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SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
PREMIER NATIONAL BANCORP, INC.
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(Name of Registrant as Specified in Its Charter)
N/A
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
--------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
--------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[X] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
50,025
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(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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First mailed to Premier Shareholders on or about December 20, 2000
MERGER PROPOSED --
YOUR VOTE IS VERY IMPORTANT
Dear Premier Shareholders:
M&T Bank Corporation and Premier National Bancorp, Inc. have agreed
to a transaction in which Premier will merge with M&T.
As a result of the merger, you will have an opportunity to elect to
receive, for each share of Premier common stock that you own, either $21 in cash
or M&T common stock having a market value of $21. You will be able to elect
whether you want cash or M&T stock for each of your Premier shares. However,
elections will be limited by the requirement in the merger agreement that 50% of
the outstanding shares of Premier common stock be exchanged for M&T common
stock. Therefore, the actual allocation of cash and shares of M&T common stock
that you receive will depend on the elections of other Premier shareholders and
may be different from what you elect. The federal income tax consequences of the
merger to you will depend on whether you receive cash, stock or a combination of
cash and stock in exchange for your shares of Premier common stock.
M&T is a bank holding company headquartered in Buffalo, New York, with
total assets of approximately $22 billion as of September 30, 2000. M&T's common
stock is listed on the New York Stock Exchange under the symbol "MTB." The last
reported sale price of M&T common stock on the New York Stock Exchange on
December 14, 2000 was $59.96 per share.
We cannot complete the merger unless we obtain the necessary government
approvals and approval of the shareholders of Premier. We have scheduled a
special meeting for our shareholders to vote on the approval and adoption of the
merger agreement. The meeting will be held at the Sheraton Civic Center Hotel,
40 Civic Center Plaza, Poughkeepsie, New York, on Thursday, January 25, 2001 at
9:00 a.m., New York time.
It is very important that your shares be voted at the meeting,
regardless of whether you plan to attend in person. To assure that your shares
are represented on this very important matter, please sign, date and return
the enclosed proxy card in the enclosed postage-prepaid envelope whether or
not you plan to attend the meeting. If you hold shares in your own name and do
attend, you may revoke your proxy and vote your shares in person at the
meeting. Because approval of the merger requires the affirmative vote of
holders of two-thirds of the outstanding Premier common stock entitled to vote
on the merger, each share not voted and each abstention will have the effect
of a vote against the merger.
The Board of Directors of Premier has determined that the merger is
in the best interest of Premier and its shareholders, and has approved the
merger agreement. The Premier Board unanimously recommends that you vote for
the approval and adoption of the merger agreement.
Sincerely,
/s/ T. Jefferson Cunningham III
T. Jefferson Cunningham III
Chairman and Chief Executive Officer
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Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
Proxy Statement-Prospectus is truthful or complete. Any representation to the
contrary is a criminal offense. The shares of M&T common stock offered through
the merger are not insured by the Federal Deposit Insurance Corporation and are
not deposits or other obligations of, or guaranteed by, any bank subsidiary of
M&T.
The date of this Proxy Statement-Prospectus is December 15, 2000
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PREMIER NATIONAL BANCORP, INC.
1100 ROUTE 55
LAGRANGEVILLE, NEW YORK 12540
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON JANUARY 25, 2001
NOTICE IS HEREBY GIVEN that a special meeting of shareholders of
Premier National Bancorp, Inc. will be held at the Sheraton Civic Center Hotel,
40 Civic Center Plaza, Poughkeepsie, New York, on Thursday, January 25, 2001 at
9:00 a.m., New York time, for the following purposes:
1. To consider and vote on a proposal for approval and adoption of the
Agreement and Plan of Reorganization, dated as of July 9, 2000, by and
among Premier National Bancorp, Inc., M&T Bank Corporation and Olympia
Financial Corp., a wholly owned subsidiary of M&T Bank Corporation, and
approval and adoption of the related Agreement and Plan of Merger, dated
as of July 9, 2000, by and between Premier National Bancorp, Inc. and
Olympia Financial Corp. and joined in by M&T Bank Corporation, as
amended, pursuant to which Premier National Bancorp, Inc. would merge
into Olympia Financial Corp. and the holders of each outstanding share of
Premier common stock would have the right to elect to receive either $21
in cash or that number of shares of M&T Bank Corporation common stock
equal to the quotient obtained by dividing $21 by the market value (the
average of the average daily high and low prices of M&T Bank Corporation
common stock on the New York Stock Exchange for the ten trading days
immediately preceding the effective date of the merger) of such stock
(with cash to be distributed instead of issuing fractional shares),
subject to the terms and conditions contained therein.
2. To consider and act on such other matters as may properly come before the
meeting or any adjournment or postponement thereof.
Only shareholders of record at the close of business on December 8,
2000 will be entitled to notice of, and to vote at, the meeting or any
adjournment or postponement thereof. The affirmative vote of holders of
two-thirds of the outstanding common stock of Premier National Bancorp, Inc.
entitled to vote at the meeting is required for approval of the merger.
Information regarding voting rights and the business to be transacted
at the meeting is given in the accompanying Proxy Statement-Prospectus.
By Order of the Board of Directors
/s/ Robert Apple
Robert Apple
Corporate Secretary
LaGrangeville, New York
December 15, 2000
IMPORTANT
YOUR VOTE IS IMPORTANT REGARDLESS OF THE NUMBER OF SHARES YOU OWN.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE SIGN, DATE AND PROMPTLY
RETURN THE ACCOMPANYING PROXY CARD USING THE ENCLOSED POSTAGE-PREPAID ENVELOPE.
IF YOU ARE A BENEFICIAL OWNER HOLDING THROUGH A NOMINEE, YOU MUST REQUEST THE
NOMINEE TO ACT ON YOUR BEHALF. IF FOR ANY REASON YOU SHOULD DESIRE TO REVOKE
YOUR PROXY, YOU MAY DO SO AT ANY TIME BEFORE IT IS VOTED AT THE MEETING.
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WHERE YOU CAN FIND MORE INFORMATION
This document incorporates important business and financial
information about M&T and Premier that is not included in or delivered with
this document. You may read and copy any materials M&T and Premier have filed
with the Securities and Exchange Commission at the Commission's Public
Reference Room located at 450 Fifth Street, N.W., Washington, D.C. 20549. You
may obtain information on the operation of the Public Reference Room by calling
the Commission at 1-800-SEC-0330. You may also visit the Commission's web site
at www.sec.gov to obtain reports, proxy and information statements, and other
information that M&T or Premier has filed electronically.
Copies of any of these documents without their exhibits are also
available without charge to any person to whom we deliver this document. You
must make a written or oral request to, in the case of information concerning
M&T, M&T Bank Corporation, One M&T Plaza, Buffalo, New York 14203, attention:
Clifford P. Johnson, Vice President, Corporate Reporting (telephone: (716)
842-5973); or, in the case of information concerning Premier National Bancorp,
Inc., Premier National Bank, 1100 Route 55, LaGrangeville, New York 12540;
attention: Robert Apple, Corporate Secretary (telephone: (845) 437-4322). IN
ORDER TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE BY
January 18, 2001. You may also obtain information about the companies from our
respective web sites, www.mandtbank.com for M&T, and www.premiernational.com
for Premier.
i
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PROXY STATEMENT-PROSPECTUS
TABLE OF CONTENTS
<TABLE>
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PAGE
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WHERE YOU CAN FIND MORE INFORMATION......................................................................i
SUMMARY..................................................................................................1
MARKET PRICES AND DIVIDEND INFORMATION...................................................................7
COMPARATIVE PER SHARE DATA...............................................................................9
SELECTED CONSOLIDATED FINANCIAL DATA....................................................................10
THE COMPANIES...........................................................................................13
THE PREMIER SHAREHOLDERS' MEETING.......................................................................15
Date, Place and Time...........................................................................15
Record Date; Voting Rights.....................................................................15
Voting and Revocation of Proxies...............................................................15
Solicitation of Proxies........................................................................16
THE MERGER..............................................................................................17
Background of the Merger.......................................................................17
Reasons for the Merger; Recommendation of Premier's Board of Directors.........................18
Opinion of Premier's Financial Advisor.........................................................20
Terms of the Merger............................................................................24
Election Procedures; Surrender of Stock Certificates..........................................27
Representations and Warranties; Conditions to the Merger; Waiver...............................28
Regulatory Approvals Needed to Complete the Merger.............................................29
Covenants; Conduct of Business Pending the Merger..............................................30
Amending the Agreement.........................................................................31
Effective Date of the Merger; Terminating the Agreement........................................31
Management and Operations After the Merger.....................................................32
Interests of Directors and Officers in the Merger That Are Different from Your Interests.......34
Certain Federal Income Tax Consequences........................................................36
Resale of M&T Common Stock....................................................................39
Accounting Treatment of the Merger.............................................................40
</TABLE>
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<TABLE>
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Stock Option Agreement.........................................................................40
COMPARISON OF CERTAIN RIGHTS OF HOLDERS OF M&T COMMON STOCK AND PREMIER COMMON STOCK....................41
EXPERTS.................................................................................................46
LEGAL OPINION...........................................................................................46
SUBMISSION OF SHAREHOLDER PROPOSALS.....................................................................46
DOCUMENTS INCORPORATED BY REFERENCE.....................................................................47
A WARNING ABOUT FORWARD-LOOKING STATEMENTS..............................................................48
</TABLE>
APPENDIX A - AGREEMENT AND PLAN OF REORGANIZATION
(INCLUDING AGREEMENT AND PLAN OF MERGER, AS AMENDED)
APPENDIX B - STOCK OPTION AGREEMENT
APPENDIX C - OPINION OF J.P. MORGAN SECURITIES, INC.
<PAGE> 7
SUMMARY
This summary does not contain all of the information that is important to you.
You should carefully read this entire document and the documents to which we
have referred you in order to understand the merger fully and to obtain a more
complete description of the merger. See "Where You Can Find More Information"
(Page i).
THE COMPANIES (PAGE 13)
M&T BANK CORPORATION
One M&T Plaza
Buffalo, New York 14203
(716) 842-5445
M&T Bank Corporation is a bank holding company incorporated under New York
law in 1969. As of September 30, 2000, M&T had total assets of approximately
$22 billion and total shareholders' equity of approximately $1.9 billion.
M&T's principal banking subsidiary is Manufacturers and Traders Trust
Company, which is headquartered in Buffalo, New York. Manufacturers and Traders
Trust Company is commonly known by its trade name, M&T Bank, and is referred to
by that name in this document. M&T Bank accounted for 96% of M&T's consolidated
assets on September 30, 2000 and for virtually all of its net income in 1999.
M&T also owns M&T Bank, N.A., which offers certain banking products on behalf of
M&T on a national basis. Collectively, the M&T banks and their subsidiaries
offer a wide range of commercial banking, trust, investment and financial
services to a diverse base of consumers, businesses, professional clients,
governmental entities and financial institutions located in their markets.
On October 6, 2000, M&T acquired Keystone Financial, Inc., a bank holding
company headquartered in Harrisburg, Pennsylvania. At the same time,
Keystone's bank subsidiary, Keystone Financial Bank, N.A., which operated in
31 Pennsylvania counties, three Maryland counties and one county in West
Virginia, merged into M&T Bank. As of June 30, 2000, Keystone had total assets
of approximately $7.0 billion and total shareholders' equity of approximately
$566 million. The former Keystone shareholders received an aggregate of
15,900,292 shares of M&T common stock and approximately $374.4 million in cash
in the merger.
PREMIER NATIONAL BANCORP, INC.
1100 Route 55
LaGrangeville, New York 12540
(845) 471-1711
Premier is a bank holding company incorporated under New York law in 1985.
As of September 30, 2000, Premier had total assets of approximately $1.6 billion
and total shareholders' equity of approximately $145 million.
Premier's bank subsidiary is Premier National Bank. The bank operates in
the seven contiguous New York counties of the mid-Hudson Valley. In addition
to a full range of personal, commercial and municipal banking services,
Premier National Bank offers through its trust department and relationship
management program a variety of financial services including discount
brokerage services, sales of mutual funds and annuities and investment
advisory and custody services.
THE MERGER (PAGE 17)
We have attached the merger agreement to this document as Appendix A.
Please read this agreement. It is the legal document that governs the merger.
M&T AND M&T BANK WILL BE THE SURVIVING HOLDING COMPANY AND BANK (PAGE 24)
In the merger, Premier will merge into Olympia Financial Corp., which will
continue in existence as a wholly owned subsidiary of M&T. Also, Premier
National Bank will merge into M&T Bank, which will be the surviving bank and
will continue the banking operations of the combined bank.
YOU WILL RECEIVE $21 EITHER IN CASH OR IN M&T COMMON STOCK FOR EACH OF YOUR
PREMIER SHARES (PAGE 24)
As a result of the merger, you will have the right to elect to receive
for each of your Premier shares either $21 in cash or $21 in M&T
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common stock and cash for any fractional share left over. The market value of
M&T common stock used to calculate the $21 value will be the average, for the
ten trading days immediately before the date the merger becomes effective, of
the daily average of the high and low prices of the M&T stock on the New York
Stock Exchange. As a result, the market value of the M&T common stock issued in
the merger may be more or less than $21 per share when the merger becomes
effective. There is a floating exchange ratio for the shares of M&T common stock
that will be issued in the merger. Therefore, the number of shares of M&T common
stock that you will receive is not fixed, but will depend on the market value of
the M&T common stock at the time it is calculated.
Although you may elect to receive either cash or M&T common stock for
each Premier common share that you own, the amount of cash and/or stock that
you actually receive may differ from the amounts that you elect due to the
allocation and proration procedures in the merger agreement. These procedures
generally provide that 50% of the shares of Premier common stock outstanding
when M&T and Premier agreed to the merger will be converted into M&T common
stock and the remaining Premier shares will be converted into the right to
receive cash.
Because the tax consequences of receiving cash will differ from the tax
consequences of receiving stock, you should carefully read the tax information
beginning on page 36.
HOW TO ELECT TO RECEIVE CASH OR STOCK AND EXCHANGE YOUR PREMIER STOCK
CERTIFICATES (PAGE 27)
A transmittal form for making an election accompanies this document. The
transmittal form contains detailed instructions on how to make elections with
respect to the Premier common stock held by the Premier shareholders. The
election form allows you to elect to receive cash or stock, to make a mixed
election (M&T common stock for some of your Premier shares, cash for the others)
or to make no election. Mixed elections will be treated as separate stock and
cash elections for purposes of the allocation and proration procedures.
For your election to be effective, you must return your properly completed
election form, along with your Premier stock certificates (or an appropriate
guarantee that those certificates will be delivered), to the exchange agent,
EquiServe, on or before 5:00 p.m., Eastern time, on January 29, 2001.
Shortly after the merger, EquiServe will allocate cash and stock among
Premier shareholders, consistent with their elections and the allocation and
proration procedures. If you do not submit an election form, you will receive
instructions on where to surrender your Premier stock certificates to EquiServe
after the merger is completed. In any event, you should forward your Premier
stock certificates only with an appropriate transmittal form and not with your
proxy cards.
If your shares of Premier common stock are held on your behalf by your
broker or other nominee, you will receive a different version of the election
form from your broker or other nominee and you will not be required to submit
certificates representing your shares with that form. Also, if you participate
in Premier's Dividend Investment and Stock Purchase Plan you will not have to
submit certificates representing shares held in the plan with your completed
election form.
If you have a preference for receiving either M&T stock or cash for your
Premier stock, you should complete and return the enclosed election form.
Premier shareholders who make an election will be accorded priority in
instances where the stock and cash consideration must be re-allocated among
Premier shares to achieve the required ratio of Premier shares to be converted
into M&T stock and into cash. If you do not make an election you will be
allocated M&T common stock and/or cash depending on the elections made by
other shareholders. However, even if you do make an election, you may not
receive the amount of cash and/or stock that you elect.
No one associated with M&T or Premier is recommending whether you should
elect to receive cash or stock in the merger. You must make your own decision
about your election.
DIFFERENCES IN THE RIGHTS OF M&T AND PREMIER SHAREHOLDERS (PAGE 41)
The rights of Premier shareholders currently are governed by Premier's
second amended and restated certificate of incorporation and bylaws, and by
New York law. After the merger is completed, shareholders of Premier who
receive M&T common stock in the merger will become
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shareholders of M&T, and therefore their rights as shareholders of M&T will be
governed by M&T's amended certificate of incorporation and bylaws, and by New
York law. This means that, as a result of the merger, the rights of
shareholders of Premier may change, as the rights of M&T shareholders differ
in some ways from those of Premier shareholders.
THE PREMIER SHAREHOLDERS' MEETING (PAGE 15)
The special meeting of Premier shareholders will be held at the Sheraton
Civic Center Hotel in Poughkeepsie, New York, on Thursday, January 25, 2001 at
9:00 a.m., New York time. At the special meeting, you will be asked to consider
and vote on the approval and adoption of the merger agreement. You may vote at
the special meeting if you owned Premier common stock at the close of business
on December 8, 2000. You may vote in person or by returning the proxy card
accompanying this document.
TWO-THIRDS VOTE REQUIRED (PAGE 15)
Shareholder approval of the merger will require the affirmative vote of
the holders of two-thirds of the outstanding Premier common stock entitled to
vote on the merger at the special meeting.
As of November 30, 2000, Premier's directors and executive officers and
related parties (including George Gale Foster Corporation) had the power to
vote 2,840,711 shares of Premier common stock, representing approximately 17.7%
of the shares of Premier common stock then issued and outstanding. Each of the
directors of Premier, as well as George Gale Foster Corporation, has agreed
with M&T to vote his, her or its Premier shares for approval of the merger
agreement. Each of the executive officers is also expected to vote his or her
shares for approval of the merger agreement.
In addition, as of the same date, the trust department of Premier
National Bank, as fiduciary, custodian or agent, had the power to vote
641,462 shares of Premier common stock, representing approximately 4.0%
of the issued and outstanding shares of Premier common stock. The trust
department will vote these shares in accordance with the terms of the
respective governing documents, applicable law and the trust department's
fiduciary policies. In those cases in which the trust department has sole or
shared power to vote, the trust department will make a determination as to how
it will vote these shares following receipt of this document.
PREMIER'S REASONS FOR THE MERGER (PAGE 18)
Premier's Board of Directors considered a number of factors in approving
the merger. These included the terms of the transaction, the prospects of the
combined company as opposed to those of Premier as an independent company and
M&T's business reputation and stock performance. The Board of Directors also
considered the likelihood of a 10-for-1 stock split of M&T common stock and an
increase in M&T's cash dividends in connection with the Keystone merger. Since
the date the Board of Directors approved the merger, both the stock split and
the dividend increase have occurred.
PREMIER'S RECOMMENDATIONS TO SHAREHOLDERS (PAGE 20)
Premier's Board of Directors has approved the merger. The Premier Board
believes that the merger is fair to you and in your best interests. Premier's
Board recommends that you vote FOR the proposal to approve and adopt the
merger agreement.
THE TRANSACTION IS FAIR TO SHAREHOLDERS ACCORDING TO PREMIER'S FINANCIAL
ADVISOR (PAGE 20)
Among other factors considered in deciding to approve the merger, the
Premier Board has received the written opinion of its financial advisor, J.P.
Morgan Securities, Inc., that, as of July 9, 2000 (the date of Premier's Board
of Directors vote on the merger), the merger consideration was fair to
Premier's shareholders from a financial point of view. We have attached this
opinion to this document as Appendix C. You should read this opinion completely
to understand the assumptions made, matters considered and limitations of the
review undertaken by J.P. Morgan Securities, Inc. in providing its opinion.
ROLE OF PREMIER DIRECTORS AFTER THE MERGER (PAGE 34)
As of the effective time of the merger, M&T will appoint T. Jefferson
Cunningham III, Chairman and Chief Executive Officer of Premier,
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to the Board of Directors of M&T and M&T Bank. Mr. Cunningham will also serve
as a consultant to M&T and as Chairman of the Hudson Valley Advisory Board of
M&T Bank. M&T Bank also will appoint ten directors of Premier as members of
the Hudson Valley Advisory Board of M&T Bank.
WHAT M&T AND PREMIER NEED TO DO BEFORE THE MERGER IS COMPLETE (PAGE 28)
Completion of the merger depends on a number of conditions being met,
including the following:
- approval of the merger by the required two-thirds vote of the
shareholders of Premier;
- approval by the Board of Governors of the Federal Reserve System and the
New York State Banking Board. The Federal Reserve has approved the
merger. While we do not know of any reason why we would not be able to
obtain the approval from the New York State Banking Board in a timely
manner, we cannot be certain when or if we will get this approval; and
- receipt by Premier of an opinion from the law firm of Milbank, Tweed,
Hadley & McCloy LLP and receipt by M&T of an opinion from the law firm of
Arnold & Porter, each to the effect that the U.S. federal income tax
treatment of the merger to Premier shareholders, Premier and M&T will
generally be as described in this document.
Generally, M&T and Premier can waive conditions to completion of the
merger. Some of these conditions, however, cannot be waived, including
shareholder and regulatory approvals and the absence of a government order
prohibiting the merger. We expect to complete this merger during February
2001.
TERMINATING THE MERGER AGREEMENT (PAGE 31)
M&T or Premier may terminate the merger agreement without completing the
merger by mutual consent, or if any of the following occurs:
- the other party has materially breached the merger agreement and has
not cured the breach;
- a government agency denies an approval needed to complete the
merger;
- a court or government agency issues an order prohibiting the merger;
- the shareholders of Premier fail to approve the merger; or
- the merger has not been completed by June 30, 2001.
Premier may terminate the merger agreement at any time if:
- M&T completes a transaction resulting in a change in control of M&T;
or
- Premier signs a definitive agreement, after meeting certain
requirements in the merger agreement, relating to a proposal for a
business combination involving Premier, and Premier pays M&T $24
million, less any profit realized by M&T from the sale or exercise of
its option under the stock option agreement discussed below.
AMENDING THE AGREEMENT (PAGE 31)
M&T and Premier may amend the merger agreement at any time by mutual
written agreement, except that after approval by the shareholders of Premier,
no waiver or amendment can change the amount and kind of consideration that
Premier shareholders would receive in the merger.
ACCOUNTING TREATMENT OF THE MERGER (PAGE 40)
The merger will be accounted for as a purchase transaction under
generally accepted accounting principles ("GAAP"). This means that M&T will
treat the two companies as one company beginning on the date of the merger.
M&T will record the fair market value of Premier's assets and liabilities on
its financial statements. The difference between the purchase price in the
merger and the fair market value of Premier's identifiable assets net of its
liabilities will be recorded on M&T's books as "goodwill." Approximately $235
million in goodwill and core deposit intangible assets will result from
accounting for the merger under the purchase method of accounting and
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will be amortized over periods of up to 20 years as charges to M&T's earnings.
PREMIER STOCK OPTION AGREEMENT (PAGE 40)
Premier, as a condition to M&T's willingness to enter into the merger
agreement, granted M&T an option to purchase up to 3,144,107 shares of Premier
common stock (approximately 19.9% of Premier's outstanding common stock at the
time the option was granted) at a price of $13.375 per share. M&T asked for
the option to increase the likelihood that Premier would complete the merger.
The option agreement could discourage other companies from trying or proposing
to combine with Premier before we complete the merger.
M&T cannot exercise its option unless specified events occur that
threaten completion of the merger. These events include business combination
or acquisition transactions relating to Premier and certain related activities
other than the merger proposed in this document, such as a merger or the sale
of a substantial amount of assets or stock. We do not know of any event that
has occurred as of the date of this document that would permit M&T to exercise
its option. The stock option agreement also contains provisions limiting M&T's
total profit from selling or exercising the option to not more than $24
million. A copy of the stock option agreement is attached to this document as
Appendix B.
