto.
Each of Meridian and CoreStates agrees that the Joint Proxy
Statement (except, in the case of Meridian, with respect to
portions thereof prepared by CoreStates, and except, in the case
of CoreStates, with respect to portions thereof prepared by
Meridian) will comply as to form in all material respects with
the requirements of the Exchange Act and the rules and
regulations of the SEC thereunder, and the Registration Statement
(except, in the case of Meridian, with respect to portions
thereof prepared by CoreStates, and except, in the case of
CoreStates, with respect to portions thereof prepared by
Meridian) will comply as to form in all material respects with
the requirements of the Securities Act and the rules and
regulations of the SEC thereunder.
(C) In the case of CoreStates, CoreStates will advise
Meridian, promptly after CoreStates receives notice thereof, of
the time when the Registration Statement has become effective or
any supplement or amendment has been filed, of the issuance of
any stop order or the suspension of the qualification of the
CoreStates Common Stock for offering or sale in any jurisdiction,
of the initiation or threat of any proceeding for any such
purpose, or of any request by the SEC for the amendment or
supplement of the Registration Statement or for additional
information.
5.04. Press Releases. Except as otherwise required by
applicable law or the rules of the Nasdaq NMS or NYSE, neither
CoreStates nor Meridian shall, or shall permit any of its
subsidiaries to, issue or cause the publication of any press
release or other public announcement with respect to, or
otherwise make any public statement concerning, the transactions
contemplated by this Plan or the Stock Option Agreements without
the consent of the other party, which consent shall not be
unreasonably withheld.
5.05. Access; Information.
(A) Upon reasonable notice, it shall afford the other
party and its officers, employees, counsel, accountants and other
authorized representatives, access, during normal business hours
throughout the period prior to the Effective Date, to all of its
properties, books, contracts, commitments and records and, during
such period, it shall furnish promptly to it (i) a copy of each
material report, schedule and other document filed by it pursuant
to the requirements of federal or state securities or banking
laws, and (ii) all other information concerning the business,
properties and personnel of it as the other may reasonably
request; and (B) it will not use any information obtained
pursuant to this Section 5.05 for any purpose unrelated to the
consummation of the transactions contemplated by this Plan and,
if this Plan is terminated, will hold all information and
documents obtained pursuant to this paragraph in confidence (as
provided in Section 8.06) unless and until such time as such
information or documents become publicly available other than by
reason of any action or failure to act by it or as it is advised
by counsel that any such information or document is required by
law or applicable Nasdaq or NYSE rules to be disclosed. No
investigation by either party of the business and affairs of
another shall affect or be deemed to modify or waive any
representation, warranty, covenant or agreement in this Plan, or
the conditions to either party's obligation to complete the
transactions contemplated by this Plan.
5.06. Acquisition Proposals. Without the prior written
consent of the other, neither Meridian nor CoreStates shall, and
each of them shall cause its respective subsidiaries not to, and
each of them shall direct its officers, directors and employees
and bankers, financial advisors, attorneys, accountants and other
representatives ("Representatives") not to, solicit or encourage
inquiries or proposals with respect to, or engage in any
negotiations concerning, or provide any confidential information
to, or have any discussions with, any person (other than the
other party hereto) relating to a Takeover Proposal, or enter
into any agreement with respect to or take any action to endorse
or recommend a Takeover Proposal. As used herein, the term
"Takeover Proposal" shall mean any proposal for a merger,
consolidation or other business combination involving such party
or such subsidiary or any of its significant subsidiaries (other
than a merger, consolidation or other business combination in
which such party is the surviving corporation), or any tender or
exchange offer or other plan, proposal or offer by any person
(other than the other party hereto) to acquire in any manner 10%
or more of the shares of any class of voting securities of, or
20% or more of the assets of, such party or any of its
significant subsidiaries, other than pursuant to the transactions
contemplated by this Plan. Each of CoreStates and Meridian shall
advise the other orally (within one business day) and in writing
(as promptly as practicable), in reasonable detail, of any such
inquiry or proposal which it or any of its subsidiaries or any
Representative may receive and if such inquiry or proposal is in
writing, then CoreStates or Meridian, as the case may be, shall
deliver to the other a copy of such inquiry or proposal as
promptly as practicable after the receipt thereof.
5.07. Affiliate Agreements.
(A) Not later than the 15th day prior to the mailing
of the Joint Proxy Statement, CoreStates shall deliver to
Meridian, and Meridian shall deliver to CoreStates, a schedule of
each person that, to the best of its knowledge, is or is
reasonably likely to be, as of the date of the relevant Meeting,
deemed to be an "affiliate" of it (each, an "Affiliate") as that
term is used in Rule 145 under the Securities Act or SEC
Accounting Series Releases 130 and 135.
(B) Each of Meridian and CoreStates shall use its
respective reasonable best efforts to cause each person who may
be deemed to be an Affiliate of Meridian or CoreStates, as the
case may be, to execute and deliver to Meridian and CoreStates on
a date at least 40 days prior to the Merger an agreement in the
form attached hereto as Exhibit D or Exhibit E, respectively.
5.08. Certain Modifications.
In the case of Meridian, Meridian agrees to amend its
Dividend Reinvestment Plan ("DRP") so that after the execution of
this Plan, no original issue shares or treasury shares of
Meridian Common Stock will be issued under the DRP.
5.09. Takeover Laws. No party shall take any action that
would cause the transactions contemplated by this Plan and/or the
Stock Option Agreements to be subject to requirements imposed by
any Takeover Law and each of them shall take all necessary steps
within its control to exempt (or ensure the continued exemption
of) the transactions contemplated by this Plan and the Stock
Option Agreements from, or if necessary challenge the validity or
applicability of, any applicable Takeover Law, as now or
hereafter in effect, including, without limitation, applicable
provisions of Chapter 25 of the BCL, other Takeover Laws of the
Commonwealth of Pennsylvania or Takeover Laws of any other State
that purport to apply to this Plan, the Stock Option Agreements
or the transactions contemplated hereby or thereby.
5.10. Shares Listed. In the case of CoreStates, CoreStates
shall use its reasonable best efforts to cause to be approved for
listing, prior to the Effective Date, on the NYSE, upon official
notice of issuance, the shares of CoreStates Common Stock to be
issued to the holders of Meridian Common Stock in the Merger.
5.11. Regulatory Applications.
(A) Each party shall promptly (i) prepare and submit
applications to the appropriate Regulatory Authorities and
(ii) make all other appropriate filings to secure all other
approvals, consents and rulings, which are necessary for it to
complete the Merger.
(B) Each of CoreStates and Meridian agrees to
cooperate with the other and, subject to the terms and conditions
set forth in this Plan, use its reasonable best efforts to
prepare and file all necessary documentation, to effect all
necessary applications, notices, petitions, filings and other
documents, and to obtain all necessary permits, consents, orders,
approvals and authorizations of, or any exemption by, all third
parties and Regulatory Authorities necessary or advisable to
complete the transactions contemplated by this Plan, including
without limitation the regulatory approvals referred to in
Section 6.02. Each of CoreStates and Meridian shall have the
right to review in advance, and to the extent practicable each
will consult with the other, in each case subject to applicable
laws relating to the exchange of information, with respect to all
material written information submitted to, any third party or any
Regulatory Authorities in connection with the transactions
contemplated by this Plan. In exercising the foregoing right,
each of the parties hereto agrees to act reasonably and as
promptly as practicable. Each party hereto agrees that it will
consult with the other party hereto with respect to the obtaining
of all material permits, consents, approvals and authorizations
of all third parties and Regulatory Authorities necessary or
advisable to complete the transactions contemplated by this Plan
and each party will keep the other party apprised of the status
of material matters relating to completion of the transactions
contemplated hereby.
(C) Each party agrees, upon request, to furnish the
other party with all information concerning itself, its
subsidiaries, directors, officers and shareholders and such other
matters as may be reasonably necessary or advisable in connection
with any filing, notice or application made by or on behalf of
such other party or any of its subsidiaries to any Regulatory
Authority.
5.12. Indemnification.
(A) For six years after the Effective Date (except as
such time period is inapplicable as described below), CoreStates
shall indemnify, defend and hold harmless the present and former
directors, officers and employees of Meridian and its
subsidiaries (each, an "Indemnified Party") against all costs or
expenses (including reasonable attorneys' fees), judgments,
fines, losses, claims, damages or liabilities (collectively,
"Costs") incurred in connection with any claim, action, suit,
proceeding or investigation, whether civil, criminal,
administrative or investigative, arising out of actions or
omissions occurring at or prior to the Effective Time (including,
without limitation and without regard to the six year time limit
otherwise imposed by this Section 5.12(A), the transactions
contemplated by this Plan and the Meridian Stock Option
Agreement) to the fullest extent that such persons are
indemnified under Meridian's articles of incorporation and
by-laws as in effect on the date hereof (and during such period
CoreStates shall also advance expenses (including expenses
described in Section 5.12(E)) as incurred to the fullest extent
permitted under Meridian's articles of incorporation and by-laws
as in effect on the date hereof, provided that the person to whom
expenses are advanced provides an undertaking to repay such
advances if it is ultimately determined that such person is not
entitled to indemnification with no bond or security to be
required). Notwithstanding the foregoing or anything to the
contrary contained elsewhere herein, CoreStates's indemnity
agreement set forth above shall be limited to cover claims only
to the extent that such claims are not paid under Meridian's
directors' and officers' liability insurance policies referred to
in Section 5.12(B) (or any substitute policy permitted by such
section).
(B) CoreStates shall maintain Meridian's existing
directors' and officers' liability insurance policy (or a policy
providing comparable coverage amounts on terms no less favorable,
including CoreStates's existing policy if it meets the foregoing
standard) covering persons who are currently covered by such
insurance for a period of six years after the Effective Date;
provided, however, that in no event shall CoreStates be obligated
to expend, in order to maintain or provide insurance coverage
pursuant to this Section 5.12(B), any amount per annum in excess
of 250% of the amount of the annual premiums paid as of the date
hereof by Meridian for such insurance (the "Maximum Amount"). If
the amount of the annual premiums necessary to maintain or
procure such insurance coverage exceeds the Maximum Amount,
CoreStates shall use all reasonable efforts to maintain the most
advantageous policies of directors' and officers' insurance
obtainable for an annual premium equal to the Maximum Amount. In
the event that CoreStates acts as its own insurer for all of its
directors and officers with respect to matters typically covered
by a directors' and officers' liability insurance policy,
CoreStates's obligations under this Section 5.12(B) may be
satisfied by such self insurance, so long as its senior debt
ratings by Standard & Poor's Corporation and Moody's Investors
Services, Inc. are not lower than such ratings as of the date
hereof.
(C) Any Indemnified Party wishing to claim
indemnification under Section 5.12(A), upon learning of any
claim, action, suit, proceeding or investigation described above,
shall promptly notify CoreStates thereof; provided that the
failure so to notify shall not affect the obligations of
CoreStates under Section 5.12(A) unless and to the extent
CoreStates has no actual knowledge of such claim, action, suit,
proceeding or investigation and such failure so to notify
materially increases CoreStates's liability under such
Section 5.12(A).
(D) If CoreStates or any of its successors or assigns
shall consolidate with or merge into any other entity and shall
not be the continuing or surviving entity of such consolidation
or merger or shall transfer all or substantially all of its
assets to any entity, then and in each case, proper provision
shall be made so that the successors and assigns of CoreStates
shall assume the obligations set forth in this Section 5.12.
(E) CoreStates shall pay all reasonable costs,
including attorneys' fees, that may be incurred by any
Indemnified Party in enforcing the indemnity and other
obligations provided for in this Section 5.12. The rights of
each Indemnified Party hereunder shall be in addition to any
other rights such Indemnified Party may have under applicable
law.
5.13. Benefit Plans.
(A) As soon as practicable after the Effective Date,
CoreStates shall take all reasonable action so that employees of
Meridian and its subsidiaries shall be generally entitled to
participate in the pension, severance, benefit, vacation, sick
pay and similar plans on substantially the same terms and
conditions as employees of CoreStates and its subsidiaries, and
until such time, the plans of Meridian shall remain in effect;
provided, that no employee of Meridian who becomes an employee of
CoreStates and who elects coverage by CoreStates's medical
insurance plans shall be excluded from coverage thereunder (for
such employee or any other covered person) on the basis of a
preexisting condition that was not also excluded under Meridian's
medical insurance plans, but to the extent such preexisting
condition was excluded from coverage under Meridian's medical
insurance plans, this proviso shall not require coverage for such
preexisting condition. For the purpose of determining
eligibility to participate in such plans, eligibility for benefit
forms and subsidies, the vesting of benefits under such plans and
the accrual of benefits under such plans (including, but not
limited to, any pension, severance, 401(k), employee stock
ownership, vacation and sick pay), without duplicating any
benefits, CoreStates shall give effect to years of service (and
for purposes of qualified and nonqualified pension plans, prior
earnings) with Meridian or its subsidiaries (and to the extent
required by such plan, service with other corporations), as the
case may be, as if they were with CoreStates or its subsidiaries.
CoreStates also shall, and shall cause its subsidiaries to,
continue to honor, to the extent required by law, in accordance
with their terms all employment, severance, consulting and other
compensation contracts, disclosed in Section 4.03(M) of the
Meridian Disclosure Letter, between Meridian or any of its
subsidiaries and any current or former director, officer or
employee thereof. CoreStates hereby expressly assumes and agrees
to perform the termination agreements with the individuals listed
on Schedule 5.13(a) hereto in the same manner and to the same
extent that Meridian would be required to perform such agreements
if CoreStates had not succeeded to the business of Meridian. In
addition, Meridian will enter into agreements with the first two
individuals listed on Schedule 5.13(a), which shall be generally
consistent with the summary term sheet, attached hereto as
Exhibit F, and shall supersede the termination agreements
currently in effect. The parties will work in good faith to
treat affected employees in an equitable manner under all
supplemental plans, policies or arrangements.
(B) As soon as practicable, but no more than 60 days
after the date hereof, Meridian shall enter into agreements with
those individuals listed on Schedule 5.13(b) hereto. Such
agreements shall be substantially in the form attached hereto as
Exhibit G. Upon execution of each such agreement, any prior
employment, salary continuation, termination, severance or other
similar agreement between such individual and Meridian or any of
its subsidiaries shall be cancelled and shall be of no further
force or effect.
(C) Any executive of Meridian (or of an affiliated
company and who was set forth on a list delivered to CoreStates
prior to the execution hereof for the following purpose) who on
the date hereof has an annual salary rate of $120,000 or more or
is listed on Disclosure Letter 5.13(c) (the "Covered Employees"),
shall be covered on and after the Effective Date by an executive
severance policy (the "Policy") adopted by CoreStates (which
policy shall also benefit similarly situated CoreStates
executives), which shall provide severance benefits between 12
and 18 months (consistent with existing commitments made by
Meridian) of (i) salary continuation, (ii) the Covered Employee's
1995 target annual bonus amount under the Meridian annual bonus
plan and (iii) continuation of medical benefits in the event that
an executive is terminated other than for "Cause", as defined in
the Policy, or voluntarily terminates employment due to certain
delineated demotions; provided, however, that the average of the
severance attributable to all Covered Employees shall not exceed
15 months. The Policy shall generally be based on the proposed
Meridian Severance Policy, attached hereto as Exhibit H.
(D) To the extent CoreStates provides Meridian
assurances, reasonably satisfactory to Meridian's Board of
Directors, that it will honor the obligations of Meridian under
the related plans, Meridian shall take all steps necessary to
ensure that no amounts will be contributed to any grantor trust
by Meridian or its subsidiaries on account of any compensation or
benefit plan, program or arrangement benefitting one or more
employees of Meridian, including, but not limited to, the
Meridian Supplemental Executive Retirement Plan, the Meridian
Supplemental Salary Reduction Plan and the Meridian Retirement
Restoration Plan. Any such grantor trust shall be terminated and
shall be of no further force or effect as of the Effective Date,
to the extent permitted by law.
(E) Any CoreStates or Meridian (and, in general, any
employee of an affiliated company thereof) employee who (i) is
not entering into an agreement pursuant to Section 5.13(B)
hereof, (ii) is not covered by any termination or severance
agreement and (iii) is not covered by the Policy described in
Section 5.13(C) above shall receive severance payments if he or
she is involuntarily terminated from employment during the period
commencing on the Effective Date and ending one year thereafter
equal to the greater of six months of salary or the amount
provided for under the applicable CoreStates severance policy.
In addition, each such terminated employee shall be entitled to
continued coverage under CoreStates's medical insurance plans (or
the equivalent thereof) for a period of time which is coextensive
with the period on which the employee's severance is based.
(F) Meridian and CoreStates shall take all actions
necessary to ensure that on or after the Effective Date the
Meridian Employee Stock Ownership Plan (the "ESOP") shall
continue in effect for employees of Meridian and CoreStates,
except that CoreStates Common Stock shall be held by the ESOP, as
successor to Meridian Common Stock.
5.14. Certain Director and Officer Positions.
(A) CoreStates agrees to fix the size of its Board at
15 members and to cause five members of Meridian's Board of
Directors consisting of Mr. McCullough and Mr. Strawbridge and
three other current directors of Meridian selected by CoreStates
from a list of six persons, nominated by Meridian and willing so
to serve subject to any applicable legal restrictions ("Former
Meridian Directors") to be elected or appointed as directors of
CoreStates at, or as promptly as practicable after, the Effective
Time. Two of the Former Meridian Directors, including
Mr. McCullough, shall be appointed to the class of the Board of
Directors of CoreStates elected by the shareholders of CoreStates
at the annual meeting of CoreStates immediately preceding the
Effective Date. Two of the Former Meridian Directors shall be
appointed to the class of the Board of Directors of CoreStates
elected by the shareholders of CoreStates at the annual meeting
of CoreStates immediately preceding the annual meeting referenced
in the preceding sentence. The remaining Former Meridian
Director shall be appointed to the remaining class of the
CoreStates Board of Directors.
(B) CoreStates agrees to cause that number of Former
Meridian Directors to be elected or appointed as members of the
Executive Committee of the Board of Directors of CoreStates at,
or as promptly as practicable after, the Effective Time as shall
constitute one-third of the members of such committee and which
Former Meridian Directors shall include Mr. McCullough and other
Former Meridian Directors agreed upon by the Chief Executive
Officers of Meridian and CoreStates prior to the Effective Time.
In the event Meridian Bank is merged into CoreStates Bank, N.A.,
the Board of Directors of CoreStates Bank, N.A. immediately
following the Merger shall consist of that number of former
Meridian Bank directors as bears the same proportion to the total
number of directors of CoreStates Bank, N.A. as the number of
Former Meridian Directors bears to the total number of directors
of CoreStates.
(C) At the Effective Time, CoreStates's Board of
Directors shall elect or appoint (i) Mr. McCullough as President
and Chief Operating Officer of CoreStates, (ii) Mr. Sparks as
Chief Financial Officer of CoreStates, and (iii) each of them as
members of the Office of the Chairman.
5.15. Notification of Certain Matters. Each of Meridian
and CoreStates shall give prompt notice to the other of any fact,
event or circumstance known to it that (i) is reasonably likely,
individually or taken together with all other facts, events and
circumstances known to it, to result in any Material Adverse
Effect with respect to it or (ii) would cause or constitute a
material breach of any of its representations, warranties,
covenants or agreements contained herein.
5.16. Dividend Adjustment. After the date of this
Agreement, each of CoreStates and Meridian shall coordinate with
the other the payment of dividends with respect to the CoreStates
Common Stock and Meridian Common Stock and the record dates and
payment dates relating thereto, it being the intention of the
parties hereto that holders of CoreStates Common Stock and
Meridian Common Stock shall not receive two dividends, or fail to
receive one dividend, for any single calendar quarter with
respect to their shares of CoreStates Common Stock and/or
Meridian Common Stock or any shares of CoreStates Common Stock
that any such holder receives in exchange for such shares of
Meridian Common Stock in the Merger.
5.17. Post-Merger Operations. It is the present intention
of CoreStates that the Continuing Corporation maintain a
substantial and prominent presence in the Reading market and, in
connection therewith, shall continue to use and occupy Meridian's
Spring Ridge Operations Center and, upon completion thereof,
Meridian's headquarters building currently under construction in
Reading, subject in each such case to such changes in business
plans as the Board of Directors of the Continuing Corporation may
determine to be in the best interests of the Continuing
Corporation and its shareholders, employees, customers and the
communities it serves.
VI. CONDITIONS TO CONSUMMATION OF THE MERGER.
The obligations of each of the parties to consummate the
Merger is conditioned upon the satisfaction at or prior to the
Effective Time of each of the following (except that only
Meridian's obligations are conditioned upon satisfaction of
Section 6.06 and only CoreStates's obligations are conditioned
upon satisfaction of Sections 6.07 and 6.12):
6.01. Shareholder Vote. Approval of (i) this Plan by the
requisite votes of the shareholders of Meridian and CoreStates
and (ii) in the case of CoreStates, the amendment to its Articles
of Incorporation by the requisite vote of the shareholders of
CoreStates;
6.02. Regulatory Approvals. Procurement by CoreStates and
Meridian of all requisite approvals and consents of Regulatory
Authorities and the expiration of the statutory waiting period or
periods relating thereto and such approvals and consents shall
not impose any condition or restriction upon the Continuing
Corporation or its subsidiaries which would be reasonably
expected either (i) to have a Material Adverse Effect after the
Effective Time on the present or prospective consolidated
financial condition, business or operating results of the
Continuing Corporation, or (ii) to prevent the parties from
realizing the major portion of the economic benefits of the
Merger and the transactions contemplated thereby that they
currently anticipate obtaining therefrom;
6.03. Third Party Consents. All consents or approvals of
all persons (other than Regulatory Authorities) required for the
completion of the Merger shall have been obtained and shall be in
full force and effect, unless the failure to obtain any such
consent or approval is not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on
Meridian or CoreStates;
6.04. No Injunction, Etc. No order, decree or injunction
of any court or agency of competent jurisdiction shall be in
effect, and no law, statute or regulation shall have been enacted
or adopted, that enjoins, prohibits or makes illegal consummation
of the Merger or any of the other transactions contemplated
hereby;
6.05. Pooling Letters. Meridian shall have received from
KPMG Peat Marwick LLP, independent auditors for Meridian, and
CoreStates shall have received from Ernst & Young, independent
auditors for CoreStates, letters, dated the date of or shortly
prior to each of the mailing dates of the Joint Proxy Statement
and the Effective Date, to the effect that the Merger, if
consummated in accordance with this Plan, qualifies for pooling
of interests accounting treatment;
6.06. Representations, Warranties and Covenants of
CoreStates. (i) Each of the representations and warranties
contained herein of CoreStates shall be true and correct as of
the date of this Plan and upon the Effective Date with the same
effect as though all such representations and warranties had been
made on the Effective Date, except for any such representations
and warranties made as of a specified date, which shall be true
and correct as of such date, in any case subject to the standards
established by Section 4.02, (ii) each and all of the agreements
and covenants of CoreStates to be performed and complied with
pursuant to this Plan on or prior to the Effective Date shall
have been duly performed and complied with in all material
respects, and (iii) Meridian shall have received a certificate
signed by the Chief Financial Officer of CoreStates, dated the
Effective Date, to the effect set forth in clauses (i) and (ii);
6.07. Representations, Warranties and Covenants of
Meridian. (i) Each of the representations and warranties
contained herein of Meridian shall be true and correct as of the
date of this Plan and upon the Effective Date with the same
effect as though all such representations and warranties had been
made on the Effective Date, except for any such representations
and warranties made as of a specified date, which shall be true
and correct as of such date, in any case subject to the standards
established by Section 4.02, (ii) each and all of the agreements
and covenants of Meridian to be performed and complied with
pursuant to this Plan on or prior to the Effective Date shall
have been duly performed and complied with in all material
respects, and (iii) CoreStates shall have received a certificate
signed by the Chief Financial Officer of Meridian, dated the
Effective Date, to the effect set forth in clauses (i) and (ii);
6.08. Effective Registration Statement. The Registration
Statement shall have become effective and no stop order
suspending the effectiveness of the Registration Statement shall
have been issued and no proceedings for that purpose shall have
been initiated or threatened by the SEC or any other Regulatory
Authority;
6.09. Blue-Sky Permits. CoreStates shall have received all
state securities laws and "blue sky" permits necessary to
consummate the Merger;
6.10. Tax Opinion. CoreStates shall have received an
opinion from Simpson Thacher & Bartlett, and Meridian shall have
received an opinion from Stevens & Lee, to the effect that
(i) the Merger constitutes a reorganization under Section 368 of
the Code, and (ii) no gain or loss will be recognized by
shareholders of Meridian who receive shares of CoreStates Common
Stock, in exchange for their shares of Meridian Common Stock,
except that gain or loss may be recognized as to cash received in
lieu of fractional share interests; in rendering their respective
opinions, each such counsel may require and rely upon
representations and agreements contained in certificates of
officers of CoreStates, Meridian, and others;
6.11. NYSE Listing. The shares of CoreStates Common Stock
issuable pursuant to this Plan shall have been approved for
listing on the NYSE, subject to official notice of issuance; and
6.12. Rights Agreements. No "Distribution Date," "Stock
Acquisition Date" or "Triggering Event" (as each of such terms
are defined in the Meridian Rights Agreement) shall have
occurred.
VII. TERMINATION.
7.01. Termination. This Plan may be terminated, and the
Merger may be abandoned:
(A) Mutual Consent. At any time prior to the
Effective Time, by the mutual consent of CoreStates and Meridian,
if the Board of Directors of each so determines by vote of a
majority of the members of its entire Board.
(B) Delay. At any time prior to the Effective Time,
by CoreStates or Meridian, if its Board of Directors so
determines by vote of a majority of the members of its entire
Board, in the event that the Merger is not consummated by
September 30, 1996, except to the extent that the failure of the
Merger then to be consummated arises out of or results from the
knowing action or inaction of the party seeking to terminate
pursuant to this Section 7.01(B).
(C) No Approval. By Meridian or CoreStates, if its
Board of Directors so determines by a vote of a majority of the
members of its entire Board, in the event that (i) the consent of
the Board of Governors of the Federal Reserve System for
consummation of the Merger and the other transactions
contemplated by this Plan shall have been denied by final action
of the Board and the time for appeal shall have expired, or
(ii) any shareholder approval required by Section 6.01 herein is
not obtained at the Meridian Meeting or the CoreStates Meeting.
(D) Possible Adjustment. By Meridian, if its Board of
Directors so determines by a vote of a majority of the members of
its entire Board, at any time during the ten-day period
commencing two days after the Determination Date, if either
(x) both of the following conditions are satisfied:
(1) the Average Closing Price on the
Determination Date of shares of CoreStates Common Stock shall be
less than $32.725; and
(2) (i) the number obtained by dividing the
Average Closing Price on the Determination Date by $38.50 (such
number being referred to herein as the "CoreStates Ratio") shall
be less than (ii) the number obtained by dividing the Index Price
on the Determination Date by the Index Price on the Starting Date
and subtracting 0.15 from the quotient in this clause
(x)(2)(ii) (such number being referred to herein as the "Index
Ratio");
or (y) the Average Closing Price on the Determination Date of
shares of CoreStates Common Stock shall be less than the product
of 0.75 and the Starting Price;
subject, however, to the following four sentences. If Meridian
elects to exercise its termination right pursuant to the
immediately preceding sentence, it shall give prompt written
notice to CoreStates which notice shall specify which of
clauses (x) or (y) is applicable (or if both would be applicable,
which clause is being invoked); provided that such notice of
election to terminate may be withdrawn at any time within the
aforementioned ten-day period. During the five-day period
commencing with its receipt of such notice, CoreStates shall have
the option in the case of a failure to satisfy the condition in
clause (x), of adjusting the Exchange Ratio to equal the lesser
of (i) a number equal to a quotient (rounded to the nearest
one-thousandth), the numerator of which is the product of $32.725
and the Exchange Ratio (as then in effect) and the denominator of
which is the Average Closing Price, and (ii) a number equal to a
quotient (rounded to the nearest one-thousandth), the numerator
of which is the Index Ratio multiplied by the Exchange Ratio (as
then in effect) and the denominator of which is the CoreStates
Ratio. During such five-day period, CoreStates shall have the
option, in the case of a failure to satisfy the condition in
clause (y), to elect to increase the Exchange Ratio to equal a
number equal to a quotient (rounded to the nearest
one-thousandth), the numerator of which is the product of 0.75,
the Starting Price and the Exchange Ratio (as then in effect) and
the denominator of which is the Average Closing Price. If
CoreStates makes an election contemplated by either of the two
preceding sentences, within such five-day period, it shall give
prompt written notice to Meridian of such election and the
revised Exchange Ratio, whereupon no termination shall have
occurred pursuant to this Section 7.01(D) and this Plan shall
remain in effect in accordance with its terms (except as the
Exchange Ratio shall have been so modified), and any references
in this Agreement to "Exchange Ratio" shall thereafter be deemed
to refer to the Exchange Ratio as adjusted pursuant to this
Section 7.01(D).
For purposes of this Section 7.01(D), the following terms
shall have the meanings indicated:
"Average Closing Price" means the average of the daily
last sale prices of CoreStates Common Stock as reported on
the NYSE Composite Transactions reporting system (as
reported in The Wall Street Journal or, if not reported
therein, in another mutually agreed upon authoritative
source) for the ten consecutive full trading days in which
such shares are traded on the NYSE ending at the close of
trading on the Determination Date.
"Determination Date" means the date on which the
approval of the Federal Reserve Board required for
completion of the Merger shall be received.
"Index Group" means the group of each of the 11 bank
holding companies listed below, the common stock of all of
which shall be publicly traded and as to which there shall
not have been, since the Starting Date and before the
Determination Date, an announcement of a proposal for the
acquisition or sale of such company. In the event that the
common stock of any such company ceases to be publicly
traded or any such announcement is made with respect to any
such company, such company will be removed from the Index
Group, and the weights (which have been determined based on
the number of outstanding shares of common stock)
redistributed proportionately for purposes of determining
the Index Price. The 11 bank holding companies and the
weights attributed to them are as follows:
<TABLE>
<CAPTION>
<S> <C>
Bank Holding Company Weighting
Bank of Boston (BKB) 8.03
Barnett Banks, Inc. (BBI) 8.12
Boatmen's Bancshares, Inc. (BOAT) 7.23
Comerica (CMA) 6.25
First Bank System, Inc. (FBS) 9.78
Fleet Financial Group, Inc. (FLT) 8.18
KeyCorp (KEY) 12.02
Mellon Bank Corporation (MBC) 10.11
National City Corporation (NCC) 6.87
PNC Financial Corp (PNC) 9.87
The Bank of New York Company, Inc. (BK) 13.55
100.00%
</TABLE>
"Index Price" on a given date means the weighted
average (weighted in accordance with the factors listed
above) of the closing prices of the companies composing the
Index Group.
"Starting Date" means October 9, 1995.
"Starting Price" shall mean the last sale price per
share of CoreStates Common Stock on October 10, 1995, as
reported by the NYSE Composite Transactions reporting system
(as reported in The Wall Street Journal or, if not reported
therein, in another mutually agreed upon authoritative
source).
If any company belonging to the Index Group or CoreStates
declares or effects a stock dividend, reclassification,
recapitalization, split-up, combination, exchange of shares or
similar transaction between the Starting Date and the
Determination Date, the prices for the common stock of such
company or CoreStates shall be appropriately adjusted for the
purposes of applying this Section 7.01(D).
(E) Failure to Recommend, Etc. At any time prior to
the Meridian Meeting, by CoreStates if the Board of Directors of
Meridian shall have failed to make its recommendation referred to
in Section 5.02, withdrawn such recommendation or modified or
changed such recommendation in a manner adverse to the interests
of CoreStates; or at any time prior to the CoreStates Meeting, by
Meridian if the Board of Directors of CoreStates shall have
failed to make its recommendation referred to in Section 5.02,
withdrawn such recommendation or modified or changed such
recommendation in a manner adverse to the interests of Meridian.
7.02. Effect of Termination and Abandonment. In the event
of termination of this Plan and the abandonment of the Merger
pursuant to this Article VII, no party to this Plan shall have
any liability or further obligation to any other party hereunder
except (i) as set forth in Section 8.01, (ii) that each of the
Stock Option Agreements shall be governed by its own terms as to
termination and (iii) that termination will not relieve a
breaching party from liability for any willful breach of this
Plan giving rise to such termination.
VIII. OTHER MATTERS.
8.01. Survival. All representations, warranties,
agreements and covenants contained in this Plan shall not survive
the Effective Time or termination of this Plan if this Plan is
terminated prior to the Effective Time; provided, however, if the
Effective Time occurs, the agreements of the parties in
Sections 5.12, 5.13, 5.14, 8.01, 8.04, 8.06 and 8.09 shall
survive the Effective Time, and if this Plan is terminated prior
to the Effective Time, the agreements of the parties in Sections
5.05(B), 7.02, 8.01, 8.04, 8.05, 8.06, 8.07 and 8.09, shall
survive such termination.
8.02. Waiver; Amendment. Prior to the Effective Time, any
provision of this Plan may be (i) waived by the party benefitted
by the provision, or (ii) amended or modified at any time, by an
agreement in writing among the parties hereto approved by their
respective Boards of Directors and executed in the same manner as
this Plan, except that, after the Meridian Meeting the
consideration to be received by the shareholders of Meridian for
each share of Meridian Common Stock shall not thereby be
decreased.
8.03. Counterparts. This Plan may be executed in one or
more counterparts, each of which shall be deemed to constitute an
original.
8.04. Governing Law. This Plan shall be governed by, and
interpreted in accordance with, the laws of the Commonwealth of
Pennsylvania, without regard to the conflict of law principles
thereof.
8.05. Expenses. Each party hereto will bear all expenses
incurred by it in connection with this Plan and the transactions
contemplated hereby, except that printing expenses and SEC
registration fees shall be shared equally between Meridian and
CoreStates.
8.06. Confidentiality. Except as otherwise provided in
Section 5.05(B), each of the parties hereto and their respective
agents, attorneys and accountants will maintain the
confidentiality of all information provided in connection
herewith which has not been publicly disclosed or as it is
advised by counsel that any such information or document is
required by law or applicable Nasdaq or NYSE rule to be
disclosed. For purposes of this Agreement, the term "major
portion" of the economic benefits of the Merger means two-thirds
of such economic benefits.
8.07. Notices. All notices, requests and other
communications hereunder to a party shall be in writing and shall
be deemed given if personally delivered, telecopied (with
confirmation) or mailed by registered or certified mail (return
receipt requested) to such party at its address set forth below
or such other address as such party may specify by notice to the
parties hereto.
If to CoreStates, to: CoreStates Financial Corp
Broad & Chestnut Streets
Philadelphia, Pennsylvania 19107
Attention: Terrence A. Larsen,
Chairman and Chief Executive
Officer
With copies to: David T. Walker
Counsel
CoreStates Financial Corp
PNB Building, F.C. 1-1-17-1
Broad and Chestnut Streets
Philadelphia, Pennsylvania 19107
and to: Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attention: Lee Meyerson, Esq.
If to Meridian, to: Meridian Bancorp, Inc.
35 North Sixth Street
Reading, Pennsylvania 19603
Attention: Samuel A. McCullough,
Chairman, President and
Chief Executive Officer
With a copy to: Stevens & Lee
111 North Sixth Street
P.O. Box 679
Reading, Pennsylvania 19603
Attention: Joseph M. Harenza,
Esquire
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attention: H. Rodgin Cohen,
Esquire
8.08. Definitions. Any term defined anywhere in this Plan
shall have the meaning ascribed to it for all purposes of this
Plan (unless expressly noted to the contrary). In addition:
(A) the term "Material Adverse Effect" shall mean,
with respect to Meridian or CoreStates, respectively, any effect
that (i) is material and adverse to the financial position,
results of operations or business of Meridian and its
subsidiaries taken as a whole, or CoreStates and its subsidiaries
taken as a whole, respectively, or (ii) materially impairs the
ability of Meridian or CoreStates, respectively, to perform its
obligations under this Plan or the consummation of the Merger and
the other transactions contemplated by this Plan; provided,
however, that Material Adverse Effect shall not be deemed to
include the impact of actions or omissions of Meridian, or
CoreStates taken with the prior informed consent of Meridian or
CoreStates, as applicable, in contemplation of the transactions
contemplated hereby;
(B) the term "person" shall mean any individual, bank,
savings association, corporation, partnership, association,
joint-stock company, business trust or unincorporated
organization;
(C) the term "Previously Disclosed" by a party shall
mean information set forth in its Disclosure Letter or a schedule
that is delivered by that party to the other party prior to the
execution of this Plan and specifically designated as information
"Previously Disclosed" pursuant to this Plan;
(D) the term "Rights" means, with respect to any
person, securities or obligations convertible into or
exchangeable for, or giving any person any right to subscribe for
or acquire, or any options, calls or commitments relating to,
shares of capital stock of such person; and
(E) the terms "subsidiary" and "significant
subsidiary" shall have the meanings set forth in Rule 1-02 of
Regulation S-X of the SEC.
8.09. Entire Understanding; No Third Party Beneficiaries.
This Plan and the Stock Option Agreements together represent the
entire understanding of the parties hereto with reference to the
transactions contemplated hereby and thereby and supersede any
and all other oral or written agreements heretofore made. Except
for Sections 5.12, 5.13 and 5.14, nothing in this Plan, expressed
or implied, is intended to confer upon any person, other than the
parties hereto or their respective successors, any rights,
remedies, obligations or liabilities under or by reason of this
Plan.
<PAGE>
8.10. Headings. The headings contained in this Plan are
for reference purposes only and are not part of this Plan.
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed in counterparts by their duly
authorized officers, all as of the day and year first above
written.
MERIDIAN BANCORP, INC.
By /s/Samuel A. McCullough
Samuel A. McCullough,
Chairman, President and Chief
Executive Officer
CORESTATES FINANCIAL CORP
By /s/Terrence A. Larsen
Terrence A. Larsen,
Chairman and Chief Executive
Officer
<PAGE>
SCHEDULE 5.13(a)
Samuel A. McCullough
David E. Sparks
William M. Fenimore, Jr.
George W. Grosz
<PAGE>
SCHEDULE 5.13(b)
P. Sue Perrotty
R. William Holland
Wayne R. Huey, Jr.
Thomas G. Strohm
Richard E. Meyers
<PAGE>
Exhibit A
FORM OF MERIDIAN STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of October 10, 1995 (the
"Agreement"), by and between MERIDIAN BANCORP, INC., a
Pennsylvania corporation ("Issuer"), and CORESTATES FINANCIAL
CORP, a Pennsylvania corporation ("Grantee").
RECITALS
A. The Plan. Grantee and Issuer are concurrently
herewith entering into an Agreement and Plan of Merger, dated as
of the date hereof (the "Plan"), providing for, among other
things, the merger of Issuer with and into Grantee, with Grantee
being the surviving corporation.
B. Condition to Plan. As a condition and inducement
to Grantee's execution of the Plan and Grantee's agreement
referred to in the next sentence, Grantee has required that
Issuer agree, and Issuer has agreed, to grant Grantee the Option
(as hereinafter defined). As a condition and inducement to
Issuer's execution of the Plan and this Agreement, Grantee and
Issuer have concurrently herewith entered into an agreement (the
"CoreStates Stock Option Agreement") to grant an option to Issuer
on terms and conditions substantially identical to those of the
Option and this Agreement.
NOW, THEREFORE, in consideration of the foregoing and
the respective representations, warranties, covenants and
agreements set forth herein and in the Plan and the CoreStates
Stock Option Agreement, and intending to be legally bound hereby,
Issuer and Grantee agree as follows:
1. Defined Terms. Capitalized terms which are used
but not defined herein shall have the meanings ascribed to such
terms in the Plan.
2. Grant of Option. Subject to the terms and
conditions set forth herein, Issuer hereby grants to Grantee an
irrevocable option (the "Option") to purchase a number of shares
of common stock, par value $5.00 per share ("Issuer Common
Stock"), of Issuer up to 11,506,698 of such shares (as adjusted
as set forth herein, the "Option Shares," which shall include the
Option Shares before and after any transfer of such Option
Shares, but in no event shall the number of Option Shares for
which this Option is exercisable exceed 19.9% of the issued and
outstanding shares of Issuer Common Stock) at a purchase price
per Option Share (as adjusted as set forth herein, the "Purchase
Price") equal to $38 13/16. Each Option Share issued upon
exercise of the Option shall be accompanied by Meridian Rights as
provided in the Meridian Rights Agreement.
3. Exercise of Option.
(a) Provided that (i) Grantee or Holder (as
hereinafter defined), as applicable, shall not be in material
breach of the agreements or covenants contained in this Agreement
or, in the case of Grantee, the Plan or the CoreStates Stock
Option, and (ii) no preliminary or permanent injunction or other
order against the delivery of shares covered by the Option issued
by any court of competent jurisdiction in the United States shall
be in effect, the Holder may exercise the Option, in whole or in
part, at any time and from time to time following the occurrence
of a Purchase Event (as hereinafter defined); provided that the
Option shall terminate and be of no further force or effect upon
the earliest to occur of (A) the Effective Time, (B) termination
of the Plan in accordance with the terms thereof prior to the
occurrence of a Purchase Event or a Preliminary Purchase Event
(as hereinafter defined) or (C) 18 months after termination of
the Plan following the occurrence of a Purchase Event or a
Preliminary Purchase Event; provided, however, that any purchase
of shares upon exercise of the Option shall be subject to
compliance with applicable law. Notwithstanding the termination
of the Option, Grantee or Holder as the case may be, shall be
entitled to purchase those Option Shares with respect to which it
has exercised the Option in accordance herewith prior to the
termination of the Option. The term "Holder" shall mean the
holder or holders of the Option from time to time, and which
initially is Grantee. The termination of the Option shall not
affect any rights hereunder which by their terms extend beyond
the date of such termination.
(b) As used herein, a "Purchase Event" means any
of the following events:
(i) Without Grantee's prior written consent,
Issuer shall have recommended, publicly proposed or publicly
announced an intention to authorize, recommend or propose,
or entered into an agreement with any person (other than
Grantee or any subsidiary of Grantee) to effect (A) a
merger, consolidation or similar transaction involving
Issuer or any of its significant subsidiaries (other than
transactions solely between Issuer's subsidiaries that are
not violative of the Plan), (B) the disposition, by sale,
lease, exchange or otherwise, of assets or deposits of
Issuer or any of its significant subsidiaries representing
in either case 15% or more of the consolidated assets or
deposits of Issuer and its subsidiaries or (C) the issuance,
sale or other disposition by Issuer of (including by way of
merger, consolidation, share exchange or any similar
transaction) securities representing 15% or more of the
voting power of Issuer or any of its significant
subsidiaries, other than, in each case of (A), (B), or (C),
any merger, consolidation, share exchange or similar
transaction involving Issuer or any of its significant
subsidiaries in which the voting securities of Issuer
outstanding immediately prior thereto continue to represent
(by either remaining outstanding or being converted into the
voting securities of the surviving entity of any such
transaction) at least 65% of the combined voting power of
the voting securities of the Issuer or the surviving entity
outstanding immediately after the completion of such merger,
consolidation, or similar transaction (provided any such
transaction is not violative of the Plan) (each of (A), (B),
or (C), an "Acquisition Transaction"); or
(ii) any person (other than Grantee or any
subsidiary of Grantee) shall have acquired beneficial
ownership (as such term is defined in Rule 13d-3 promulgated
under the Exchange Act) of or the right to acquire
beneficial ownership of, or any "group" (as such term is
defined in Section 13(d)(3) of the Exchange Act), other than
a group of which Grantee or any subsidiary of Grantee is a
member, shall have been formed which beneficially owns or
has the right to acquire beneficial ownership of 15% or more
of the voting power of Issuer or any of its significant
subsidiaries; or
(iii) any person (other than Grantee or any
subsidiary of Grantee) shall have commenced (as such term is
defined in Rule 14d-2 under the Exchange Act) or shall have
filed a registration statement under the Securities Act,
with respect to, a tender offer or exchange offer to
purchase any shares of Issuer Common Stock such that, upon
consummation of such offer, such person would own or control
15% or more of the then outstanding shares of Issuer Common
Stock (such an offer being referred to herein as a "Tender
Offer" or an "Exchange Offer," respectively); or
(iv) the shareholders shall not have
approved the Plan by the requisite vote at the Meridian
Meeting, the Meridian Meeting shall not have been held or
shall have been canceled prior to termination of the Plan,
or Issuer's Board of Directors shall have withdrawn or
modified in a manner adverse to Grantee the recommendation
of Issuer's Board of Directors with respect to the Plan, in
each case after it shall have been publicly announced that
any person (other than Grantee or any subsidiary of Grantee)
shall have (A) made, or disclosed an intention to make, a
bona fide proposal to engage in an Acquisition Transaction,
(B) commenced a Tender Offer or filed a registration
statement under the Securities Act with respect to an
Exchange Offer or (C) filed an application (or given a
notice), whether in draft or final form, under the Home
Owners' Loan Act, as amended ("HOLA"), the BHC Act, the Bank
Merger Act, as amended (the "BMA") or the Change in Bank
Control Act of 1978, as amended (the "CBCA"), for approval
to engage in an Acquisition Transaction.