INTERESTS OF DIRECTORS AND OFFICERS IN THE MERGER THAT ARE DIFFERENT FROM YOUR
INTERESTS (PAGE 34)
Some of Premier's directors and officers have interests in the merger
that are different from, or in addition to, their interests as Premier
shareholders. These interests include:
- the appointment of T. Jefferson Cunningham III to the Boards of M&T, M&T
Bank and M&T Bank's Hudson Valley Advisory Board after the merger;
- the appointment of ten Premier directors to M&T Bank's Hudson Valley
Advisory Board after the merger;
- provisions of the merger agreement relating to indemnification and
insurance for Premier directors and officers;
- T. Jefferson Cunningham III entering into a new consulting agreement with
M&T;
- John Charles VanWormer possibly being offered a new employment agreement
with Premier, which will be binding on M&T;
- the effect of the merger on benefits and awards under existing Premier
employment arrangements and employee benefit plans (including accelerated
vesting of employee and director retirement plan benefits); and
- the creation of a bonus pool to help retain key employees of Premier.
The members of Premier's Board of Directors knew about these additional
interests and considered them when they approved the merger.
YOU DO NOT HAVE DISSENTERS' RIGHTS IN THE MERGER (PAGE 24)
Under New York law, you do not have dissenters' rights in connection with
the merger.
YOUR EXPECTED TAX TREATMENT AS A RESULT OF THE MERGER (PAGE 36)
M&T and Premier have structured the merger to be treated as a
reorganization for U.S. federal income tax purposes. Each of M&T and Premier
has conditioned the consummation of the merger on its receipt of a legal
opinion that this will be the case. Those opinions, however, will not bind the
Internal Revenue Service, which could take a different view. Your federal
income tax treatment will depend primarily on whether you exchange your
Premier common stock solely for M&T common stock (with cash received instead
of a fractional share of M&T common stock), solely for cash, or for a
combination of M&T common stock and cash. The following summary assumes that
you hold your Premier common stock as a capital asset.
EXCHANGE SOLELY FOR CASH: You generally will recognize capital gain or
loss equal to the difference between the amount of cash you receive and your
adjusted tax basis in the shares of Premier common stock you surrender.
However, if you
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own any shares of M&T stock immediately after the merger, either actually or
through the constructive ownership rules of the Internal Revenue Code, part or
all of the cash you receive, depending on your circumstances, may be treated
as ordinary income.
EXCHANGE SOLELY FOR STOCK WITH CASH RECEIVED INSTEAD OF A FRACTIONAL
SHARE OF M&T COMMON STOCK: You will not recognize gain or loss except with
respect to the cash you receive instead of a fractional share of M&T common
stock.
EXCHANGE FOR A COMBINATION OF STOCK AND CASH: You will recognize income
or gain equal to the amount of cash you receive -- not counting cash received
instead of a fractional share of M&T common stock -- or the amount of gain you
realize, whichever is lower. The amount of gain you realize equals the amount
of cash you receive (not counting cash received instead of a fractional share
of M&T common stock) plus the fair market value of the M&T common stock you
receive (including fractional shares deemed received) minus your adjusted tax
basis in the shares of Premier common stock that you surrender. You will not
recognize any loss on the exchange of your Premier stock for a combination of
M&T stock and cash in the merger.
In addition, if you receive cash instead of a fractional share of M&T
common stock, you will recognize income, gain or loss on your receipt of that
cash.
Exceptions to these conclusions or other considerations may apply. Some of
these are discussed beginning on page 36. Determining the actual tax
consequences of the merger to you can be complicated. Those consequences will
depend on your specific situation, on whether you elect to receive stock, cash
or a mix of stock and cash, on whether your election is effective or must be
changed under the proration provisions of the merger agreement, and on many
variables which are not within our control. YOU SHOULD CONSULT YOUR OWN TAX
ADVISOR FOR A FULL UNDERSTANDING OF THE MERGER'S FEDERAL INCOME TAX AND OTHER
TAX CONSEQUENCES AS THEY APPLY SPECIFICALLY TO YOU.
6
<PAGE> 13
MARKET PRICES AND DIVIDEND INFORMATION
M&T common stock is listed and traded on the New York Stock Exchange under
the symbol "MTB." As of December 8, 2000 there were 12,035 shareholders of
record of M&T common stock. Premier common stock is listed and traded on the
American Stock Exchange under the symbol "PNB." As of December 8, 2000 there
were 2,065 shareholders of record of Premier common stock.
In connection with the Keystone merger, M&T effected a 10-for-1 split of
the M&T common stock on October 5, 2000. In addition, M&T has increased its
regular quarterly cash dividend to $0.25 per share for the fourth quarter of
2000.
The table below sets forth for the periods indicated the high and low sale
prices and the dividends declared per share for M&T common stock (adjusted for
the 10-for-1 split) and Premier common stock.
<TABLE>
<CAPTION>
M&T Premier
---------------------------------------- -------------------------------------
High Low Dividends High Low Dividends
---- --- --------- ---- --- ---------
<S> <C> <C> <C> <C> <C> <C>
2000 Quarters
Fourth (through December 14,
2000)........................... $62.70 $46.67 $0.250 $21.00 $20.19 $0.150
Third............................ 52.29 44.50 0.125 20.63 13.00 0.150
Second........................... 47.50 39.95 0.125 14.88 11.75 0.150
First............................ 45.81 35.70 0.125 16.63 10.00 0.150
1999 Quarters
Fourth........................... $51.20 $40.60 $0.125 $17.22 $14.48 $0.150
Third............................ 57.50 41.25 0.125 18.64 15.00 0.136
Second........................... 58.25 46.25 0.100 18.75 14.44 0.136
First............................ 51.88 46.40 0.100 17.05 13.64 0.118
1998 Quarters
Fourth........................... $53.95 $40.00 $0.100 $15.70 $12.30 $0.118
Third............................ 58.20 41.00 0.100 19.22 13.44 0.107
Second........................... 55.40 48.00 0.100 19.73 17.56 0.107
First............................ 50.40 42.90 0.080 20.66 16.42 0.107
</TABLE>
7
<PAGE> 14
The information presented in the following table reflects:
(1) the closing price for M&T common stock (adjusted for the 10-for-1 stock
split) and Premier common stock on July 7, 2000, the last trading day
preceding the public announcement of the proposed merger;
(2) the same information on December 14, 2000 which, was the latest trading day
practicable before the printing of this document; and
(3) the Premier common stock equivalent pro forma per share price as of July
7, 2000 and December 14, 2000, which is presented as $21 per share (the amount
of cash or market value of the M&T common stock to be received for each share
of Premier common stock). Because the exchange ratio is based on the average
of the daily average of high and low prices of the M&T common stock for the
ten trading days immediately before the effective date of the merger, the
market value of the M&T common stock issued in the merger for each share of
Premier common stock that is exchanged for M&T common stock may be more or
less than $21 per share at the time the merger becomes effective.
(4) an implied exchange ratio for the amount of M&T common stock to be exchanged
for each share of Premier common stock as of July 7, 2000 and December 14, 2000,
based on the closing price of M&T common stock on those two dates.
The merger agreement provides that the number of shares of Premier common
stock converted into shares of M&T common stock in the merger will equal 50%
of the total number of outstanding Premier shares on the date the merger
agreement was signed, less the total number of shares of Premier common stock
acquired by M&T or Premier and not reissued as permitted by the merger
agreement prior to the merger. The remaining shares of Premier common stock
will be converted into the right to receive $21 per share in cash. See "THE
MERGER - Terms of the Merger."
<TABLE>
<CAPTION>
M&T Premier Premier Implied
Common Common Equivalent Exchange
Market value per share: Stock Stock Pro Forma Ratio
<S> <C> <C> <C> <C>
July 7, 2000..................................... $ 45.90 $ 13.375 $21 0.4575
December 14, 2000................................ 59.96 20.75 $21 0.3502
</TABLE>
8
<PAGE> 15
COMPARATIVE PER SHARE DATA
The following table shows information about the income per share,
dividends per share and book value per share for (i) M&T on a historical basis
adjusted for the 10-for-1 stock split, (ii) Premier on a historical basis and
(iii) Premier on a "Pro Forma Premier Equivalent" basis. The Pro Forma Premier
equivalent information was obtained by multiplying the M&T historical amounts
adjusted for the 10-for-1 stock split by an assumed exchange ratio of 0.3502 of
a share of M&T common stock for each share of Premier common stock converted
into M&T common stock in the merger. The assumed exchange ratio was calculated
based on the closing price of M&T common stock on December 14, 2000. The
actual exchange ratio will equal $21 divided by the average trading price of
the M&T common stock for the ten trading days preceding the effective date of
the merger, and may be more or less than 0.3502.
We expect that certain reorganization and restructuring expenses will
result from the merger. We also anticipate that the merger will provide the
combined company with financial benefits that include reduced operating
expenses and the opportunity to earn more revenue. The equivalent information
does not reflect these expenses or benefits and does not attempt to predict or
suggest future results.
The information in the following table is based on the historical
financial information that M&T and Premier have previously reported in their
respective Securities and Exchange Commission filings, except that the
information regarding M&T is adjusted for the 10-for-1 stock split. We have
incorporated this material into this document by reference. See "WHERE YOU CAN
FIND MORE INFORMATION" and "DOCUMENTS INCORPORATED BY REFERENCE."
The M&T financial information reflected in the Pro Forma Premier
Equivalent data does not give effect to the proposed merger because Premier
would not constitute a "significant subsidiary" of M&T as this term is defined
in Securities and Exchange Commission rules.
<TABLE>
<CAPTION>
-------------------------------------------------
HISTORICAL PRO FORMA
---------------------------- PREMIER
PER SHARE DATA: M&T PREMIER EQUIVALENT
-------------- -------------- -------------- -------------
<S> <C> <C> <C>
BASIC EARNINGS
Nine months ended September 30, 2000................. $2.79 $0.94 $0.98
Twelve months ended December 31, 1999................ 3.41 1.23 1.19
DILUTED EARNINGS
Nine months ended September 30, 2000................. 2.71 0.93 0.95
Twelve months ended December 31, 1999................ 3.28 1.21 1.15
CASH DIVIDENDS (1)
Nine months ended September 30, 2000................. 0.38 0.45 0.13
Twelve months ended December 31, 1999................ 0.45 0.54 0.16
BOOK VALUE
At September 30, 2000................................ $25.22 $9.13 $8.83
</TABLE>
(1) The Premier equivalent dividends per share represents historical
dividends per common share paid by M&T adjusted for the 10-for-1 stock
split, multiplied by the exchange ratio of 0.3502 of a share of M&T
common stock for each share of Premier common stock in the merger. M&T
has increased its regular quarterly cash dividend to $0.25 per share of
M&T common stock on a post-split basis for the fourth quarter of 2000.
At the annual rate implied by this increase, the Premier cash dividends
would have been $0.26 for the nine months ended September 30, 2000 and
$0.35 for the twelve months ended December 31, 1999. Actual dividends
paid will depend on the economic performance of M&T and related
factors.
9
<PAGE> 16
SELECTED CONSOLIDATED FINANCIAL DATA
The following tables set forth certain selected historical consolidated
financial data for M&T and Premier. The historical selected consolidated
financial data for the five years ending December 31, 1999 are derived from
the respective audited consolidated financial statements of M&T and Premier
and from the financial records of each company. The selected financial data
for the nine-month periods ended September 30, 2000 and 1999 are derived from
unaudited consolidated interim financial statements and from the financial
records of each company and are not necessarily indicative of the results for
the remainder of the year or any future period. The respective consolidated
interim financial statements of M&T and Premier reflect all adjustments, which
are of a normal recurring nature, necessary for a fair statement of the
results for the interim periods presented. You should read this summary in
connection with the financial statements and other financial information
included in documents incorporated in this document by reference. See "WHERE
YOU CAN FIND MORE INFORMATION" and "DOCUMENTS INCORPORATED BY REFERENCE."
10
<PAGE> 17
M&T BANK CORPORATION
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30 YEAR ENDED DECEMBER 31
---------------------------- -----------------------------
2000 1999 1999 1998
------------- ------------ ------------ --------------
<S> <C> <C> <C> <C>
SUMMARIZED INCOME
STATEMENT DATA:
Net interest income...... $ 596,139 $ 562,454 $ 759,397 $ 671,947
Provision for credit
losses................... 24,000 30,500 44,500 43,200
Other income............. 221,894 212,021 282,375 262,939
Other expense............ 460,266 429,911 578,958 566,123
Income taxes............. 119,578 114,556 152,688 117,589
------------ ------------ ----------- ------------
Net income....... $ 214,189 $ 199,508 $ 265,626 $ 207,974
PER COMMON SHARE DATA:(1)
Basic net income......... $ 2.79 $ 2.56 $ 3.41 $ 2.73
Diluted net income....... 2.71 2.46 3.28 2.62
Book value at end of
period................... 25.22 23.05 23.24 20.79
Cash dividends........... .375 .325 0.45 0.38
WEIGHTED AVERAGE NUMBER
OF SHARES: (1)
Basic.................... 76,830 78,021 78,003 76,194
Diluted.................. 79,171 81,012 80,905 79,497
AVERAGE BALANCE SHEET DATA:
Total assets............. $22,036,546 $20,689,856 $21,057,080 $18,309,436
Total borrowings......... 4,562,313 3,762,578 3,804,625 2,758,130
Shareholders' equity..... 1,844,209 1,714,628 1,736,087 1,500,677
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
---------------------------------------------
1997 1996 1995
------------- -------------- -------------
<S> <C> <C> <C>
SUMMARIZED INCOME
STATEMENT DATA:
Net interest income...... $ 559,406 $ 533,522 $ 488,744
Provision for credit
losses................... 46,000 43,325 40,350
Other income............. 190,529 167,750 147,218
Other expense............ 421,776 408,978 374,439
Income taxes............. 105,918 97,866 90,137
------------ ------------ ------------
Net income....... $ 176,241 $ 151,103 $ 131,036
PER COMMON SHARE DATA:(1)
Basic net income......... $ 2.66 $ 2.25 $ 1.96
Diluted net income....... 2.53 2.11 1.80
Book value at end of
period................... 15.59 13.55 12.53
Cash dividends........... 0.32 0.28 0.25
WEIGHTED AVERAGE NUMBER
OF SHARES: (1)
Basic.................... 66,253 66,635 64,990
Diluted.................. 69,773 71,701 72,877
AVERAGE BALANCE SHEET DATA:
Total assets............. $13,308,559 $12,478,666 $11,484,754
Total borrowings......... 1,184,864 1,310,784 1,569,514
Shareholders' equity..... 953,021 863,133 782,520
</TABLE>
(1) Amounts have been adjusted for the 10-for-1 stock split.
11
<PAGE> 18
PREMIER NATIONAL BANCORP, INC.
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30 YEAR ENDED DECEMBER 31
------------------------------ ---------------------------
2000 1999 1999 1998
------------ -------------- ----------- -------------
<S> <C> <C> <C> <C>
SUMMARIZED INCOME STATEMENT
DATA:
Net interest income........ $ 45,791 $ 49,097 $ 65,302 $ 67,095
Provision for credit losses 750 1,800 2,000 5,929
Other income............... 7,790 7,767 10,323 9,552
Other expense.............. 31,294 31,996 42,596 49,988
Income taxes............... 6,567 8,017 10,431 7,678
----------- ------------ ----------- ------------
Net income......... $ 14,970 $ 15,051 $ 20,598 $ 13,052
PER COMMON SHARE DATA:
Basic net income........... 0.94 0.89 1.23 0.76
Diluted net income......... 0.93 0.88 1.21 0.74
Book value at end of period 9.13 8.71 8.65 9.04
Cash dividends............. 0.45 0.25 0.54 0.44
WEIGHTED AVERAGE NUMBER OF
SHARES:
Basic...................... 15,980 16,937 16,793 17,174
Diluted.................... 16,139 17,148 17,057 17,566
AVERAGE BALANCE SHEET DATA:
Total assets............... $1,570,654 $1,540,153 $1,554,122 $1,630,920
Total borrowings........... 74,359 26,011 38,259 1,725
Shareholders' equity....... 141,219 149,680 148,032 153,001
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
---------------------------------------------
1997 1996 1995
------------- ------------ ------------
<S> <C> <C> <C>
SUMMARIZED INCOME STATEMENT
DATA:
Net interest income........ $ 66,054 $ 62,901 $ 57,265
Provision for credit losses 4,475 5,150 2,900
Other income............... 9,469 9,706 9,085
Other expense.............. 43,411 42,566 41,735
Income taxes............... 9,997 6,904 7,964
----------- ----------- -----------
Net income......... $ 17,640 $ 17,987 $ 13,751
PER COMMON SHARE DATA:
Basic net income........... 1.04 1.05 0.81
Diluted net income......... 1.01 1.03 0.76
Book value at end of period 8.73 8.09 7.47
Cash dividends............. 0.41 0.34 0.28
WEIGHTED AVERAGE NUMBER OF
SHARES:
Basic...................... 16,963 17,012 16,554
Diluted.................... 17,427 17,423 17,642
AVERAGE BALANCE SHEET DATA:
Total assets............... $1,599,351 $1,550,059 $1,384,071
Total borrowings........... 1,809 2,782 2,117
Shareholders' equity....... 141,767 133,055 123,083
</TABLE>
12
<PAGE> 19
THE COMPANIES
M&T BANK CORPORATION
M&T Bank Corporation ("M&T") is a New York business corporation
registered as a bank holding company under the Bank Holding Company Act of 1956,
as amended, and under Article III-A of the New York State Banking Law. The
principal executive offices of M&T are located at One M&T Plaza, Buffalo, New
York 14203. M&T was incorporated in November 1969. As of September 30, 2000, M&T
reported, on a consolidated basis, total assets of approximately $22 billion,
total deposits of approximately $14.7 billion and total shareholders' equity of
approximately $1.9 billion. M&T had 5,604 full-time and 965 part-time employees
as of December 31, 1999. M&T's two banking subsidiaries are Manufacturers and
Traders Trust Company ("M&T Bank"), with its principal executive offices in
Buffalo, New York, and M&T Bank, National Association ("M&T Bank, N.A.") with
its main office in Oakfield, New York. Collectively, the banks and their
subsidiaries offer a wide range of commercial banking, trust and investment
services to their customers.
M&T Bank is a banking corporation incorporated and chartered under New
York law. M&T Bank is a member of the Federal Reserve System and the Federal
Home Loan Bank System, and its deposits are insured by the Federal Deposit
Insurance Corporation ("FDIC") up to applicable limits. As of September 30,
2000, M&T Bank represented 96% of the consolidated assets of M&T. As of
September 30, 2000, M&T Bank had 247 banking offices located throughout New York
State, 19 banking offices located in northeastern Pennsylvania and a branch in
Nassau, The Bahamas. As a commercial bank, M&T Bank offers a broad range of
financial services to a diverse base of consumers, businesses, professional
clients, governmental entities and financial institutions located in its
markets. Lending is largely focused on consumers residing in New York State and
Northeastern Pennsylvania and on small and medium-size businesses. However,
certain of M&T Bank's subsidiaries conduct lending activities in markets outside
of New York State and Northeastern Pennsylvania. M&T Bank and certain of its
subsidiaries offer commercial mortgage loans secured by income producing
properties or properties used by borrowers in a trade or business. M&T Bank also
provides other financial services through its operating subsidiaries, including
consumer lending and leasing, commercial lending and leasing, mortgage banking,
capital equipment leasing, commercial real estate lending and servicing, and
securities brokerage and investment advisory services.
M&T Bank, N.A. is a national bank and a member of the Federal Reserve
System, and its deposits are insured by the FDIC up to applicable limits. M&T
Bank, N.A. offers selected deposit, loan and insurance products on a nationwide
basis, primarily through telephone marketing and direct mail marketing
techniques. Insurance products are also offered by M&T Bank, N.A. through the
banking offices of M&T Bank. As of September 30, 2000, M&T Bank, N.A. had total
assets of $918 million.
On October 6, 2000, M&T acquired Keystone Financial, Inc., a bank
holding company headquartered in Harrisburg, Pennsylvania. At the same time,
Keystone's bank subsidiary, Keystone Financial Bank, N.A., which operated in 31
Pennsylvania counties, three Maryland counties and one county in West Virginia,
merged into M&T Bank. As of June 30, 2000, Keystone reported, on a consolidated
basis, total assets of approximately $7.0 billion and total shareholders'
equity of approximately $566 million. The former Keystone shareholders received
an aggregate of 15,900,292 shares of M&T common stock and approximately $374.4
million in cash in the merger. Additional information about the Keystone merger
is included in the documents with respect to M&T incorporated in this document
by reference, which are available as described on page 47.
The combination of M&T and Keystone adds to M&T's existing network of
171 branches in 33 counties throughout Central Pennsylvania, creating a company
that has over 450 branches and nearly 1,000 ATMs in New York, Pennsylvania,
Maryland and West Virginia and ranks first, based on deposit share, in both
Central Pennsylvania and Upstate New York.
From time to time, M&T investigates and holds discussions and
negotiations in connection with possible strategic transactions with other
banks and financial services entities. As of the date of this document, M&T has
not entered into any agreements in any transactions of the type referred to
above
13
<PAGE> 20
except for the transaction described in this document and in documents
incorporated in this document by reference. See "WHERE YOU CAN FIND MORE
INFORMATION" and "DOCUMENTS INCORPORATED BY REFERENCE." If required under
applicable law or New York Stock Exchange policy, any such transactions would
be subject to regulatory approval and the approval of shareholders.
For additional information concerning the business of M&T and its
financial condition, you should refer to the M&T documents incorporated in this
document by reference. See "WHERE YOU CAN FIND MORE INFORMATION" and "DOCUMENTS
INCORPORATED BY REFERENCE."
OLYMPIA FINANCIAL CORP.
Olympia Financial Corp. ("Olympia"), a wholly owned subsidiary of M&T,
is a Delaware corporation that holds the stock of M&T Bank and is registered as
a bank holding company under the Bank Holding Company Act. Its registered
office is located at 1209 Orange Street, Wilmington, Delaware 19801.
PREMIER NATIONAL BANCORP, INC.
Premier is a New York corporation registered as a bank holding company
under the Bank Holding Company Act. As of September 30, 2000, Premier had total
assets of $1.6 billion and shareholders' equity of $145 million. Premier has
one wholly owned bank subsidiary, Premier National Bank ("Premier Bank"), a
national banking association. Premier Bank is a member of the Federal Reserve
System and the Federal Home Loan Bank of New York, and its deposits are insured
by the FDIC up to applicable limits.
Premier Bank offers diversified financial services through 34
community banking offices and five off-site ATMs in seven contiguous mid-Hudson
Valley counties in New York. The principal business of Premier Bank is to
accept deposits from the general public and to invest those deposits, together
with funds from borrowings and ongoing operations, in commercial, consumer and
residential mortgage loans as well as eligible investment securities. Premier
Bank concentrates its efforts in the retail, municipal and commercial banking
businesses. Premier Bank offers a variety of deposit and loan products and
trust services designed to meet the needs of the residents and businesses of
its market areas. Premier Bank also offers brokerage services, investment
advisory services and sales of non-insured mutual funds and annuities through
its Trust Department and personal relationship management program.
For additional information concerning the business of Premier and its
financial condition, you should refer to Premier's documents incorporated in
this document by reference. See "WHERE YOU CAN FIND MORE INFORMATION" and
"DOCUMENTS INCORPORATED BY REFERENCE."
THE COMBINED COMPANY
Combining M&T and Premier will create a company that will rank first,
based on deposits, in the mid-Hudson Valley and will be a stronger presence
throughout upstate New York. The combined company will offer a broader range of
products and services to current Premier customers and will benefit from
greater geographic diversity and the benefits of scale associated with a larger
company. M&T also expects that the merger will result in significant
opportunities for cost savings and revenue enhancement. See "THE
MERGER--Management and Operations After the Merger--Operations."