(c) As used herein, a "Preliminary Purchase
Event" means any of the following events:
(i) any person (other than Grantee or any
subsidiary of Grantee) shall have made a bona fide proposal
to Issuer or its shareholders by public announcement, or
written communication that is or becomes the subject of
public disclosure, to engage in an Acquisition Transaction;
or
(ii) after a proposal is made by a third
party to Issuer or its shareholders to engage in an
Acquisition Transaction, or such third party states its
intention to the Issuer to make such a proposal if the Plan
terminates, Issuer shall have breached any representation,
warranty, covenant or agreement contained in the Plan; or
(iii) any person (other than Grantee or any
subsidiary of Grantee) 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
Regulatory Authority for approval to engage in an
Acquisition Transaction; or
(iv) any event entitling Grantee to
terminate the Plan pursuant to Section 7.01(E) thereof.
As used in this Agreement, "person" shall have the meaning
specified in Sections 3(a)(9) and 13(d)(3) of the Exchange Act.
(d) Issuer shall notify Grantee promptly in
writing of the occurrence of any Preliminary Purchase Event or
Purchase Event, it being understood that the giving of such
notice by Issuer shall not be a condition to the right of Holder
to exercise the Option.
(e) In the event Holder wishes to exercise the
Option, it shall send to Issuer a written notice (the date of
which being herein referred to as the "Notice Date") specifying
(i) the total number of Option Shares it intends to purchase
pursuant to such exercise and (ii) a place and date not earlier
than three business days nor later than 15 business days from the
Notice Date for the closing (the "Closing") of such purchase (the
"Closing Date"); provided that if the Closing cannot be
consummated by reason of any applicable judgement, decree, order,
law or regulation, the period of time that otherwise would run
pursuant to this sentence shall run instead from the date on
which such restriction on consummation has expired or been
terminated; and provided, further, without limiting the
foregoing, that if prior notification to or approval of any
Regulatory Authority is required in connection with such
purchase, Issuer shall cooperate with the Holder in the filing of
the required notice of application for approval and the obtaining
of such approval and the Closing shall occur immediately
following such regulatory approvals (and any mandatory waiting
periods). Any exercise of the Option shall be deemed to occur on
the Notice Date relating thereto.
(f) Notwithstanding Section 3(e), in no event
shall any Closing Date be more than 18 months after the related
Notice Date, and if the Closing Date shall not have occurred
within 18 months after the related Notice Date due to the failure
to obtain any such required approval, the exercise of the Option
effected on the Notice Date shall be deemed to have expired. In
the event (i) Holder receives official notice that an approval of
any other Regulatory Authority required for the purchase of
Option Shares will not be issued or granted or (ii) a Closing
Date shall not have occurred within 18 months after the related
Notice Date due to the failure to obtain any such required
approval, Grantee shall be entitled to exercise its right as set
forth in Section 8 to exercise the Option in connection with the
resale of Issuer Common Stock or other securities pursuant to a
registration statement as provided in Section 9. The provisions
of this Section 3 and Section 4 shall apply with appropriate
adjustments to any such exercise.
4. Payment and Delivery of Certificates.
(a) On each Closing Date, Holder shall (i) pay to
Issuer, in immediately available funds by wire transfer to a bank
account designated by Issuer, an amount equal to the Purchase
Price multiplied by the number of Option Shares to be purchased
on such Closing Date, and (ii) present and surrender this
Agreement to the Issuer at the address of the Issuer specified in
Section 12(f).
(b) At each Closing, simultaneously with the
delivery of immediately available funds and surrender of this
Agreement as provided in Section 4(a), (i) Issuer shall deliver
to Holder (A) a certificate or certificates representing the
Option Shares to be purchased at such Closing, which Option
Shares shall be free and clear of all Liens and subject to no
preemptive rights, and (B) if the Option is exercised in part
only, an executed new agreement with the same terms as this
Agreement evidencing the right to purchase the balance of the
shares of Issuer Common Stock purchasable hereunder, and
(ii) Holder shall deliver to Issuer a letter agreeing that Holder
shall not offer to sell or otherwise dispose of such Option
Shares in violation of applicable federal and state law or of the
provisions of this Agreement.
(c) In addition to any other legend that is
required by applicable law, certificates for the Option Shares
delivered at each Closing shall be endorsed with a restrictive
legend which shall read substantially as follows:
THE TRANSFER OF THE STOCK REPRESENTED BY THIS CERTIFICATE IS
SUBJECT TO RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND PURSUANT TO THE TERMS OF A STOCK
OPTION AGREEMENT DATED AS OF OCTOBER 10, 1995. A COPY OF
SUCH AGREEMENT WILL BE PROVIDED TO THE HOLDER HEREOF WITHOUT
CHARGE UPON RECEIPT BY THE ISSUER OF A WRITTEN REQUEST
THEREFOR.
It is understood and agreed that (i) the portion of the above
legend relating to the Securities Act shall be removed by
delivery of substitute certificates without such legend if 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 and its counsel, to the effect
that such legend is not required for purposes of the Securities
Act and (ii) the reference to restrictions pursuant to this
Agreement in the above legend shall be removed by delivery of
substitute certificate(s) without such reference if the Option
Shares evidenced by certificate(s) containing such reference have
been sold or transferred in compliance with the provisions of
this Agreement under circumstances that do not require the
retention of such reference.
(d) Upon the giving by Holder to Issuer of the
written notice of exercise of the Option provided for under
Section 3(e), the tender of the applicable Purchase Price in
immediately available funds and the tender of this Agreement to
Issuer, Holder shall be deemed to be the holder of record of the
shares of Issuer 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
Issuer Common Stock shall not then be actually delivered to
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, issuance and
delivery of stock certificates under this Section 4(d) in the
name of Holder or its assignee, transferee, or designee.
(e) Issuer agrees (i) that it shall at all times
maintain, free from preemptive rights, sufficient authorized but
unissued or treasury shares of Issuer Common Stock so that the
Option may be exercised without additional authorization of
Issuer Common Stock after giving effect to all other options,
warrants, convertible securities and other rights to purchase
Issuer 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 (A) complying with all premerger
notification, reporting and waiting period requirements and
(B) in the event prior approval of or notice to any Regulatory
Authority is necessary before the Option may be exercised,
cooperating fully with Holder in preparing such applications or
notices and providing such information to such Regulatory
Authority as it may require) in order to permit Holder to
exercise the Option and Issuer duly and effectively to issue
shares of the Issuer Common Stock pursuant hereto, and
(iv) promptly to take all action provided herein to protect the
rights of Holder against dilution.
5. Representations and Warranties of Issuer. Issuer
hereby represents and warrants to Grantee (and Holder, if
different than Grantee) as follows:
(a) Corporate Authority. Issuer has full
corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby;
the execution and delivery of this Agreement and, subject to
receiving any necessary Regulatory Approvals, the consummation of
the transactions contemplated hereby have been duly and validly
authorized by the Board of Directors of Issuer, and no other
corporate proceedings on the part of Issuer are necessary to
authorize this Agreement or to consummate the transactions so
contemplated; this Agreement has been duly and validly executed
and delivered by Issuer.
(b) Beneficial Ownership. To the best knowledge
of Issuer, as of the date of this Agreement, no person or group
has beneficial ownership of more than 10% of the issued and
outstanding shares of Issuer Common Stock.
(c) Shares Reserved for Issuance; Capital Stock.
Issuer has taken all necessary corporate action to authorize and
reserve and 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 Issuer Common Stock equal
to the maximum number of shares of Issuer Common Stock at any
time and from time to time purchasable upon exercise of the
Option, and all such shares, upon issuance pursuant to the
Option, will be duly authorized, validly issued, fully paid and
nonassessable, and will be delivered free and clear of all Liens,
(other than those created by this Agreement) and not subject to
any preemptive rights.
(d) No Violations. The execution, delivery and
performance of this Agreement does not and will not, and the
consummation by Issuer of any of the transactions contemplated
hereby will not, constitute or result in (A) a breach or
violation of, or a default under, its articles of incorporation
or by-laws, or the comparable governing instruments of any of its
subsidiaries, or (B) 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 non-
governmental permit or license to which it or any of its
subsidiaries is subject, that would, in any case give any other
person the ability to prevent or enjoin Issuer's performance
under this Agreement in any material respect.
(e) Board Action. The Board of Directors of
Issuer having approved this Agreement and the consummation of the
transactions contemplated hereby by the vote of greater than
66-2/3% of the members of the Meridian Board of Directors, the
provisions of Chapter 25 of the BCL, and the provisions of
Articles Eleventh and Sixteenth of its Articles of Incorporation,
do not and will not apply to this Agreement or the purchase of
shares of Issuer Common Stock pursuant to this Agreement.
(f) Rights Amendment. The Meridian Rights
Agreement has been amended to provide that Grantee will not
become an "Acquiring Person" or an "Adverse Person" and that no
"Triggering Event," "Stock Acquisition Date" or "Distribution
Date" (as such terms are defined in the Meridian Rights
Agreement) will occur as a result of the approval, execution or
delivery of this Agreement or the Plan or the consummation of the
transactions contemplated hereby and thereby, including the
acquisition of shares of Issuer Common Stock by Grantee or Holder
pursuant to this Agreement.
6. Representations and Warranties of Grantee.
Grantee hereby represents and warrants to Issuer as follows:
(a) Corporate Authority. Grantee has full
corporate power and authority to enter into this Agreement and,
subject to obtaining the approvals referred to in this Agreement,
to consummate the transactions contemplated by this Agreement;
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; and
this Agreement has been duly executed and delivered by Grantee.
(b) Purchase Not for Distribution. Any Option
Shares or other securities acquired by Grantee or Holder upon
exercise of the Option will not be taken with a view to the
public distribution thereof and will not be transferred or
otherwise disposed of except in a transaction registered or
exempt from registration under the Securities Act.
7. Adjustment upon Changes in Issuer Capitalization,
Etc.
(a) In the event of any change in Issuer Common
Stock by reason of a stock dividend, stock split, split-up,
recapitalization, combination, exchange of shares, exercise of
the Meridian Rights or similar transaction, the type and number
of shares or securities subject to the Option, and the Purchase
Price therefor, shall be adjusted appropriately, and proper
provision shall be made in the agreements governing such
transaction so that Holder shall receive, upon exercise of the
Option, the number and class of shares or other securities or
property that Holder would have received in respect of Issuer
Common Stock if the Option had been exercised immediately prior
to such event, or the record date therefor, as applicable. If
any additional shares of Issuer Common Stock are issued after the
date of this Agreement (other than pursuant to an event described
in the first sentence of this Section 7(a)), upon exercise of any
option to purchase Issuer Common Stock outstanding on the date
hereof, the number of shares of Issuer Common Stock subject to
the Option shall be adjusted so that, after such issuance, it,
together with any shares of Issuer Common Stock previously issued
pursuant hereto, equals 19.9% of the number of shares of Issuer
Common Stock then issued and outstanding, without giving effect
to any shares subject to or issued pursuant to the Option. No
provision of this Section 7 shall be deemed to affect or change,
or constitute authorization for any violation of, any of the
covenants or representations in the Plan.
(b) In the event that Issuer shall enter into an
agreement (i) to consolidate with or merge into any person, other
than Grantee or one of its subsidiaries, and shall not be the
continuing or surviving corporation of such consolidation or
merger, (ii) to permit any person, other than Grantee or one of
its subsidiaries, to merge into Issuer and Issuer shall be the
continuing or surviving corporation, but, in connection with such
merger, the then outstanding shares of Issuer Common Stock shall
be changed into or exchanged for stock or other securities of
Issuer or any other person or cash or any other property or the
outstanding shares of Issuer Common Stock immediately prior to
such merger 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 or deposits to any person, other
than Grantee or one of its subsidiaries, then, and in each such
case, the agreement governing such transaction shall make proper
provisions 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 Holder, of either
(x) the Acquiring Corporation (as hereinafter defined), (y) any
person that controls the Acquiring Corporation, or (z) in the
case of a merger described in clause (ii), Issuer (such person
being referred to as "Substitute Option Issuer").
(c) The Substitute Option shall have the same
terms as the Option, provided, that, if the terms of the
Substitute Option cannot, for legal reasons, be the same as the
Option, such terms shall be as similar as possible and in no
event less advantageous to Holder. Substitute Option Issuer
shall also enter into an agreement with Holder 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
hereinafter defined) as is equal to the Assigned Value (as
hereinafter defined) multiplied by the number of shares of Issuer
Common Stock for which the Option was theretofore exercisable,
divided by the Average Price (as hereinafter defined). The
exercise price of Substitute Option per share of Substitute
Common Stock (the "Substitute Option Price") shall then be equal
to the Purchase Price multiplied by a fraction in which the
numerator is the number of shares of Issuer Common Stock for
which the Option was theretofore exercisable and the denominator
is the number of shares of the Substitute Common Stock for which
the Substitute Option is exercisable.
(e) The following terms have the meanings
indicated:
(i) "Acquiring Corporation" shall mean
(x) the continuing or surviving corporation of a
consolidation or merger with Issuer (if other than Issuer),
(y) Issuer in a merger in which Issuer is the continuing or
surviving person, or (z) the transferee of all or
substantially all of Issuer's assets (or a substantial part
of the assets of its subsidiaries taken as a whole).
(ii) "Substitute Common Stock" shall mean
the shares of capital stock (or similar equity interest)
with the greatest voting power in respect of the election of
directors (or persons similarly responsible for the
direction of the business and affairs) of the Substitute
Option Issuer.
(iii) "Assigned Value" shall mean the
highest of (w) the price per share of Issuer Common Stock at
which a Tender Offer or an Exchange Offer therefor has been
made, (x) the price per share of Issuer Common Stock to be
paid by any third party pursuant to an agreement with
Issuer, (y) the highest closing price for shares of Issuer
Common Stock within the six-month period immediately
preceding the consolidation, merger, or sale in question and
(z) in the event of a sale of all or substantially all of
Issuer's assets or deposits an amount equal to (I) the sum
of the price paid in such sale for such assets (and/or
deposits) and the current market value of the remaining
assets of Issuer, as determined by a nationally recognized
investment banking firm selected by Holder divided by
(II) the number of shares of Issuer Common Stock outstanding
at such time. In the event that a Tender Offer or an
Exchange Offer is made for Issuer Common Stock or an
agreement is entered into for a merger or consolidation
involving consideration other than cash, the value of the
securities or other property issuable or deliverable in
exchange for Issuer Common Stock shall be determined by a
nationally recognized investment banking firm selected by
Holder.
(iv) "Average Price" shall mean the average
closing price of a share of Substitute Common Stock for the
one year 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 Issuer, the person merging into
Issuer or by any company which controls such person, as
Holder may elect.
(f) In no event, pursuant to any of the foregoing
paragraphs, shall the Substitute Option be exercisable for more
than 19.9% of the aggregate of the shares of Substitute Common
Stock outstanding prior to exercise of the Substitute Option. In
the event that the Substitute Option would be exercisable for
more than 19.9% of the aggregate of the shares of Substitute
Common Stock but for the limitation in the first sentence of this
Section 7(f), Substitute Option Issuer shall make a cash payment
to Holder equal to the excess of (i) the value of the Substitute
Option without giving effect to the limitation in the first
sentence of this Section 7(f) over (ii) the value of the
Substitute Option after giving effect to the limitation in the
first sentence of this Section 7(f). This difference in value
shall be determined by a nationally-recognized investment banking
firm selected by Holder.
(g) Issuer shall not enter into any transaction
described in Section 7(b) unless the Acquiring Corporation and
any person that controls the Acquiring Corporation assume in
writing all the obligations of Issuer hereunder and take all
other actions that may be necessary so that the provisions of
this Section 7 are given full force and effect (including,
without limitation, any action that may be necessary so that the
holders of the other shares of common stock issued by Substitute
Option Issuer are not entitled to exercise any rights by reason
of the issuance or exercise of the Substitute Option and the
shares of Substitute Common Stock are otherwise in no way
distinguishable from or have lesser economic value (other than
any diminution in value resulting from the fact that the
Substitute Common Stock are restricted securities, as defined in
Rule 144 under the Securities Act or any successor provision)
than other shares of common stock issued by Substitute Option
Issuer).
8. Repurchase at the Option of Holder.
(a) At the request of Holder at any time
(i) commencing upon the first occurrence of a Repurchase Event
(as defined in Section 8(d)) and ending 18 months immediately
thereafter and (ii) for 30 business days following the occurrence
of either of the events set forth in clauses (i) and (ii) of
Section 3(f) (but solely as to shares of Issuer Common Stock with
respect to which the required approval was not received, Issuer
(or any successor) shall repurchase from Holder (x) the Option
and (y) all shares of Issuer Common Stock purchased by 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 aggregate Purchase Price paid by
Holder for any shares of Issuer Common Stock acquired
pursuant to the Option with respect to which Holder then has
beneficial ownership;
(ii) the excess, if any, of (x) the
Applicable Price (as defined below) for each share of Issuer
Common Stock over (y) the Purchase Price (subject to
adjustment pursuant to Section 7), multiplied by the number
of shares of Issuer Common Stock with respect to which the
Option has not been exercised; and
(iii) the excess, if any, of the Applicable
Price over the Purchase Price (subject to adjustment
pursuant to Section 7) paid (or, in the case of Option
Shares with respect to which the Option has been exercised
but the Closing Date has not occurred, payable) by Holder
for each share of Issuer Common Stock with respect to which
the Option has been exercised and with respect to which
Holder then has beneficial ownership, multiplied by the
number of such shares.
(b) If Holder exercises its rights under this
Section 8, Issuer shall, 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 Issuer 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) and the period of time that would otherwise run
pursuant to the preceding sentence for the payment of the portion
of the Section 8 Repurchase Consideration shall run instead from
the date on which, as the case may be, (i) any required
notification period has expired or been terminated or (ii) such
approval has been obtained and, in either event, any requisite
waiting period shall have passed. 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; provided that if the Option shall have
terminated prior to the date of such notice or shall be scheduled
to terminate at any time before the expiration of a period ending
on the thirtieth business day after such date, Grantee shall
nonetheless have the right so to exercise the Option or exercise
its rights under Section 9 until the expiration of such period of
30 business days. 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.
(c) For purposes of this Agreement, the
"Applicable Price" means the highest of (i) the highest price per
share of Issuer Common Stock paid for any such share by the
person or groups described in Section 8(d)(i), (ii) the price per
share of Issuer Common Stock received by holders of Issuer Common
Stock in connection with any merger or other business combination
transaction described in Section 7(b)(i), 7(b)(ii) or 7(b)(iii),
or (iii) the highest closing sales price per share of Issuer
Common Stock quoted on the Nasdaq NMS during the 40 business days
preceding the Request Date; provided, however, that in the event
of a sale of less than all of Issuer's assets, the Applicable
Price shall be the sum of the price paid in such sale for such
assets and the current market value of the remaining assets of
Issuer as determined by a nationally recognized investment
banking firm selected by Holder, divided by the number of shares
of the Issuer Common Stock outstanding at the time of such sale.
If the consideration to be offered, paid or received pursuant to
either of the foregoing clauses (i) or (ii) shall be other than
in cash, the value of such consideration shall be determined in
good faith by an independent nationally recognized investment
banking firm selected by 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 (i) any person (other than Grantee or any subsidiary of
Grantee) 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, or any
"group" (as such term is defined under the Exchange Act) shall
have been formed which beneficially owns or has the right to
acquire beneficial ownership of, 25% or more of the then
outstanding shares of Issuer Common Stock, or (ii) Issuer has
entered into an agreement pursuant to which any of the
transactions described in Section 7(b)(i), 7(b)(ii) or 7(b)(iii)
could or will be consummated.
9. Registration Rights.
(a) Demand Registration Rights. Issuer shall,
subject to the conditions of Section 9(c) below, if requested by
any Holder, including Grantee and any permitted transferee
("Selling Shareholder"), as expeditiously as possible prepare and
file a registration statement under the Securities Act if such
registration is necessary in order to permit the sale or other
disposition of any or all shares of Issuer Common Stock or other
securities that have been acquired by or are issuable to the
Selling Shareholder upon exercise of the Option in accordance
with the intended method of sale or other disposition stated by
the Selling Shareholder in such request, including without
limitation a "shelf" registration statement under Rule 415 under
the Securities Act or any successor provision, and Issuer shall
use its best efforts to qualify such shares or other securities
for sale under any applicable state securities laws.
- Additional Registration Rights. If Issuer at
any time after the exercise of the Option proposes to register
any shares of Issuer Common Stock under the Securities Act in
connection with an underwritten public offering of such Issuer
Common Stock, Issuer will promptly give written notice to the
Selling Shareholders of its intention to do so and, upon the
written request of any Selling Shareholder given within 30 days
after receipt of any such notice (which request shall specify the
number of shares of Issuer Common Stock intended to be included
in such underwritten public offering by the Selling Shareholder),
Issuer will cause all such shares for which a Selling Shareholder
requests participation in such registration, to be so registered
and included in such underwritten public offering; provided,
however, that Issuer may elect to not cause any such shares to be
so registered (i) if the underwriters in good faith object for
valid business reasons, or (ii) in the case of a registration
solely to implement an employee benefit plan or a registration
filed on Form S-4 of the Securities Act or any successor Form;
provided, further, however, that such election pursuant to
(i) may only be made two times. If some but not all the shares
of Issuer Common Stock with respect to which Issuer shall have
received requests for registration pursuant to this Section 9(b)
shall be excluded from such registration, Issuer shall make
appropriate allocation of shares to be registered among the
Selling Shareholders desiring to register their shares pro rata
in the proportion that the number of shares requested to be
registered by each such Selling Shareholder bears to the total
number of shares requested to be registered by all such Selling
Shareholders then desiring to have Issuer Common Stock registered
for sale.
(c) Conditions to Required Registration. Issuer
shall use all reasonable efforts to cause each registration
statement referred to in Section 9(a) above to become effective
and to obtain all consents or waivers of other parties which are
required therefor and to keep such registration statement
effective; provided, however, that Issuer may delay any
registration of Option Shares required pursuant to Section 9(a)
above for a period not exceeding 90 days provided Issuer shall in
good faith determine that any such registration would adversely
affect an offering or contemplated offering of other securities
by Issuer, and Issuer shall not be required to register Option
Shares under the Securities Act pursuant to Section 9(a) above:
(i) prior to the earliest of (a) termination
of the Plan pursuant to Article VII thereof, (b) failure to
obtain the requisite shareholder approval pursuant to
Section 6.01 of the Plan, and (c) a Purchase Event or a
Preliminary Purchase Event;
(ii) on more than one occasion during any
calendar year;
(iii) within 90 days after the effective
date of a registration referred to in Section 9(b) above
pursuant to which the Selling Shareholder or Selling
Shareholders concerned were afforded the opportunity to
register such shares under the Securities Act and such
shares were registered as requested; and
(iv) unless a request therefor is made to
Issuer by Selling Shareholders that hold at least 25% or
more of the aggregate number of Option Shares (including
shares of Issuer Common Stock issuable upon exercise of the
Option) then outstanding.
In addition to the foregoing, Issuer shall not be
required to maintain the effectiveness of any registration
statement after the expiration of nine months from the effective
date of such registration statement. Issuer shall use all
reasonable efforts to make any filings, and take all steps, under
all applicable state securities laws to the extent necessary to
permit the sale or other disposition of the Option Shares so
registered in accordance with the intended method of distribution
for such shares; provided, however, that Issuer shall not be
required to consent to general jurisdiction or qualify to do
business in any state where it is not otherwise required to so
consent to such jurisdiction or to so qualify to do business.
(d) Expenses. Except where applicable state law
prohibits such payments, Issuer will pay all expenses (including
without limitation registration fees, qualification fees, blue
sky fees and expenses (including the fees and expenses of
counsel), legal expenses, including the reasonable fees and
expenses of one counsel to the holders whose Option Shares are
being registered, printing expenses and the costs of special
audits or "cold comfort" letters, expenses of underwriters,
excluding discounts and commissions but including liability
insurance if Issuer so desires or the underwriters so require,
and the reasonable fees and expenses of any necessary special
experts) in connection with each registration pursuant to
Section 9(a) or 9(b) above (including the related offerings and
sales by holders of Option Shares) and all other qualifications,
notifications or exemptions pursuant to Section 9(a) or 9(b)
above.
(e) Indemnification. In connection with any
registration under Section 9(a) or 9(b) above Issuer hereby
indemnifies the Selling Shareholders, and each underwriter
thereof, including each person, if any, who controls such holder
or underwriter within the meaning of Section 15 of the Securities
Act, against all expenses, losses, claims, damages and
liabilities caused by any untrue, or alleged untrue, statement of
a material fact contained in any registration statement or
prospectus or notification or offering circular (including any
amendments or supplements thereto) or any preliminary prospectus,
or caused by any omission, or alleged omission, to state therein
a material fact required to be stated therein or necessary to
make the statements therein not misleading, except insofar as
such expenses, losses, claims, damages or liabilities of such
indemnified party are caused by any untrue statement or alleged
untrue statement that was included by Issuer in any such
registration statement or prospectus or notification or offering
circular (including any amendments or supplements thereto) in
reliance upon and in conformity with, information furnished in
writing to Issuer by such indemnified party expressly for use
therein, and Issuer and each officer, director and controlling
person of Issuer shall be indemnified by such Selling
Shareholders, or by such underwriter, as the case may be, for all
such expenses, losses, claims, damages and liabilities caused by
any untrue, or alleged untrue, statement, that was included by
Issuer in any such registration statement or prospectus or
notification or offering circular (including any amendments or
supplements thereto) in reliance upon, and in conformity with,
information furnished in writing to Issuer by such holder or such
underwriter, as the case may be, expressly for such use.
Promptly upon receipt by a party indemnified under this
Section 9(e) of notice of the commencement of any action against
such indemnified party in respect of which indemnity or
reimbursement may be sought against any indemnifying party under
this Section 9(e), such indemnified party shall notify the
indemnifying party in writing of the commencement of such action,
but the failure so to notify the indemnifying party shall not
relieve it of any liability which it may otherwise have to any
indemnified party under this Section 9(e) unless the failure so
to notify the indemnified party results in substantial prejudice
thereto. In case notice of commencement of any such action shall
be given to the indemnifying party as above provided, the
indemnifying party shall be entitled to participate in and, to
the extent it may wish, jointly with any other indemnifying party
similarly notified, to assume the defense of such action at its
own expense, with counsel chosen by it and satisfactory to such
indemnified party. The indemnified party shall have the right to
employ separate counsel in any such action and participate in the
defense thereof, but the fees and expenses of such counsel (other
than reasonable costs of investigation) shall be paid by the
indemnified party unless (i) the indemnifying party either agrees
to pay the same, (ii) the indemnifying party fails to assume the
defense of such action with counsel satisfactory to the
indemnified party, or (iii) the indemnified party has been
advised by counsel that one or more legal defenses may be
available to the indemnifying party that may be contrary to the
interest of the indemnified party, in which case the indemnifying
party shall be entitled to assume the defense of such action
notwithstanding its obligation to bear fees and expenses of such
counsel. No indemnifying party shall be liable for any
settlement entered into without its consent, which consent may
not be unreasonably withheld.
If the indemnification provided for in this
Section 9(e) is unavailable to a party otherwise entitled to be
indemnified in respect of any expenses, losses, claims, damages
or liabilities referred to herein, then the indemnifying party,
in lieu of indemnifying such party otherwise entitled to be
indemnified, shall contribute to the amount paid or payable by
such party to be indemnified as a result of such expenses,
losses, claims, damages or liabilities in such proportion as is
appropriate to reflect the relative benefits received by Issuer,
the Selling Shareholders and the underwriters from the offering
of the securities and also the relative fault of Issuer, the
Selling Shareholders and the underwriters in connection with the
statements or omissions which resulted in such expenses, losses,
claims, damages or liabilities, as well as any other relevant
equitable considerations. The amount paid or payable by a party
as a result of the expenses, losses, claims, damages and
liabilities referred to above shall be deemed to include any
legal or other fees or expenses reasonably incurred by such party
in connection with investigating or defending any action or
claim; provided, however, that in no case shall any Selling
Shareholder be responsible, in the aggregate, for any amount in
excess of the net offering proceeds attributable to its Option
Shares included in the offering. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. Any
obligation by any holder to indemnify shall be several and not
joint with other holders.
In connection with any registration pursuant to
Section 9(a) or 9(b) above, Issuer and each Selling Shareholder
(other than Grantee) shall enter into an agreement containing the
indemnification provisions of this Section 9(e).
(f) Miscellaneous Reporting. Issuer shall comply
with all reporting requirements and will do all such other things
as may be necessary to permit the expeditious sale at any time of
any Option Shares by the Selling Shareholders thereof in
accordance with and to the extent permitted by any rule or
regulation promulgated by the SEC from time to time, including,
without limitation, Rule 144. Issuer shall at its expense
provide the Selling Shareholders with any information necessary
in connection with the completion and filing of any reports or
forms required to be filed by them under the Securities Act or
the Exchange Act, or required pursuant to any state securities
laws or the rules of any stock exchange.
(g) Issue Taxes. Issuer will pay all stamp taxes
in connection with the issuance and the sale of the Option Shares
and in connection with the exercise of the Option, and will save
the Selling Shareholders harmless, without limitation as to time,
against any and all liabilities, with respect to all such taxes.
10. Quotation; Listing. If Issuer Common Stock or any
other securities to be acquired in connection with the exercise
of the Option are then authorized for quotation or trading or
listing on the NYSE, the Nasdaq NMS or any securities exchange,
Issuer, upon the request of Holder, will promptly file an
application, if required, to authorize for quotation or trading
or listing the shares of Issuer Common Stock or other securities
to be acquired upon exercise of the Option on the NYSE, the
Nasdaq NMS or such other securities exchange and will use its
best efforts to obtain approval, if required, of such quotation
or listing as soon as practicable.
11. Division of Option. This Agreement (and the
Option granted hereby) are exchangeable, without expense, at the
option of 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 in the aggregate the same number of
shares of Issuer Common Stock purchasable hereunder. The terms
"Agreement" and "Option" as used herein include any other
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.
12. Miscellaneous.
(a) Expenses. 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.
(b) Waiver and Amendment. Any provision of this
Agreement may be waived at any time by the party that is entitled
to the benefits of such provision. This Agreement may not be
modified, amended, altered or supplemented except upon the
execution and delivery of a written agreement executed by the
parties hereto.
(c) Entire Agreement: No Third-Party
Beneficiaries; Severability. This Agreement, together with the
Plan and the other documents and instruments referred to herein
and therein, between Grantee and Issuer (i) constitutes the
entire agreement and supersedes all prior agreements and
understandings, both written and oral, between the parties with
respect to the subject matter hereof and (ii) is not intended to
confer upon any person other than the parties hereto (other than
the indemnified parties under Section 9(e) and any transferees of
the Option Shares or any permitted transferee of this Agreement
pursuant to Section 12(h)) any rights or remedies hereunder. If
any term, provision, covenant or restriction of this Agreement is
held by a court of competent jurisdiction or Regulatory Authority
to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of 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 Authority determines that the Option does not permit
Holder to acquire, or does not require Issuer to repurchase, the
full number of shares of Issuer Common Stock as provided in
Section 2 (as may be adjusted herein), it is the express
intention of Issuer to allow Holder to acquire or to require
Issuer to repurchase such lesser number of shares as may be
permissible without any amendment or modification hereof.
(d) Governing Law. This Agreement shall be
governed and construed in accordance with the laws of the
Commonwealth of Pennsylvania without regard to any applicable
conflicts of law rules.
(e) Descriptive Headings. The descriptive
headings contained herein are for convenience of reference only
and shall not affect in any way the meaning or interpretation of
this Agreement.
(f) Notices. All notices and other
communications hereunder shall be in writing and shall be deemed
given if delivered personally, telecopied (with confirmation) or
mailed by registered or certified mail (return receipt requested)
to the parties at the addresses set forth in the Plan (or at such
other address for a party as shall be specified by like notice).
(g) Counterparts. This Agreement and any
amendments hereto may be executed in two counterparts, each of
which shall be considered one and the same agreement and shall
become effective when both counterparts have been signed, it
being understood that both parties need not sign the same
counterpart.
(h) Assignment. Neither this Agreement nor any
of the rights, interests or obligations hereunder or under the
Option shall be assigned by any of the parties hereto (whether by
operation of law or otherwise) without the prior written consent
of the other party, except that Holder may assign this Agreement
to a wholly-owned subsidiary of Holder and Holder may assign its
rights hereunder in whole or in part after the occurrence of a
Purchase Event. Subject to the preceding sentence, this
Agreement shall be binding upon, inure to the benefit of and be
enforceable by the parties and their respective successors and
assigns.
(i) Further Assurances. In the event of any
exercise of the Option by the Holder, Issuer and the Holder shall
execute and deliver all other documents and instruments and take
all other action that may be reasonably necessary in order to
consummate the transactions provided for by such exercise.
(j) Specific Performance. The parties hereto
agree that this Agreement may be enforced by either party through
specific performance, injunctive relief and other equitable
relief. Both parties further agree to waive any requirement for
the securing or posting of any bond in connection with the
obtaining of any such equitable relief and that this provision is
without prejudice to any other rights that the parties hereto may
have for any failure to perform this Agreement.
IN WITNESS WHEREOF, Issuer and Grantee have caused this
Stock Option Agreement to be signed by their respective officers
thereunto duly authorized, all as of the day and year first
written above.
MERIDIAN BANCORP, INC.
By /s/ Samuel A. McCullough
Samuel A. McCullough,
Chairman, President and Chief
Executive Officer
CORESTATES FINANCIAL CORP
By /s/ Terrence A. Larsen
Terrence A. Larsen,
Chairman and Chief Executive
Officer
<PAGE>
Exhibit B
FORM OF CORESTATES STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of October 10, 1995
(the "Agreement"), by and between CORESTATES FINANCIAL CORP, a
Pennsylvania corporation ("Issuer"), and MERIDIAN BANCORP, INC.,
a Pennsylvania corporation ("Grantee").
RECITALS
A. The Plan. Grantee and Issuer are concurrently
herewith entering an Agreement and Plan of Merger, dated as of
the date hereof (the "Plan"), providing for, among other things,
the merger of Grantee with and into Issuer, with Issuer being the
surviving corporation.
B. Condition to Plan. As a condition and inducement
to Grantee's execution of the Plan and Grantee's agreement
referred to in the next sentence, Grantee has required that
Issuer agree, and Issuer has agreed, to grant Grantee the Option
(as hereinafter defined). As a condition and inducement to
Issuer's execution of the Plan and this Agreement, Grantee and
Issuer have concurrently herewith entered into an agreement (the
"Meridian" Stock Option Agreement") to grant an option to Issuer
on terms and conditions substantially identical to those of the
Option and this Agreement.
NOW, THEREFORE, in consideration of the foregoing and
the respective representations, warranties, covenants and
agreements set forth herein and in the Plan and the Meridian
Stock Option Agreement, and intending to be legally bound hereby,
Issuer and Grantee agree as follows:
1. Defined Terms. Capitalized terms which are used
but not defined herein shall have the meanings ascribed to such
terms in the Plan.
2. Grant of Option. Subject to the terms and
conditions set forth herein, Issuer hereby grants to Grantee an
irrevocable option (the "Option") to purchase a number of shares
of common stock, par value $1.00 per share ("Issuer Common
Stock"), of Issuer up to 27,643,009 of such shares (as adjusted
as set forth herein, the "Option Shares," which shall include the
Option Shares before and after any transfer of such Option
Shares, but in no event shall the number of Option Shares for
which this Option is exercisable exceed 19.9% of the issued and
outstanding shares of Issuer Common Stock) at a purchase price
per Option Share (as adjusted as set forth herein, the "Purchase
Price") equal to $38.50.
3. Exercise of Option.
(a) Provided that (i) Grantee or Holder (as
hereinafter defined), as applicable, shall not be in material
breach of the agreements or covenants contained in this Agreement
or, in the case of Grantee, the Plan or the Meridian Stock Option
Agreement, and (ii) no preliminary or permanent injunction or
other order against the delivery of shares covered by the Option
issued by any court of competent jurisdiction in the United
States shall be in effect, the Holder may exercise the Option, in
whole or in part, at any time and from time to time following the
occurrence of a Purchase Event (as hereinafter defined); provided
that the Option shall terminate and be of no further force or
effect upon the earliest to occur of (A) the Effective Time,
(B) termination of the Plan in accordance with the terms thereof
prior to the occurrence of a Purchase Event or a Preliminary
Purchase Event (as hereinafter defined) or (C) 18 months after
termination of the Plan following the occurrence of a Purchase
Event or a Preliminary Purchase Event; provided, however, that
any purchase of shares upon exercise of the Option shall be
subject to compliance with applicable law. Notwithstanding the
termination of the Option, Grantee or Holder as the case may be,
shall be entitled to purchase those Option Shares with respect to
which it has exercised the Option in accordance herewith prior to
the termination of the Option. The term "Holder" shall mean the
holder or holders of the Option from time to time, and which
initially is Grantee. The termination of the Option shall not
affect any rights hereunder which by their terms extend beyond
the date of such termination.
(b) As used herein, a "Purchase Event" means any
of the following events:
(i) Without Grantee's prior written consent,
Issuer shall have recommended, publicly proposed or publicly
announced an intention to authorize, recommend or propose,
or entered into an agreement with any person (other than
Grantee or any subsidiary of Grantee) to effect (A) a
merger, consolidation or similar transaction involving
Issuer or any of its significant subsidiaries (other than
transactions solely between Issuer's subsidiaries that are
not violative of the Plan), (B) the disposition, by sale,
lease, exchange or otherwise, of assets or deposits of
Issuer or any of its significant subsidiaries representing
in either case 15% or more of the consolidated assets or
deposits of Issuer and its subsidiaries or (C) the issuance,
sale or other disposition by Issuer of (including by way of
merger, consolidation, share exchange or any similar
transaction) securities representing 15% or more of the
voting power of Issuer or any of its significant
subsidiaries, other than, in each case of (A), (B), or (C),
any merger, consolidation, share exchange or similar
transaction involving Issuer or any of its significant
subsidiaries in which the voting securities of Issuer
outstanding immediately prior thereto continue to represent
(by either remaining outstanding or being converted into the
voting securities of the surviving entity of any such
transaction) at least 65% of the combined voting power of
the voting securities of the Issuer or the surviving entity
outstanding immediately after the consummation of such
merger, consolidation, or similar transaction (provided any
such transaction is not violative of the Plan) (each of (A),
(B), or (C), an "Acquisition Transaction"); or
(ii) any person (other than Grantee or any
subsidiary of Grantee) shall have acquired beneficial
ownership (as such term is defined in Rule 13d-3 promulgated
under the Exchange Act) of or the right to acquire
beneficial ownership of, or any "group" (as such term is
defined in Section 13(d)(3) of the Exchange Act), other than
a group of which Grantee or any subsidiary of Grantee is a
member, shall have been formed which beneficially owns or
has the right to acquire beneficial ownership of 15% or more
of the voting power of Issuer or any of its significant
subsidiaries; or
(iii) any person (other than Grantee or any
subsidiary of Grantee) shall have commenced (as such term is
defined in Rule 14d-2 under the Exchange Act) or shall have
filed a registration statement under the Securities Act,
with respect to, a tender offer or exchange offer to
purchase any shares of Issuer Common Stock such that, upon
consummation of such offer, such person would own or control
15% or more of the then outstanding shares of Issuer Common
Stock (such an offer being referred to herein as a "Tender
Offer" or an "Exchange Offer," respectively); or
(iv) the shareholders shall not have
approved the matters relating to the Plan requiring approval
by the requisite vote at the CoreStates Meeting, the
CoreStates Meeting shall not have been held or shall have
been canceled prior to termination of the Plan, or Issuer's
Board of Directors shall have withdrawn or modified in a
manner adverse to Grantee the recommendation of Issuer's
Board of Directors with respect to the matters relating to
the Plan requiring approval, in each case after it shall
have been publicly announced that any person (other than
Grantee or any subsidiary of Grantee) shall have (A) made,
or disclosed an intention to make, a bona fide proposal to
engage in an Acquisition Transaction, (B) commenced a Tender
Offer or filed a registration statement under the Securities
Act with respect to an Exchange Offer or (C) filed an
application (or given a notice), whether in draft or final
form, under the Home Owners' Loan Act, as amended ("HOLA"),
the BHC Act, the Bank Merger Act, as amended (the "BMA") or
the Change in Bank Control Act of 1978, as amended (the
"CBCA"), for approval to engage in an Acquisition
Transaction.
(c) As used herein, a "Preliminary Purchase
Event" means any of the following events:
(i) any person (other than Grantee or any
subsidiary of Grantee) shall have made a bona fide proposal
to Issuer or its shareholders by public announcement, or
written communication that is or becomes the subject of
public disclosure, to engage in an Acquisition Transaction;
or
(ii) after a proposal is made by a third
party to Issuer or its shareholders to engage in an
Acquisition Transaction, or such third party states its
intention to the Issuer to make such a proposal if the Plan
terminates, Issuer shall have breached any representation,
warranty, covenant or agreement contained in the Plan; or
(iii) any person (other than Grantee or any
subsidiary of Grantee) 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
Regulatory Authority for approval to engage in an
Acquisition Transaction; or
(iv) any event entitling Grantee to
terminate the Plan pursuant to Section 7.01(E) thereof.
As used in this Agreement, "person" shall have the meaning
specified in Sections 3(a)(9) and 13(d)(3) of the Exchange Act.
(d) Issuer shall notify Grantee promptly in
writing of the occurrence of any Preliminary Purchase Event or
Purchase Event, it being understood that the giving of such
notice by Issuer shall not be a condition to the right of Holder
to exercise the Option.
(e) In the event Holder wishes to exercise the
Option, it shall send to Issuer a written notice (the date of
which being herein referred to as the "Notice Date") specifying
(i) the total number of Option Shares it intends to purchase
pursuant to such exercise and (ii) a place and date not earlier
than three business days nor later than 15 business days from the
Notice Date for the closing (the "Closing") of such purchase (the
"Closing Date"); provided that if the Closing cannot be
consummated by reason of any applicable judgment, decree, order,
law or regulation, the period of time that otherwise would run
pursuant to this sentence shall run instead from the date on
which such restriction on consummation has expired or been
terminated; and provided, further, without limiting the
foregoing, that if prior notification to or approval of any
Regulatory Authority is required in connection with such
purchase, Issuer shall cooperate with the Holder in the filing of
the required notice of application for approval and the obtaining
of such approval and the Closing shall occur immediately
following such regulatory approvals (and any mandatory waiting
periods). Any exercise of the Option shall be deemed to occur on
the Notice Date relating thereto.
(f) Notwithstanding Section 3(e), in no event
shall any Closing Date be more than 18 months after the related
Notice Date, and if the Closing Date shall not have occurred
within 18 months after the related Notice Date due to the failure
to obtain any such required approval, the exercise of the Option
effected on the Notice Date shall be deemed to have expired. In
the event (i) Holder receives official notice that an approval of
any other Regulatory Authority required for the purchase of
Option Shares will not be issued or granted or (ii) a Closing
Date shall not have occurred within 18 months after the related
Notice Date due to the failure to obtain any such required
approval, Grantee shall be entitled to exercise its right as set
forth in Section 8 to exercise the Option in connection with the
resale of Issuer Common Stock or other securities pursuant to a
registration statement as provided in Section 9. The provisions
of this Section 3 and Section 4 shall apply with appropriate
adjustments to any such exercise.
4. Payment and Delivery of Certificates.
(a) On each Closing Date, Holder shall (i) pay to
Issuer, in immediately available funds by wire transfer to a bank
account designated by Issuer, an amount equal to the Purchase
Price multiplied by the number of Option Shares to be purchased
on such Closing Date, and (ii) present and surrender this
Agreement to the Issuer at the address of the Issuer specified in
Section 12(f).