14
<PAGE> 21
THE PREMIER SHAREHOLDERS' MEETING
DATE, PLACE AND TIME
The special meeting of Premier shareholders will be held at the
Sheraton Civic Center Hotel, 40 Civic Center Plaza, Poughkeepsie, New York on
January 25, 2001 at 9:00 a.m., New York time.
RECORD DATE; VOTING RIGHTS
The Premier record date is the close of business on December 8, 2000.
The Premier record date has been fixed as the date for purposes of determining
shareholders entitled to notice of, and to vote at, the special meeting. On the
Premier record date, there were issued and outstanding 15,949,541 shares of
Premier common stock entitled to vote at the special meeting. As a shareholder
of Premier on the Premier record date, you will be entitled to one vote for
each share of Premier common stock held of record with respect to the merger
and any other matter properly submitted at the special meeting. The affirmative
vote of the holders of two-thirds of the outstanding shares of Premier common
stock entitled to vote at the special meeting is required to approve the merger
agreement.
Premier intends to count shares of Premier common stock present in
person at the special meeting but not voting, and shares of Premier common
stock for which it has received proxies but with respect to which holders of
such shares have abstained on any matter, as present at the special meeting for
purposes of determining whether a quorum exists. Because approval of the merger
requires the affirmative vote of holders of two-thirds of the outstanding
Premier common stock entitled to vote on the merger, each unvoted share and
each abstention will have the effect of a vote against the merger. In addition,
under applicable rules of the American Stock Exchange, brokers that hold shares
of Premier common stock in street name for customers who are the beneficial
owners of such shares may not give a proxy to vote those shares with respect to
the merger without specific instructions to that effect from such customers.
Accordingly, the failure of such customers to provide instructions with respect
to their shares of Premier common stock to their broker will have the effect of
a vote against the merger. Such "broker non-votes," if any, will be counted as
present for determining the presence or absence of a quorum for the transaction
of business.
As of November 30, 2000, Premier's directors and executive officers
and related parties (including George Gale Foster Corporation) had the power to
vote 2,840,711 shares of Premier common stock, representing
approximately 17.7% of the shares of Premier common stock then issued and
outstanding. Each of the directors of Premier, as well as George Gale Foster
Corporation, has agreed with M&T to vote his, her or its Premier shares in
favor of the merger agreement. Each of the executive officers is also expected
to vote his or her shares for approval of the merger.
As of the same date, the trust department of Premier Bank, as
fiduciary, custodian or agent, had the power to vote 641,462 shares of
Premier common stock, representing approximately 4.0% of the then issued and
outstanding Premier common stock. The trust department of Premier Bank will
vote these shares in accordance with the terms of the respective governing
documents, applicable law and the trust department's fiduciary policies. The
trust department will make a determination as to how it will vote these shares
following receipt of this document.
VOTING AND REVOCATION OF PROXIES
Shares of Premier common stock represented by a proxy properly signed
and returned at or prior to the special meeting, and not subsequently revoked
prior to the vote on the merger, will be voted at the special meeting in
accordance with the instructions on the proxy. If a proxy is signed and
returned without indicating any voting instructions, the shares of Premier
common stock represented by the proxy will be voted FOR approval of the merger.
You may revoke your proxy at any time before it is exercised. In order
to revoke a proxy, you must either give written notice of such revocation to
the Secretary of Premier or vote the shares of Premier
15
<PAGE> 22
common stock subject to such proxy by a later-dated proxy or by written ballot
at the special meeting. Written notices of revocation may be directed to:
Robert Apple, General Counsel and Corporate Secretary, Premier National
Bancorp, Inc., 1100 Route 55, LaGrangeville, New York 12540. Your presence at
the special meeting, if you have given a proxy, will not, in and of itself,
revoke the proxy. Any shareholder of record attending the special meeting may
vote in person whether or not a proxy has been previously given.
The Premier Board is not aware of any other business to be acted upon
at the special meeting other than the merger. If other matters are duly brought
before the special meeting, or any adjournments or postponements thereof, the
persons appointed as proxies will have discretion to vote or act on these
matters according to their best judgment. The persons named as proxies by a
shareholder may propose and vote for one or more adjournments or postponements
of the special meeting to permit additional solicitation of proxies in favor of
the merger, but no proxy voted against the merger will be voted in favor of any
such adjournment or postponement.
SOLICITATION OF PROXIES
In addition to solicitation of proxies by mail, Premier's directors,
officers and regular employees may also solicit proxies without additional
compensation to such directors, officers or regular employees and at a nominal
cost to Premier. Brokerage houses, nominees, fiduciaries and other custodians
have been requested to forward proxy materials to beneficial owners of Premier
common stock and such parties will be reimbursed for the expenses incurred by
them. Premier has retained Corporate Investor Communications, Inc. to assist in
the solicitation of proxies. It is anticipated that the fee of such firm will
not exceed $10,000 plus reasonable out-of-pocket costs and expenses authorized
by Premier. Premier will bear its own expenses in connection with the
solicitation of proxies, except that M&T and Premier each will bear half of all
printing and mailing costs and filing fees associated with this document.
16
<PAGE> 23
THE MERGER
This section describes material aspects of the merger. The description
of the merger agreement and the stock option agreement contained in this
section does not purport to be complete and is qualified in its entirety by
reference to the merger agreement and the stock option agreement, which are
attached to this document as Appendix A and Appendix B, respectively, and are
incorporated in this document by reference. You are urged to read the merger
agreement and the stock option agreement carefully and in their entirety.
BACKGROUND OF THE MERGER
Beginning in early 1999, T. Jefferson Cunningham III, Premier's
Chairman and Chief Executive Officer, and Robert G. Wilmers, then M&T's
President, met several times to discuss developments in the banking industry.
During each of these meetings, Mr. Wilmers expressed M&T's interest in
discussing a merger between M&T and Premier. At the time of these meetings,
Premier was not interested in pursuing a merger with M&T.
On September 13, 1999, Premier's management presented a strategic
review of the company to the Executive Committee of Premier's Board of
Directors. The review focused on challenges and opportunities facing the
banking industry, nationally and locally, as well as those particular to
Premier. The Executive Committee also discussed expressions of interest in a
possible merger that had been received from M&T and three other financial
institutions. The Executive Committee determined that it would be appropriate
to engage an investment banker to advise Premier on its business strategies and
evaluate the position which Premier should take in the event it wished to
pursue or was forced to react to one or more proposals.
Shortly thereafter, Premier retained J.P. Morgan Securities, Inc. as
Premier's financial advisor. J.P. Morgan presented a report to the Executive
Committee on October 14, 1999. The report discussed challenges facing the
banking industry, with a particular focus on community banks like Premier;
fundamental changes in and the outlook for bank earnings performance and, thus,
market valuations, that had occurred in the preceding year; disadvantages faced
by community banks in dealing with the competitive evolution of the industry;
the strategic options available to Premier, including remaining independent and
growing by acquisition, seeking a merger of equals or pursuing an outright
sale; and an analysis of the potential value of Premier to a wide range of
possible acquirers. The Executive Committee concluded that J.P. Morgan should
seek to identify which of the possible acquirers would represent the most
attractive partners in the event that Premier wished to seek a merger partner
or if Premier received unsolicited proposals from such parties.
On November 4, 1999, Premier formally retained Keefe, Bruyette &
Woods, Inc. ("KBW") as an additional advisor to work with J.P. Morgan. At a
subsequent meeting of the Executive Committee, J.P. Morgan and KBW presented
their findings and concluded that, in addition to banks which had already
approached Premier, a select group of other institutions also might be
attractive merger partners. The Executive Committee directed J.P. Morgan and
KBW to informally contact these companies to ascertain if they had any interest
in either disposing of a material portion of their Hudson Valley branch network
or making a strategic acquisition in the Hudson Valley. During late November
and December 1999, J.P. Morgan and KBW made these inquiries. While none of the
banks contacted was willing to dispose of any material number of branches, one
of the institutions that had no banking facilities in the Hudson Valley
expressed significant interest in establishing a strategic presence in that
market. Premier authorized J.P. Morgan to inform that institution of Premier's
identity. During the first quarter of 2000, discussions were held between
representatives of that institution and of Premier about the possibility of a
strategic combination. Ultimately, that institution concluded that it was
unable to offer a sufficient value to Premier shareholders to warrant further
discussions at that time.
On March 23, 2000, J.P. Morgan, KBW and Mr. Cunningham reported to the
Executive Committee on the status of Premier's evaluation of its strategic
business opportunities, including Premier's investigation of four acquisition
candidates (one of which was a potential candidate for a merger of equals),
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<PAGE> 24
none of which, in management's estimation, could produce significant value to
Premier's shareholders at the prices sought. Mr. Cunningham and J.P. Morgan
also reported continued contacts from M&T regarding a possible merger. After
the presentations, the Executive Committee instructed J.P. Morgan to inform M&T
that Premier might be willing to consider a merger proposal. Shortly thereafter,
representatives of Premier and M&T thereafter met to discuss valuation models,
but no agreement was reached.
On May 22, 2000, Mr. Wilmers proposed that M&T acquire Premier at a
value of approximately $21 per share of Premier common stock payable 50% in cash
and 50% in M&T common stock. M&T's proposal was conditioned on, among other
things, M&T verifying that it could achieve targeted cost savings, satisfactory
completion of due diligence and negotiation of a definitive merger agreement. On
May 25, 2000, J.P. Morgan and KBW informed the Executive Committee of M&T's
proposal and the committee authorized further exploration of a merger with M&T.
A confidentiality agreement was signed on June 14, 2000 and due diligence
materials were made available for M&T's review during the period from June 15 to
June 21, 2000.
On June 22, 2000, Premier's management and its financial and legal
advisors made a presentation to Premier's full Board of Directors. The
presentation included a review of Premier's strategic options, the background
of the proposed transaction, an outline of the structure of the proposed
transaction, and the factors which should be considered before reaching any
conclusion on the matter. The Premier Board authorized management to continue
discussions with M&T. Drafts of the merger agreements were provided by M&T's
counsel the next day and negotiation of these documents and each party's
on-site due diligence review of the other occurred over the following two
weeks.
The progress of negotiations and due diligence were reviewed at a
meeting of Premier's Executive Committee on July 3, 2000. Further negotiations
followed, with the parties ultimately reaching agreement on the terms set forth
in the merger agreement. Premier's full Board of Directors met again on July 9,
2000, and after detailed consideration of the final proposal and receipt of J.P.
Morgan's fairness opinion, which appears in the attached Appendix C, the Board
unanimously (with three directors absent) approved the merger agreement and
related documents. Premier and M&T executed the merger and stock option
agreements following the Premier Board meeting and a press release announcing
the merger was issued on July 10, 2000.
REASONS FOR THE MERGER; RECOMMENDATION OF PREMIER'S BOARD OF DIRECTORS
At its meeting held on July 9, 2000, the Premier Board received and
considered presentations of Premier's senior management and its financial and
legal advisors regarding the merger. The Premier Board also discussed the
economic and strategic benefits of the potential transaction, the results of
the due diligence investigation of M&T, including the Keystone merger, and the
history of negotiations. After considering the presentations, those members of
the Board present voted unanimously (with three members absent) to approve the
merger agreement and to recommend its approval and adoption by Premier
shareholders.
In reaching its conclusion, the Premier Board considered a number of
factors, including those listed below. While the following list reflects all of
the material factors considered by the Premier Board, in view of the variety
and complexity of factors it considered in evaluating the merger proposal, the
Premier Board did not consider it practicable, and did not try, to quantify or
assign relative weights to the specific factors it considered. Also, individual
directors may have assigned different weights to different factors.
- the prospects for Premier's growth and financial performance and
the greater diversification of earnings and greater earnings
growth prospects of the combined company as compared with
Premier;
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<PAGE> 25
- an analysis of Premier's value on a stand-alone basis and in a
sale, using the methods described in the discussion below of J.P.
Morgan's fairness opinion;
- M&T's earnings outlook, as affected by the merger under various
assumptions concerning synergies, including the ability to
achieve estimated pre-tax cost savings of approximately $19
million through eliminating duplicative operations of the two
companies;
- the fact that M&T's shares trade at a higher earnings multiple
than those of its peer group (including the possibility that, due
to this higher multiple, as well as the risks associated with the
Keystone transaction, M&T common stock might perform less
favorably than anticipated);
- the terms of the transaction, which was accretive to earnings
and book value per share of Premier common stock at the time,
including the structure of the exchange ratio, which was designed
in the negotiations to assure that the M&T common stock received
in the merger will have approximately the same value at the time
the merger is consummated as it had at the time that the merger
was agreed, and the opportunity for Premier's shareholders to
receive a substantial premium over recent market prices for their
shares, and, with respect to the M&T stock component of the
consideration, at the implied exchange ratio at that time, a
substantial premium on attributable earnings per share, as well as
the opportunity for Premier shareholders to receive at least a
significant portion of their consideration on a tax-free basis;
- the arrangements with respect to Premier's directors and
officers, including Mr. Cunningham's membership on the M&T and
M&T Bank Boards and his consulting agreement, and his proposed
chairmanship of the Hudson Valley Advisory Board of M&T Bank;
- Premier's business strengths, alternative business strategies,
strategic issues facing Premier, including the need to update
operating systems, expand product lines and upgrade staff,
competition from much larger banks and other financial
institutions, and Premier's aging customer base;
- M&T's reputation for quality, consistency and success, and the
effect of the merger on the combined company's strategic
position, including the combined company's strong position in the
mid-Hudson Valley and elsewhere in upstate New York;
- recent trends in banking acquisitions and the current environment
in the banking industry, including the recent performance of bank
stocks as compared with the overall market, and investor concerns
with respect to these stocks, especially those of smaller
regional banking companies;
- the combined company's anticipated ability to bring Premier's
customers the broader product and service capabilities of a
larger institution while maintaining the local expertise and
decision-making ability of a community bank;
- a review of M&T's business and finances as compared with peer
bank holding companies and consideration of the pending Keystone
acquisition;
- the likelihood of the prospective split of the M&T common stock
and increase in M&T's cash dividends in connection with the
Keystone merger; and
- the views of Premier's financial advisors, including J.P.
Morgan's fairness opinion, and advice of Premier's legal counsel
regarding the terms of the merger agreements and the Premier
directors' fiduciary duties.
In reviewing the potential benefits and risks of the merger, the
Premier Board considered the risk of underperformance by M&T common stock
before the merger to be mitigated by the price protection offered by having the
exchange ratio determined during a period immediately prior to the consummation
of the merger. The Premier Board considered the possibility that Premier's
competitive position could be impaired if the merger was announced but did not
occur, but deemed this risk slight. In addition, the Board believed that in
light of Premier's research into the possibility of other business
combinations, the likelihood of receiving a more favorable acquisition proposal
was limited, and that the stock option and the breakup fee would not unduly
discourage a proposal that otherwise would have been made. The Premier Board
also took into account the likelihood that the merger would lead to the loss of
a substantial number
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<PAGE> 26
of jobs and the departure of key personnel, but believed that this risk was
mitigated to some extent by the staff retention and severance arrangements
negotiated in connection with the merger. On balance, the Premier Board
concluded that the potential risks of the merger clearly were outweighed by the
likely benefit to Premier shareholders.
The Premier Board believes that the merger is in the best interests of
Premier and its shareholders. ACCORDINGLY, THE PREMIER BOARD RECOMMENDS THAT
PREMIER'S SHAREHOLDERS VOTE FOR APPROVAL AND ADOPTION OF THE MERGER AGREEMENT.
OPINION OF PREMIER'S FINANCIAL ADVISOR
Premier retained J.P. Morgan to act as its financial advisor in
connection with the merger. On July 9, 2000, the Premier Board held a meeting
to consider the merger. At this meeting, J.P. Morgan rendered its oral opinion
that, as of that date and based upon and subject to the factors and assumptions
set forth in its opinion, the merger consideration that was to be paid to
Premier's shareholders was fair, from a financial point of view, to such
shareholders. J.P. Morgan simultaneously confirmed its oral opinion by
delivering to the Premier Board a written opinion dated as of July 9, 2000. The
opinion has not been updated since that time.
The full text of the J.P. Morgan opinion which describes, among other
things, the assumptions made, matters considered, and qualifications and
limitations on the review undertaken by J.P. Morgan is attached as Appendix C
to this document and is incorporated in this document by reference. Premier
shareholders should read J.P. Morgan's opinion carefully and in its entirety.
The J.P. Morgan opinion was provided to the Premier Board in
connection with and for the purposes of its evaluation of the merger. The
opinion is directed only to the fairness of the merger consideration to Premier
shareholders from a financial point of view and does not constitute a
recommendation to any shareholder of Premier as to how such shareholder should
vote with respect to the merger or any other related matter, including whether
any shareholder should elect to receive cash or M&T common stock for each
shareholder's Premier shares. The summary of the fairness opinion set forth in
this document is qualified in its entirety by reference to the full text of the
opinion.
In arriving at its opinion, J.P. Morgan reviewed:
- the merger agreement;
- certain publicly available information concerning the businesses
of Premier and of certain other companies engaged in businesses
comparable to those of Premier and the reported market prices for
certain other companies' securities deemed comparable;
- publicly available terms of certain transactions involving
companies comparable to Premier and the consideration received
for such companies;
- current and historical market prices of the common stock of
Premier and M&T;
- the audited financial statements of Premier and M&T for the
fiscal year ended December 31, 1999 and the unaudited financial
statements of Premier and M&T for the period ended March 31,
2000;
- certain internal financial analyses and forecasts prepared by
Premier and M&T and their respective managements; and
- the terms of other business combinations that J.P. Morgan deemed
relevant.
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<PAGE> 27
In addition, J.P. Morgan held discussions with certain members of the
management of Premier and M&T with respect to certain aspects of the proposed
merger, and the past and current business operations of Premier and M&T, the
financial condition and future prospects and operations of each of Premier and
M&T, the effects of the proposed merger on the financial condition and future
prospects of each of Premier and M&T, and certain other matters J.P. Morgan
believed necessary or appropriate to the inquiry. J.P. Morgan reviewed such
other financial studies and analyses and considered such other information as
it deemed appropriate for the purposes of the opinion.
In giving its July 9, 2000 opinion, J.P. Morgan relied upon and
assumed, without independent verification, the accuracy and completeness of all
information that was publicly available or was furnished to J.P. Morgan by
Premier and M&T or otherwise reviewed by J.P. Morgan, and J.P. Morgan did not
assume any responsibility or liability therefor. J.P. Morgan did not conduct
any valuation or appraisal of any assets or liabilities, nor were any such
valuations or appraisals provided to it. In relying on financial analyses and
forecasts provided to it, J.P. Morgan assumed that they had been reasonably
prepared based on assumptions reflecting the best currently available estimates
and judgments by the managements of Premier and M&T as to the expected future
results of operations and financial condition of Premier and M&T to which such
analyses or forecasts relate. J.P. Morgan also assumed that the proposed merger
will have the tax consequences described in discussions with, and materials
furnished to J.P. Morgan by, representatives of Premier, and that the other
transactions contemplated by the merger agreement will be consummated as
described in the merger agreement. J.P. Morgan relied as to all legal matters
relevant to rendering its opinion upon the advice of counsel.
J.P. Morgan's opinion is necessarily based on economic, market and
other conditions as in effect on, and the information made available to J.P.
Morgan as of, the date of the opinion. It should be understood that subsequent
developments may affect its opinion and that J.P. Morgan does not have any
obligation to update, revise or reaffirm its opinion. J.P. Morgan has expressed
no opinion herein as to the price at which M&T's stock will trade at any future
time.
In accordance with customary investment banking practice, J.P. Morgan
employed generally accepted valuation methods in reaching its opinion. The
following is a summary of the material financial analyses that J.P. Morgan
utilized in providing its opinion. Some of the summaries of financial analyses
are presented in tabular format. In order to understand the financial analyses
used by J.P. Morgan more fully, you should read the tables together with the
text of each summary. The tables alone do not constitute a complete description
of J.P. Morgan's financial analyses.
Offer Valuation: J.P. Morgan reviewed the terms of the proposed
merger, including the historical relationship between the stock prices of
Premier and M&T and the aggregate transaction value. J.P. Morgan also reviewed
the value of the consideration offered. M&T had offered a fixed value of
$21.00 per share of Premier's common stock. J.P. Morgan calculated that, based
on this proposal, Premier's common shareholders would receive a premium of
57.0% to the $13.375 closing price of Premier's common stock on July 7, 2000.
J.P. Morgan also calculated the premiums implied by the offer value to the
market prices of Premier's common stock on June 23, 2000 (ten days before
announcement of the transaction) and the average market price for the period
from May 25, 2000 to July 5, 2000 (30-day average price) and determined that
the implied premiums were 64.7% and 62.4%, respectively.
J.P. Morgan calculated that M&T's proposal implied the following
multiples:
<TABLE>
<CAPTION>
Premier basis Value
------------- -------
<S> <C>
Last twelve months GAAP earnings per share at March 31, 2000 16.7x
Last twelve months cash earnings per share at March 31, 2000 16.0x
Twelve months forward estimated GAAP earnings per share from March 31, 2000 (adjusted
I/B/E/S estimate) 14.8x
Twelve months forward estimated cash earnings per share from March 31, 2000 (adjusted
I/B/E/S estimate) 14.0x
Tangible book value as of March 31, 2000 2.45x
Tangible book premium to deposits 18.1%
</TABLE>
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I/B/E/S is a data service that monitors and publishes compilations of earnings
estimates by selected research analysts. Finally, J.P. Morgan determined that
the merger would result in Premier's shareholders owning approximately 4% of
the combined company immediately following the merger, based on their
prevailing stock prices on July 7, 2000.
Pro Forma Merger Analysis: J.P. Morgan analyzed pro forma earnings per
share forecasts for 2001 and 2002 based upon estimates provided by I/B/E/S and
management of the companies. Assuming transaction synergies phased in 100% in
2002, the analysis showed that the merger would be dilutive to M&T's GAAP
earnings per share in 2002 and accretive to M&T's cash earnings per share in
2002 based on M&T's share price on July 6, 2000. Under the same assumptions,
J.P. Morgan's analysis showed that there would be significant accretion to GAAP
earnings per share and cash earnings per share for the portion of Premier's
stock that would be exchanged for M&T stock.
Selected Transaction Analysis. Using publicly available information,
J.P. Morgan examined the following bank transactions, each of which had a value
greater than $200 million and was announced after January 1, 1999:
<TABLE>
<CAPTION>
Buyer Seller
-------------------------------- -----------------------------------
<S> <C>
M&T Bank Corporation Keystone Financial, Inc.
BancorpSouth Inc. First United Bancshares, Inc.
Wells Fargo Corporation First Security Corporation
North Fork Bancorporation, Inc. Dime Bancorp, Inc.
BB&T Corporation One Valley Bancorp, Inc.
Wells Fargo Corporation First Commerce Bancshares, Inc.
Carolina First Corporation Anchor Financial Corporation
Wells Fargo Corporation National Bancorp of Alaska, Inc.
Webster Financial Corp. MECH Financial, Inc.
First Charter Corporation Carolina First BancShares, Inc.
Wells Fargo Corporation Michigan Financial Corporation
Old Kent Financial Corporation Grand Premier Financial
North Fork Bancorporation, Inc. Reliance Bancorp, Inc.
Centura Banks, Inc. Triangle Bancorp, Inc.
North Fork Bancorporation, Inc. JSB Financial, Inc.