(b) At each Closing, simultaneously with the
delivery of immediately available funds and surrender of this
Agreement as provided in Section 4(a), (i) Issuer shall deliver
to Holder (A) a certificate or certificates representing the
Option Shares to be purchased at such Closing, which Option
Shares shall be free and clear of all Liens and subject to no
preemptive rights, and (B) if the Option is exercised in part
only, an executed new agreement with the same terms as this
Agreement evidencing the right to purchase the balance of the
shares of Issuer Common Stock purchasable hereunder, and
(ii) Holder shall deliver to Issuer a letter agreeing that Holder
shall not offer to sell or otherwise dispose of such Option
Shares in violation of applicable federal and state law or of the
provisions of this Agreement.
(c) In addition to any other legend that is
required by applicable law, certificates for the Option Shares
delivered at each Closing shall be endorsed with a restrictive
legend which shall read substantially as follows:
THE TRANSFER OF THE STOCK REPRESENTED BY THIS CERTIFICATE IS
SUBJECT TO RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND PURSUANT TO THE TERMS OF A STOCK
OPTION AGREEMENT DATED AS OF OCTOBER 10, 1995. A COPY OF
SUCH AGREEMENT WILL BE PROVIDED TO THE HOLDER HEREOF WITHOUT
CHARGE UPON RECEIPT BY THE ISSUER OF A WRITTEN REQUEST
THEREFOR.
It is understood and agreed that (i) the portion of the above
legend relating to the Securities Act shall be removed by
delivery of substitute certificate(s) without such legend if
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 and its counsel, to the effect
that such legend is not required for purposes of the Securities
Act and (ii) the reference to restrictions pursuant to this
Agreement in the above legend shall be removed by delivery of
substitute certificate(s) without such reference if the Option
Shares evidenced by certificate(s) containing such reference have
been sold or transferred in compliance with provisions of this
Agreement under circumstances that do not require the retention
of such reference.
(d) Upon the giving by Holder to Issuer of the
written notice of exercise of the Option provided for under
Section 3(e), the tender of the applicable Purchase Price in
immediately available funds and the tender of this Agreement to
Issuer, Holder shall be deemed to be the holder of record of the
shares of Issuer 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
Issuer Common Stock shall not then be actually delivered to
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, issuance and
delivery of stock certificates under this Section 4(d) in the
name of Holder or its assignee, transferee, or designee.
(e) Issuer agrees (i) that it shall at all times
maintain, free from preemptive rights, sufficient authorized but
unissued or treasury shares of Issuer Common Stock so that the
Option may be exercised without additional authorization of
Issuer Common Stock after giving effect to all other options,
warrants, convertible securities and other rights to purchase
Issuer 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 (A) complying with all premerger
notification, reporting and waiting period requirements and
(B) in the event prior approval of or notice to any Regulatory
Authority is necessary before the Option may be exercised,
cooperating fully with Holder in preparing such applications or
notices and providing such information to such Regulatory
Authority as it may require) in order to permit Holder to
exercise the Option and Issuer duly and effectively to issue
shares of the Issuer Common Stock pursuant hereto, and
(iv) promptly to take all action provided herein to protect the
rights of Holder against dilution.
5. Representations and Warranties of Issuer. Issuer
hereby represents and warrants to Grantee (and Holder, if
different than Grantee) as follows:
(a) Corporate Authority. Issuer has full
corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby;
the execution and delivery of this Agreement and, subject to
receiving any necessary Regulatory Approval, the consummation of
the transactions contemplated hereby have been duly and validly
authorized by the Board of Directors of Issuer, and no other
corporate proceedings on the part of Issuer are necessary to
authorize this Agreement or to consummate the transactions so
contemplated; this Agreement has been duly and validly executed
and delivered by Issuer.
(b) Beneficial Ownership. To the best knowledge
of Issuer, as of the date of this Agreement, no person or group
has beneficial ownership of more than 10% of the issued and
outstanding shares of Issuer Common Stock.
(c) Shares Reserved for Issuance; Capital Stock.
Issuer has taken all necessary corporate action to authorize and
reserve and 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 Issuer Common Stock equal
to the maximum number of shares of Issuer Common Stock at any
time and from time to time purchasable upon exercise of the
Option, and all such shares, upon issuance pursuant to the
Option, will be duly authorized, validly issued, fully paid and
nonassessable, and will be delivered free and clear of all Liens
(other than those created by this Agreement) and not subject to
any preemptive rights.
(d) No Violations. The execution, delivery and
performance of this Agreement does not and will not, and the
consummation by Issuer of any of the transactions contemplated
hereby will not, constitute or result in (A) a breach or
violation of, or a default under, its articles of incorporation
or by-laws, or the comparable governing instruments of any of its
subsidiaries, or (B) 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 non-
governmental permit or license to which it or any of its
subsidiaries is subject, that would, in any case give any other
person the ability to prevent or enjoin Issuer's performance
under this Agreement in any material respect.
(e) Board Action. The Board of Directors of
Issuer having approved this Agreement and the consummation of the
transactions contemplated hereby by the vote of greater than
66-2/3% of the members of the Meridian Board of Directors, the
provisions of Chapter 25 of the BCL do not and will not apply to
this Agreement or the purchase of shares of Issuer Common Stock
pursuant to this Agreement.
6. Representations and Warranties of Grantee.
Grantee hereby represents and warrants to Issuer as follows:
(a) Corporate Authority. Grantee has full
corporate power and authority to enter into this Agreement and,
subject to obtaining the approvals referred to in this Agreement,
to consummate the transactions contemplated by this Agreement;
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; and
this Agreement has been duly executed and delivered by Grantee.
(b) Purchase Not for Distribution. Any Option
Shares or other securities acquired by Grantee or Holder upon
exercise of the Option will not be taken with a view to the
public distribution thereof and will not be transferred or
otherwise disposed of except in a transaction registered or
exempt from registration under the Securities Act.
7. Adjustment upon Changes in Issuer Capitalization,
etc.
(a) In the event of any change in Issuer Common
Stock by reason of a stock dividend, stock split, split-up,
recapitalization, combination, exchange of shares, exercise of
the CoreStates Rights or similar transaction, the type and number
of shares or securities subject to the Option, and the Purchase
Price therefor, shall be adjusted appropriately, and proper
provision shall be made in the agreements governing such
transaction so that Holder shall receive, upon exercise of the
Option, the number and class of shares or other securities or
property that Holder would have received in respect of Issuer
Common Stock if the Option had been exercised immediately prior
to such event, or the record date therefor, as applicable. If
any additional shares of Issuer Common Stock are issued after the
date of this Agreement (other than pursuant to an event described
in the first sentence of this Section 7(a)), upon exercise of any
option to purchase Issuer Common Stock outstanding on the date
hereof, the number of shares of Issuer Common Stock subject to
the Option shall be adjusted so that, after such issuance, it,
together with any shares of Issuer Common Stock previously issued
pursuant hereto, equals 19.9% of the number of shares of Issuer
Common Stock then issued and outstanding, without giving effect
to any shares subject to or issued pursuant to the Option. No
provision of this Section 7 shall be deemed to affect or change,
or constitute authorization for any violation of, any of the
covenants or representations in the Plan.
- In the event that Issuer shall enter into an
agreement (i) to consolidate with or merge into any person, other
than Grantee or one of its subsidiaries, and shall not be the
continuing or surviving corporation of such consolidation or
merger, (ii) to permit any person, other than Grantee or one of
its subsidiaries, to merge into Issuer and Issuer shall be the
continuing or surviving corporation, but, in connection with such
merger, the then outstanding shares of Issuer Common Stock shall
be changed into or exchanged for stock or other securities of
Issuer or any other person or cash or any other property or the
outstanding shares of Issuer Common Stock immediately prior to
such merger 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 or deposits to any person, other
than Grantee or one of its subsidiaries, then, and in each such
case, the agreement governing such transaction shall make proper
provisions 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 Holder, of either
(x) the Acquiring Corporation (as hereinafter defined), (y) any
person that controls the Acquiring Corporation, or (z) in the
case of a merger described in clause (ii), Issuer (such person
being referred to as "Substitute Option Issuer").
(c) The Substitute Option shall have the same
terms as the Option, provided, that, if the terms of the
Substitute Option cannot, for legal reasons, be the same as the
Option, such terms shall be as similar as possible and in no
event less advantageous to Holder. Substitute Option Issuer
shall also enter into an agreement with Holder 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
hereinafter defined) as is equal to the Assigned Value (as
hereinafter defined) multiplied by the number of shares of Issuer
Common Stock for which the Option was theretofore exercisable,
divided by the Average Price (as hereinafter defined). The
exercise price of Substitute Option per share of Substitute
Common Stock (the "Substitute Option Price") shall then be equal
to the Purchase Price multiplied by a fraction in which the
numerator is the number of shares of Issuer Common Stock for
which the Option was theretofore exercisable and the denominator
is the number of shares of the Substitute Common Stock for which
the Substitute Option is exercisable.
(e) The following terms have the meanings
indicated:
(i) "Acquiring Corporation" shall mean
(x) the continuing or surviving corporation of a
consolidation or merger with Issuer (if other than Issuer),
(y) Issuer in a merger in which Issuer is the continuing or
surviving person, or (z) the transferee of all or
substantially all of Issuer's assets (or a substantial part
of the assets of its subsidiaries taken as a whole).
(ii) "Substitute Common Stock" shall mean
the shares of capital stock (or similar equity interest)
with the greatest voting power in respect of the election of
directors (or persons similarly responsible for the
direction of the business and affairs) of the Substitute
Option Issuer.
(iii) "Assigned Value" shall mean the
highest of (w) the price per share of Issuer Common Stock at
which a Tender Offer or an Exchange Offer therefor has been
made, (x) the price per share of Issuer Common Stock to be
paid by any third party pursuant to an agreement with
Issuer, (y) the highest closing price for shares of Issuer
Common Stock within the six-month period immediately
preceding the consolidation, merger, or sale in question and
(z) in the event of a sale of all or substantially all of
Issuer's assets or deposits an amount equal to (I) the sum
of the price paid in such sale for such assets (and/or
deposits) and the current market value of the remaining
assets of Issuer, as determined by a nationally recognized
investment banking firm selected by Holder divided by
(II) the number of shares of Issuer Common Stock outstanding
at such time. In the event that a Tender Offer or an
Exchange Offer is made for Issuer Common Stock or an
agreement is entered into for a merger or consolidation
involving consideration other than cash, the value of the
securities or other property issuable or deliverable in
exchange for Issuer Common Stock shall be determined by a
nationally recognized investment banking firm selected by
Holder.
(iv) "Average Price" shall mean the average
closing price of a share of Substitute Common Stock for the
one year 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 Issuer, the person merging into
Issuer or by any company which controls such person, as
Holder may elect.
(f) In no event, pursuant to any of the foregoing
paragraphs, shall the Substitute Option be exercisable for more
than 19.9% of the aggregate of the shares of Substitute Common
Stock outstanding prior to exercise of the Substitute Option. In
the event that the Substitute Option would be exercisable for
more than 19.9% of the aggregate of the shares of Substitute
Common Stock but for the limitation in the first sentence of this
Section 7(f), Substitute Option Issuer shall make a cash payment
to Holder equal to the excess of (i) the value of the Substitute
Option without giving effect to the limitation in the first
sentence of this Section 7(f) over (ii) the value of the
Substitute Option after giving effect to the limitation in the
first sentence of this Section 7(f). This difference in value
shall be determined by a nationally-recognized investment banking
firm selected by Holder.
(g) Issuer shall not enter into any transaction
described in Section 7(b) unless the Acquiring Corporation and
any person that controls the Acquiring Corporation assume in
writing all the obligations of Issuer hereunder and take all
other actions that may be necessary so that the provisions of
this Section 7 are given full force and effect (including,
without limitation, any action that may be necessary so that the
holders of the other shares of common stock issued by Substitute
Option Issuer are not entitled to exercise any rights by reason
of the issuance or exercise of the Substitute Option and the
shares of Substitute Common Stock are otherwise in no way
distinguishable from or have lesser economic value (other than
any diminution in value resulting from the fact that the
Substitute Common Stock are restricted securities, as defined in
Rule 144 under the Securities Act or any successor provision)
than other shares of common stock issued by Substitute Option
Issuer).
8. Repurchase at the Option of Holder.
(a) At the request of Holder at any time
(i) commencing upon the first occurrence of a Repurchase Event
(as defined in Section 8(d)) and ending 18 months immediately
thereafter and (ii) for 30 business days following the occurrence
of either of the events set forth in clauses (i) and (ii) of
Section 3(f) (but solely as to shares of Issuer Common Stock with
respect to which the required approval was not received) Issuer
(or any successor) shall repurchase from Holder (x) the Option
and (y) all shares of Issuer Common Stock purchased by 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 aggregate Purchase Price paid by
Holder for any shares of Issuer Common Stock acquired
pursuant to the Option with respect to which Holder then has
beneficial ownership;
(ii) the excess, if any, of (x) the
Applicable Price (as defined below) for each share of Issuer
Common Stock over (y) the Purchase Price (subject to
adjustment pursuant to Section 7), multiplied by the number
of shares of Issuer Common Stock with respect to which the
Option has not been exercised; and
(iii) the excess, if any, of the Applicable
Price over the Purchase Price (subject to adjustment
pursuant to Section 7) paid (or, in the case of Option
Shares with respect to which the Option has been exercised
but the Closing Date has not occurred, payable) by Holder
for each share of Issuer Common Stock with respect to which
the Option has been exercised and with respect to which
Holder then has beneficial ownership, multiplied by the
number of such shares.
(b) If Holder exercises its rights under this
Section 8, Issuer shall, 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 Issuer 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) and the period of time that would otherwise run
pursuant to the preceding sentence for the payment of the portion
of the Section 8 Repurchase Consideration shall run instead from
the date on which, as the case may be, (i) any required
notification period has expired or been terminated or (ii) such
approval has been obtained and, in either event, any requisite
waiting period shall have passed. 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; provided that if the Option shall have
terminated prior to the date of such notice or shall be scheduled
to terminate at any time before the expiration of a period ending
on the thirtieth business day after such date, Grantee shall
nonetheless have the right so to exercise the Option or exercise
its rights under Section 9 until the expiration of such period of
30 business days. 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.
(c) For purposes of this Agreement, the
"Applicable Price" means the highest of (i) the highest price per
share of Issuer Common Stock paid for any such share by the
person or groups described in Section 8(d)(i), (ii) the price per
share of Issuer Common Stock received by holders of Issuer Common
Stock in connection with any merger or other business combination
transaction described in Section 7(b)(i), 7(b)(ii) or 7(b)(iii),
or (iii) the highest closing sales price per share of Issuer
Common Stock quoted on the NYSE (or if Issuer Common Stock is not
quoted on the NYSE, 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;
provided, however, that in the event of a sale of less than all
of Issuer's assets, the Applicable Price shall be the sum of the
price paid in such sale for such assets and the current market
value of the remaining assets of Issuer as determined by a
nationally recognized investment banking firm selected by Holder,
divided by the number of shares of the Issuer Common Stock
outstanding at the time of such sale. If the consideration to be
offered, paid or received pursuant to either of the foregoing
clauses (i) or (ii) shall be other than in cash, the value of
such consideration shall be determined in good faith by an
independent nationally recognized investment banking firm
selected by 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 (i) any person (other than Grantee or any subsidiary of
Grantee) 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, or any
"group" (as such term is defined under the Exchange Act) shall
have been formed which beneficially owns or has the right to
acquire beneficial ownership of, 25% or more of the then
outstanding shares of Issuer Common Stock, or (ii) Issuer has
entered into an agreement pursuant to which any of the
transactions described in Section 7(b)(i), 7(b)(ii) or 7(b)(iii)
could or will be consummated.
9. Registration Rights.
(a) Demand Registration Rights. Issuer shall,
subject to the conditions of Section 9(c) below, if requested by
any Holder, including Grantee and any permitted transferee
("Selling Shareholder"), as expeditiously as possible prepare and
file a registration statement under the Securities Act if such
registration is necessary in order to permit the sale or other
disposition of any or all shares of Issuer Common Stock or other
securities that have been acquired by or are issuable to the
Selling Shareholder upon exercise of the Option in accordance
with the intended method of sale or other disposition stated by
the Selling Shareholder in such request, including without
limitation a "shelf" registration statement under Rule 415 under
the Securities Act or any successor provision, and Issuer shall
use its best efforts to qualify such shares or other securities
for sale under any applicable state securities laws.
(b) Additional Registration Rights. If Issuer at
any time after the exercise of the Option proposes to register
any shares of Issuer Common Stock under the Securities Act in
connection with an underwritten public offering of such Issuer
Common Stock, Issuer will promptly give written notice to the
Selling Shareholders of its intention to do so and, upon the
written request of any Selling Shareholder given within 30 days
after receipt of any such notice (which request shall specify the
number of shares of Issuer Common Stock intended to be included
in such underwritten public offering by the Selling Shareholder),
Issuer will cause all such shares for which a Selling Shareholder
requests participation in such registration, to be so registered
and included in such underwritten public offering; provided,
however, that Issuer may elect to not cause any such shares to be
so registered (i) if the underwriters in good faith object for
valid business reasons, or (ii) in the case of a registration
solely to implement an employee benefit plan or a registration
filed on Form S-4 of the Securities Act or any successor Form;
provided, further, however, that such election pursuant to (i)
may only be made two times. If some but not all the shares of
Issuer Common Stock with respect to which Issuer shall have
received requests for registration pursuant to this Section 9(b)
shall be excluded from such registration, Issuer shall make
appropriate allocation of shares to be registered among the
Selling Shareholders desiring to register their shares pro rata
in the proportion that the number of shares requested to be
registered by each such Selling Shareholder bears to the total
number of shares requested to be registered by all such Selling
Shareholders then desiring to have Issuer Common Stock registered
for sale.
(c) Conditions to Required Registration. Issuer
shall use all reasonable efforts to cause each registration
statement referred to in Section 9(a) above to become effective
and to obtain all consents or waivers of other parties which are
required therefor and to keep such registration statement
effective; provided, however, that Issuer may delay any
registration of Option Shares required pursuant to Section 9(a)
above for a period not exceeding 90 days provided Issuer shall in
good faith determine that any such registration would adversely
affect an offering or contemplated offering of other securities
by Issuer, and Issuer shall not be required to register Option
Shares under the Securities Act pursuant to Section 9(a) above:
(i) prior to the earliest of (a) termination
of the Plan pursuant to Article VII thereof, (b) failure to
obtain the requisite shareholder approval pursuant to
Section 6.01 of the Plan, and (c) a Purchase Event or a
Preliminary Purchase Event;
(ii) on more than one occasion during any
calendar year;
(iii) within 90 days after the effective
date of a registration referred to in Section 9(b) above
pursuant to which the Selling Shareholder or Selling
Shareholders concerned were afforded the opportunity to
register such shares under the Securities Act and such
shares were registered as requested; and
(iv) unless a request therefor is made to
Issuer by Selling Shareholders that hold at least 25% or
more of the aggregate number of Option Shares (including
shares of Issuer Common Stock issuable upon exercise of the
Option) then outstanding.
In addition to the foregoing, Issuer shall not be
required to maintain the effectiveness of any registration
statement after the expiration of nine months from the effective
date of such registration statement. Issuer shall use all
reasonable efforts to make any filings, and take all steps, under
all applicable state securities laws to the extent necessary to
permit the sale or other disposition of the Option Shares so
registered in accordance with the intended method of distribution
for such shares; provided, however, that Issuer shall not be
required to consent to general jurisdiction or qualify to do
business in any state where it is not otherwise required to so
consent to such jurisdiction or to so qualify to do business.
(d) Expenses. Except where applicable state law
prohibits such payments, Issuer will pay all expenses (including
without limitation registration fees, qualification fees, blue
sky fees and expenses (including the fees and expenses of
counsel), legal expenses, including the reasonable fees and
expenses of one counsel to the holders whose Option Shares are
being registered, printing expenses and the costs of special
audits or "cold comfort" letters, expenses of underwriters,
excluding discounts and commissions but including liability
insurance if Issuer so desires or the underwriters so require,
and the reasonable fees and expenses of any necessary special
experts) in connection with each registration pursuant to
Section 9(a) or 9(b) above (including the related offerings and
sales by holders of Option Shares) and all other qualifications,
notifications or exemptions pursuant to Section 9(a) or 9(b)
above.
(e) Indemnification. In connection with any
registration under Section 9(a) or 9(b) above Issuer hereby
indemnifies the Selling Shareholders, and each underwriter
thereof, including each person, if any, who controls such holder
or underwriter within the meaning of Section 15 of the Securities
Act, against all expenses, losses, claims, damages and
liabilities caused by any untrue, or alleged untrue, statement of
a material fact contained in any registration statement or
prospectus or notification or offering circular (including any
amendments or supplements thereto) or any preliminary prospectus,
or caused by any omission, or alleged omission, to state therein
a material fact required to be stated therein or necessary to
make the statements therein not misleading, except insofar as
such expenses, losses, claims, damages or liabilities of such
indemnified party are caused by any untrue statement or alleged
untrue statement that was included by Issuer in any such
registration statement or prospectus or notification or offering
circular (including any amendments or supplements thereto) in
reliance upon and in conformity with, information furnished in
writing to Issuer by such indemnified party expressly for use
therein, and Issuer and each officer, director and controlling
person of Issuer shall be indemnified by such Selling
Shareholders, or by such underwriter, as the case may be, for all
such expenses, losses, claims, damages and liabilities caused by
any untrue, or alleged untrue, statement, that was included by
Issuer in any such registration statement or prospectus or
notification or offering circular (including any amendments or
supplements thereto) in reliance upon, and in conformity with,
information furnished in writing to Issuer by such holder or such
underwriter, as the case may be, expressly for such use.