</TABLE>
J.P. Morgan calculated the median premiums represented by the purchase
price paid in the acquisitions announced in 1999 and those announced in 2000
and those transactions deemed to be in-market to the market price ten days
prior to announcement, to book value per share, to tangible book value per
share, to estimates of the next twelve months' projected earnings per share and
to core deposit premium. Based on a review of such information, J.P. Morgan
determined the following:
<TABLE>
<CAPTION>
Median for comparable transactions
-------------------------------------------------------------------------------
2000 YTD 1999 In-market
Premier (median) (median) (median)
------------------- --------------------- ------------------- --------------
<S> <C> <C> <C> <C>
10-day premium to market 64.7% 30% 22% 24%
Price to book value 2.37x 1.88x 2.08x 1.99x
Price to tangible book value 2.45x 2.01x 2.21x 2.16x
Price to 12-month forward est. EPS 14.8x 13.4x 16.9x 15.5x
Core deposit premium 18% 14% 22% 19%
</TABLE>
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J.P. Morgan also calculated a range of imputed values for a share of
Premier's common stock based on the ratios for the comparable transactions.
This analysis resulted in a range of imputed values for Premier's common stock
of between $15.94 and $24.34.
Discounted Cash Flow Analysis. Using a discounted cash flow analysis,
J.P. Morgan estimated the net present value of the future streams of after-tax
cash flows that Premier could produce on a stand-alone basis from 2000 through
2006 and distribute to Premier's shareholders. In this analysis, J.P. Morgan
used earnings estimates provided by Premier's management for 2000 and 2001 and
assumed that Premier's earnings grew thereafter at an annual rate ranging from
6% to 8%. J.P Morgan further assumed the tangible equity/tangible assets ratio
to be held constant at 8%. For each growth rate, J.P. Morgan calculated the sum
of: (i) the estimated 2000-2006 distributable income streams per share,
projected such that Premier's dividend payout ratio would be maintained at
44.8%, and discounted to present values at an assumed discount rate of 11%, and
(ii) the terminal values per share of Premier's common stock based on assumed
multiples of Premier's projected 2006 earnings ranging from 9.0x to 11.0x. This
discounted cash flow analysis indicated a reference range of $13.73 to $17.13
per share of Premier's common stock.
J.P. Morgan also used a discounted cash flow analysis to estimate the
net present value of transaction synergies assumed to result from the merger.
These synergies were assumed to produce cash flows resulting from: (i) 40% cost
savings, which were assumed to be phased in 25% in 2001 and 100% thereafter;
and (ii) a restructuring charge based on fully phased-in cost savings. The
transaction synergy cash flows were discounted to present values at an assumed
discount rate of 11%, and terminal values were based on assumed multiples of
projected 2006 transaction synergies ranging from 9.0x to 11.0x. This
discounted cash flow analysis indicated a reference range for total transaction
synergies of $4.68 to $5.25 per share of Premier's common stock.
This summary does not purport to be a complete description of the
analyses or data presented by J.P. Morgan. The preparation of a fairness
opinion is a complex process and is not necessarily susceptible to partial
analysis or summary description. J.P. Morgan believes that one must consider
its opinion, the summary and its analyses as a whole. Selecting portions of
this summary and these analyses, without considering the analyses as a whole,
would create an incomplete view of the processes underlying the analyses and
opinion. In arriving at its opinion, J.P. Morgan considered the results of all
of the analyses as a whole. No single factor or analysis was determinative of
J.P. Morgan's fairness determination. Rather, the totality of the factors
considered and analyses performed operated collectively to support its
determination. J.P. Morgan based its analyses on assumptions that it deemed
reasonable, including those concerning general business and economic conditions
and industry-specific factors. This summary sets forth under the description of
each analysis the other principal assumptions upon which J.P. Morgan based that
analysis. J.P. Morgan's analyses are not necessarily indicative of actual
values or actual future results that either company or the combined company
might achieve, which values may be higher or lower than those indicated.
Analyses based upon forecasts of future results are inherently uncertain, as
they are subject to numerous factors or events beyond the control of the
parties and their advisors. Accordingly, these forecasts and analyses are not
necessarily indicative of actual future results, which may be significantly
more or less favorable than suggested by those analyses. Therefore, none of
Premier, M&T, J.P. Morgan or any other person assumes responsibility if future
results are materially different from those forecasted. Moreover, J.P. Morgan's
analyses are not and do not purport to be appraisals or otherwise reflective of
the prices at which businesses actually could be bought or sold.
As a part of its investment banking business, J.P. Morgan and its
affiliates are continually engaged in the valuation of businesses and their
securities in connection with mergers and acquisitions, investments for passive
and control purposes, negotiated underwritings, secondary distributions of
listed and unlisted securities, private placements, and valuations for estate,
corporate and other purposes. Premier selected J.P. Morgan to advise it and
deliver a fairness opinion with respect to the merger on the basis of such
experience and its familiarity with Premier.
J.P. Morgan acted as financial advisor to Premier with respect to the
proposed merger with M&T and will receive a fee from Premier for its services
equal to the greater of (1) 0.56% of the aggregate purchase price paid in the
merger upon consummation of the merger or (2) $2.0 million. This fee will be
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<PAGE> 30
reduced by the $500,000 fee that J.P. Morgan received on public announcement of
the merger. Premier also agreed to reimburse J.P. Morgan for its reasonable
out-of-pocket expenses, including the fees and disbursements of counsel, and to
indemnify J.P. Morgan against certain liabilities, including liabilities which
might arise under the federal securities laws.
J.P. Morgan has in the past provided certain other services to Premier
and has received compensation for such services. In the ordinary course of
their businesses, J.P. Morgan and its affiliates may actively trade the debt
and equity securities of Premier or M&T for their own account or for the
accounts of customers and, accordingly, they may at any time hold long or short
positions in such securities.
KBW also acted as financial advisor to Premier with respect to the
proposed merger and will receive a fee from Premier for its services equal to
0.24% of the aggregate purchase price paid in the merger on consummation of the
merger. KBW was not asked to provide, and did not provide, an opinion to the
Premier Board with respect to whether the merger consideration to be paid to
Premier's shareholders was fair, from a financial point of view.
KBW has in the past provided certain other investment banking services
to Premier and has received compensation for such services. In the ordinary
course of their businesses, KBW and its affiliates may actively trade the debt
and equity securities of Premier or M&T for their own account or for the
accounts of customers and, accordingly, they may at any time hold long or short
positions in such securities.
TERMS OF THE MERGER
Under the terms of the merger agreement and applicable Delaware and
New York law, M&T will acquire Premier through the merger of Premier with and
into Olympia, a direct wholly owned subsidiary of M&T. The separate existence
of Premier will cease, and Olympia will continue as the surviving entity.
SHAREHOLDERS OF PREMIER COMMON STOCK WILL NOT BE ENTITLED TO STATUTORY
DISSENTERS' RIGHTS IN CONNECTION WITH THE MERGER. Immediately following the
merger, Premier Bank will merge with and into M&T Bank.
CONVERSION OF PREMIER COMMON STOCK; ALLOCATION AND PRORATION
PROCEDURES
When the merger becomes effective, each share of Premier common stock
issued and outstanding immediately prior to the completion of the merger will
automatically be converted into the right to receive, at the holder's election,
either (a) $21 in cash, without interest, or (b) that number of shares of M&T
common stock equal to the quotient (the "exchange ratio") obtained by dividing
$21 by the market value (as defined below) of M&T common stock, and cash
instead of fractional shares (collectively, the "merger consideration"). The
"market value" of M&T common stock means the average, for the ten trading days
immediately preceding the date on which the effective time of the merger
occurs, of the daily average of the high and low prices of such stock on the
New York Stock Exchange - Composite Transactions List (as reported by The Wall
Street Journal or, if not reported therein, another comparable authoritative
source). A Premier shareholder's receipt of either cash and/or stock, however,
is subject to the allocation and proration procedures in the merger agreement.
Under the terms of the merger agreement, Premier shareholders may
elect to convert their shares into M&T common stock, cash or a mixture of cash
and M&T common stock. The amount of cash and/or M&T common stock Shareholders
actually receive may differ from the amounts that they elect due to the
allocation and proration procedures in the merger agreement. Premier
shareholders may also choose not to indicate a preference for stock or cash and
make no election. The allocation and proration procedures in the merger
agreement provide that the number of shares of Premier common stock to be
converted into M&T common stock in the merger must equal 50% of the total
number of shares of Premier common stock issued and outstanding on July 9,
2000, the date of the merger agreement (15,799,535), less the total number
of shares of Premier common stock acquired by M&T or acquired by Premier and
not reissued as permitted by the merger agreement prior to the completion of
the merger (no shares as of December 8, 2000).
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<PAGE> 31
It is unlikely that Premier shareholders will make elections in the
exact proportions of stock and cash required by the merger agreement. As a
result, the merger agreement includes procedures to be followed if Premier
shareholders in the aggregate elect to receive more or less of the M&T common
stock than M&T has agreed to issue. These procedures are summarized below.
NO GUARANTEE CAN BE MADE THAT YOU WILL RECEIVE THE AMOUNTS OF CASH
AND/OR STOCK YOU ELECT. AS A RESULT OF THE ALLOCATION AND PRORATION PROCEDURES
AND OTHER LIMITATIONS IN THE MERGER AGREEMENT, YOU MAY RECEIVE M&T COMMON STOCK
OR CASH IN AMOUNTS THAT VARY FROM THE AMOUNTS YOU ELECT. CHANGES IN THE AMOUNT
OF CASH AND/OR STOCK YOU RECEIVE AS A RESULT OF THESE PROCEDURES WILL HAVE NO
IMPACT ON YOUR VOTE ON THE MERGER.
Because the number of shares of M&T common stock to be issued for each
share of Premier common stock is the quotient obtained by dividing $21 by the
average of the daily average of the high and low prices of M&T common stock for
the ten trading days before the merger becomes effective, the value of the M&T
common stock you will receive on completion of the merger may be more or less
than $21 per share of Premier common stock. There is a floating exchange ratio
for the shares of M&T common stock that will be issued in the merger. Therefore,
the number of shares of M&T common stock that you will receive is not fixed, but
will depend on the market value of the M&T common stock at the time it is
calculated. No assurance can be given as to what the market price of M&T common
stock will be if and when the merger is completed, and Premier shareholders are
advised to obtain current market quotations for the M&T common stock and the
Premier common stock. In addition, because the tax consequences of receiving
cash will differ from the tax consequences of receiving M&T common stock, you
should carefully read the information included below under "Certain Federal
Income Tax Consequences."
- IF STOCK IS OVERSUBSCRIBED:
If Premier shareholders making elections elect in the aggregate
to receive M&T common stock for more than the 50% of Premier
shares that the parties have agreed will be converted into M&T
common stock, then:
- All shares for which a cash election or no election has been
made will be converted into the right to receive cash.
- Shares for which an M&T common stock election has been made
will be converted into M&T common stock until M&T common
stock has been issued for 50% of the Premier common shares.
- Shares electing to receive M&T common stock in excess of 50%
of Premier common shares will be converted into cash.
Each shareholder's "stock election" shares will be reduced on a
pro rata basis. For example, if the actual percentage of
outstanding Premier shares electing to receive M&T common stock
is 75%, then approximately 33% of each Premier shareholder's
"stock election" shares will be converted into the right to
receive $21 per share in cash, with only the remaining 67% being
converted into M&T common stock.
- IF STOCK IS UNDERSUBSCRIBED:
If Premier shareholders making elections elect in the aggregate
to receive M&T common stock for fewer than the 50% of Premier
shares that the parties have agreed will be converted into M&T
common stock, then:
- All Premier shares for which a "stock election" has been
made will be converted into M&T common stock.
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<PAGE> 32
- If the number of Premier shares for which no election has
been made, when added to the number of "stock election"
shares, is equal to 50% or more of the Premier shares, then
enough "no election" shares will be converted into M&T
common stock to reach the 50% level; and the rest of the "no
election" shares and all cash elections will be converted
into the right to receive cash.
- If the number of Premier shares for which no election has
been made, when added to the number of "stock election"
shares, is less than 50% of the Premier shares, then all of
these "no election" shares will be converted into the right
to receive M&T common stock; enough "cash election" shares
will be converted into the right to receive M&T common stock
to reach, when combined with the "stock election" and "no
election" shares, the 50% level; and the rest of the "cash
election" shares will be converted into the right to receive
cash.
Allocation of your "no election" shares and "cash election"
shares between the right to receive cash and M&T common stock
will be done on a pro rata basis. This means that each Premier
shareholder will, as nearly as possible, have the same percentage
of his or her "no election" shares, and then, if necessary, any
"cash election" shares, converted into the right to receive cash
or M&T common stock as every other Premier shareholder who is in
the same circumstances.
If you submit a "mixed election" form, you will be treated as having
requested all cash for the shares for which you have elected cash and all stock
for the shares for which you have requested stock. Any pro rata percentage
reductions applied to elections of one form of consideration in order to
achieve the aggregate overall proportion of stock and cash required by the
merger agreement will be applied only to that number of shares for which you
have elected that form of consideration. For example, if you elect stock for
half your shares and cash for half your shares, and stock is oversubscribed,
you will receive cash for all your cash election shares, and your stock
election will be prorated. As a result, you will receive stock for less than
half your shares.
Notwithstanding these rules, in order that the tax opinions described
under "Certain Federal Income Tax Consequences" can be rendered, it may be
necessary for M&T to reduce the number of Premier common shares that will be
converted into the right to receive cash and correspondingly increase the
number of Premier common shares that will be converted into M&T common stock
above the number otherwise determined under the terms of the merger agreement.
If this is necessary, the allocation and proration procedures described above
will remain the same except that they will be based on this higher number of
Premier common shares to be converted into M&T common stock.
NO FRACTIONAL SHARES
Each holder of shares of Premier common stock who would otherwise have
been entitled to receive a fraction of a share of M&T common stock (after
taking into account all shares of Premier common stock owned by such holder)
will receive, instead of M&T common stock, cash in an amount equal to the value
of such fractional share based on the market value of M&T common stock. No such
holder will be entitled to dividends, voting rights or any other shareholder
rights in respect of such fractional share.
PREMIER EMPLOYEE STOCK OPTIONS AND STOCK OPTION APPRECIATION RIGHTS
M&T has agreed to assume each vested or unvested stock option or stock
appreciation right granted by Premier outstanding prior to the effective time
of the merger. Each Premier option or right assumed by M&T will continue to
have, and be subject to, the same terms and conditions set forth in the Premier
plan under which the option or right had been granted and as in existence
immediately prior to the effective time of the merger, except that (i) the
option or right will be exercisable (when vested) for (or, in the case of a
right, with respect to) that number of whole shares of M&T common stock equal
to the product of the number of shares of Premier common stock covered by the
option or right multiplied by the exchange ratio, except that any fractional
shares of M&T common stock resulting from this multiplication will be rounded
down to the nearest share and (ii) the exercise price per share of M&T common
stock will
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<PAGE> 33
be equal to the exercise price per share of Premier common stock divided by the
exchange ratio, except that such exercise price will be rounded up to the
nearest cent. The terms under which the Premier options and rights will be
assumed are subject to adjustment to reflect, among other things, increases or
decreases in the number of outstanding shares of M&T common stock to reflect
recapitalizations, reclassifications, stock dividends, stock splits and other
like changes in M&T's capitalization.
ELECTION PROCEDURES; SURRENDER OF STOCK CERTIFICATES
Along with this document, an election form is being mailed to
registered holders of shares of Premier common stock, together with other
customary transmittal materials, which specify that delivery will be effected,
and risk of loss and title to the certificates representing Premier common stock
will pass, only on proper delivery of certificates to the exchange agent,
currently EquiServe.
Each election form entitles registered holders of Premier common stock
to elect to receive cash, M&T common stock, or a combination of both as
outlined above. See "Conversion of Premier Common Stock."
TO MAKE AN EFFECTIVE ELECTION, YOU MUST SUBMIT A PROPERLY COMPLETED
ELECTION FORM TO THE EXCHANGE AGENT ON OR BEFORE THE ELECTION DEADLINE, WHICH
HAS BEEN SET AS 5:00 P.M., NEW YORK TIME, ON JANUARY 29, 2001. An election form
will be deemed properly completed only if accompanied by one or more stock
certificates representing all shares of Premier common stock covered by such
election form (or an appropriate guarantee of delivery), together with the duly
executed transmittal materials included in the election form. Premier
shareholders whose shares are held by nominees or brokers will receive
instructions from them regarding the election, and the nominee or broker will
complete the election form on behalf of the shareholders. An election form with
respect to the Premier shares held in the Premier Dividend Investment and Stock
Purchase Plan will be completed by the Plan Administrator in accordance with
instructions, if any, received from Plan participants. Premier shareholders may
change their election at any time prior to the election deadline by written
notice, accompanied by a properly completed and signed revised election form,
received by the exchange agent prior to the election deadline or by withdrawal
of their stock certificates (or guarantee of delivery) prior to the election
deadline. All elections will be revoked automatically if the exchange agent is
notified by M&T and Premier that the merger agreement is terminated.
If certificates for Premier common stock are not immediately
available, or time will not permit the election form and other required
documents to reach the exchange agent prior to the election deadline, Premier
shares may be properly exchanged if (i) such exchanges are made by or through a
member firm of a registered national securities exchange or of the National
Association of Securities Dealers, Inc., or by a commercial bank or trust
company having an office, branch or agency in the United States; (ii) the
exchange agent receives, prior to the election deadline, a properly completed
and duly executed Notice of Guaranteed Delivery substantially in the form
provided with the accompanying form (delivered by hand, mail, telegram, telex or
facsimile transmission); and (iii) the exchange agent receives, within three
business days after the election deadline, the certificates for all exchanged
Premier shares, or confirmation of the delivery of all such certificates into
the exchange agent's account with the Depository Trust Company in accordance
with the proper procedures for such transfer, together with a properly
completed and duly executed election form and any other documents required by
the election form.
Premier shareholders who do not submit a properly completed election
form or revoke their election form prior to the election deadline and do not
thereafter deliver a properly completed election form will have their shares of
Premier common stock designated as "no election" shares for purposes of the
allocation procedures described above. See "Conversion of Premier Common
Stock." Premier stock certificates represented by elections that have been
revoked will be promptly returned without charge to the Premier shareholder
submitting the election form upon written request. Subject to the merger
agreement and the election form, the exchange agent will have reasonable
discretion to determine whether any election, revocation or change has been
properly or timely made and to disregard immaterial defects in any election
form, and any good faith decisions of the exchange agent will be binding and
conclusive. After the completion of the merger, the exchange agent will
allocate cash and M&T common stock among the
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<PAGE> 34
shareholders of Premier common stock according to the allocation procedures
outlined above, and will transmit the merger consideration to the registered
holders as soon as practicable.
After the completion of the merger, the exchange agent will mail to
shareholders who did not submit election forms a letter of transmittal,
together with instructions for the exchange of their Premier common stock
certificates for the merger consideration, which should be mailed promptly.
Until so exchanged, each certificate representing shares of Premier common
stock that have been converted into shares of M&T common stock will be deemed
for all purposes to evidence ownership of the number of shares of M&T common
stock (if any) into which such shares have been converted, except that no
dividends or other distributions declared after the completion of the merger
with respect to M&T common stock will be paid to the holder of any
unsurrendered certificate until the holder surrenders that certificate.
Premier shareholders will not be entitled to change the amount of M&T
common stock and/or cash allocated to them in accordance with the merger
agreement. Nevertheless, Premier shareholders having a preference as to the
form of merger consideration to be received in exchange for their shares of
Premier common stock should make an election, because shares as to which an
election has been made will be given priority in allocating the merger
consideration over shares as to which no election is made. No one is making any
recommendation as to whether shareholders should elect to receive cash or M&T
common stock in the merger. Each holder of Premier common stock must make his
or her own decision with respect to such election.
REPRESENTATIONS AND WARRANTIES; CONDITIONS TO THE MERGER; WAIVER
Articles 2 and 3 of the Agreement and Plan of Reorganization contain
representations and warranties by M&T and Premier regarding various legal,
financial, business and regulatory matters. The representations and warranties
will not survive after the merger except to the limited extent provided for in
the merger agreement.
The respective obligations of M&T, Olympia and Premier to complete the
merger are subject to the fulfillment of the following conditions:
- obtaining the approval of the merger by the requisite vote of the
shareholders of Premier;
- receipt of all required regulatory approvals, expiration of all
notice and waiting periods required after the grant of any such
approvals and the satisfaction of all pre-consummation conditions
contained in any such approval. However, no such approval may
have imposed any condition or requirement which, in the
reasonable opinion of the Board of Directors of M&T or Premier,
so materially and adversely affects the anticipated economic and
business benefits to M&T or Premier, respectively, of the
transactions contemplated by the merger agreement as to render
consummation of such transaction inadvisable. In the merger
agreement, each of M&T and Premier represented that at the date
of the merger agreement, it was not aware of any reason that this
regulatory condition would not be satisfied without the
imposition of any such material adverse conditions. While no
assurances can be given, neither M&T nor Premier is aware of any
such reason as of the date of this document;
- the effectiveness of the registration statement of which this
document forms a part, and the absence of any threatened or
pending proceeding by the Securities and Exchange Commission to
suspend the effectiveness of the registration statement;
- receipt of all state securities "Blue Sky" permits or other
authorizations, or confirmations as to the availability of an
exemption from registration requirements as may be necessary;
- receipt of all third-party consents or waivers required in
connection with the merger under agreements to which Premier or
any subsidiary of Premier is a party, unless the failure to
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<PAGE> 35
obtain any such consents or waivers, individually or in the
aggregate, would not have a material adverse effect on Premier;
- the absence of any court or agency order prohibiting completion
of the transactions contemplated by the merger agreement;
- approval for listing on the NYSE of the shares of M&T common
stock to be issued in the merger;
- receipt by M&T and Premier of the tax opinions described in
"Certain Federal Income Tax Consequences";
- the material accuracy of the representations and warranties of
the other party to the merger agreement;
- material compliance by the other party with all covenants
required to be performed at or prior to the closing date;
- receipt of customary officer's certificates as to the preceding
two items; and
- in the case of Premier's obligation to complete the merger, T.
Jefferson Cunningham III's election to the Boards of M&T and M&T
Bank as of the effective date of the merger, and the continued
effectiveness of the consulting agreement entered into between
M&T and Mr. Cunningham (unless terminated according to its
terms).
Except with respect to any required shareholder or regulatory approval
and certain other conditions described below, M&T and Premier, respectively,
may at any time, whether before or after approval of the merger agreement by
the shareholders of Premier, extend the time for the performance of any of the
obligations or other acts of Premier, on the one hand, or M&T or Olympia, on
the other hand, and may waive any inaccuracies in the representations or
warranties made by the other party, compliance with any of the covenants,
undertakings or agreements of such party, or satisfaction of any of the
conditions precedent to its obligations, or the performance by such other party
of any of its obligations set out in the merger agreement. No waiver executed
after approval of the shareholders of Premier may change the amount or kind of
merger consideration. Certain conditions to the consummation of the merger
cannot be waived as a matter of law, including the existence of an effective
registration statement, the absence of a government order enjoining or
prohibiting consummation of the merger or any other transaction contemplated by
the merger agreement and the receipt of any required "Blue Sky" permits or
other authorizations.
REGULATORY APPROVALS NEEDED TO COMPLETE THE MERGER
The merger is subject to the approval of the Board of Governors of the
Federal Reserve System (the "Federal Reserve") under the Bank Holding Company
Act and the New York State Banking Board under the New York State Banking Law.
The merger of Premier Bank into M&T Bank (the "bank merger") is subject to the
approval of the Federal Reserve under the Bank Merger Act and the Federal
Reserve Act. The bank merger also is subject to the approval of the New York
State Banking Board under the New York State Banking Law. In addition, Premier
Bank must give notice to the Office of the Comptroller of the Currency in order
to facilitate the termination of Premier Bank's status as a national banking
association. All of the applications and notices required to be filed with the
relevant state and federal agencies described above have been filed.