Promptly upon receipt by a party indemnified under
this Section 9(e) of notice of the commencement of any action
against such indemnified party in respect of which indemnity or
reimbursement may be sought against any indemnifying party under
this Section 9(e), such indemnified party shall notify the
indemnifying party in writing of the commencement of such action,
but the failure so to notify the indemnifying party shall not
relieve it of any liability which it may otherwise have to any
indemnified party under this Section 9(e) unless the failure so
to notify the indemnified party results in substantial prejudice
thereto. In case notice of commencement of any such action shall
be given to the indemnifying party as above provided, the
indemnifying party shall be entitled to participate in and, to
the extent it may wish, jointly with any other indemnifying party
similarly notified, to assume the defense of such action at its
own expense, with counsel chosen by it and satisfactory to such
indemnified party. The indemnified party shall have the right to
employ separate counsel in any such action and participate in the
defense thereof, but the fees and expenses of such counsel (other
than reasonable costs of investigation) shall be paid by the
indemnified party unless (i) the indemnifying party either agrees
to pay the same, (ii) the indemnifying party fails to assume the
defense of such action with counsel satisfactory to the
indemnified party, or (iii) the indemnified party has been
advised by counsel that one or more legal defenses may be
available to the indemnifying party that may be contrary to the
interest of the indemnified party, in which case the indemnifying
party shall be entitled to assume the defense of such action
notwithstanding its obligation to bear fees and expenses of such
counsel. No indemnifying party shall be liable for any
settlement entered into without its consent, which consent may
not be unreasonably withheld.
If the indemnification provided for in this
Section 9(e) is unavailable to a party otherwise entitled to be
indemnified in respect of any expenses, losses, claims, damages
or liabilities referred to herein, then the indemnifying party,
in lieu of indemnifying such party otherwise entitled to be
indemnified, shall contribute to the amount paid or payable by
such party to be indemnified as a result of such expenses,
losses, claims, damages or liabilities in such proportion as is
appropriate to reflect the relative benefits received by Issuer,
the Selling Shareholders and the underwriters from the offering
of the securities and also the relative fault of Issuer, the
Selling Shareholders and the underwriters in connection with the
statements or omissions which resulted in such expenses, losses,
claims, damages or liabilities, as well as any other relevant
equitable considerations. The amount paid or payable by a party
as a result of the expenses, losses, claims, damages and
liabilities referred to above shall be deemed to include any
legal or other fees or expenses reasonably incurred by such party
in connection with investigating or defending any action or
claim; provided, however, that in no case shall any Selling
Shareholder be responsible, in the aggregate, for any amount in
excess of the net offering proceeds attributable to its Option
Shares included in the offering. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. Any
obligation by any holder to indemnify shall be several and not
joint with other holders.
In connection with any registration pursuant to
Section 9(a) or 9(b) above, Issuer and each Selling Shareholder
(other than Grantee) shall enter into an agreement containing the
indemnification provisions of this Section 9(e).
(f) Miscellaneous Reporting. Issuer shall comply
with all reporting requirements and will do all such other things
as may be necessary to permit the expeditious sale at any time of
any Option Shares by the Selling Shareholders thereof in
accordance with and to the extent permitted by any rule or
regulation promulgated by the SEC from time to time, including,
without limitation, Rule 144. Issuer shall at its expense
provide the Selling Shareholders with any information necessary
in connection with the completion and filing of any reports or
forms required to be filed by them under the Securities Act or
the Exchange Act, or required pursuant to any state securities
laws or the rules of any stock exchange.
(g) Issue Taxes. Issuer will pay all stamp taxes
in connection with the issuance and the sale of the Option Shares
and in connection with the exercise of the Option, and will save
the Selling Shareholders harmless, without limitation as to time,
against any and all liabilities, with respect to all such taxes.
10. Quotation; Listing. If Issuer Common Stock or any
other securities to be acquired in connection with the exercise
of the Option are then authorized for quotation or trading or
listing on the NYSE or any securities exchange, Issuer, upon the
request of Holder, will promptly file an application, if
required, to authorize for quotation or trading or listing the
shares of Issuer Common Stock or other securities to be acquired
upon exercise of the Option on the NYSE or such other securities
exchange and will use its best efforts to obtain approval, if
required, of such quotation or listing as soon as practicable.
11. Division of Option. This Agreement (and the
Option granted hereby) are exchangeable, without expense, at the
option of 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 in the aggregate the same number of
shares of Issuer Common Stock purchasable hereunder. The terms
"Agreement" and "Option" as used herein include any other
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.
12. Miscellaneous.
(a) Expenses. 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.
(b) Waiver and Amendment. Any provision of this
Agreement may be waived at any time by the party that is entitled
to the benefits of such provision. This Agreement may not be
modified, amended, altered or supplemented except upon the
execution and delivery of a written agreement executed by the
parties hereto.
(c) Entire Agreement: No Third-Party
Beneficiaries; Severability. This Agreement, together with the
Plan and the other documents and instruments referred to herein
and therein, between Grantee and Issuer (i) constitutes the
entire agreement and supersedes all prior agreements and
understandings, both written and oral, between the parties with
respect to the subject matter hereof and (ii) is not intended to
confer upon any person other than the parties hereto (other than
the indemnified parties under Section 9(e) and any transferees of
the Option Shares or any permitted transferee of this Agreement
pursuant to Section 12(h)) any rights or remedies hereunder. If
any term, provision, covenant or restriction of this Agreement is
held by a court of competent jurisdiction or Regulatory Authority
to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of 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 Authority determines that the Option does not permit
Holder to acquire, or does not require Issuer to repurchase, the
full number of shares of Issuer Common Stock as provided in
Section 2 (as may be adjusted herein), it is the express
intention of Issuer to allow Holder to acquire or to require
Issuer to repurchase such lesser number of shares as may be
permissible without any amendment or modification hereof.
(d) Governing Law. This Agreement shall be
governed and construed in accordance with the laws of the
Commonwealth of Pennsylvania without regard to any applicable
conflicts of law rules.
(e) Descriptive Headings. The descriptive
headings contained herein are for convenience of reference only
and shall not affect in any way the meaning or interpretation of
this Agreement.
(f) Notices. All notices and other
communications hereunder shall be in writing and shall be deemed
given if delivered personally, telecopied (with confirmation) or
mailed by registered or certified mail (return receipt requested)
to the parties at the addresses set forth in the Plan (or at such
other address for a party as shall be specified by like notice).
(g) Counterparts. This Agreement and any
amendments hereto may be executed in two counterparts, each of
which shall be considered one and the same agreement and shall
become effective when both counterparts have been signed, it
being understood that both parties need not sign the same
counterpart.
(h) Assignment. Neither this Agreement nor any
of the rights, interests or obligations hereunder or under the
Option shall be assigned by any of the parties hereto (whether
by, operation of law or otherwise) without the prior written
consent of the other party, except that Holder may assign this
Agreement to a wholly-owned subsidiary of Holder and Holder may
assign its rights hereunder in whole or in part after the
occurrence of a Purchase Event. Subject to the preceding
sentence, this Agreement shall be binding upon, inure to the
benefit of and be enforceable by the parties and their respective
successors and assigns.
(i) Further Assurances. In the event of any
exercise of the Option by the Holder, Issuer and the Holder shall
execute and deliver all other documents and instruments and take
all other action that may be reasonably necessary in order to
consummate the transactions provided for by such exercise.
(j) Specific Performance. The parties hereto
agree that this Agreement may be enforced by either party through
specific performance, injunctive relief and other equitable
relief. Both parties further agree to waive any requirement for
the securing or posting of any bond in connection with the
obtaining of any such equitable relief and that this provision is
without prejudice to any other rights that the parties hereto may
have for any failure to perform this Agreement.
IN WITNESS WHEREOF, Issuer and Grantee have caused this
Stock Option Agreement to be signed by their respective officers
thereunto duly authorized, all as of the day and year first
written above.
CORESTATES FINANCIAL CORP
By /s/ Terrence A. Larsen
Terrence A. Larsen,
Chairman and Chief Executive
Officer
MERIDIAN BANCORP, INC.
By /s/ Samuel A. McCullough
Samuel A. McCullough,
Chairman, President and Chief
Executive Officer
<PAGE>
Exhibit C
AMENDMENT TO RIGHTS AGREEMENT
Amendment No. 2, dated as of October 10, 1995, to the
Rights Agreement, dated as of July 25, 1989, as amended June 28,
1994 (as amended, the "Rights Agreement"), between MERIDIAN
BANCORP, INC., a Pennsylvania business corporation (the
"Company"), and MERIDIAN TRUST COMPANY, a Pennsylvania trust
company, as Rights Agent (the "Rights Agent").
WITNESSETH
WHEREAS, the Rights (as defined in the Rights
Agreement) distributed in accordance with the Rights Agreement
remain issued and outstanding;
WHEREAS, no Distribution Date or Triggering Event (each
as defined in the Rights Agreement) has occurred;
WHEREAS, the Company and CoreStates Financial Corp, a
Pennsylvania business corporation ("CoreStates"), propose to
enter into an Agreement and Plan of Merger (the "Merger
Agreement"), pursuant to which the Company would merge with and
into CoreStates (the "Merger");
WHEREAS, concurrently with the execution of the Merger
Agreement, the Company and CoreStates will enter into a Stock
Option Agreement referred to therein (the "Stock Option
Agreement") pursuant to which the Company would grant to
CoreStates an option to acquire up to 19.9% of the outstanding
shares of Common Stock of the Company under certain
circumstances;
WHEREAS, in connection with the anticipated approval,
execution and delivery of the Merger Agreement and the Stock
Option Agreement, the Board of Directors of the Company deems it
advisable and in the best interests of the Company to make
certain changes in the Rights Agreement as set forth herein; and
WHEREAS, the Board of Directors of the Company has
adopted, in accordance with Section 27 of the Rights Agreement, a
resolution approving this Amendment and directing the appropriate
officers of the Company to take all appropriate steps to execute
and put into effect this Amendment and an appropriate officer of
the Company has provided a certificate to the Rights Agent as
provided for in such Section 27.
NOW, THEREFORE, in consideration of the premises and
covenants set forth in the Rights Agreement and this Amendment,
the parties hereby agree as follows:
1. Section 1(a) of the Rights Agreement is hereby
amended to read in its entirety as follows:
"(a) "Acquiring Person" shall mean any
Person who or which, together with all Affiliates and
Associates of such Person, shall be the Beneficial
Owner of (i) 19.9% or more of the shares of Common
Stock or (ii) Voting Securities that in the aggregate
represent 19.9% or more of the Total Voting Power, but
shall not include any of the following:
(A) the Company, any Subsidiary of the
Company, any employee stock option plan or other
employee benefit plan of the Company or of any
Subsidiary of the Company, or any Person or entity
organized, appointed or established by the Company
for or pursuant to the terms of any such plan;
(B) until the termination of the Stock
Option Agreement in accordance with its terms
prior to any exercise thereunder, CoreStates or
any Affiliate or Associate of CoreStates, as a
result of their acquisition of Beneficial
Ownership of Common Stock of the Company by reason
of the approval, execution, or delivery of the
Stock Option Agreement or the Merger Agreement or
by reason of the completion of any transaction or
the exercise of any Option contemplated by the
Stock Option Agreement or the Merger Agreement, so
long as CoreStates and any Affiliate or Associate
of CoreStates is not the Beneficial Owner of any
Common Stock of the Company other than (w) Common
Stock of the Company of which CoreStates or any
Affiliate or Associate of CoreStates is or becomes
the Beneficial Owner by reason of the approval,
execution, or delivery of the Stock Option
Agreement or the Merger Agreement, or by reason of
the completion of any transaction or the
exercising of the Option contemplated by the Stock
Option Agreement, the Merger Agreement, or both,
(x) Common Stock of the Company Beneficially Owned
by CoreStates or any Affiliate or Associate of
CoreStates on the date hereof, (y) Common Stock of
the Company of which CoreStates or any Affiliate
or Associate of CoreStates inadvertently becomes
the Beneficial Owner after the date hereof,
provided that the number of such shares of Common
Stock does not exceed 1% of the shares of Common
Stock of the Company outstanding on the date
hereof and that CoreStates or any such Affiliate
or Associate, as the case may be, divests such
Common Stock as soon as practicable after it
becomes aware of such acquisition of Beneficial
Ownership, and (z) Common Stock of the Company
Beneficially Owned or otherwise held by CoreStates
or any Affiliate or Associate of CoreStates in a
bona fide fiduciary capacity or in satisfaction of
debts previously contracted in good faith, in
either case in the ordinary course of its banking
business.
Notwithstanding the foregoing, no Person shall become
an "Acquiring Person" solely as the result of any
acquisition of Common Stock by the Company which, by
reducing the number of shares outstanding, increases
the proportionate number of shares beneficially owned
by such Person to 19.9% or more of the Common Stock of
the Company then outstanding; provided, however, that
if a Person not otherwise excluded from the definition
of "Acquiring Person" pursuant to Paragraph (B) above
shall become the Beneficial Owner of 19.9% or more of
the Common Stock of the Company then outstanding by
reason of share purchases by the Company and shall,
after such share purchases by the Company, become the
Beneficial Owner of any additional Common Stock of the
Company, then such Person shall be deemed to be an
Acquiring Person."
2. Section 1(b) of the Rights Agreement is hereby
amended to read in its entirety as follows:
"(b) 'Adverse Person' shall mean any Person
declared to be an Adverse Person by the Board of
Directors upon a determination by such Directors
that the criteria set forth in Section
11(a)(ii)(B) apply to such Person, provided,
however, that the Board of Directors shall not
declare CoreStates or any Affiliate or Associate
of CoreStates to be an Adverse Person as a result
of the Merger Agreement, the Stock Option
Agreement, their acquisition of Beneficial
Ownership of shares of Common Stock by reason of
the Stock Option Agreement or the Merger
Agreement, or by reason of the consummation of any
transaction or the exercise of any option
contemplated by the Stock Option Agreement or the
Merger Agreement."
3. A new Section 1(ll) is added to the Rights
Agreement, to read as follows:
"(ll) "CoreStates" shall mean CoreStates
Financial Corp, a corporation duly organized and
existing under the laws of the Commonwealth of
Pennsylvania, and its successors."
4. A new Section 1(mm) is added to the Rights
Agreement, to read as follows:
"(mm) "Merger Agreement" shall mean the
Agreement and Plan of Merger, dated as of October 10,
1995, by and between CoreStates and the Company, as the
same may be amended from time to time."
5. A new Section 1(nn) is added to the Rights
Agreement, to read as follows:
"(nn) "Stock Option Agreement" shall mean
the Stock Option Agreement, dated as of October 10,
1995, by and between the Company, as issuer, and
CoreStates, as grantee, as the same may be amended from
time to time."
6. A new Section 1(oo) is added to the Rights
Agreement, to read as follows:
"(oo) "Termination Time" shall be
immediately prior to the Effective Time, as defined in
the Merger Agreement."
7. Section 7(a) of the Rights Agreement is hereby
amended to read in its entirety as follows:
"(a) Subject to Section 7(e) hereof, the
registered holder of any Rights Certificate may
exercise the Rights evidenced thereby (except as
otherwise provided herein including, without
limitation, the restrictions on exercisability set
forth in Section 9(c), Section 11(a)(iii), and
Section 23(a) hereof) in whole or in part at any time
after the Distribution Date upon surrender of the
Rights Certificate, with the form of election to
purchase and the certificate on the reverse side
thereof duly executed, to the Rights Agent at the
principal office or offices of the Rights Agent
designated for such purpose, together with payment of
the aggregate Purchase Price with respect to the total
number of one one-hundredths of a share (or other
securities, cash, or other assets, as the case may be)
as to which such surrendered Rights are then
exercisable, at or prior to the earliest of (i) the
close of business on July 25, 1999 (the "Final
Expiration Date"), (ii) the time at which the Rights
are redeemed as provided in Section 23 hereof (the
earlier of (i) and (ii) being herein referred to as the
"Expiration Date"), (iii) the time at which such Rights
are exchanged as provided in Section 24 hereof, or
(iv) the Termination Time.
8. Section 13(a) of the Rights Agreement is hereby
amended to read in its entirety as follows:
"(a) In the event that, following the Stock
Acquisition Date, directly or indirectly, (x) the
Company shall consolidate with, or merge with and into,
any other Person (other than a Subsidiary of the
Company in a transaction which complies with
Section 11(o) hereof), and the Company shall not be the
continuing or surviving corporation of such
consolidation or merger, (y) any Person (other than a
Subsidiary of the Company in a transaction which
complies with Section 11(o) hereof) shall consolidate
with, or merge with or into, the Company, and the
Company shall be the continuing or surviving
corporation of such consolidation or merger and, in
connection with such consolidation or merger, all or
part of the outstanding shares of Voting Securities
shall be changed into or exchanged for stock or other
securities of any other Person or cash or any other
property, or (z) the Company shall sell or otherwise
transfer (or one or more of its Subsidiaries shall sell
or otherwise transfer), in one transaction or a series
of related transactions, assets or earning power
aggregating more than 50% of the assets or earning
power of the Company and its Subsidiaries (taken as a
whole) to any Person or Persons (other than the Company
or any Subsidiary of the Company in one or more
transactions each of which complies with Section 11(o)
hereof); provided, however, that so long as the Merger
Agreement shall not have been terminated, the
references to other "Person" and any "Person" with
respect to the transactions listed in clauses (x), (y),
and (z) above shall not include CoreStates or any of
its Affiliates; then, and in each such case (except as
may be contemplated by Section 13(d) hereof), proper
provision shall be made so that: (i) each holder of a
Right, except as provided in Section 7(e) hereof, shall
thereafter have the right to receive, upon the exercise
thereof at the then current Purchase Price in
accordance with the terms of this Agreement, such
number of validly authorized and issued, fully paid,
nonassessable, and freely tradeable shares of Common
Stock of the Principal Party (as such term in
hereinafter defined), not subject to any liens,
encumbrances, rights of first refusal, or other adverse
claims, as shall be equal to the result obtained by
(1) multiplying the then-current Purchase Price by the
number of one one-hundredths of a share of Preferred
Stock for which a Right is exercisable immediately
prior to the first occurrence of a Section 13 Event
(or, if a Section 11(a)(ii) Event has occurred prior to
the first occurrence of a Section 13 Event, multiplying
the number of such one one-hundredths of a share for
which a Right was exercisable immediately prior to the
first occurrence of a Section 11(a)(ii) Event by the
Purchase Price in effect immediately prior to such
first occurrence), and dividing that product (which,
following the first occurrence of a Section 13 Event,
shall be referred to as the "Purchase Price" for each
Right and for all purposes of this Agreement) by
(2) 50% of the current market price (determined
pursuant to Section 11(d)(i) hereof) per share of the
Common Stock of such Principal Party on the date of
completion of such Section 13 Event; (ii) such
Principal Party shall thereafter be liable for, and
shall assume, by virtue of such Section 13 Event, all
the obligations and duties of the Company pursuant to
this Agreement; (iii) the term "Company" shall
thereafter be deemed to refer to such Principal Party,
it being specifically intended that the provisions of
Section 11 hereof shall apply only to such Principal
Party following the first occurrence of a Section 13
Event; (iv) such Principal Party shall take such steps
(including, but not limited to, the reservation of a
sufficient number of shares of its Common Stock) in
connection with the consummation of any such
transaction as may be necessary to assure that the
provisions hereof shall thereafter be applicable, as
nearly as reasonably may be, in relation to its shares
of Common Stock thereafter deliverable upon the
exercise of the Rights; and (v) the provisions of
Section(a)(ii) hereof shall be of no effect following
the first occurrence of any Section 13 Event."
9. Clause (iv) of Section 25(a) of the Rights
Agreement is amended to read as follows:
"(iv) to effect any consolidation or merger
into or with any other Person (other than a Subsidiary
of the Company in a transaction which complies with
Section 11(o) hereof), or to effect any sale or other
transfer (or to permit one or more of its Subsidiaries
to effect any sale or other transfer), in one
transaction or a series of related transactions of more
than 50% of the assets or earning power of the Company
and its Subsidiaries (taken as a whole) to any other
Person or Persons (other than the company and/or any of
its Subsidiaries in one or more transactions each of
which complies with Section 11(o) hereof), provided,
however, that so long as the Merger Agreement shall not
have been terminated, such other Person shall not, in
any such consolidation, merger, or sale or transfer of
assets or earning power, include CoreStates or any of
its Affiliates or Associates,"
10. A new Section 35 is added to the Rights Agreement,
to read in its entirety as follows:
"Section 35. Termination. This Agreement
shall terminate at the Termination Time and all rights,
benefits, obligations, duties and agencies created by
this Agreement shall be terminated at such Termination
Time. All Rights issued and outstanding shall, at the
Termination Time, cease to exist and shall be
terminated without any payment to any holder thereof."
11. On or after the date hereof, each reference in the
Rights Agreement (including the Exhibits thereto) to "This
Agreement," "hereunder," "herein" or words of like import shall
mean and be a reference to the Rights Agreement as amended hereby
and all Exhibits thereto shall be deemed to be amended to reflect
the amendments made hereby.
12. This Amendment shall be effective as of the date
of its execution and, except as set forth herein, the Rights
Agreement shall remain in full force and effect and shall be
otherwise unaffected hereby.
13. Capitalized terms which are used but not defined
herein shall have the meaning ascribed to such terms in the
Rights Agreement.
14. If any term, provision, covenant, or restriction
of this Amendment is held by a court of competent jurisdiction or
other authority to be invalid, void, or unenforceable, the
remainder of the terms, provisions, covenants, and restrictions
of this Amendment shall remain in full force and effect and shall
in no way be affected, impaired, or invalidated.
15. This Amendment shall be deemed to be a contract
made under the laws of the Commonwealth of Pennsylvania and for
all purposes shall be governed by and construed in accordance
with the laws of the Commonwealth applicable to contracts made
and to be performed entirely within the Commonwealth.
16. This Amendment may be executed in any number of
counterparts and each of such counterparts shall for all purposes
be deemed to be an original, and all such counterparts shall
together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed, all as of the day and year first
above written.
MERIDIAN BANCORP, INC.
By_________________________________
Attest:____________________________
MERIDIAN TRUST COMPANY
By_________________________________
Attest:____________________________
<PAGE>
Exhibit D
FORM OF MERIDIAN AFFILIATE'S LETTER
_____________, 1995
CoreStates Financial Corp
Broad and Chestnut Streets
Philadelphia, Pennsylvania 19107
Meridian Bancorp, Inc.
35 North Sixth Street
Reading, Pennsylvania 19603
Gentlemen:
Pursuant to the terms of the Agreement and Plan of Merger,
dated as of October 10, 1995 (the "Plan"), by and between
CoreStates Financial Corp ("CoreStates") and Meridian Bancorp,
Inc. ("Meridian"), Meridian plans to merge with and into
CoreStates (the "Merger"). As a result of the Merger, the
undersigned may receive shares of CoreStates common stock, par
value $1.00 per share (the "CoreStates Common Stock") in exchange
for shares (or options on shares) of Meridian common stock, par
value $5.00 per share (the "Meridian Common Stock").