On September 8, 2000, the Federal Reserve approved the applications
under the Bank Holding Company Act, the Bank Merger Act and the Federal Reserve
Act. The Federal Reserve's approvals did not impose any burdensome conditions
or requirements on M&T. In considering whether to approve the merger under the
New York Banking Law, the New York State Banking Board will generally consider
factors similar
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<PAGE> 36
to those considered by the Federal Reserve under the Bank Holding Company Act
and the Bank Merger Act, including whether the transaction is consistent with
adequate or sound banking, the competitive effects of the transaction, and the
public interest and the needs and convenience thereof. The Banking Board will
also consider the institutions' performance under the New York State equivalent
of the federal Community Reinvestment Act.
Neither M&T nor Premier is aware of any governmental approvals or
actions that are required for completion of the merger and the bank merger
except as described above. Should any such approval or action be required, it
is presently contemplated that such approval or action would be sought. M&T and
Premier will not complete the merger and the bank merger in the absence of the
receipt of all required regulatory approvals and the expiration of all related
waiting periods, and there can be no assurance that all such approvals will be
obtained. Further, even if the merger is approved, there can be no assurance as
to the date of such approvals, or that such approvals will not be conditioned
on matters that would cause the Premier Board or the M&T Board to abandon the
merger. However, as of the date of this document, neither M&T nor Premier is
aware of any reason why these approvals would be denied or such condition
imposed. Likewise, there is a risk that there will be legal challenges to the
merger or the bank merger, including attempts by the Department of Justice or
any state attorney general to challenge these transactions on antitrust
grounds, and if such a challenge is made, that the challenge will succeed. See
"Representations and Warranties; Conditions to the Merger; Waiver" and
"Effective Date of the Merger; Terminating the Agreement."
The approval of any application merely implies satisfaction of
regulatory criteria for approval, which do not include a review of the merger
from the standpoint of the adequacy of the consideration that Premier
shareholders are to receive. Furthermore, regulatory approvals do not
constitute an endorsement or recommendation of the merger.
COVENANTS; CONDUCT OF BUSINESS PENDING THE MERGER
Under the terms of the merger agreement, M&T, Premier and Olympia have
each agreed to use its reasonable best efforts in good faith to obtain as soon
as practicable all consents and approvals of any persons necessary or desirable
for the consummation of the merger and the bank merger, including the requisite
approvals of Premier shareholders and all requisite regulatory approvals. None
of M&T, Premier or Olympia may take any action that would substantially impair
the prospects of completing, or would materially delay, the merger or that
would adversely affect the desired income tax consequences of the merger.
The merger agreement provides that Premier will, and will cause each
of its subsidiaries to, use its reasonable best efforts to preserve in all
material respects its properties, business and relationships with customers,
employees and others and to carry on its respective business in the usual,
regular and ordinary course in substantially the same manner as conducted prior
to the execution of the merger agreement. In addition, Premier may not, without
the prior written consent of M&T, except as otherwise provided in the merger
agreement, increase the compensation or fringe benefits of its directors,
officers or employees except in a manner consistent with past practice or as
required by law or contractual obligation in effect as of the date of the
merger agreement; declare or pay any dividends or other distributions on
capital stock other than its regular quarterly cash dividend on Premier common
stock in an amount not in excess of $0.15 per share, except that Premier may
pay dividends at the current level on a pro rata basis for any period less than
a calendar quarter up to the effective date of the merger (provided that
Premier deducts the pro rata portion of any dividend in respect of M&T common
stock for the same period that the holder of Premier common stock would
otherwise receive); or take other specified actions, other than in the ordinary
course of business, that might impact its financial condition or business.
Article 4 of the Agreement and Plan of Reorganization also includes additional
covenants applicable in the period between signing and closing.
In addition, the merger agreement provides that neither Premier nor
its subsidiaries or any of its officers, directors, employees or agents may
directly or indirectly solicit, initiate or encourage any inquiries relating
to, or the making of any proposal which would constitute, a "takeover proposal"
(as defined below). The merger agreement also provides that, except to the
extent legally required for the discharge of
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<PAGE> 37
the fiduciary duties of the Premier Board, Premier, its subsidiaries or any of
these individuals may not recommend or endorse any takeover proposal, or
participate in any discussions or negotiations, or provide third parties with
any nonpublic information, relating to any such inquiry or proposal, or
otherwise facilitate any effort or attempt to make or implement a takeover
proposal. The merger agreement allows Premier to communicate information about
a takeover proposal to its shareholders if, in the judgment of the Premier
Board, based on the advice of outside counsel, that communication is required
under applicable law. Premier has agreed to notify M&T immediately if any such
inquiries or takeover proposals are received by, any such information is
requested from, or any such negotiations or discussions are sought to be
initiated or continued with, Premier. The merger agreement defines a "takeover
proposal" as any tender or exchange offer, proposal for a merger, consolidation
or other business combination involving Premier or any subsidiary of Premier or
any proposal or offer to acquire in any manner a substantial equity interest
in, or a substantial portion of, the assets of Premier or any subsidiary of
Premier other than the transactions contemplated or permitted by the merger
agreement or the stock option agreement.
AMENDING THE AGREEMENT
M&T and Premier may amend the merger agreement at any time by mutual
written agreement, except that after approval by the shareholders of Premier,
no waiver or amendment may change the amount and kind of merger consideration.
EFFECTIVE DATE OF THE MERGER; TERMINATING THE AGREEMENT
The effective date will be the date and time as described in the
certificates of merger that are to be delivered and filed on the closing date
with the Delaware Secretary of State and the New York Department of State
according to the respective laws of Delaware and New York. The closing date
will be on a date between January 2, 2001 and February 15, 2001, determined by
M&T with five days' prior notice to Premier, or if later, the first business
day following the satisfaction of the conditions to the consummation of the
merger (other than conditions to be satisfied at closing).
M&T and Premier expect that the merger will be completed during
February 2001. However, consummation of the merger could be delayed as a result
of delays in obtaining the requisite regulatory approvals or the satisfaction of
the closing conditions. There can be no assurance as to whether or when such
approvals will be obtained or that the merger will be completed. See "Regulatory
Approvals Needed to Complete the Merger."
The merger agreement may be terminated, either before or after
approval by the shareholders of Premier:
- by the mutual consent in writing of M&T and Premier;
- by either party if the other party has breached any covenant,
agreement, representation or warranty contained in the merger
agreement, if such breach has not been cured within 30 days after the
date on which written notice of the breach is given by the party
seeking to terminate and the materiality of the breach would excuse the
terminating party's obligation to complete the merger;
- by either party if any application for regulatory approval has been
finally denied and the time period for appeals and requests for
reconsideration has expired, or if a court or agency has issued a
final, non-appealable order enjoining or otherwise prohibiting the
merger;
- by either party if the shareholders of Premier do not approve the
merger;
- by either party if the closing has not occurred by June 30, 2001
unless the failure of the closing to occur by such date is due to the
failure of the party seeking to terminate to perform or observe the
covenants and agreements in the merger agreement;
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- by Premier, on its execution of a definitive agreement relating to a
takeover proposal; provided that (1) Premier has complied with its
obligations in connection with such a takeover proposal under the
merger agreement, (2) the Premier Board has determined, after having
received the advice of outside counsel and Premier's financial
advisors, that such action is necessary for the Premier Board to comply
with applicable law, and (3) concurrently with its notification of
termination, Premier pays M&T $24 million, less certain amounts, if
any, provided in the merger agreement, whereupon the option granted to
M&T by Premier under the stock option agreement will expire; and
- by Premier if there is a "change in control" of M&T, which is defined
in the merger agreement to mean any business combination involving M&T
following which the M&T shareholders immediately before such business
combination own less than 60% of the shares of the surviving entity.
MANAGEMENT AND OPERATIONS AFTER THE MERGER
BOARD OF DIRECTORS; MANAGEMENT
The merger agreement provides that, following the merger, those
persons serving as directors of M&T and Olympia immediately prior to the
effective date will continue as directors of those respective entities, except
that, as of the effective date, the M&T Board will elect T. Jefferson
Cunningham III as a member of the M&T Board. Subject to its fiduciary duty, the
M&T Board will nominate Mr. Cunningham for re-election as a member of M&T's
Board in each of the next three succeeding years. See "Interests of Directors
and Officers in the Merger That Are Different from Your Interests."
The merger agreement also provides that, following the consummation of
the merger, Premier Bank will be merged with and into M&T Bank and Mr.
Cunningham will be appointed to the Board of Directors of M&T Bank. Subject to
the fiduciary duty of the Board of M&T Bank, M&T will cause the Board of M&T
Bank to nominate Mr. Cunningham for re-election as a director of M&T Bank in
each of the next three succeeding years.
As provided in the Keystone merger agreement, as of October 6, 2000,
the M&T and M&T Bank Boards elected Carl L. Campbell, the chairman, president
and chief executive officer of Keystone, and Donald Devorris, Daniel R.
Hawbaker, Richard G. King and Stephen G. Sheetz, as members of the M&T Board
and M&T Bank Board. Mr. Campbell was also elected Vice Chairman of M&T and M&T
Bank. The following tables sets forth certain information about these directors:
<TABLE>
<CAPTION>
Name, Age, Principal
Occupation During The Past Shares Beneficially Owned Percent of Common Stock
Five Years (1) (2) (3) Outstanding (1)
-------------------------------- ---------------------------- ----------------------------
<S> <C> <C>
Carl L. Campbell; Age 57; 295,301 (6)
Chairman and Chief Executive
Officer of Keystone
Donald Devorris; Age 66; 50,947 (4) (6)
President of Blair Electric
Service Co., Blair Sign Co.,
Inc., Blair Design &
Construction Co., and
Electrical Construction
Service, Inc.
Daniel R. Hawbaker; Age 61; 5,220 (6)
President of Glenn O. Hawbaker, Inc.
Richard G. King; Age 56; 11,783 (6)
President of UTZ Quality
Foods, Inc.
Stephen G. Sheetz; Age 52; 8,464 (5) (6)
Chairman of the Board of Sheetz, Inc.
</TABLE>
-------------------------------
(1) As of November 22, 2000.
(2) Includes the following shares subject to options resulting from the
conversion of existing options granted under stock option plans maintained
by Keystone and assumed by M&T in connection with the Keystone merger, all
of which are currently exercisable: Mr. Campbell - 239,167 shares, Mr.
Devorris - 12,654 shares, and Mr. King - 4,822 shares.
(3) Includes the following shares subject to phantom stock units resulting from
the conversion of existing phantom stock units received under a director
fee plan maintained by Keystone and assumed by M&T in connection with the
Keystone merger: Mr. Devorris - 1,356 shares, Mr. Sheetz - 1,980 shares,
Mr. King - 2,368 shares, and Mr. Hawbaker - 103 shares.
(4) Includes (i) 3,250 shares jointly held with Mr. Devorris' spouse and (ii)
6,635 shares owned by a corporation controlled by Mr. Devorris.
(5) Includes 185 shares held by Mr. Sheetz as the trustee for Kathleen
Sheetz.
(6) Less than 1%.
The merger agreement further provides that ten members of the Premier
Board will be appointed as members of the Hudson Valley Advisory Board of M&T
Bank and that Mr. Cunningham will be elected Chairman of such Advisory Board.
See "Interests of Directors and Officers in the Merger That Are Different from
Your Interests - Membership on Boards of Directors and Advisory Boards After
the Merger."
While certain officers currently employed by Premier, mainly those in
branch management and commercial lending positions, are expected to hold
similar positions with the combined company, senior management responsibility
for almost all of Premier's current business lines and operations is expected
to be assumed by individuals who are currently M&T personnel.
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<PAGE> 39
Information regarding the current directors of M&T and Premier is
included in documents incorporated in this document by reference. See "WHERE
YOU CAN FIND MORE INFORMATION" and "DOCUMENTS INCORPORATED BY REFERENCE."
OPERATIONS
M&T believes that the merger will allow M&T to enhance its position in
upstate New York, especially in the mid-Hudson Valley, where the combined
company will rank first in deposit share. M&T estimates that, once operations
are fully integrated, the merger will produce annual pre-tax savings of
approximately $19 million. These estimated savings are expected to be achieved
in the area of back office operations and through the consolidation of offices
and line personnel in areas where the two companies' markets overlap. These
estimated cost savings do not take into account various expenses associated
with the merger and with combining the companies' operations, including an
estimated $15.6 million in after-tax merger-related charges and purchase price
adjustments. M&T also believes that the merger will provide Premier customers
with a greater range of products and services than is currently available to
them.
EMPLOYEES
On completion of the merger, all persons employed by Premier or any of
its subsidiaries whose employment is continued by M&T will be employed on terms
and conditions (including benefits) which in the aggregate are no less favorable
(as determined by M&T in its reasonable discretion and good faith after
consultation with Premier) with respect to their employment by M&T and its
subsidiaries after the merger than those generally afforded to other employees
of M&T holding similar positions, subject to the terms and conditions under
which those employee benefits are made available to such employees. For purposes
of determining eligibility for and vesting of such employee benefits only (and
not for pension benefit accrual purposes), determining levels of short-term
disability benefits, vacation benefits and severance benefits under any
severance pay arrangement and, if applicable, for purposes of satisfying any
waiting periods concerning preexisting conditions, service with Premier or a
subsidiary of Premier or any predecessor thereto prior to the merger will be
treated as service with an "employer" to the same extent as if such persons had
been employees of M&T. In addition, co-payments and expenses paid by employees
of Premier and its affiliates under Premier's plans that provide medical
benefits will be treated as if paid under M&T's plans that provide medical
benefits for purposes of satisfying co-payment and deductible requirements. M&T
will provide employees or former employees of Premier or its subsidiaries with
post-retirement medical benefits on the same basis as those provided to new
hires at M&T. M&T has agreed to honor, or to cause the appropriate subsidiaries
of M&T to honor, in accordance with their terms, all employment, severance and
employee benefit plans, contracts, agreements, arrangements and understandings
of Premier or any of its subsidiaries as provided in the merger agreement. M&T
may, however, amend or terminate any such plan, contract, agreement, arrangement
or understanding in accordance with its terms and applicable law. Pursuant to
its terms, Premier's Change in Control Severance Pay Plan may not be amended in
a manner adverse to covered employees (without their consent) for the 18 month
period immediately following the merger.
The continued coverage of the Premier employees under the employee
benefit plans maintained by Premier and/or any Premier subsidiary immediately
prior to the merger during a transitional period of no more than six months will
be deemed to provide the Premier employees with benefits that are on the same
basis as those offered to other employees of M&T and any M&T subsidiary, unless
after the merger there is a material reduction (determined on an overall basis)
in the benefits provided under the Premier employee benefit plans.
In addition, Premier has reserved the right to amend the Fishkill
National Corporation Incentive Stock Option Plan to remove any transfer
restrictions on shares previously issued on exercise of options under the plan
and to eliminate its right of first refusal on any sale of those shares. Premier
does not intend to eliminate the restrictions in the Fishkill plan with respect
to an aggregate of 49,194 shares owned by T. Jefferson Cunningham III, Paul S.
Mack and Paul A. Maisch.
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Premier has also reserved the right to amend all of its qualified
pension plans so as to cause all participants in such plans who are employed on
the closing date of the merger to become fully vested in their accrued benefits
under such plans as of the closing date. Such accelerated vesting will apply to
two executive officers, Ronald M. Bentley and Ian C. Lucy.
M&T has also agreed to honor Premier's Change in Control Severance Pay
Plan, under which employees who are terminated in connection with the merger,
either at the company's request or for "good reason," are entitled to salary and
benefits continuation for, depending on title level and years of service, a
minimum of 3 weeks and a maximum of 104 weeks (although benefits continuation is
limited to 12 months). Employees whose continuation period extends beyond 26
weeks will draw salary and benefits beyond that time only to the extent not
offset by their then pay and benefits from another employer.
INTERESTS OF DIRECTORS AND OFFICERS IN THE MERGER THAT ARE DIFFERENT FROM YOUR
INTERESTS
In considering the recommendation of the Premier Board that you vote
in favor of approving and adopting the merger agreement, you should be aware
that some Premier executive officers and directors have interests in the merger
with M&T that are different from, or in addition to, your interest as a
shareholder generally. The Premier Board knew about these additional interests,
and considered them, in making its decisions to approve the merger agreement
and to recommend approval and adoption of the merger agreement to you.
CONSULTING AGREEMENT WITH M&T
In connection with the signing of the merger agreement, M&T entered
into a five-year consulting agreement with T. Jefferson Cunningham III, the
current chairman and chief executive officer of Premier. M&T will pay Mr.
Cunningham at the annual rate of $125,000 during the term of the agreement. M&T
will reimburse Mr. Cunningham for his expenses and will provide him with an
office, a car and administrative services and with life insurance coverage
substantially equivalent to that provided to senior executive officers of M&T.
The consulting agreement also provides for the establishment of a nonqualified
supplemental retirement plan ("SERP") that will provide Mr. Cunningham a
retirement benefit determined using the same retirement benefit formula as
under M&T's tax-qualified defined benefit pension plan but determined without
applying certain tax code limits on compensation and benefits that are required
to satisfy tax-qualified plan requirements. Mr. Cunningham will receive credit
under the SERP for his 16 years of service as a director and executive officer
of Premier and will be treated as having "average annual compensation" of
$360,000 for purposes of calculating benefits. Mr. Cunningham has agreed that,
for a period of one year from the effective date of the merger, he will not
knowingly engage in the direct solicitation of loans or deposits of commercial
customers of Premier on the effective date.
EXISTING EMPLOYMENT AND CHANGE IN CONTROL AGREEMENTS
Mr. Cunningham currently is party to an employment agreement with
Premier that provides for, among other things, the payment of severance benefits
to Mr. Cunningham in the event of his termination of employment following a
"Triggering Event" (which is defined to include a change in control). In
connection with the merger, Mr. Cunningham has entered into an agreement with
Premier and M&T pursuant to which he will resign as of the effective date of the
merger and will be paid a severance benefit of $685,000 in full satisfaction of
Premier's severance obligations under Mr. Cunningham's employment agreement. In
addition, Mr. Cunningham will be entitled to receive retirement benefits of
$60,000 a year and continued medical benefits for 10 years under an existing
supplemental retirement agreement.
John Charles VanWormer has entered into a three-year employment
agreement with Premier expiring June 30, 2003. His present annual base salary is
$250,000. If his employment terminates in connection with a "change in control,"
Mr. VanWormer is entitled to a lump sum cash payment equal to the sum of (1) his
base salary as of the date of termination through the expiration of the
employment agreement, and (2) his annual base salary as of the date of
termination as well as medical and life insurance benefits for a two-year period
following the termination and payment of $27,500 per year under his supplemental
executive income plan commencing at age 65. Under the agreement, any payments or
benefits to which Mr.
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VanWormer is entitled following a termination of his employment in connection
with a change in control will be limited in accordance with the maximum amount
payable without loss of deductibility under the golden parachute provisions of
the Internal Revenue Code. This maximum amount is computed on the basis of
compensation during the five calendar years preceding termination. Assuming Mr.
VanWormer's compensation in calendar year 2000 is $250,000, he would be entit
led under these provisions to receive a maximum payment of up to approximately
$645,000 on termination in connection with the merger, plus the continued
medical and life insurance and payments under his supplemental executive income
plan. If Mr. VanWormer's compensation in calendar year 2000 reached
approximately $726,000 -- for example, if he were to exercise non-qualified
stock options covering Premier common stock prior to the end of calendar year
2000 -- he would be entitled to receive approximately $854,000 on termination
plus the medical, life insurance and supplemental executive income plan
benefits described above. If Mr. VanWormer wishes to do so, rather than accept
the change in control payment he would be entitled to receive after the merger
becomes effective, he may terminate his current employment agreement prior to
that time and receive the severance to which he would be entitled under the
current contract if his employment was terminated by Premier without "just
cause." Although Premier is not obligated to do so, it is authorized under the
merger agreement to enter into a new employment agreement with Mr. VanWormer,
providing annual compensation of $250,000 and incentives, benefits, perquisites
and other material terms comparable to executives at M&T at comparable salary
levels.
Premier also has entered into employment agreements with six other
executive officers: Paul A. Maisch, Robert P. Apple, Ian C. Lucy, Robert M.
Bentley, George Elferink and Paul S. Mack. Premier also is party to a consulting
agreement with Peter Van Kleeck, formerly President and Chief Executive Officer
of Premier and currently Vice Chairman of the Board of Directors of Premier.
Each of these agreements provides, under certain circumstances, severance
payments or benefits in the event of a change in control of Premier. M&T has
agreed to honor, in accordance with their terms, all of Premier's employment
agreements with Mr. VanWormer. In addition, the merger will be deemed to
constitute a change in control for purposes of these agreements and each of
Messrs. Apple, Lucy, Mack and Maisch will be deemed to have "good reason" or to
have experienced a "triggering event" under their respective employment
agreements allowing the individual to terminate employment and receive severance
benefits.
Pursuant to their agreements with Premier, Messrs. Van Kleeck, Maisch,
Apple, Lucy, Bentley, Elferink and Mack would be entitled to payments of
approximately $300,000, $392,500, $175,500, $624,000, $262,500, $159,000, and
$262,000, respectively, in the event their respective employment (or consulting
arrangement in the case of Mr. Van Kleeck) is terminated in connection with the
merger.
Each director of Premier who has completed five years of service and is
not an executive officer is entitled to receive upon normal retirement at age 70
(or at an earlier date if the director is terminated at the request of or with
the consent of the Board of Directors after completing five years of credited
service) a lump sum equal to $5,000 for every year of credited service up to a
maximum of $75,000. On a change in control, each director has a vested right to
receive upon termination of service as a Board member a lump sum equal to $5,000
for each year of credited service, subject to the $75,000 maximum.
Five directors of Premier, including T. Jefferson Cunningham III, have
deferred their past director's fees through November 30, 2000, and will receive
an aggregate of $537,263, due on the effective date of the merger, based on the
$21 per share merger consideration.
MEMBERSHIP ON BOARDS OF DIRECTORS AND ADVISORY BOARDS AFTER THE MERGER
Under the merger agreement, M&T has agreed that, as of the date the
merger is completed, it will elect T. Jefferson Cunningham III as director of
M&T and also cause him to be elected as a director of M&T Bank and, subject to
the fiduciary duty of the Boards of M&T and M&T Bank, nominate Mr. Cunningham
for re-election to the Boards of M&T and M&T Bank in each of the succeeding
three years.
In addition, M&T has agreed to appoint ten members of the Premier
Board, for a period of not less than 24 months after the merger, to serve on
the Hudson Valley Advisory Board of M&T Bank. This Advisory Board advises M&T
Bank on business conditions and opportunities in the Hudson Valley region and
other matters reasonably or customarily requested of such a board by M&T Bank.
Mr. Cunningham
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will be appointed chairman of this Advisory Board. M&T has agreed that, during
this 24-month period, members of the Hudson Valley Advisory Board will be paid
fees for their participation as advisory directors. Advisory Board members who
satisfy the attendance requirements set forth in the merger agreement will
receive a $2,600 retainer fee and a fee of $250 for each Advisory Board meeting
they attend.
INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS
The merger agreement provides that, following the completion of the
merger, M&T will indemnify, to the fullest extent permitted by law, any
then-current or former Premier director or officer for any claims or lawsuits
against them that relate to:
- their status as an employee, officer or director of Premier or its
subsidiaries, or
- the merger agreement, the stock option agreement or any
transaction contemplated by those agreements.
M&T has also agreed that any rights to indemnification, or limitations
on liability, that currently exist in the certificate of incorporation or
bylaws or agreements of Premier or its subsidiaries in favor of any of the
employees, officers or directors of Premier or its subsidiaries will continue
unchanged and will be honored for six years after the merger is completed.
M&T has further agreed that, for at least four years after the merger,
it will use its reasonable best efforts to cause Premier directors and officers
to continue to be covered by Premier's existing directors and officers liability
insurance policy or an equivalent policy, except that M&T will not be required
to spend more than 200% of Premier's current premium to secure this coverage.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the anticipated material U.S. federal
income tax consequences of the merger to a holder of Premier common stock. This
discussion is based on laws, regulations, rulings and judicial decisions as
they exist on the date of this document. These authorities are all subject to
change and any such change may be made with retroactive effect.