The undersigned hereby represents, warrants and covenants
with and to CoreStates that in the event the undersigned receives
any CoreStates Common Stock as a result of the Merger:
(A) The undersigned will not sell, transfer or
otherwise dispose of such CoreStates Common Stock unless (i) such
sale, transfer or other disposition has been registered under the
Securities Act of 1933, as amended (the "Act"), (ii) such sale,
transfer or other disposition is made in conformity with the
provisions of Rule 145 under the Act (as such rule may be
hereafter from time to time be amended), or (iii) in the opinion
of counsel in form and substance reasonably satisfactory to
CoreStates, or under a "no-action" letter obtained by the
undersigned from the staff of the Securities and Exchange
Commission (the "SEC"), such sale, transfer or other disposition
will not violate or is otherwise exempt from registration under
the Act.
(B) The undersigned understands that CoreStates is
under no obligation to register the sale, transfer or other
disposition of shares of CoreStates Common Stock by the
undersigned or on the undersigned's behalf under the Act or to
take any other action necessary in order to make compliance with
an exemption from such registration available.
(C) The undersigned also understands that stop
transfer instructions will be given to CoreStates's transfer
agent with respect to the shares of CoreStates Common Stock
issued to the undersigned as a result of the Merger and that
there will be placed on the certificates for such shares, or any
substitutions 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 of 1933 applies. The shares represented by this
certificate may only be transferred in accordance with
the terms of a letter agreement between the registered
holder hereof and CoreStates, a copy of which agreement
is on file at the principal offices of CoreStates."
(D) The undersigned also understands that, unless the
transfer by the undersigned of the CoreStates Common Stock issued
to the undersigned as a result of the Merger have been registered
under the Act or a sale made in conformity with the provisions of
Rule 145(d) under the Act, CoreStates reserves the right, in its
sole discretion, to place the following legend on the
certificates issued to any transferee of such CoreStates Common
Stock from the undersigned:
"The shares represented by this certificate have not
been registered under the Securities Act of 1933 and
were acquired from a person who received such shares in
a transaction to which Rule 145 under the Securities
Act of 1933 applies. The shares have been acquired by
the holder not with a view to, or for resale in
connection with, any distribution thereof within the
meaning of the Securities Act of 1933 and may not be
offered, sold, pledged or otherwise transferred except
in accordance with an exemption from the registration
requirements of the Securities Act of 1933."
It is understood and agreed that the legends set forth
in paragraphs (C) and (D) above shall be removed by delivery of
substitute certificates without such legend if the undersigned
shall have delivered to CoreStates (i) a copy of a "no action"
letter from the staff of the SEC, or an opinion of counsel in
form and substance reasonably satisfactory to CoreStates, to the
effect that such legend is not required for purposes of the Act,
or (ii) evidence or representations satisfactory to CoreStates
that the CoreStates Common Stock represented by such certificates
is being or has been sold in a transaction made in conformity
with the provisions of Rule 145(d).
(E) The undersigned further represents, warrants and
covenants with and to, CoreStates that the undersigned will not
sell, transfer or otherwise dispose of his or her interests in,
or reduce his or her risk relative to, any shares of CoreStates
Common Stock or Meridian Common Stock beneficially owned by the
undersigned during the period commencing 30 days prior to the
effective date of the Merger and ending at such time as
CoreStates notifies the undersigned that results covering at
least 30 days of combined operations of CoreStates after the
Merger have been published by CoreStates, which CoreStates agrees
to publish consistent with its normal financial reporting
practice.
(F) The undersigned further represents, warrants and
covenants with and to CoreStates that the undersigned will, and
will cause each of the other parties whose shares are deemed to
be beneficially owned by the undersigned pursuant to paragraph
(G) below to, have all shares of Meridian Common Stock owned by
the undersigned or such parties registered in the name of the
undersigned or such parties, as applicable, prior to the
effective date of the Merger and not in the name of any bank,
broker-dealer, nominee or clearing house.
(G) The undersigned understands and agrees that this
letter agreement shall apply to all shares of the capital stock
of Meridian and CoreStates that are deemed to be beneficially
owned by the undersigned pursuant to applicable federal
securities laws.
(H) The undersigned has carefully read this letter and
discussed its requirements and other applicable limitations upon
the undersigned's ability to sell, transfer or otherwise dispose
of the capital stock of Meridian or CoreStates, to the extent the
undersigned felt necessary, with the undersigned's counsel or
counsel for Meridian.
Very truly yours,
___________________________________
Name:
add below the signatures of
all registered owners of
shares deemed beneficially
owned by the affiliate
___________________________________
Name:
___________________________________
Name:
___________________________________
Name:
Acknowledged this ____ day of ___________, 1995.
CORESTATES FINANCIAL CORP
By_________________________________
Name:
Title:
MERIDIAN BANCORP, INC.
By_________________________________
Name:
Title:
<PAGE>
Exhibit E
FORM OF CORESTATES AFFILIATE'S LETTER
_____________, 1995
CoreStates Financial Corp
Broad and Chestnut Streets
Philadelphia, Pennsylvania 19107
Gentlemen:
Pursuant to the terms of the Agreement and Plan of Merger,
dated as of October 10, 1995 (the "Plan"), by and between
CoreStates Financial Corp ("CoreStates") and Meridian Bancorp,
Inc. ("Meridian"), Meridian plans to merge with and into
CoreStates (the "Merger").
The undersigned hereby represents, warrants and covenants
with and to CoreStates that:
(A) The undersigned will not sell, transfer or
otherwise dispose of his or her interests in, or reduce his or
her risk relative to, any shares of common stock of either
CoreStates or Meridian beneficially owned by the undersigned,
during the period commencing 30 days prior to the effective date
of the Merger and ending at such time as CoreStates notifies the
undersigned that results covering at least 30 days of combined
operations of CoreStates after the Merger have been published by
CoreStates.
(B) The undersigned understands and agrees that this
letter agreement shall apply to all shares of the capital stock
of Meridian and CoreStates that are deemed to be beneficially
owned by the undersigned under applicable federal securities law.
Very truly yours,
___________________________________
Name:
add below the signatures of
all registered owners of
shares deemed beneficially
owned by the affiliate
___________________________________
Name:
___________________________________
Name:
___________________________________
Name:
Acknowledged this ____ day of ____________, 1995.
CORESTATES FINANCIAL CORP.
By_________________________________
Name:
Title:
<PAGE>
Exhibit F
SUMMARY TERM SHEET
TERMINATION AGREEMENT
1. PARTIES
- [Executive] and Meridian Bancorp, Inc. (to be assumed
by CoreStates).
2. TERM
- 3 years from date of Corestates/Meridian closing.
3. POSITION
- Samuel A. McCullough - President and Chief Operating
Officer, CoreStates Financial Corp.
- David E. Sparks - Chief Financial Officer, CoreStates
Financial Corp.
4. TERMINATION BY CORESTATES FOR DISABILITY
- 30 days' notice required by CoreStates.
- Annual payment for a period of one year of the
following compensation and benefits:
- Highest base salary during the year of termination
or the preceding 2 years (including periods
employed by Meridian), payable in accordance with
pay policies.
- Greater of: (i) highest bonus over current and
preceding 2 years, or (ii) highest annual bonus
received from Meridian with respect to calendar
years 1992-1994.
- Highest amounts contributed to any tax-qualified
defined contribution plans (other than own
contributions) in the year of termination or the
3 preceding years (including periods employed by
Meridian), payable annually.
- Highest amount contributed to any supplemental
salary reduction plan, defined contribution
portion of a retirement restoration plan and other
nonqualified plans (other than own contributions)
in the year of termination or the 3 preceding
years (including periods employed by Meridian),
payable annually.
- Continuation of welfare benefit plan participation
or tax-effected payments in lieu thereof.
- Accrual of additional benefits under any
retirement plan, SERP, and defined benefit portion
of a retirement restoration plan based on highest
compensation in current and preceding 3 years
(including periods employed by Meridian), payable
in accordance with plans.
- Pro ration of payments and benefits as required.
- Offset for any amounts/benefits payable under any
CoreStates disability plan.
- Other provisions for termination of welfare benefits
and disposition of benefits in the event of death.
5. DEATH WHILE EMPLOYED
- Basically, the same compensation and benefits as set
forth in Item #4 above -- payable to surviving spouse
or estate.
6. TERMINATION BY CORESTATES FOR CAUSE
- Definition of "cause" attached.
- 30 days' notice required of CoreStates.
- He receives only accrued but unpaid base compensation.
- Termination must be effected by Board.
7. TERMINATION BY HIM WITHOUT GOOD REASON
- Definition of "good reason" attached.
- He is required to give 30 days' notice.
- He receives only accrued but unpaid base compensation.
8. TERMINATION BY CORESTATES WITHOUT CAUSE
- 30 days' notice required of CoreStates.
- Compensation and benefits basically parallel those set
forth under Item #4 above, except for three years.
9. TERMINATION BY HIM FOR GOOD REASON
- 30 days' notice required of him.
- Compensation and benefits basically parallel those set
forth under Item #4 above, except for three years.
10. LIMITATION ON BENEFITS
- Notwithstanding the foregoing provisions of the
Agreement, the present value of the payments and
benefits, under the agreement, when aggregated with any
other payments or benefits to him which constitute
parachute payments (within the meaning of Code
Section 280G) shall in no event exceed 2.99 times the
execution "base amount" (as determined under Code
Section 280G). To the extent payments or benefits are
reduced hereunder, he may designate which payments or
benefits shall be reduced. In the event he fails to
make such designation in a reasonably timely fashion,
CoreStates shall be entitled to do so.
11. PAYMENT OF HIS FEES AND EXPENSES RELATING TO AGREEMENT
- CoreStates is required to reimburse him for his fees
and expenses incurred in connection with the agreement,
except where an arbitration panel or court determines
he instituted an action or otherwise acted in bad
faith.
12. OFFSET FOR SEVERANCE PAY
- Termination payments and benefits are offset by amounts
received by him under any severance policy.
13. NO MITIGATION
- No mitigation of damages is required or permitted
following his termination of employment.
14. CONFIDENTIALITY
- In all cases, he is precluded from disclosing
confidential information following termination.
15. ARBITRATION
- Provision is made for mandatory arbitration of
disputes, subject to the right of CoreStates to secure
an injunction, etc. in court for proscribed conduct on
his part.
16. EFFECT ON RELATED AGREEMENTS
- Other agreements are superseded to the extent they
limit, qualify, duplicate, or are inconsistent with
this agreement.
<PAGE>
ABBREVIATED GLOSSARY
"Cause" means (i) a documented repeated and willful
failure by the Executive to perform his duties, after written
demand, (ii) his unappealable conviction of a felony, or
(iii) the issuance by the federal regulators of CoreStates of
unappealable orders to the effect that he be permanently
discharged.
For purposes of this definition, no act or failure to act on the
part of the Executive shall be considered "willful" unless done
or omitted not in good faith and without reasonable belief that
the action or omission was in the best interest of CoreStates or
any of its Subsidiaries.
"Good Reason" means:
(i) a demotion in the Executive's status or
position immediately after the CoreStates/Meridian closing,
or any material diminution in his duties or responsibilities
(which are customary for the position of the executive set
forth above); removal from office of chair will be a
demotion in status and position.
(ii) a reduction in the Executive's base
compensation, other than a reduction which is proportionate
to a company-wide reduction in executive pay by CoreStates;
(iii) a failure to increase the Executive's base
compensation, consistent with his performance rating, by the
earlier of (A) the expiration of the normal salary
adjustment cycle from time to time in effect, or
(B) 24 months since the last increase, other than similar
treatment on a company-wide basis for CoreStates executives
or a voluntary deferral by him of an increase;
(iv) a failure (unless such failure is
attributable to job performance) to award Executive bonuses
consistent in amount with bonuses awarded to other
Corestates Executives in the office of the Chairman; or
(v) any material breach of the agreement.
<PAGE>
Exhibit G
TERMINATION AGREEMENT
THIS AGREEMENT made as of this ____ day of October,
1995, by and between MERIDIAN BANCORP, INC. ("Meridian"), a
Pennsylvania business corporation having its principal office at
35 North Sixth Street, Reading, Berks County, Pennsylvania, and
_____________ (the "Executive"), an adult individual.
WITNESSETH
WHEREAS, the Executive is presently serving as an
executive of Meridian; and
WHEREAS, Meridian considers the continued services of
the Executive to be in the best interests of Meridian and its
stockholders and desires to induce the Executive to remain in the
employ of Meridian; and
WHEREAS, Meridian and CoreStates Financial Corp (the
"Company") have entered into an Agreement and Plan of Merger (the
"Merger") and Meridian and the Company wish to provide a
Termination Agreement to Executive, contingent upon completion of
the Merger; and
WHEREAS, the Company, as successor by Merger to
Meridian wishes to provide the Termination Payments to Executives
in the circumstances set forth in this Agreement.
AGREEMENT:
NOW, THEREFORE, the parties hereto, intending to be
legally bound, hereby agree as follows:
1. Term of Agreement.
(a) This Agreement shall be for a three (3) year
period commencing on the Effective Date of the Merger (the
"Effective Date") and ending on the third anniversary of the
Effective Date.
(b) Notwithstanding the provisions of
Section 1(a) of this Agreement, this Agreement shall terminate
automatically upon termination by the Company of the Executive's
employment for Cause. As used in this Agreement, "Cause" shall
mean (A) the Executive's conviction of or plea of guilty or nolo
contendere to a felony or the actual incarceration of the
Executive for a period of forty-five (45) consecutive days,
(B) the issuance by any federal or state banking authority of an
order directing that the Company terminate the Executive's
employment with the Company or relieve the Executive of the
duties being performed by the Executive for the Company or
(C) Executive's willful misconduct or gross negligence in the
performance of Executive's duties.
If the Executive's employment is terminated for Cause, the
Executive's rights under this Agreement shall cease as of the
effective date of such termination.
(c) Notwithstanding the provisions of
Section 1(a) of this Agreement, this Agreement shall terminate
automatically upon termination of the Executive's employment as a
result of the Executive's voluntary termination (other than in
accordance with Section 2 of this Agreement), retirement at the
Executive's election, or death and the Executive's rights under
this Agreement shall cease as of the date of such voluntary
termination, retirement at the Executive's election, or death;
provided, however, that if the Executive dies after a Notice of
Termination (as defined in Section 2 of this Agreement) is
delivered by the Executive, the provisions of Section 8(b) of
this Agreement shall apply.
(d) Notwithstanding the provisions of
Section 1(a) of this Agreement, this Agreement shall terminate
automatically upon termination of the Executive's employment as a
result of the Executive's disability and the Executive's rights
under this Agreement shall cease as of the date of such
termination; provided, however, that, if the Executive becomes
disabled after a Notice of Termination (as defined in Section 2
of this Agreement) is delivered by the Executive, the Executive
shall nevertheless be absolutely entitled to receive all of the
compensation and benefits provided for in, and for the term set
forth in, Section 3 of this Agreement. For purposes of this
Agreement, "disability" shall mean the Executive's incapacitation
by accident, sickness, or otherwise which renders the Executive
mentally or physically incapable of performing the services
required of the Executive for three hundred sixty (360)
consecutive days.
2. Termination Provisions. If at any time during the
term of this Agreement, there shall be:
(i) any involuntary termination of the Executive
(other than as set forth in Section 1(b), 1(c), or 1(d) of
this Agreement);
(ii) the assignment to the Executive of duties
materially inconsistent with the Executive's office
immediately after the Effective Date or as the same may be
increased from time to time after the Effective Date;
(iii) any reassignment of the Executive to a
location greater than one hundred (100) miles from such
Executive's current job location;
(iv) any reduction in excess of 10 percent in the
sum of Executive's annual base salary and target bonus in
effect on the Effective Date or as the same may be increased
from time to time after the Effective Date;
(v) any failure to provide the Executive with a
target bonus comparable to similarly situated executives at
the Company;
(vi) any failure to provide the Executive with
benefits at least as favorable as those enjoyed by similarly
situated executives at CoreStates under CoreStates's
pension, life insurance, medical, health and accident,
disability or other employee plans;
(vii) any requirement that the Executive travel
in performance of Executive's duties on behalf of the
Company for a significantly greater period of time during
any year than was required of the Executive during the year
preceding the year in which the Effective Date occurred;
(viii) any material breach of this Agreement on
the part of the Company;
then, at the option of the Executive, exercisable by the
Executive within ninety (90) days after the occurrence of each
and every of the foregoing events, the Executive may resign from
employment with the Company (or, if involuntarily terminated,
give notice of intention to collect benefits under this
Agreement) by delivering a notice in writing (the "Notice of
Termination") to the Company and the provisions of Section 3 of
this Agreement shall apply.
3. Rights in Event of Termination.
(a) In the event that the Executive delivers a
Notice of Termination to the Company in accordance with Section 2
above, the Executive shall be entitled to receive the
compensation and benefits set forth below for the remaining term
of this Agreement, but not exceeding twenty-four (24) months, as
follows:
(i) the Executive shall continue to receive
payments of annual base salary at the highest amount in
effect during the three (3) calendar years preceding the
year in which the Notice of Termination is delivered,
payable in the same manner as salaries paid to other
executive employees of the Company;
(ii) the Executive shall receive, no later than
the fifth (5th) calendar day of each month, an amount equal
to one-twelfth (1/12) of the annual dollar amount the
Executive would have received under the Meridian Bancorp,
Inc. Executive Annual Incentive Plan, based on the
Executive's annual base salary in effect during, and based
on the target percentage award of annual base salary under
such Plan during, the calendar year in which the Effective
Date occurs;
(iii) the Executive shall receive, no later than
the fifth (5th) calendar day of each month, an amount equal
to one-twelfth (1/12) of the amount of the contribution made
by the Company to the Meridian Bancorp, Inc. Savings Plan,
or any successor plan, on behalf of the Executive for the
calendar year prior to the year in which the Notice of
Termination is delivered;
(iv) the Executive shall be entitled to continue
to participate in the Meridian Bancorp, Inc. Employee's
Retirement Plan and the Meridian Bancorp, Inc. Retirement
Restoration Plan, or any other supplemental executive
retirement plan or other plan in effect during the term of
this Agreement designed to supplement payments made under
the Meridian Employee's Retirement Plan or any successor
plan, as if the Executive's employment had not terminated;
and
(v) the Company shall provide the Executive with
life, disability, and medical insurance benefits at levels
equivalent to the levels to which Executive would have been
entitled had the Executive remained in the Company's employ
during such period.
(b) In the event that the Executive is ineligible
to continue participation in the Meridian Employee's Retirement
Plan (and any successor plan) or in any of the life, disability,
or medical insurance plans or programs referred to in
Section 3(a) of this Agreement, the Company shall, in lieu of
such participation, pay the Executive a dollar amount equal to
the dollar amount of the benefit forfeited by the Executive as a
result of such ineligibility in the case of the Retirement Plan
or a dollar amount equal to the cost to the Executive to obtain
such benefits in the case of any life, disability, or medical
insurance plans or programs.
(c) The Company shall pay to the Executive all
legal fees and expenses incurred by the Executive as a result of
the Executive's delivery of a Notice of Termination (including
all such fees and expenses, if any, incurred in contesting or
disputing any termination of employment or in seeking to obtain
or enforce any right or benefit provided by this Agreement);
unless a court determines an Executive instituted an action or
otherwise acted in bad faith.
(d) The Executive shall not be required to
mitigate the amount of any payment provided for in this Section 3
by seeking other employment or otherwise, nor shall the amount of
any payment or benefit provided for in this Section 3 be reduced
by any compensation earned by the Executive as the result of
employment by another employer or by reason of the Executive's
receipt of or right to receive any retirement or other benefits
after the date of termination of employment or otherwise;
provided, however, that the payments provided for in this
Section 3 shall be reduced by the amount actually received by the
Executive under the severance policy of the Company then in
effect.
(e) The Executive's right to receive payments
under this Agreement shall not decrease the amount of, or
otherwise adversely affect, any benefits payable to the Executive
under any plan, agreement, or arrangement relating to employee
benefits provided by the Company.
(f) Notwithstanding the foregoing provisions of
this Section 3, the present value (determined in accordance with
the provisions of Section 280G of the Internal Revenue Code of
1986, as amended (the "Code") of the total amount of all payments
under this Section 3 when aggregated with any other payments to
Executive which constitute parachute payments (within the meaning
of Section 280G of the Code) shall in no event exceed 2.99 times
the Executive's "base amount" (as determined under Section 280G
of the Code).
4. Notices. Except as otherwise provided in this
Agreement, any notice required or permitted to be given under
this Agreement shall be deemed properly given if in writing and
if mailed by registered or certified mail, postage prepaid with
return receipt requested, to the Executive's residence, in the
case of notices to the Executive, and to the principal office of
the Company, Attention: General Counsel, in the case of notices
to the Company.
5. Waiver. No provision of this Agreement may be
modified, waived, or discharged unless such waiver, modification,
or discharge is agreed to in writing and signed by the Executive
and the Company. No waiver by either party hereto at any time of
any breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such
other party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or
subsequent time.
6. Assignment. This Agreement shall not be
assignable by either party, except by the Company to any
successor in interest to the Company's business.
7. Entire Agreement. This Agreement contains the
entire agreement of the parties relating to the subject matter of
this Agreement.
8. Successors; Binding Agreement.
(a) The Company will require any successor
(whether direct or indirect, by purchase, merger, consolidation,
or otherwise) to all or substantially all of the business and/or
assets of the Company to expressly assume and agree to perform
this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had
taken place. Failure by the Company to obtain such assumption
and agreement prior to the effectiveness of any such succession
shall constitute a breach of this Agreement and the provisions of
Section 3 of this Agreement shall apply. As used in this
Agreement, "Company" shall mean the Company as defined previously
and any successor to its business and/or assets as aforesaid
which assumes and agrees to perform this Agreement by operation
of law or otherwise.
(b) This Agreement shall inure to the benefit of
and be enforceable by the Executive's personal or legal
representatives, executors, administrators, heirs, distributees,
devisees, and legatees. If the Executive should die after a
Notice of Termination is delivered by the Executive and any
amounts would be payable to the Executive under this Agreement if
the Executive had continued to live, all such amounts shall be
paid in accordance with the terms of this Agreement to the
Executive's devisee, legatee, or other designee, or, if there is
no such designee, to the Executive's estate.
9. Validity. The invalidity or unenforceability of
any provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which
shall remain in full force and effect.
10. Applicable Law. This Agreement shall be governed
by and construed in accordance with the domestic laws (but not
the law of conflicts of law) of the Commonwealth of Pennsylvania.
11. Headings. The headings of the Sections of this
Agreement are for convenience only and shall not control or
affect the meaning or construction or limit the scope of intent
of any of the provisions of this Agreement.
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first above written.
MERIDIAN BANCORP, INC.
By________________________________
Chairman of the Board
(SEAL)
Attest:___________________________
Secretary
Witness:
__________________________ _____________________________(SEAL)
("Executive")
<PAGE>
Exhibit H
EXECUTIVE SEVERANCE POLICY
OF
MERIDIAN BANCORP, INC. AND PARTICIPATING COMPANIES
1. Purpose. The purpose of this Policy is to provide for
the payment of severance and the continuation of certain benefits
for eligible executives of Meridian Bancorp, Inc. and other
Participating Companies under the circumstances described below.
2. Definitions. Each capitalized word and term used
herein shall have the meaning ascribed to it, if any, in the
glossary appended hereto, unless the context in which such word
or term is used otherwise clearly requires. Such glossary is
incorporated herein by reference and made a part hereof.
3. Eligible Individuals.
(a) Persons eligible for participation in this Policy
are (i) executive employees of the Participating
Companies who are employed in a salary grade of 22
or higher, and (ii) such other employees of the
Participating Companies (not to exceed 12 in
number at any given time) designated in writing by
Meridian's Chief Executive Officer as
Participants; provided, however, that no such
person shall be designated who does not appear to
qualify as a member of "a select group of
management or highly compensated employees" under
U.S. Department of Labor Regulations promulgated
under ERISA. For purposes of this paragraph, in
the event the job classification system is
hereafter changed, "salary grade 22" shall be
deemed such grade or rank as, in the judgment of
the senior Human Resources officer, most nearly
approximates the prior "salary grade 22."
(b) Prior to a Change in Control, an individual shall
cease to be a Participant as of (i) the effective
date of any demotion to a salary grade less than
22, unless designated as a Participant under the
provisions of Paragraph 3(a)(ii), and (ii) in the
case of an individual described in Paragraph
3(a)(ii), the effective date specified in any
written notice, delivered to such individual by
the Chief Executive Officer of Meridian, or his
designee, providing for such cessation of
participation.
(c) After a Change in Control, no individual who was a
Participant at such time shall cease to be a
Participant for any reason prior to termination of
employment; provided, however, that no such
individual shall be entitled to Policy benefits
except in the event of his or her termination of
employment under circumstances qualifying
therefor.
4. Terminations of Employment Qualifying and Not
Qualifying for Policy Benefits. A Participant shall be entitled
to receive Policy benefits upon his or her termination of
employment, except in the case of:
(a) the voluntary termination of employment by the
Participant, whether by reason of retirement or
otherwise, including, in the case of a Participant
who has been advised of his or her pending
involuntary termination under circumstances that
would otherwise qualify for Policy benefits,
voluntary termination prior to actual termination
by his or her employer;
(b) the termination of the Participant by the Company
for Cause;
(c) the transfer of the Participant by the Company to
another Participating Company;
(d) the termination of the Participant by the Company
following the refusal by the Participant to accept
a demotion, reassignment, or transfer of
employment to another Participating Company;
provided, however, that following a Change in
Control, this subparagraph shall not apply unless
the offered employment constitutes a Reasonable
Job Offer;
(e) the termination of the Participant by the Company
if he or she receives a Reasonable Job Offer in
connection therewith (whether or not accepted);
(f) the termination of the Participant by reason of
his or her death; or
(g) the termination of the Participant as a result or
following the incurrence of a disability, if such
Participant is entitled to disability benefits
under a long-term disability plan of the Company.
Notwithstanding the preceding provisions of this paragraph, in
the case of a proposed demotion, reassignment or transfer of a
Participant to a Participating Company following a Change in
Control, if the offered employment does not constitute a
Reasonable Job Offer, then such Participant shall be entitled to
refuse to accept such demotion, reassignment or transfer and to
terminate his or her employment, in which event he or she shall
be entitled to Policy benefits provided hereunder.
5. Policy Benefits in General. The following Policy
benefits will be provided to a Participant whose employment
terminates under circumstances making him or her eligible
therefor:
(a) The payment in one lump sum, within 30 days
following termination of employment, of such
individual's Base Salary times a number of months
not less than 12 nor more than 24, and determined
pursuant to the provisions of Paragraph 6 or the
following sentence. The participants in the
executive severance policy in effect immediately
prior to the Effective Date shall initially
continue as Participants hereunder, and the number
of months applicable to each shall be as set forth
in written communications previously delivered to
them by the senior Human Resources officer, or his
designee.
(b) The payment in one lump sum, within 30 days
following termination of employment, of an amount
equal to (i) one-twelfth (1/12) of the highest
Annual Bonus awarded to such individual with
respect to any of Meridian's three fiscal years
ended prior to the fiscal year in which
termination occurs, times (ii) the number of
months applicable to such individual under
Paragraph 5(a).
(c) The periodic payment, at Company expense, of the
cost of COBRA continuation coverage for health
insurance for the lesser of (i) the number of
months applicable to such individual under
Paragraph 5(a), or (ii) the required number of
months of such continuation coverage under ERISA.
To the extent the number of months in Clause
(i) is greater than the number of months in Clause
(ii), the Company will continue to provide the
same dollar amount towards conversion coverage as
before the expiration of the COBRA period.
Notwithstanding the foregoing, however, the
obligation to provide the benefit described in
this subparagraph shall terminate as of the date
the Participant becomes covered under a group
health plan or Medicare under circumstances which
terminate his or her right to COBRA continuation
coverage (or would so terminate such coverage, if
it were applicable).
(d) To the extent not otherwise covered by this Policy
and relevant to such individual, such additional
benefits as would be provided to or on behalf of
such individual if he or she were participating
under the Company's general severance policy then
in effect. In no event, however, shall a
Participant be entitled to an installment payment
of Base Salary and annual bonus.
6. Equivalent Months of Benefit. The number of months of
Base Salary to which a Participant may become entitled shall be
as set forth in any written communication which may be sent to
such Participant by Meridian's Chief Executive Officer, or his
designee. In default of such communication, such number shall be
12. Such number may from time to time be increased, but it may
not be decreased (whether or not previously increased), except in
the case of termination of participation. The number of months
applicable to Meridian's Chief Executive Officer shall at all
times be 24.
7. Rights Under Company Plans. Except as otherwise
provided herein, a Participant's rights under any pension or
welfare benefit plan of the Company shall be unaffected by the
receipt of benefits under this Policy; provided, however, that no
amounts payable under this Policy shall be treated as
compensation under such plans unless and to the extent such plans
may otherwise provide.
8. Primary and Secondary Obligors. The right of a
terminated Participant to receive Policy benefits shall be the
primary obligation of his or her employer at the time of
termination. In the event such employer (other than Meridian) is
financially unable to discharge such obligation, Meridian shall
do so.
9. Preclusion Against Multiple Benefits. It is not the
intent of this Policy to provide benefits that would constitute a
windfall to any individual. Rather, the Policy is intended to
ease the transition of a terminated Participant toward new
employment. For this reason, notwithstanding anything herein to
the contrary, in no event will benefits be paid hereunder to the
extent a Participant is entitled to severance benefits under a
contract, agreement, or severance policy or plan with the
Company, or any Successor thereto, or any business of which the
Company is directly or indirectly a Successor, providing for
identical or similar benefits, unless such contract, agreement,
or severance policy or plan provides for the reduction of
benefits thereunder paid under this Policy. However, in the
event the aggregate value of benefits otherwise payable hereunder
exceed those provided for under such a severance arrangement that
does not provide for such a reduction, the excess value of
benefits payable hereunder shall be paid in such form as the
senior Human Resource officer shall reasonably designate.
10. Amendment and Termination. Prior to a Change in
Control, this Policy may be amended or terminated by the Board of
Directors of Meridian at any time and from time to time;
provided, however, that no such amendment or termination shall
adversely affect the rights of a Participant who has therefore
become entitled to Policy benefits by reason of his or her
termination of employment. Following a Change in Control, this
Policy may not be amended or terminated for a period of two
years, unless: (i) it is replaced with a policy or plan providing
equivalent or more favorable terms, conditions and benefits,
(ii) Participants are made eligible for severance benefits under
another existing policy or plan which provides for equivalent or
more favorable terms, conditions and benefits, (iii) in the case
of termination, such termination is required by law, or (iv) in
the case of amendment, only if such amendment is required by law
and only to the extent so required.
11. Withholding and Related Matters. The Company is
authorized to withhold from Policy benefits taxes (including
excise taxes) and such other amounts as may be required by law.
In addition, as a condition to the receipt of Policy benefits
each Participant shall be deemed to have consented and agreed to
remit to the Company such amounts as may be needed by it to
discharge its withholding obligations.
12. Effect on Prior Executive Severance Policy. This
Policy shall supersede Meridian's executive severance policy
heretofore in effect and such policy shall be deemed terminated,
except for purposes of making payments required thereunder to
eligible persons who terminated prior to the Effective Date of
this Policy.
13. Administration of Policy. Except as otherwise provided
herein, this Policy shall be construed, enforced and administered
by Meridian's senior Human Resources officer. In the event a
matter arises under the Policy relating specifically to the
senior Human Resources officer, this Policy shall be construed,
enforced and administered as to such officer by Meridian's Chief
Executive Officer. Meridian shall cause to be implemented such
claims procedure as may be required by law to ensure that any
Participant who is denied Policy benefits, in whole or in part,
receives fair consideration of any claim for benefits.
14. Status of Participant as Creditor. Benefits under the
Policy shall be paid from the general assets of the relevant
Company. As such, each Participant shall be a general unsecured
creditor with respect to his or her entitlement to Policy
benefits.
15. No Contract of Employment. This Policy shall not
constitute a contract of employment, and participation herein
shall not give any individual the right to be retained in the
employ of a Participating Company or any business entity directly
or indirectly related to a Participating Company.
16. Assignment, Alienation, Etc. of Policy Benefits.
Except as otherwise required by applicable law, the right of a
Participant to Policy benefits shall not be voluntarily or
involuntarily assigned, transferred, pledged, encumbered, or
attached.
17. Captions. The captions of the several paragraphs of
this Policy document are inserted for convenience of reference
only and shall not be considered in the construction hereof.
18. Number. Wherever any word is used herein in the
singular form, it shall be construed as though it were used in
the plural form, as the context requires, and vice versa.
19. Gender. A masculine, feminine or neuter pronoun,
wherever used herein, shall be construed to include all genders,
as the context requires.
20. Severability. In the event any provision in this
Policy document shall be held illegal or invalid for any reason,
such illegal or invalid provision shall not affect the remaining
provisions hereof, and this Policy document shall be construed,
enforced and administered as if such illegal or invalid provision
were not contained herein.
21. Applicable Law. Except to the extent preempted by
federal law, this Policy document shall be construed, enforced
and administered in accordance with the domestic internal law of
the Commonwealth of Pennsylvania.
22. Binding Effect. This Policy shall be binding upon
Meridian, the other Participatory Companies, and their respective
successors and assigns.
23. No Waiver. The failure of any Participating Company or
a Participant to promptly exercise any right under this Policy
shall not be construed as a waiver of such right or any similar
right that may thereafter arise, except to the extent otherwise
agreed in writing.
<PAGE>
GLOSSARY
"Annual Bonus" means a bonus paid to a Participant by a
Participating Company with respect to a fiscal year of 12 months
pursuant to the Company's Executive Annual Incentive Plan or any
other formal and recurring bonus plans or arrangements of the
Company. In the case of a bonus paid with respect to a lesser
period, such bonus shall be annualized and the resulting amount
shall be treated as an Annual Bonus.
"Bank" means Meridian Bank, a Pennsylvania bank and trust
company, and any successor thereto.
"Base Salary" means the monthly base salary (before any
salary reduction) being paid to a Participant by a Participating
Company immediately prior to his or her termination of
employment.
"Board of Directors" means the board of directors of the
relevant corporation.
"Cause" means:
(a) prior to a Change in Control --
(i) repeated unsatisfactory work performance
following written communication of specific
deficiencies by an individual's immediate supervisor,
coupled with the written concurrence with the
supervisor's appraisal of such performance by the
Company's senior Human Resources officer;
(ii) a documented repeated and willful failure by
the Participant to perform his or her duties, but only
after written demand and only if termination is
effected following action taken by a vote of at least a
majority of the directors of Meridian then in office;
(iii) the commission of any act of dishonesty
against Meridian, any direct or indirect Subsidiary of
Meridian, or any business entity affiliated with
Meridian or a Subsidiary of Meridian;
(iv) the violation of any written code of conduct
applicable to Company employees generally or officers
specifically;
(v) an unappealable conviction of a felony or
other act constituting a misdemeanor which act is
likely to cause one or more of the Participating
Companies embarrassment in the financial or relevant
local community; or
(vi) the issuance by a federal or state regulator
of an unappealable order to the effect that a
Participant be permanently discharged; and
(b) upon or following a Change in Control --
(i) a documented repeated and willful failure by
the Participant to perform his or her duties, but only
after written demand and only if termination is
effected following action taken by a vote of at least
80% of the nonofficer directors of Meridian then in
office;
(ii) the commission of any act of dishonesty
against Meridian, any direct or indirect Subsidiary of
Meridian, or any business entity affiliated with
Meridian or a Subsidiary of Meridian;
(iii) the violation of any written code of
conduct applicable to Company employees generally or
officers specifically;
(iv) an unappealable conviction of a felony or
other act constituting a misdemeanor which act is
likely to cause one or more of the Participating
Companies embarrassment in the financial or relevant
local community; or
(v) the issuance by a federal or state regulator
of an unappealable order to the effect that a
Participant be permanently discharged.
"Change in Control" means the occurrence of any of the
following events:
(a) any Person (except (i) Meridian or any
Subsidiary of Meridian, or (ii) any Employee Benefit Plan
(or any trust forming a part thereof) maintained by Meridian
or any Subsidiary of Meridian) is or becomes the beneficial
owner, directly or indirectly, of Meridian's securities
representing 19.9% or more of the combined voting power of
Meridian's then outstanding securities, other than pursuant
to a transaction described in Clause (c);
(b) there occurs a sale, exchange, transfer or
other disposition of all or substantially all of the assets
of Meridian or the Bank to another entity, except to an
entity controlled directly or indirectly by Meridian;
(c) there occurs a merger, consolidation, share
exchange, division or other reorganization of or relating to
the Meridian, unless--
(i) the shareholders of Meridian immediately
before such merger, consolidation, share exchange,
division or reorganization own, directly or indirectly,
immediately thereafter at least 66-2/3% of the combined
voting power of the outstanding voting securities of
the Surviving Company in substantially the same
proportion as their ownership of the voting securities
immediately before such merger, consolidation, share
exchange, division or reorganization; and
(ii) the individuals who, immediately before
such merger, consolidation, share exchange, division or
reorganization, are members of the Incumbent Board
continue to constitute at least two-thirds of the Board
of Directors of the Surviving Company; provided,
however, that if the election, or nomination for
election by Meridian's shareholders, of any new
director was approved by a vote of at least two-thirds
of the Incumbent Board, such director shall, for the
purposes hereof, be considered a member of the
Incumbent Board; and provided further, however, that no
individual shall be considered a member of the
Incumbent Board if such individual initially assumed
office as a result of either an actual or threatened
Election Contest or Proxy Contest, including by reason
of any agreement intended to avoid or settle any
Election Contest or Proxy Contest; and
(iii) no Person (except (A) Meridian or any
Subsidiary of Meridian, (B) any Employee Benefit Plan
or any trust forming a part thereof) maintained by
Meridian or any Subsidiary of Meridian, (C) the
Surviving Company or any Subsidiary of the Surviving
Company, or (D) any Person who, immediately prior to
such merger, consolidation, share exchange, division or
reorganization had beneficial ownership of 19.9% or
more of the then outstanding voting securities of
Meridian) has beneficial ownership of 19.9% or more of
the combined voting power of the Surviving Company's
outstanding voting securities immediately following
such merger, consolidation, share exchange, division or
reorganization;
(d) a plan of liquidation or dissolution of
Meridian, other than pursuant to bankruptcy or insolvency
laws, is adopted;
(e) during any period of two consecutive years,
individuals who, at the beginning of such period,
constituted the Board of Directors of Meridian cease for any
reason to constitute at least a majority of such Board of
Directors, unless the election, or the nomination for
election by Meridian's shareholders, of each new director
was approved by a vote of at least two-thirds of the
directors then still in office who were directors at the
beginning of the period; provided, however, that no
individual shall be considered a member of the Board of
Directors of Meridian at the beginning of such period if
such individual initially assumed office as a result of
either an actual or threatened Election Contest or Proxy
Contest, including by reason of any agreement intended to
avoid or settle any Election Contest or Proxy Contest; or
(f) there occurs a Triggering Event.
Notwithstanding the foregoing, a Change in Control shall not be
deemed to have occurred if a Person becomes the beneficial owner,
directly or indirectly, of securities representing 19.9% or more
of the combined voting power of Meridian's then outstanding
securities solely as a result of an acquisition by Meridian of
its voting securities which, by reducing the number of shares
outstanding, increases the proportionate number of shares
beneficially owned by such Person; provided, however, that if a
Person becomes a beneficial owner of 19.9% or more of the
combined voting power of Meridian's then outstanding securities
by reason of share repurchases by Meridian and thereafter becomes
the beneficial owner, directly or indirectly, of any additional
voting securities of the Meridian (other than pursuant to a stock
split, stock dividend or similar transaction), then a Change in
Control shall be deemed to have occurred with respect to such
Person under Clause (a).
Notwithstanding anything contained herein to the contrary, if an
individual's participation is terminated and he or she reasonably
demonstrates that such termination (i) was at the request of a
third party who has indicated an intention of taking steps
reasonably calculated to effect a Change in Control and who
effects a Change in Control, or (ii) otherwise occurred in
connection with, or in anticipation of, a Change in Control which
actually occurs, then for all purposes hereof, a Change in
Control shall be deemed to have occurred on the day immediately
prior to the date of such termination of participation.
"COBRA" and references to COBRA continuation coverage mean
the legal requirement to make available, under certain
circumstances, continued health insurance coverage to certain
individuals under the provisions of ERISA.
"Company" means, as the context requires, Meridian or any
Participating Affiliated Company.
"Effective Date" means, with respect to this Policy,
_____________, 1995.
"Election Contest" means a solicitation with respect to the
election or removal of directors that is subject to the
provisions of Rule 14a-11 of the 1934 Act.
"Employee Benefit Plan" has the meaning ascribed to such
term in ERISA Section 3(3).
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended and as the same may be amended from time to
time.
"Incumbent Board" means the Board of Directors of Meridian
as constituted at any relevant time.
"Meridian" means Meridian Bancorp, Inc., a Pennsylvania
corporation, and any Successor thereto.
"1934 Act" means the Securities Exchange Act of 1934, as
amended and as the same may be amended from time to time.
"Participant" means an individual who is potentially
entitled to Policy benefits by reason of being described in
Paragraph 3(a).
"Participating Affiliated Company" means each corporate
entity that qualifies as an "affiliated company" under and, as of
the Effective Date of this Policy, participates in the Meridian
Bancorp, Inc. Employees' Retirement Plan, and any successor
thereto.
"Participating Companies" means Meridian and each
Participating Affiliated Company. Such term shall also include
any other business entity directly or indirectly controlling,
controlled by, or under common control with Meridian and
designated as such (with the concurrence of its Board of
Directors) by Meridian's Chief Executive Officer. For purposes
of this Policy, (i) the employees of Meridian Capital Markets,
Inc., a division of the Bank, and Meridian Securities, Inc. shall
not be deemed employees of a Participating Company and,
therefore, shall be ineligible to become Participants; provided,
however, that any individual described in the second sentence of
Paragraph 5(a) shall be eligible to participate in the Policy
and, in connection with such participation, his or her employer
shall be deemed a Participating Company, and (ii) McGlinn Capital
Management, Inc. shall in no event be deemed a Participating
Affiliated Company.
"Person" has the same meaning as such term has for purposes
of Sections 13(d) and 14(d) of the 1934 Act.
"Policy" means the Executive Severance Policy of Meridian
Bancorp, Inc. and Certain Affiliated Companies.
"Proxy Contest" means the solicitation of proxies or
consents by or on behalf of a Person other than the Board of
Directors of Meridian.
"Reasonable Job Offer" means the offer of employment to a
Participant by any business entity, which offer was directly or
indirectly arranged, induced, facilitated or otherwise caused to
be made by reason of the efforts of a Participating Company
(including, without limitation, offers made in connection with
outsourcing programs), provided (i) such offer provides for an
initial base salary or wage not less than 100% of the
Participant's then Base Salary (and, in the case of a demotion,
reassignment or transfer within the affiliated group of
corporations of which the Participant is employed following a
Change in Control, the opportunity to earn an Annual Bonus
consistent with prior Annual Bonuses), (ii) the primary business
location of the offered position is not more than 50 miles from
his or her then primary residence and does not initially cause an
increase in such individual's one-way commuting distance of more
than 20 miles, and (iii) the entity offering the position
represents to the Participant that its then present intent is for
the employment to constitute a full-time permanent position.
"Subsidiary" means, with respect to any corporation, any
business entity of which a majority of its voting power or its
equity securities or equity interests is owned, directly or
indirectly, by such corporation.
"Successor" means any Person that succeeds to, or has the
practical ability to control (either immediately or with the
passage of time), Meridian's business directly, by merger or
consolidation, or indirectly, by purchase of Meridian's voting
securities or all or substantially all of its assets.
"Surviving Company" means the business entity that is a
resulting company following a merger, consolidation, share
exchange, division or other reorganization of or relating to the
Company.
"Triggering Event" has the meaning ascribed to such term in
the Rights Agreement, dated as of July 25, 1989, between Meridian
and Meridian Trust Company, as the same may be amended from time
to time, and any successor agreement thereto.