This discussion is not a complete description of the U.S. federal
income tax consequences of the merger and may not apply to a holder subject to
special treatment under the Internal Revenue Code of 1986, as amended, such as
to a holder that is
- a financial institution,
- an insurance company,
- a dealer in securities or foreign currencies,
- a trader in securities,
- a tax-exempt organization,
- a person who holds shares of Premier common stock in an
individual retirement account (IRA), 401(k) plan or similar
tax-favored account,
- a person who acquired shares of Premier common stock on exercise
of an employee stock option or otherwise as compensation, or
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- a person who holds shares of Premier common stock as part of a
hedge, straddle, conversion or constructive sale transaction.
In addition, this discussion applies only to a holder of Premier common stock
who is holding such stock as a capital asset and who is a U.S. person (as
defined in Section 7701(a)(30) of the Internal Revenue Code). No ruling will be
requested from the Internal Revenue Service regarding the tax consequences of
the merger. Moreover, the opinions of counsel described in this discussion are
not binding on the Internal Revenue Service, and none of those opinions would
prevent the Internal Revenue Service from challenging the U.S. federal income
tax treatment of the merger. In addition, this discussion does not address the
state, local or foreign tax consequences of the merger.
BECAUSE OF THE COMPLEXITIES OF THE TAX LAWS IN GENERAL, AND THE
COMPLEXITIES OF THE TAX CONSEQUENCES ASSOCIATED WITH THE RECEIPT OF CASH IN THE
MERGER IN PARTICULAR, YOU SHOULD CONSULT YOUR TAX ADVISOR WITH RESPECT TO THE
FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF THE MERGER AS THEY APPLY
TO YOUR SPECIFIC SITUATION.
In connection with the filing with the Securities and Exchange
Commission of the registration statement of which this document is a part,
Arnold & Porter, special counsel to M&T, and Milbank, Tweed, Hadley & McCloy
LLP, special counsel to Premier, have delivered their respective opinions
addressing the U.S. federal income tax consequences of the merger described
below. These opinions are based upon facts, representations and assumptions set
forth or referred to in each opinion. In rendering these opinions, Arnold &
Porter and Milbank Tweed have relied on representations and facts provided by
M&T and Premier. These opinions are to the effect that the merger will be
treated as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code and that:
- Premier, M&T and Olympia will each be a party to the
reorganization within the meaning of Section 368(b) of the
Internal Revenue Code;
- No gain or loss will be recognized by M&T, Olympia or Premier as
a result of the merger (except for amounts resulting from any
required change in accounting methods or any income or deferred
gain recognized under the relevant consolidated return
regulations);
- Premier shareholders who receive M&T common stock in exchange for
all of their shares of Premier common stock will not recognize
any gain or loss with respect to shares of M&T common stock
received (except with respect to cash received instead of a
fractional share interest in M&T common stock);
- Each Premier shareholder who receives M&T common stock and cash
(other than cash instead of a fractional share interest in M&T
common stock) in exchange for the shareholder's shares of Premier
common stock will recognize the gain, if any, realized by such
shareholder, in an amount not in excess of the amount of cash
received (other than cash received instead of a fractional share
interest in M&T common stock), but will not recognize any loss on
the exchange;
- The aggregate tax basis of the M&T common stock received by a
Premier shareholder in the merger (including fractional shares
deemed received and redeemed as described below) will be the same
as the aggregate tax basis of the shares of Premier common stock
surrendered by such shareholder for the M&T common stock,
decreased by the amount of any cash received (other than cash
received instead of a fractional share interest in M&T common
stock) by the shareholder and increased by the amount of income
or gain recognized by the shareholder in the exchange (which does
not include gain recognized in respect of fractional shares
deemed received and redeemed (as described below)); and
- Each Premier shareholder's holding period in any shares of M&T
common stock received in the transaction (including any
fractional shares deemed received and redeemed as described
below) will, in each instance, include the period during which
the shares of Premier common
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stock surrendered in exchange therefor were held, provided that
those shares of Premier common stock were held as capital assets
on the effective date of the merger.
For purposes of the opinions described above, a Premier shareholder's
realized gain in the exchange is equal to the sum of the amount of cash (other
than cash received instead of a fractional share interest in M&T common stock)
and the fair market value of M&T common stock received (including fractional
shares deemed received) minus the shareholder's adjusted tax basis in the
Premier common stock surrendered.
Our obligations to consummate the merger are conditioned on the receipt
by M&T and Premier of additional opinions of Arnold & Porter and Milbank Tweed,
respectively, each dated as of the effective date of the merger, substantially
to the foregoing effect. Each of those opinions will be subject to and based on
facts, representations and assumptions set forth or referred to in the opinion.
In rendering those opinions, Arnold & Porter and Milbank Tweed may rely on
representations and facts provided by M&T and Premier.
CHARACTER OF GAIN WHERE PREMIER COMMON STOCK IS EXCHANGED SOLELY FOR
CASH. In general, if, pursuant to the merger, all of the shares of Premier
common stock actually owned by a shareholder are exchanged solely for cash, the
shareholder generally will recognize capital gain or loss equal to the
difference between the amount of cash received and the shareholder's adjusted
tax basis in the shares of Premier common stock exchanged therefor. This gain
or loss will be long-term capital gain or loss if the shareholder's holding
period with respect to the shares of Premier common stock exchanged is more
than one year as of the effective date of the merger. If, however, any such
shareholder actually or constructively (through the constructive ownership
rules of the Internal Revenue Code) owns shares of M&T stock immediately after
the merger, part or all of the cash received may be treated as ordinary income
if the exchange has the effect of a distribution of a dividend with respect to
the shareholder. The application of the law to a shareholder described in the
previous sentence is particularly complex; accordingly, any such shareholder
should consult his or her tax advisor.
CHARACTER OF GAIN WHERE PREMIER COMMON STOCK IS EXCHANGED FOR M&T
COMMON STOCK AND CASH. For purposes of calculating gain in this transaction, if
a shareholder receives M&T common stock and cash (other than cash received
instead of a fractional interest in M&T common stock), gain or loss must be
calculated by the shareholder separately for each identifiable block of shares
exchanged, and is equal to the sum of the amount of cash and the fair market
value of M&T common stock received with respect to that block of shares minus
the shareholder's adjusted tax basis in that block of shares. In addition, a
loss realized on one block of shares may not be used to offset a gain realized
on another block of shares.
As noted above, in the case of a Premier shareholder that exchanges
his or her shares of Premier common stock for a combination of M&T common stock
and cash pursuant to the merger, such shareholder will recognize the gain, if
any, realized by such shareholder in the exchange but not in excess of the
amount of cash received. In general, the determination of whether any gain
recognized in the exchange should be treated as capital gain or has the effect
of a distribution of a dividend depends upon whether, and to what extent, the
exchange reduces the shareholder's deemed percentage stock ownership of M&T.
For purposes of this determination, the shareholder is treated as if he or she
first exchanged all of his or her shares of Premier common stock solely for M&T
common stock and then M&T immediately redeemed (in a "deemed redemption") a
portion of such M&T common stock in exchange for the cash the shareholder
actually received. The gain recognized in the exchange will be treated as
capital gain if the deemed redemption (i) is "substantially disproportionate"
with respect to the shareholder or (ii) is not essentially equivalent to a
dividend.
The deemed redemption should generally be "substantially
disproportionate" with respect to a shareholder if the percentage of the
outstanding stock of M&T the shareholder owns, actually and constructively,
immediately after the deemed redemption is less than 80% of the percentage of
the outstanding stock of M&T the shareholder is deemed to own, actually and
constructively, immediately before the deemed redemption.
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Whether the deemed redemption is "not essentially equivalent to a
dividend" with respect to a shareholder will depend on the shareholder's
particular circumstances. In order for the deemed redemption to be "not
essentially equivalent to a dividend," the deemed redemption must result in a
"meaningful reduction" in the shareholder's actual and constructive percentage
stock ownership of M&T. In general, that determination requires a comparison of
the percentage of the outstanding stock of M&T the shareholder is deemed to own,
actually and constructively, immediately before the deemed redemption and the
percentage of the outstanding stock of M&T the shareholder actually and
constructively owns immediately after the deemed redemption. The Internal
Revenue Service has ruled that a minority shareholder (i.e., a shareholder whose
relative stock interest is minimal in relation to the number of shares
outstanding and who exercises no control with respect to corporate affairs)
generally is treated as having a "meaningful reduction" in interest if a cash
payment results in at least a relatively minor reduction in the shareholder's
actual and constructive percentage ownership.
CASH RECEIVED INSTEAD OF A FRACTIONAL SHARE. Cash received by a
Premier shareholder instead of a fractional share of M&T common stock will be
treated as though the fractional share had been received and then redeemed for
cash, and in general gain or loss will be recognized, measured by the
difference between the amount of cash received and the portion of the basis of
the shares of Premier common stock allocable to such fractional interest. Such
gain or loss generally will be long-term capital gain or loss if the holding
period for such shares of Premier common stock was more than one year as of the
effective date of the merger. If, however, the receipt of cash instead of a
fractional share of M&T common stock has the effect of the distribution of a
dividend with respect to a shareholder, part or all of the cash received may be
treated as a dividend.
BACKUP WITHHOLDING. Unless an exemption applies under the applicable
law and regulations, the exchange agent will be required to withhold 31% of any
cash payments to which a Premier shareholder or other payee is entitled
pursuant to the merger unless the shareholder or other payee provides its
taxpayer identification number (social security number or employer
identification number) and certifies, among other things, that such number is
correct. Each shareholder and, if applicable, each other payee should complete
and sign the substitute Form W-9 included as part of the transmittal letter
that accompanies the election form, so as to provide the information and
certification necessary to avoid backup withholding, unless an applicable
exemption exists and is established in a manner satisfactory to the exchange
agent.
RESALE OF M&T COMMON STOCK
The M&T common stock issued pursuant to the merger will be freely
transferable under the Securities Act of 1933, except for shares issued to any
Premier shareholder who may be deemed to be an affiliate of M&T for purposes of
Rule 144 promulgated under the Securities Act of 1933 or who may be deemed an
affiliate of Premier for purposes of Rule 145 promulgated under the Securities
Act of 1933 (each, an "Affiliate"). Affiliates will include persons (generally
executive officers, directors and 10% or greater shareholders) who control, are
controlled by or are under common control with (i) M&T or Premier at the time
of the special meeting or (ii) M&T on or after the Effective Date.
Rules 144 and 145 will restrict the sale of M&T common stock received
in the merger by Affiliates and certain of their family members and related
interests. Generally speaking, during the 12 months following the effective
date of the merger, those persons who are Affiliates of Premier at the time of
the special meeting (provided they are not Affiliates of M&T on or following
the effective date) may publicly resell any M&T common stock received by them
in the merger, subject to certain limitations as to, among other things, the
amount of M&T common stock sold by them in any three-month period and as to the
manner of sale. After such one-year period, such Affiliates may resell their
M&T common stock received in the merger without such restrictions so long as
there is adequate current public information with respect to M&T as required by
Rule 144. Beginning two years after the merger, these Affiliates may resell
their shares without restriction. Persons who are Affiliates of M&T after the
effective date may publicly resell the M&T common stock received by them in the
merger, subject to similar limitations and to certain filing requirements
specified in Rule 144.
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Affiliates also would be permitted to resell M&T common stock received
in the merger pursuant to an effective registration statement under the
Securities Act of 1933 or another available exemption from the Securities Act
of 1933 registration requirements. This document does not cover any resales of
M&T common stock received by persons in the merger who may be deemed to be
Affiliates of M&T or Premier, and M&T has not contractually undertaken to
register any such shares for resale.
ACCOUNTING TREATMENT OF THE MERGER
The merger will be accounted for as a purchase transaction under GAAP.
This means that, for financial accounting purposes, M&T will treat the two
companies as one company beginning as of the date of the combination. Under this
method of accounting, M&T will record the fair market value of Premier's assets
and liabilities on its financial statements. The difference between the purchase
price of the merger and the fair market value of Premier's identifiable assets
net of its liabilities will be recorded on M&T's books as "goodwill."
Approximately $235 million in goodwill and core deposit intangible assets will
result from accounting for the merger under the purchase method of accounting
and will be amortized over periods of up to 20 years as charges to M&T's
earnings.
STOCK OPTION AGREEMENT
THE SUMMARY INFORMATION BELOW CONCERNING THE MATERIAL TERMS OF THE
STOCK OPTION AGREEMENT IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL
TEXT OF SUCH AGREEMENT, WHICH IS ATTACHED TO THIS DOCUMENT AS APPENDIX B.
The stock option agreement provides for the grant by Premier to M&T of
an unconditional, irrevocable option to purchase up to 3,144,107 shares of
Premier common stock (subject to adjustment on changes in capitalization or in
certain other circumstances), at an exercise price of $13.375 per share (the
"option"). However, the total profit to M&T, calculated as provided in the
stock option agreement, on exercise or sale of the option may not exceed $24
million.
The purpose of the option is to increase the likelihood that the
merger will be completed by making it more difficult and more expensive for a
third party to gain control of Premier. Accordingly, the option is exercisable
only on the occurrence of certain events that generally involve the acquisition
or attempted acquisition by a third party of Premier, a significant portion of
the then-issued and outstanding Premier common stock or all or a significant
portion of Premier's assets. On the occurrence of certain triggering events in
connection with an acquisition or attempted acquisition, M&T can compel Premier
to repurchase the option for cash. This would have the effect of disqualifying
the other acquisition from the use of the pooling-of-interests method of
accounting, even if that method would otherwise have been available.
Although the shares issuable on exercise of the option represent
approximately 16.6% of the Premier common stock that would be outstanding after
such exercise (or 19.9% without giving effect to the exercise), M&T may not
acquire more than 5% of the stock of Premier, on exercise of the option or
otherwise, without prior approval of the Federal Reserve. M&T has received this
approval in connection with the approval of its application to the Federal
Reserve to acquire control of Premier. Unless and until the option is exercised,
M&T disclaims beneficial ownership of the Premier common stock subject to the
option.
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COMPARISON OF CERTAIN RIGHTS OF
HOLDERS OF M&T COMMON STOCK AND PREMIER COMMON STOCK
Both M&T and Premier are New York corporations subject to the
provisions of the New York Business Corporation Law (the "NYBCL"). On
consummation of the merger, shareholders of Premier who receive M&T common
stock in exchange for some or all of their shares of Premier common stock in
the merger, and whose rights as such currently are governed by Premier's Second
Amended and Restated Certificate of Incorporation and Bylaws and the NYBCL,
will become shareholders of M&T, and their rights as such will be governed by
the M&T Restated Certificate of Incorporation and Bylaws and by the NYBCL.
The following is a summary of the material differences between the
rights of shareholders of M&T and Premier. This summary does not purport to be
a complete discussion of all of the differences between the rights of
shareholders of M&T and Premier, and the identification of certain differences
is not meant to indicate that other differences do not exist. The following
summary is qualified in its entirety by reference to the NYBCL and the
certificate of incorporation and bylaws of each corporation.
AUTHORIZED COMMON STOCK
Under its certificate of incorporation, M&T is authorized to issue
150,000,000 shares of M&T common stock, par value $0.50 per share, 93,026,283
shares of which were issued and outstanding and none was held in treasury as of
December 8, 2000. M&T issued 15,900,292 shares of common stock in connection
with the Keystone merger. Premier is authorized by its restated certificate of
incorporation to issue 50,000,000 shares of Premier common stock, par value
$0.80 per share, 15,949,541 shares of which were issued and outstanding and
489,153 shares of which were held in treasury as of December 8, 2000. Both the
M&T and Premier Boards may, subject to applicable law and rules of the NYSE and
the American Stock Exchange (and, in the case of Premier, the merger agreement),
approve the issuance of additional shares of authorized common stock at such
times, for such purposes, and for such consideration as they may deem advisable
without further shareholder approval.
ISSUANCE OF AUTHORIZED PREFERRED STOCK
Under its certificate of incorporation, M&T is authorized to issue,
without shareholder approval, up to 1,000,000 shares of preferred stock, par
value $1.00 per share, none of which is issued and outstanding. Premier is
authorized under its certificate of incorporation to issue, without shareholder
approval, up to 5,000,000 shares of preferred stock, par value $0.01 per share,
in one or more series, none of which is issued and outstanding. Both the M&T
and Premier Boards may, subject to applicable law and rules of their respective
exchanges, approve the issuance of shares of authorized preferred stock at such
times, for such purposes, and for such consideration as they may deem advisable
without further shareholder approval. The ability of M&T and Premier to issue
shares of preferred stock up to the prescribed amounts under their respective
certificates of incorporation could have possible anti-takeover effects.
AMENDMENT OF CHARTER
In general, under the NYBCL, a corporation may amend its certificate
of incorporation in any respect provided the amendment contains only provisions
that would be lawfully contained in an original certificate filed at the time
of the amendment. To adopt an amendment under the NYBCL, a corporation's board
of directors must vote to authorize the amendment followed by the vote of a
majority of all outstanding shares entitled to vote thereon at a meeting of
stockholders. The board of directors acting alone can amend the certificate of
incorporation to change the corporation's address or registered agent for
service of process. When an amendment of the certificate would affect certain
substantial rights of the holders of a class of stock, the NYBCL provides that
the adoption of the amendment requires the approval of a majority of the votes
of all outstanding shares of such class of stock. If only certain series within
any
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class of shares are adversely affected by such a proposed amendment, then in
addition to the approval of the board of directors and a majority of all
outstanding shares entitled to vote thereon, the amendment requires the
approval only of a majority of the outstanding shares of such affected series.
M&T's certificate of incorporation does not vary from the statutory provisions.
Premier's restated certificate of incorporation provides that the affirmative
vote of a majority of the Board of Directors and the holders of at least
66-2/3% of the combined voting power of all of the shares of capital stock of
Premier then entitled to vote generally in the election of directors will be
required to amend any provisions in the certificate of incorporation relating
to the factors to be considered by the directors in taking any action, the
classification of directors, filling of vacancies in the Board of Directors,
removal of directors and amendment of the certificate of incorporation.
AMENDMENT OF BYLAWS
In general, under the NYBCL, a corporation's bylaws may be amended or
repealed by a majority of the votes cast by the shares at the time entitled to
vote in the election of directors, or, if provided in the certificate of
incorporation or a shareholder adopted bylaw, by the board of directors. Any
bylaw adopted by the board may be amended or repealed by the shareholders.
M&T's bylaws generally may be adopted, amended, or repealed by a majority vote
of the M&T Board, or at any meeting of the shareholders by the vote of the
holders of a majority of the shares of M&T entitled to vote in the election of
directors, provided that the meeting notice referred to the proposed action.
M&T's bylaws further provide that if the amendment of the bylaws pertains to
the election of directors or the procedures for calling and conducting the
meeting of shareholders, shareholders must be given adequate notice thereof in
a manner reasonably calculated to provide the shareholders with sufficient time
to respond thereto prior to the meeting. Premier's bylaws grant the Premier
Board the power to amend, repeal, or adopt bylaws at any regular or special
meeting of the Board by a majority vote of the entire Board.
ANNUAL AND SPECIAL MEETINGS OF SHAREHOLDERS
Pursuant to M&T's bylaws, the annual shareholders meeting is to be
held on the third Tuesday of April at such time as is fixed in the meeting
notice, or on any other date within 60 days thereafter as determined by the M&T
Board. M&T's bylaws provide that the chief executive officer or the M&T Board
may call special meetings, and that such a special meeting must be called if
requested in writing by the holders of at least 25% of the outstanding shares.
Written notice of every special and annual meeting of shareholders must be
given either personally or by mail to each shareholder at least 10 and not more
than 60 days prior to the meeting, stating the place, date, and hour of the
meeting, the purpose for which the meeting is called, and, other than the
annual meeting, by whom it is being called.
Pursuant to Premier's bylaws, the annual shareholders meeting is to be
held on such date and at such time as may be fixed by the Premier Board.
Premier's bylaws provide that only the chairman of the Premier Board, the chief
executive officer, the president of Premier or the Premier Board by majority
vote may call special meetings. Written notice of the date, place, and hour of
every annual and special meeting must be given to each shareholder at least 10
days and not more than 60 days prior to such meetings. No business other than
procedural matters and matters relating to the conduct of the meeting may be
transacted at any special meeting other than that stated in the notice of the
meeting and business that is relevant to such stated business.
BOARD OF DIRECTORS
The bylaws of M&T require that the M&T Board consist of a minimum of
three directors, the exact number to be fixed by the shareholders or the vote
of a majority of the Board. The M&T Board is currently comprised of 21
directors. The bylaws of Premier provide that the Premier Board will consist of
a minimum number of five and a maximum number of 25 directors, as fixed by
resolution and vote of the entire Premier Board; however, the number of
directors may not be increased by 50% or more in any 12-month period without
the approval of at least 66-2/3% of the entire Premier Board. The Premier Board
is currently comprised of 19 directors.
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CLASSIFICATION OF THE BOARD OF DIRECTORS
The NYBCL provides that a corporation's certificate of incorporation
or a shareholder-adopted bylaw may provide that the directors be divided into
two, three or four classes. All classes must be as nearly equal in number as
possible. M&T's Board of Directors is not classified. The directors must be
elected at each annual meeting of M&T shareholders. Premier's Board of
Directors is divided into three classes, each as nearly equal in number as
possible. One class of directors is elected at each annual meeting of Premier
shareholders, and each class serves a term of three years.
VACANCIES ON THE BOARD OF DIRECTORS
The NYBCL provides that newly created directorships resulting from an
increase in the number of directors and vacancies occurring on the board for
any reason, except the removal of directors without cause, may be filled by the
vote of the board, and if the number of directors remaining in office is less
than a quorum, by the vote of a majority of the directors then in office. The
certificate of incorporation or the bylaws may provide that such newly created
directorships or vacancies must be filled by the vote of shareholders and the
certificate of incorporation may impose greater requirements relating to the
quorum and vote of directors needed to fill such newly created directorships or
vacancies. Unless the certificate of incorporation or the specific provisions
of the bylaws adopted by the shareholders provide otherwise, vacancies
occurring on the board by reason of the removal of directors without cause may
not be filled by the board of directors and may only be filled by the
shareholders.
M&T's bylaws provide that newly created directorships resulting from
an increase in the number of directors and vacancies occurring for any reason
other than removal may be filled by the majority vote of the then remaining
directors, although less than a quorum exists. Any vacancy attributable to
removal by the shareholders may be filled by the vote of the shareholders at
the meeting at which the removal action is taken or at any meeting notice of
which referred to the proposed election. Any newly created directorship or
vacancy not filled prior to the annual shareholders meeting is to be filled at
the next annual shareholders meeting. Any director elected to fill a vacancy
will hold office for the unexpired term of his or her predecessor.
Premier's restated certificate of incorporation provides that any
vacancies on the Premier Board or newly created directorships will be filled by
the majority vote of the then remaining directors then in office, though less
than a quorum. Such newly elected directors will hold office only until the next
annual meeting of shareholders and until their successors are elected and
qualified, even though the term of office of other directors in the class of
which they are members does not expire at the time of that meeting. The
successor to any director elected by the Board to fill a vacancy will be elected
by the shareholders to a term of office which will expire at the same time as
the term of office of the other directors in the class to which he or she is
elected and until his or her successor is elected and qualified. If the holders
of any class or classes of shares of the Premier's capital stock or any series
thereof, other than common stock, are entitled to elect one or more directors
pursuant to Premier's certificate of incorporation, any vacancy in the directors
elected by such class or classes or series may be filled by a majority of the
directors elected by such class or classes or series then in office, or if no
such director is then in office, by the Board as otherwise provided above.
REMOVAL OF DIRECTORS
The NYBCL provides that any or all of the directors may be removed for
cause by a vote of the shareholders, and, if the certificate of incorporation
or the specific provision of a by-law adopted by the shareholders provides,
directors may be removed for cause by action of the board of directors or
without cause by the vote of the shareholders.
Pursuant to M&T's bylaws, any director may be removed for cause by the
shareholders holding the majority of the votes cast at any shareholders
meeting, notice of which referred to the proposed removal, or by three-fourths
vote of the M&T Board at any M&T Board meeting where the notice of the meeting
referred to the proposed action. M&T's bylaws further provide that any director
may be removed
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without cause by majority vote of the shares entitled to vote at any
shareholders meeting notice of which referred to the proposed removal.
Premier's restated certificate of incorporation provides that any
director may be removed from office at any time for cause by either the
affirmative vote of 66-2/3% of the combined voting power of all of the shares
of capital stock of Premier then entitled to vote generally in the election of
directors or the affirmative vote of 66-2/3% of the entire Board other than the
director to be removed. If the holders of any series of Premier's preferred
stock are entitled to elect one or more directors pursuant to a resolution or
resolutions providing for such series, any director so elected by the holders
of such series may be removed only by the applicable vote of the holders of the
shares of such class or classes or series as set forth in such resolution or
resolutions. Directors of Premier may not be removed without cause.
DIRECTOR NOMINATIONS AND PROPOSALS FOR BUSINESS
The NYBCL does not contain any provision establishing procedures that
must be followed in order for a shareholder to nominate directors or propose
items of business at any annual or special shareholders meeting.
The M&T bylaws provide that the deadline for proposals to be included
in M&T's proxy statement for its annual meetings or for proposals to be
presented at a shareholders meeting is 120 days prior to the day of the month
on which M&T first mailed its proxy materials for the prior year's annual
meeting if the date of the annual meeting is not changed more than 30 days from
the date of the preceding annual meeting. For other shareholders meetings or
annual meetings held on a date that is more than 30 days from the date of the
proceeding year's annual meeting, the deadline for submission of shareholder
proposals is the close of business on the tenth day following the date public
disclosure of the date of such meeting is first made.
Premier's bylaws require that any shareholder intending to nominate a
candidate for election as a director or submit a proposal for a shareholder
vote must give the corporation written notice of the nomination or proposal
containing specified information. In order to propose business or nominate a
candidate for election as a director at an annual meeting held within 30 days
of the date of the previous year's annual meeting of Premier shareholders, a
Premier shareholder must give notice to Premier's secretary at Premier's
principal executive offices not less than 120 days before the date of the proxy
statement released to the shareholders in connection with the previous year's
annual meeting. For annual meetings held on a date that is more than 30 days
from the date of the previous year's annual meeting, the deadline is a
reasonable time before Premier begins to print and mail its proxy materials. In
order to propose business or nominate a candidate for election as a director at
a special meeting of Premier shareholders, Premier's bylaws provide that a
Premier shareholder must deliver such proposal or nomination to Premier's
secretary at Premier's principal executive offices no later than the close of
business on the tenth day following the day on which notice of the date of a
special meeting of shareholders was given.
INDEMNIFICATION
Under the NYBCL, a corporation may indemnify any person made, or
threatened to be made, a party to any action or proceeding except for
shareholder derivative suits, by reason of the fact that he or she was a
director or officer of the corporation, provided such director or officer acted
in good faith for a purpose which he or she reasonably believed to be in the
best interests of the corporation and, in criminal proceedings, in addition,
had no reasonable cause to believe his or her conduct was unlawful. In the case
of shareholder derivative suits, the corporation may indemnify any person who
was a director or officer of the corporation if he or she acted in good faith
for a purpose which he or she reasonably believed to be in the best interests
of the corporation, except that no indemnification may be made for (i) a
threatened action, or a pending action which is settled or otherwise disposed
of, or (ii) any claim, issue or matter as to which such person had been
adjudged to be liable to the corporation, unless and only to the extent that
the court in which the action was brought or, if no action was brought, any
court of competent jurisdiction, determines
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upon application that, in view of all circumstances the person is fairly and
reasonably entitled to indemnity for such portion of the settlement amount and
expenses as the court deems proper.
Indemnification under the NYBCL is not exclusive of other
indemnification rights to which a director or officer may be entitled, whether
contained in the certificate of incorporation or bylaws, or, when authorized by
such certificate of incorporation or bylaws, (i) a resolution of shareholders
or directors, or (ii) an agreement providing for such indemnification, provided
that no indemnification may be made to or on behalf of any director or officer
if a judgment or other final adjudication adverse to the director or officer
establishes that his or her acts were committed in bad faith or were the result
of active and deliberate dishonesty and were material to the cause of action so
adjudicated, or that he or she personally gained a financial profit or other
advantage to which he or she was not legally entitled. The M&T bylaws provide
that M&T will indemnify to the maximum extent permissible under the NYBCL its
directors and officers, and any person whose testator or intestate was such a
director or officer; however, M&T will provide indemnification in connection
with an action or proceeding (or part thereof) initiated by such director or
officer only if such action or proceeding (or part thereof) was authorized by
the M&T Board. The Premier restated certificate of incorporation provides that
Premier will indemnify (and advance certain expenses as provided in the Premier
bylaws) any director or officer to the fullest extent permitted by the NYBCL
and that such indemnification is not exclusive or limiting of any other rights
to which such person is entitled, and that Premier may also, to the extent
authorized by the Premier Board and to the fullest extent authorized by the
NYBCL (or to any lesser extent or greater extent as determined by the Board and
permitted by law), grant rights to indemnification and advancement of expenses
to any employees or agents of Premier or to persons who are or were a director,
officer, employee or agent of any of Premier's affiliates, predecessor or
subsidiary corporations.
Under the NYBCL, any person to whom such provisions in the NYBCL
regarding indemnification apply who has been successful on the merits or
otherwise in the defense of a civil or criminal action or proceeding is
entitled to indemnification. Except as provided in the preceding sentence,
unless ordered by a court pursuant to the NYBCL, indemnification under the
NYBCL, the certificate of incorporation, the bylaws, any resolution of
shareholders or directors, or any agreement pursuant to the above paragraphs,
may be made only if authorized in the specific case and after a finding that
the director or officer met the requisite standard of conduct (i) by the board
acting by a quorum of disinterested directors or (ii) if such quorum is not
available, or even if available, if so directed by a quorum of disinterested
directors by either (A) the board upon the written opinion of counsel or (B) by
the shareholders.
BUSINESS COMBINATIONS WITH INTERESTED SHAREHOLDERS
Premier is subject to provisions of the NYBCL governing "business
combinations" with "interested shareholders," which provide that a New York
corporation may not engage in a business combination with an interested
shareholder for a period of five years after such interested shareholder became
an interested shareholder unless the business combination or the purchase of
stock by the interested shareholder causing him or her to become such was
approved in advance by the board of directors. Other business combinations with
an interested shareholder are prohibited at any time unless certain
requirements are met. As permitted under Section 912 of the NYBCL, M&T has
expressly elected in its bylaws not to be governed by the provisions of the
NYBCL governing "business combinations" with "interested shareholders."
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EXPERTS
The consolidated financial statements of M&T included in M&T's Annual
Report on Form 10-K for the year ended December 31, 1999 have been audited by
PricewaterhouseCoopers LLP, independent accountants, as outlined in their
report thereon incorporated in this document by reference. Such consolidated
financial statements are incorporated in this document by reference in reliance
upon such report given upon the authority of such firm as experts in accounting
and auditing.
The consolidated financial statements incorporated in this document
by reference from Premier's Annual Report on Form 10-K for the year ended
December 31, 1999 have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their report, which is incorporated in this document by
reference, and have been so incorporated in reliance upon the report of such
firm given upon their authority as experts in accounting and auditing.
The consolidated financial statements of Keystone and subsidiaries
at December 31, 1999 and 1998 and for each of the three years in the period
ended December 31, 1999 incorporated by reference in M&T's Current Report on
Form 8-K dated as of October 6, 2000 have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon and incorporated in
this document by reference. Such consolidated financial statements are
incorporated in this document by reference in reliance on such report given on
the authority of such firm as experts in accounting and auditing.
LEGAL OPINION
A legal opinion which states that the issuance of the shares of M&T
common stock offered hereby, when issued in accordance with the terms of the
merger agreement, will be validly issued, fully paid and nonassessable, has
been rendered by Richard A. Lammert, Esq., Senior Vice President and General
Counsel of M&T. As of December 8, 2000, Mr. Lammert was the beneficial owner of
61,340 shares of M&T common stock and held options granted under the M&T Bank
Corporation 1983 Stock Option Plan covering 125,000 shares of M&T common stock,
90,000 of which are currently exercisable.
SUBMISSION OF SHAREHOLDER PROPOSALS
Premier intends to hold an annual meeting of Premier shareholders in
2001 only if the merger is not completed. If an annual meeting of Premier
shareholders is held in 2001, a shareholder proposal to be timely for purposes
of Rule 14a-8 of the Securities and Exchange Commission under the Securities
Exchange Act of 1934 or for purposes of Premier's bylaws needed to be received
by December 12, 2000. If a shareholder desires to bring business before the 2001
annual meeting of Premier shareholders that is not a proposal submitted to
Premier for inclusion in Premier's proxy statement, notice must be received by
the corporate secretary of Premier no later than February 24, 2001.
The deadline under Rule 14a-8 of the Securities Exchange Act of 1934
and under M&T's bylaws for the submission of proposals by M&T shareholders for
inclusion in the proxy statement and form of proxies to be used by M&T in
connection with its 2001 annual meeting of shareholders was November 8, 2000.
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DOCUMENTS INCORPORATED BY REFERENCE
This document incorporates by reference the documents listed below
that M&T and Premier have previously filed with the Commission:
- M&T's Annual Report on Form 10-K for the year ended December 31,
1999;
- Premier's Annual Report on Form 10-K for the year ended December
31, 1999;
- M&T's Quarterly Reports on Form 10-Q for the quarters ended March
31, 2000, June 30, 2000 and September 30, 2000;
- Premier's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 2000, June 30, 2000 and September 30, 2000;
- M&T's Current Reports on Form 8-K and Form 8-K/A dated as of
March 1, 2000, May 16, 2000, July 9, 2000 and October 6, 2000;
- Premier's Current Reports on Form 8-K dated as of July 12, 2000
and November 21, 2000; and
- the description of M&T common stock contained in a registration
statement on Form 8-A dated as of May 20, 1998 filed by M&T
pursuant to Section 12 of the Securities Exchange Act of 1934,
and any amendment or report filed for the purpose of updating
such description.
M&T and Premier also incorporate by reference additional documents
that either company may file with the Commission between the date of this
document and the date of the special meeting or, if later, the expiration of
the election period for Premier shareholders to elect to receive M&T common
stock or cash for their shares of Premier common stock in the merger. These
documents may include Quarterly Reports on Form 10-Q and Current Reports on
Form 8-K, as well as proxy statements.
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A WARNING ABOUT FORWARD-LOOKING STATEMENTS
This document and the documents that have been incorporated by
reference into this document include statements that reflect projections or
expectations of future financial condition, results of operations and business
of each of M&T, Premier and the combined company following the merger and other
transactions in which either company may be involved. These statements are
subject to risk and uncertainty. M&T and Premier believe such statements to be
"forward-looking" statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
M&T and Premier have made, and may continue to make, various forward-looking
statements with respect to earnings per share, cash earnings per share, cost
savings related to acquisitions, credit quality and other financial and
business matters for 2001 and, in certain instances, subsequent periods. M&T
and Premier caution that these forward-looking statements are subject to
numerous assumptions, risks and uncertainties, and that statements for periods
after 2000 are subject to greater uncertainty because of the increased
likelihood of changes in underlying factors and assumptions. Actual results
could differ materially from those expressed in forward-looking statements. In
addition to factors disclosed in documents incorporated by reference in this
document and factors identified elsewhere in this document, the following
factors could cause actual results to differ materially from those expressed in
forward-looking statements:
- expected cost savings from the merger or other transactions
cannot be fully realized or cannot be realized within the
expected time frame;
- revenues following the merger or other transactions are lower
than expected;
- competitive pressure among financial services institutions
increases;
- costs or difficulties related to the integration of the business
of M&T, Premier and companies involved in other transactions are
greater than expected;
- changes in the interest rate environment reduce interest margins;
- general economic conditions, either nationally or in the markets
in which the combined company will be doing business, are less
favorable than expected;
- legislation or regulatory requirements or changes that adversely
affect the business in which the combined company would be
engaged; and
- other "Future Factors" enumerated in M&T's most recent Annual
Report on Form 10-K with respect to M&T, or factors enumerated
under "Forward-Looking Statements" in Premier's most recent
Annual Report on Form 10-K and Quarterly Report on Form 10-Q
dated as of September 30, 2000 with respect to Premier and
incorporated in this document by reference.
M&T's and Premier's forward-looking statements speak only as of the
dates on which they are made. By making forward-looking statements, M&T and
Premier assume no duty to update them to reflect new, changing or unanticipated
events or circumstances, except as may be required by applicable law or
regulation.
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APPENDIX A
AGREEMENT AND PLAN OF REORGANIZATION
(INCLUDING AGREEMENT AND PLAN OF MERGER, AS AMENDED)
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AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION ("Reorganization Agreement" or
"Agreement") dated as of July 9, 2000, by and among Premier National Bancorp
Inc. ("Seller"), a New York corporation having its principal executive office
at P.O. Box 310, Route 55 Lagrangeville, NY 12540, M&T Bank Corporation
("Purchaser"), a New York corporation having its principal executive office at
One M&T Plaza, Buffalo, New York 14614, and Olympia Financial Corp. ("Merger
Sub"), a Delaware corporation and a direct wholly owned subsidiary of Purchaser
having its registered office at 1209 Orange Street, Wilmington, Delaware.
WITNESSETH
WHEREAS, the parties hereto desire that Seller shall be acquired by
Purchaser through the merger ("Merger") of Seller with and into Merger Sub,
with Merger Sub as the surviving corporation ("Surviving Corporation") pursuant
to an Agreement and Plan of Merger substantially in the form attached hereto as
Annex A ("Plan of Merger"); and
WHEREAS, following the consummation of the Merger, Premier National
Bank ("Seller Bank"), a banking subsidiary of Seller, which shall be a
wholly-owned subsidiary of the Surviving Corporation following the Merger,
shall merge with and into Manufacturers and Traders Trust Company ("Purchaser
Bank"), a bank subsidiary of Purchaser ("Bank Merger"), pursuant to an
Agreement and Plan of Merger ("Bank Merger Agreement") in a form to be
specified by Purchaser; and
WHEREAS, the parties hereto desire to provide for certain
undertakings, conditions, representations, warranties and covenants in
connection with the transactions contemplated hereby;
NOW, THEREFORE, in consideration of the premises and of the mutual
representations, warranties and covenants herein contained and intending to be
legally bound hereby, the parties hereto do hereby agree as follows:
ARTICLE 1.
DEFINITIONS
1.1 "Advisory Board" is defined in Section 4.15 hereof.
1.2 "Amex" shall mean the American Stock Exchange.
1.3 "Agreement" is defined in the preamble hereto.
1.4 "Bank Holding Company Act" shall mean the Bank
Holding Company Act of 1956, as amended.
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1.5 "Banking Board" shall mean the New York State Banking
Board.
1.6 "Bank Merger" is defined in the recitals hereto.
1.7 "Bank Merger Agreement" is defined in the recitals
hereto.
1.8 "Cash Consideration" is defined in the Plan of
Merger.
1.9 "Claim" is defined in Section 4.11(g) hereof.
1.10 "Closing Date" is defined in Section 4.9 hereof.
1.11 "Code" shall mean the Internal Revenue Code of 1986,
as amended.
1.12 "Commission" or "SEC" shall mean the Securities and
Exchange Commission.
1.13 "Confidentiality Agreement" is defined in Section 4.5
hereof.
1.14 "Covered Parties" is defined in Section 4.11(g)
hereof.
1.15 "DPC Shares" is defined in the Plan of Merger.
1.16 "Effective Date" is defined in Section 4.9 hereof.
1.17 "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended.
1.18 "ERISA Affiliate" is defined in Section 2.13(a)
hereof.
1.19 "Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended.
1.20 "FDIA" shall mean the Federal Deposit Insurance Act.
1.21 "FDIC" shall mean the Federal Deposit Insurance
Corporation.
1.22 "Federal Reserve Board" shall mean the Board of
Governors of the Federal Reserve System.
1.23 "Indemnified Parties" is defined in Section 4.11(f)
hereof.
1.24 "Insurance Amount" is defined in Section 4.11(h)
hereof.
1.25 "Intellectual Property" means domestic and foreign
letters patent, patents, patent applications, patent licenses, software
licensed or owned, know-how licenses, trade names, common law and other
trademarks, service marks, licenses of trademarks, trade names and/or service
marks, trademark registrations and applications, service mark registrations and
applications and copyright registrations and applications.
1.26 "JP Morgan" is defined in Section 2.18 hereof.
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1.27 "KBW" is defined in Section 2.18 hereof.
1.28 "knowledge" and its correlative terms shall mean,
with respect to Seller or Purchaser, the knowledge of the executive officers of
the Seller or Purchaser, as the case may be, after due inquiry, with respect to
matters within the areas of responsibility of the respective executive
officers.
1.29 "Material Adverse Effect" shall mean, with respect to
Seller or Purchaser, as the case may be, a material adverse effect on the
business, results of operations or financial condition of such party and the
Subsidiaries of the party taken as a whole or a material adverse effect on such
party's ability to consummate the transactions contemplated hereby; provided,
however, that in determining whether a Material Adverse Effect has occurred
there shall be excluded any effect on the referenced party the cause of which
is (i) any change in banking or similar laws, rules or regulations of general
applicability or interpretations thereof by courts or governmental authorities,
(ii) any change in generally accepted accounting principles or regulatory
accounting requirements applicable to banks or their holding companies
generally, (iii) general changes in conditions, including interest rates, in
the banking industry or in the global or United States or Northeast regional
economy or financial markets, with respect to clause (i), (ii) or (iii), to the
extent that a change does not materially affect the referenced party to a
materially different extent than other similarly situated banking
organizations, and (iv) any action or omission of Seller or Purchaser or any
Subsidiary of either of them taken with the prior written consent of Purchaser
or Seller, as applicable, in contemplation of the Merger.
1.30 "Merger" is defined in the recitals hereto.
1.31 "Merger Consideration" is defined in the Plan of
Merger.
1.32 "Merger Sub" is defined in the preamble of this
Agreement.
1.33 "NYSE" shall mean The New York Stock Exchange.
1.34 "OCC" shall mean the Office of the Comptroller of
Currency.
1.35 "Option Agreement" shall mean the Stock Option
Agreement dated of even date herewith between Seller and Purchaser pursuant to
which Seller will grant Purchaser the right to purchase certain shares of
Seller Common Stock.
1.36 "Plan of Merger" is defined in the recitals hereto.
1.37 "Previously Disclosed" shall mean disclosed prior to
the execution hereof in (i) an SEC Document filed with the SEC subsequent to
January 1, 2000 and prior to the date hereof or (ii) a letter dated of even
date herewith from the party making such disclosure and delivered to the other
party prior to the execution hereof. Any information disclosed by one party to
the other for any purpose hereunder shall be deemed to be disclosed for all
purposes hereunder. The inclusion of any matter in information Previously
Disclosed shall not be deemed an admission or otherwise to imply that any such
matter is material for purposes of this Agreement.
1.38 "Previously Disclosed Individuals" is defined in
Section 4.11(b) hereof.
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1.39 "Proxy Statement" shall mean the proxy
statement/prospectus (or similar documents) together with any supplements
thereto sent to the shareholders of Seller to solicit their votes in connection
with this Agreement and the Plan of Merger.
1.40 "Purchaser" is defined in the preamble of this
Agreement.
1.41 "Purchaser Bank" is defined in the recitals hereof.
1.42 "Purchaser Common Stock" is defined in Section 3.1
hereof.
1.43 "Purchaser Financial Statements" shall mean (i) the
consolidated balance sheets of Purchaser as of March 31, 2000 and as of
December 31, 1999 and 1998 and the related consolidated statements of income,
cash flows and changes in shareholders' equity (including related notes, if
any) for the three months ended March 31, 2000 and each of the three years
ended December 31, 1999, 1998 and 1997, respectively, as filed by Purchaser in
SEC Documents and (ii) the consolidated balance sheets of Purchaser and related
consolidated statements of income, cash flows and changes in shareholders'
equity (including related notes, if any) as filed by Purchaser in SEC Documents
as of dates or with respect to periods ended subsequent to March 31, 2000.
1.44 "Purchaser Plan" is defined in Section 3.10 hereof.
1.45 "Purchaser Preferred Stock" is defined in Section 3.1
hereof.
1.46 "Registration Statement" shall mean the registration
statement with respect to the Purchaser Common Stock to be issued in connection
with the Merger as declared effective by the Commission under the Securities
Act and as amended from time to time.
1.47 "Rights" shall mean warrants, options, rights,
convertible securities and other arrangements or commitments which obligate an
entity to issue or dispose of any of its capital stock, and stock appreciation
rights, performance units and other similar stock-based rights whether they
obligate the issuer thereof to issue stock or other securities or to pay cash.
1.48 "Reorganization Agreement" is defined in the recitals
hereto.
1.49 "SEC Documents" shall mean all reports and
registration statements filed, or required to be filed, by a party hereto
pursuant to the Securities Laws.
1.50 "Securities Act" shall mean the Securities Act of
1933, as amended.
1.51 "Securities Laws" shall mean the Securities Act; the
Exchange Act; the Investment Company Act of 1940, as amended; the Investment
Advisers Act of 1940, as amended; the Trust Indenture Act of 1939, as amended;
and the rules and regulations of the Commission promulgated thereunder.
1.52 "Seller" is defined in the preamble of this
Agreement.
1.53 "Seller Bank" is defined in the recitals hereto.
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1.54 "Seller Common Stock" is defined in Section 2.1
hereof.
1.55 "Seller Employees" is defined in Section 4.11(a)
hereof.
1.56 "Seller Financial Statements" shall mean (i) the
consolidated balance sheets of Seller as of March 31, 2000 and as of December
31, 1999 and 1998 and the related consolidated statements of income and
expense, cash flows and stockholders' equity (including related notes, if any)
for the three months ended March 31, 2000 and each of the three years ended
December 31, 1999, 1998 and 1997, respectively, as filed by Seller in SEC
Documents and (ii) the consolidated balance sheets of Seller and related
consolidated statements of income and expense, cash flows and changes in
stockholders' equity (including related notes, if any) as filed by Seller in
SEC Documents with respect to periods ended subsequent to March 31, 2000.
1.57 "Seller Plans" is defined in Section 2.13(a) hereof.
1.58 "Seller Preferred Stock" is defined in Section 2.1
hereof.
1.59 "Seller Stock Option Plans" is defined in the Plan of
Merger.
1.60 "Stock Consideration" is defined in the Plan of
Merger.
1.61 "Subsidiary" or "Subsidiaries" shall mean with respect to
any party, any bank, corporation, partnership or other organization, whether
incorporated or unincorporated, which is consolidated with such party for
financial reporting purposes; provided, however, that "Subsidiary" or
"Subsidiaries" shall not include any subsidiary trust formed for the purpose of
issuing trust preferred or similar securities.
1.62 "Surviving Corporation" is defined in the recitals
hereto.
1.63 "Takeover Laws" is defined in Section 2.28 hereof.
1.64 "Takeover Proposal" is defined in Section 4.7(b)(13)
hereof.
1.65 "Tax," collectively, "Taxes" shall mean all taxes, however
denominated, including any interest, penalties, criminal sanctions or additions
to tax (including, without limitation, any underpayment penalties for
insufficient estimated tax payments) or other additional amounts that may
become payable in respect thereof (or in respect of a failure to file any Tax
Return when and as required), imposed by any federal, state, local or foreign
government or any agency or political subdivision of any such government, which
taxes shall include, without limiting the generality of the foregoing, all
income taxes, payroll and employment taxes, withholding taxes (including
withholding taxes in connection with amounts paid or owing to any employee,
independent contractor, creditor, stockholder or other person or entity),
unemployment insurance taxes, social security (or similar) taxes, sales and use
taxes, excise taxes, franchise taxes, gross receipts taxes, occupation taxes,
real and personal property taxes, stamp taxes, value added taxes, transfer
taxes, profits or windfall profits taxes, licenses in the nature of taxes,
estimated taxes, severance taxes, duties (custom and others), workers'
compensation taxes, premium taxes, environmental taxes (including taxes under
Section 59A of the Code), disability taxes,
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registration taxes, alternative or add-on minimum taxes, estimated taxes, and
other fees, assessments, charges or obligations of the same or of a similar
nature.
1.66 "Tax Return," collectively, "Tax Returns" shall mean all
returns, reports, estimates, information statements or other written
submissions, and any schedules or attachments thereto, required or permitted to
be filed pursuant to the statutes, rules and regulations of any federal, state,
local or foreign government Tax authority, including but not limited to,
original returns and filings, amended returns, claims for refunds, information
returns, ruling requests, administrative or judicial filings, accounting method
change requests, responses to revenue agents' reports (federal, state or local)
and settlement documents.
1.67 "Trust Account Shares" is defined in the Plan of
Merger.
ARTICLE 2.
REPRESENTATIONS AND WARRANTIES OF SELLER
Except as Previously Disclosed, Seller hereby represents and warrants
to Purchaser and Merger Sub as follows:
2.1. CAPITAL STRUCTURE OF SELLER
The authorized capital stock of Seller consists of (i) 5,000,000
shares of preferred stock, par value $0.01 per share ("Seller Preferred Stock")
none of which is issued and outstanding and (ii) 50,000,000 shares of common
stock, par value $0.80 per share ("Seller Common Stock"), of which, as of July
7, 2000, 15,799,535 shares were issued and outstanding and 644,359 shares were
held in treasury, and since that date no shares have been issued other than on
exercise of Rights Previously Disclosed. As of the date hereof, no shares of
Seller Preferred Stock or Seller Common Stock are reserved for issuance, except
as Previously Disclosed and except for 3,144,107 shares of Seller Common Stock
reserved for issuance pursuant to the Option Agreement. Seller has Previously
Disclosed a list of all currently outstanding options for the purchase of
Seller Common Stock, the number of shares of Seller Common Stock subject to
such options, whether such options are vested or unvested, the vesting schedule
for unvested options and the vesting or other treatment of all unvested options
in the event of a change of control of Seller. All outstanding shares of
Seller Common Stock have been duly authorized and validly issued and are fully
paid and nonassessable. Seller does not have and is not bound by any Rights
which are authorized, issued or outstanding with respect to the capital stock
of Seller except (i) for the Option Agreement, (ii) as Previously Disclosed,
and (iii) as set forth above. None of the shares of Seller's capital stock has
been issued in violation of the preemptive rights of any person.
2.2. ORGANIZATION, STANDING AND AUTHORITY OF SELLER
Seller is a duly incorporated corporation, validly existing and in
good standing under the laws of the State of New York with full corporate power
and authority to carry on its business as now conducted and is duly licensed or
qualified to do business in the states of the United States and foreign
jurisdictions where its ownership or leasing of property or the conduct of its
business requires such qualification, except where the failure to have such
corporate power and authority
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or to be so licensed or qualified would not have a Material Adverse Effect on
Seller. Seller is registered as a bank holding company under the Bank Holding
Company Act.
2.3. OWNERSHIP OF SELLER SUBSIDIARIES; CAPITAL STRUCTURE OF SELLER
SUBSIDIARIES
As of the date hereof, Seller does not own, directly or indirectly, 5%
or more of the outstanding capital stock or other voting securities of any
corporation, bank or other organization except the Seller Subsidiaries as
Previously Disclosed. Seller has Previously Disclosed to Purchaser a list of
all of the Subsidiaries, including a summary description of each Subsidiary's
activities and the authority under which each Subsidiary is held by Seller or
Seller Bank, as the case may be. Except as Previously Disclosed, the
outstanding shares of capital stock or other equity interests of each Seller
Subsidiary have been duly authorized and validly issued and are fully paid and
(except as provided by applicable law) nonassessable and all such shares or
equity interests are directly or indirectly owned by Seller free and clear of
all liens, claims and encumbrances. No Seller Subsidiary has or is bound by
any Rights which are authorized, issued or outstanding with respect to the
capital stock or other equity interests of any Seller Subsidiary and, except as
Previously Disclosed, there are no agreements, understandings or commitments
relating to the right of Seller to vote or to dispose of said shares. None of
the shares of capital stock or other equity interests of any Seller Subsidiary
has been issued in violation of the preemptive rights of any person.
2.4. ORGANIZATION, STANDING AND AUTHORITY OF SELLER SUBSIDIARIES
Each Seller Subsidiary is a duly incorporated corporation, banking
association or other organization, validly existing and in good standing under
applicable laws, except where the failure to be duly incorporated, validly
existing and in good standing would not have a Material Adverse Effect on
Seller. Each Seller Subsidiary (i) has full power and authority to carry on
its business as now conducted, and (ii) is duly licensed or qualified to do
business in the states of the United States and foreign jurisdictions where its
ownership or leasing of property or the conduct of its business requires such
licensing or qualification, except where failure to have such corporate power
and authority or to be so licensed or qualified would not have a Material
Adverse Effect on Seller. Each Seller Subsidiary has all federal, state, local
and foreign governmental authorizations necessary for it to own or lease its
properties and assets and to carry on its business as it is now being
conducted, except where the failure to be so authorized would not have a
Material Adverse Effect on Seller. Seller Bank is a member in good standing of
the Federal Home Loan Bank of New York and owns the requisite amount of shares
therein and is a qualified seller and servicer for the Federal Home Loan
Mortgage Corporation.
2.5. AUTHORIZED AND EFFECTIVE AGREEMENT
(a) Seller has all requisite corporate power and
authority to enter into and perform all of its obligations under this
Reorganization Agreement, the Plan of Merger and the Option Agreement. The
execution and delivery of this Reorganization Agreement, the Plan of Merger and
the Option Agreement and the consummation of the transactions contemplated
hereby and thereby have been duly and validly authorized by all necessary
corporate action in respect thereof on the part of Seller, except for the
affirmative vote of the holders of two thirds (2/3) of the outstanding shares
of Seller Common Stock, which is the only shareholder vote
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required to approve the Plan of Merger pursuant to the New York Business
Corporation Law and Seller's Second Amended and Restated Certificate of
Incorporation and Seller's Bylaws. The Board of Directors of Seller has
directed that this Agreement and the Plan of Merger be submitted to Seller's
stockholders for approval at a special meeting to be held as soon as
practicable. The Board of Directors of Seller has approved the Merger as
contemplated by Section 8 of Seller's Second Amended and Restated Certificate
of Incorporation.
(b) Assuming the accuracy of the representation contained
in Section 3.5(b) hereof, this Reorganization Agreement and the Plan of Merger
constitute legal, valid and binding obligations of Seller, enforceable against
it in accordance with their respective terms, subject to bankruptcy, insolvency
and other laws of general applicability relating to or affecting creditors'
rights and to general equity principles.
(c) Neither the execution and delivery of this
Reorganization Agreement, the Plan of Merger or the Option Agreement, nor
consummation of the transactions contemplated hereby or thereby, nor compliance
by Seller with any of the provisions hereof or thereof shall (i) conflict with
or result in a breach of any provision of the articles or certificate of
incorporation or association, charter or bylaws of Seller or any Seller
Subsidiary, (ii) assuming the consents and approvals contemplated by Section
4.3 hereof and the consents and approvals which are Previously Disclosed are
duly obtained, constitute or result in a breach of any term, condition or
provision of, or constitute a default under, or give rise to any right of
termination, cancellation or acceleration with respect to, or result in the
creation of any lien, charge or encumbrance upon any property or asset of
Seller or any Seller Subsidiary pursuant to, any note, bond, mortgage,
indenture, license, agreement or other instrument or obligation, or (iii)
assuming the consents and approvals contemplated by Section 4.3 hereof and the
consents and approvals which are Previously Disclosed are duly obtained,
violate any order, writ, injunction, decree, statute, rule or regulation
applicable to Seller or any Seller Subsidiary, except (in the case of clauses
(ii) and (iii) above) for such violations, rights, conflicts, breaches,
creations or defaults which, either individually or in the aggregate, would not
have a Material Adverse Effect on Seller.
(d) Other than (i) the filing of the Proxy Statement and
the Registration Statement with the Commission pursuant to the Securities Laws,
(ii) the filing of the Certificate of Merger and other appropriate merger
documents required by the Delaware General Corporation Law and the New York
Business Corporation Law and with their respective Secretaries of State, (iii)
the filing of appropriate documents with the relevant authorities of other
states in which the parties to the Bank Merger Agreement are qualified to do
business, and (iv) as contemplated by Section 4.3 hereof, no consent, approval
or authorization of, or declaration, notice, filing or registration with, any
governmental or regulatory authority, or any other person, is required to be
made or obtained by Seller or any Seller Subsidiary on or prior to the Closing
Date in connection with the execution, delivery and performance of this
Agreement and the Plan of Merger or the consummation of the transactions
contemplated hereby or thereby, except where the failure to obtain such
consents would not have a Material Adverse Effect on Seller. As of the date
hereof, Seller is not aware of any reason that the condition set forth in
Section 5.1(b) of this Agreement, including the proviso thereto, would not be
satisfied.
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2.6. SEC DOCUMENTS; REGULATORY FILINGS
Seller has filed all SEC Documents required by the Securities Laws
since December 31, 1994 and such SEC Documents complied, as of their respective
dates, in all material respects with the Securities Laws. Seller and each
Seller Subsidiary has filed all reports required by statute or regulation to be
filed with any federal or state bank regulatory agency, except where the
failure to so file would not have a Material Adverse Effect on Seller, and such
reports were prepared in accordance with the applicable statutes, regulations
and instructions in existence as of the date of filing of such reports in all
material respects.
2.7. FINANCIAL STATEMENTS; BOOKS AND RECORDS; MINUTE BOOKS
The Seller Financial Statements filed by Seller in SEC Documents prior
to the date of this Agreement fairly present, and the Seller Financial
Statements filed by Seller after the date of this Agreement will fairly
present, the consolidated financial position of Seller and its consolidated
Subsidiaries as of the dates indicated and the consolidated income, changes in
stockholders' equity and cash flows of Seller and its consolidated Subsidiaries
for the periods then ended in conformity with generally accepted accounting
principles applicable to financial institutions applied on a consistent basis
except as disclosed therein and except, in the case of unaudited statements, as
permitted by Form 10-Q and subject to normal recurring year-end adjustments.
The books and records of Seller and each Seller Subsidiary fairly reflect in
all material respects the transactions to which it is a party or by which its
properties are subject or bound. Such books and records have been properly
kept and maintained and are in compliance with all applicable legal and
accounting requirements in all material respects. The minute books of Seller
and each Seller Subsidiary contain records which are accurate in all material
respects of all corporate actions of its shareholders and Board of Directors
(including committees of its Board of Directors).
2.8. MATERIAL ADVERSE CHANGE
Seller has not, on a consolidated basis, suffered any change in its
financial condition, results of operations or business since December 31, 1999
which individually or in the aggregate with any other such changes would
constitute a Material Adverse Effect with respect to Seller.
2.9. ABSENCE OF UNDISCLOSED LIABILITIES
Neither Seller nor any Seller Subsidiary has any liability (contingent
or otherwise), excluding contractually assumed contingencies, that is material
to Seller on a consolidated basis, or that, when combined with all similar
undisclosed liabilities, would be material to Seller on a consolidated basis,
except as disclosed in the Seller Financial Statements filed with the SEC prior
to the date hereof and except for liabilities incurred in the ordinary course
of business subsequent to December 31, 1999.
2.10. PROPERTIES
Seller and the Seller Subsidiaries have good and marketable title free
and clear of all liens, encumbrances, charges, defaults or equitable interests
to all of the properties and assets, real and personal, which, individually or
in the aggregate, are material to the business of Seller
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and its Subsidiaries taken as a whole, and which are reflected on the Seller
Financial Statements as of December 31, 1999 or acquired after such date,
except (i) liens for taxes not yet due and payable, (ii) pledges to secure
deposits and other liens incurred in the ordinary course of banking business,
(iii) such imperfections of title, easements and encumbrances, if any, as are
not material in character, amount or extent and (iv) dispositions and
encumbrances for adequate consideration in the ordinary course of business.
All leases pursuant to which Seller or any Seller Subsidiary, as lessee, leases
real and personal property which, individually or in the aggregate, are
material to the business of Seller and its Subsidiaries taken as a whole are
valid and enforceable in accordance with their respective terms except where
the failure of such lease or leases to be valid and enforceable would not,
individually or in the aggregate, have a Material Adverse Effect on Seller.
All tangible property used in the business of Seller and its Subsidiaries taken
as a whole is in good condition, reasonable wear and tear excepted, and is
usable in the ordinary course of business consistent with Seller's past
practices.
2.11. LOANS
(a) Each loan reflected as an asset in the Seller
Financial Statements, except for loans repaid since that time, (i) is evidenced
by notes, agreements or other evidences of indebtedness which are true, genuine
and what they purport to be, (ii) to the extent secured, has been secured by
valid liens and security interests which have been perfected, and (iii) is the
legal, valid and binding obligation of the obligor named therein, enforceable
in accordance with its terms, subject to bankruptcy, insolvency, fraudulent
conveyance and other laws of general applicability relating to or affecting
creditors' rights and to general equity principles, in each case other than
loans as to which the failure to satisfy the foregoing standards, individually
or in the aggregate, after taking into account reserves for loan losses, would
not have a Material Adverse Effect on Seller.
(b) The allowance for loan losses reflected on the Seller
Financial Statements, as of their respective dates, is in all material respects
consistent with the requirements of generally accepted accounting principles to
provide for reasonably anticipated losses with respect to Seller's loan
portfolio based upon information reasonably available to Seller at the time.
2.12. TAX MATTERS
(a) Seller and each Seller Subsidiary have timely filed,
or have timely requested filing extensions for, federal income tax returns for
each year through December 31, 1999 and have timely filed, or caused to be
filed, or have timely requested filing extensions for, all other Tax Returns
required to be filed with respect to Seller or any Seller Subsidiary, except
where the failure to file timely such federal income and other Tax Returns
would not, in the aggregate, have a Material Adverse Effect on Seller. All
Taxes due by or on behalf of Seller or any Seller Subsidiary have been paid or
adequate reserves have been established on the Seller Financial Statements for
the payment of such Taxes, except where any such failure to pay or establish
adequate reserves would not, in the aggregate, have a Material Adverse Effect
on Seller. Neither Seller nor any Seller Subsidiary will have any liability for
any such Taxes in excess of the amounts so paid or reserves or accruals so
established except where such liability would not have a Material Adverse
Effect on Seller.
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(b) All Tax Returns filed by Seller and each Seller
Subsidiary are complete and accurate in all material respects. Neither Seller
nor any Seller Subsidiary is delinquent in the payment of any material Tax,
and, except as Previously Disclosed, none of them has requested any extension
of time within which to file any Tax Returns which have not since been filed.
Except as Previously Disclosed or as fully settled and paid or accrued on the
Seller Financial Statements, to Seller's knowledge, no material audit
examination, deficiency, adjustment, refund claim or litigation with respect to
Tax Returns, paid Taxes, unpaid Taxes or Tax attributes of Seller or any Seller
Subsidiary has been proposed, asserted or assessed (tentatively or otherwise).
Except as Previously Disclosed, there are currently no agreements in effect
with respect to Seller or any Seller Subsidiary to extend the period of
limitations for the assessment or collection of any material Tax.
(c) Neither the transactions contemplated hereby nor the
termination of the employment of any employees of Seller or any Seller
Subsidiary prior to or following consummation of the transactions contemplated
hereby will result in Seller or any Seller Subsidiary (or any successor
thereof) making or being required to make any "excess parachute payment" as
that term is defined in Section 280G of the Code.
(d) Except as Previously Disclosed, neither Seller nor
any Seller Subsidiary is a party to any agreement (other than an agreement
exclusively among Seller and the Seller Subsidiaries) providing for the
allocation or sharing of, or indemnification for, taxes.
(e) Neither Seller nor any Seller Subsidiary is required
to include in income any adjustment in any taxable period ending after the date
hereof pursuant to Section 481(a) of the Code.
(f) Neither Seller nor any Seller Subsidiary has executed
or entered into any written agreement with any Tax authority conceding or
agreeing to any treatment of Taxes or Tax attributes, including, without
limitation, Internal Revenue Service Form 870 or Form 870-AD, closing agreement
or special closing agreement, affecting the Seller or any Seller Subsidiary
pursuant to Section 7121 of the Code or any predecessor provision thereof or
any similar provision of state, local or foreign law, which agreement would
have a material impact on the calculation of the Taxes of Purchaser or any
Purchaser Subsidiary after the Effective Date.
(g) For purposes of this Section 2.12 and Section 2.27,
(i) references to Seller and any Seller Subsidiary shall include predecessors
thereof and (ii) "Seller Subsidiary" shall include each Subsidiary (as defined
in Article 1 hereof) of Seller, and each corporation, partnership, limited
liability company, joint venture or other entity which Seller controls directly
or indirectly (through one or more intermediaries). For purposes of the
previous sentence, "control" means the possession, direct or indirect, of the
power either (1) to vote fifty percent (50%) or more of the voting interests of
a corporation, partnership, limited liability company, joint venture or other
entity, or (2) to direct or cause the direction of the management and policies
of a corporation, partnership, limited liability company, joint venture or
other entity, whether by contract or otherwise.
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2.13. EMPLOYEE BENEFIT PLANS
(a) A true and complete list of each material Seller Plan
has been Previously Disclosed. For purposes of this Section 2.13, the term
"Seller Plan" means each bonus, deferred compensation, incentive compensation,
stock purchase, stock option, severance pay, medical, life or other insurance,
profit-sharing, or pension plan, program, agreement or arrangement, and each
other employee benefit plan, program, agreement or arrangement, sponsored,
maintained or contributed to or required to be contributed to by Seller or by
any trade or business, whether or not incorporated, that together with Seller
would be deemed a "single employer" under Section 414 of the Code (an "ERISA
Affiliate") for the benefit of any employee or director or former employee or
former director of Seller or any ERISA Affiliate of Seller.
(b) With respect to each of the Seller Plans, Seller has
made available to Purchaser true and complete copies of each of the following
documents: (a) the Seller Plan and related documents (including all amendments
thereto); (b) the most recent annual reports, financial statements, and
actuarial reports, if any; (c) the most recent summary plan description,
together with each summary of material modifications, required under ERISA with
respect to such Seller Plan and all material communications relating to each
such Seller Plan; and (d) the most recent determination letter received from
the IRS with respect to each Seller Plan that is intended to be qualified under
the Code and all material communications to or from the IRS or any other
governmental or regulatory agency or authority relating to each Seller Plan.
(c) No liability under Title IV of ERISA has been
incurred by Seller or any ERISA Affiliate of Seller that has not been satisfied
in full, and no condition exists that presents a material risk to Seller or any
ERISA Affiliate of Seller of incurring a liability under such Title, other than
liability for premium payments to the Pension Benefit Guaranty Corporation,
which premiums have been or will be paid when due.
(d) Neither Seller nor, to the knowledge of Seller, any
ERISA Affiliate of Seller, nor any of the Seller Plans, nor, to the knowledge
of Seller, any trust created thereunder, nor any trustee or administrator
thereof has engaged in a prohibited transaction (within the meaning of Section
406 of ERISA and Section 4975 of the Code) in connection with which Seller or
any ERISA Affiliate of Seller could reasonably be expected to, either directly
or indirectly, incur any material liability or material cost.
(e) Full payment has been made, or will be made in
accordance with Section 404(a)(6) of the Code, of all amounts that Seller or
any ERISA Affiliate of Seller is required to pay under Section 412 of the Code
or under the terms of the Seller Plans.
(f) The fair market value of the assets held under each
Seller Plan that is subject to Title IV of ERISA equals or exceeds the
actuarial present value of all accrued benefits under each such Seller Plan.
No reportable event under Section 4043 of ERISA has occurred with respect to
any Seller Plan other than any reportable event occurring by reason of the
transactions contemplated by this Agreement or a reportable event for which the
requirement of notice to the PBGC has been waived.
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(g) None of the Seller Plans is a "multiemployer pension
plan," as such term is defined in Section 3(37) of ERISA, a "multiple employer
welfare arrangement," as such term is defined in Section 3(40) of ERISA, or a
single employer plan that has two or more contributing sponsors, at least two
of whom are not under common control, within the meaning of Section 4063(a) of
ERISA.
(h) A favorable determination letter has been issued by
the Internal Revenue Service with respect to each of the Seller Plans that is
intended to be "qualified" within the meaning of Section 401(a) of the Code to
the effect that such plan is so qualified and, to the knowledge of Seller, no
condition exists that could adversely affect the qualified status of any such
Seller Plan. Each of the Seller Plans that is intended to satisfy the
requirements of Section 125 or 501(c)(9) of the Code satisfies such
requirements in all material respects. Each of the Seller Plans has been
operated and administered in all material respects in accordance with its terms
and applicable laws, including but not limited to ERISA and the Code.
(i) There are no actions, suits or claims pending, or, to
the knowledge of Seller, threatened or anticipated (other than routine claims
for benefits) against any Seller Plan, the assets of any Seller Plan or against
Seller or any ERISA Affiliate of Seller with respect to any Seller Plan. There
is no judgment, decree, injunction, rule or order of any court, governmental
body, commission, agency or arbitrator outstanding against or in favor of any
Seller Plan or any fiduciary thereof (other than rules of general
applicability). There are no pending or, to the knowledge of Seller,
threatened audits, examinations or investigations by any governmental body,
commission or agency involving any Seller Plan.
(j) The consummation of the transactions contemplated by
this Agreement will not result in, and is not a precondition to, (i) any
current or former employee or director of Seller or any ERISA Affiliate of
Seller becoming entitled to severance pay, unemployment compensation or any
similar payment, (ii) any acceleration in the time of payment or vesting, or
increase in the amount, of any compensation due to any such current or former
employee or director, or (iii) any renewal or extension of the term of any
agreement regarding compensation for any such current or former employee or
director.
2.14. CERTAIN CONTRACTS
(a) Neither Seller nor any Seller Subsidiary is a party
to, or is bound by, (i) any material contract as defined in Item 601(b)(10) of
Regulation S-K of the SEC or any other contract or similar arrangement
reasonably deemed material by Seller's management, whether or not made in the
ordinary course of business (other than loans or loan commitments and funding
transactions in the ordinary course of business of any Seller Subsidiary) or
any agreement restricting the nature or geographic scope of its business
activities in any material respect, (ii) any agreement, indenture or other
instrument relating to the borrowing of money by Seller or any Seller
Subsidiary or the guarantee by Seller or any Seller Subsidiary of any such
obligation, in each case amounting singly or in the aggregate to more than
$100,000, other than agreements, indentures, instruments or guarantees relating
to transactions entered into in the ordinary course of business, (iii) any
agreement, arrangement or commitment relating to the employment of a consultant
who was formerly a director or executive officer of Seller or any Seller
Subsidiary or the employment, election, retention in office or severance of any
present or former director or
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officer of Seller or any Seller Subsidiary, or (iv) any contract, agreement or
understanding with a labor union, in each case whether written or oral.
(b) Neither Seller nor any Seller Subsidiary is in
default under any material agreement, commitment, arrangement, lease, insurance
policy or other instrument whether entered into in the ordinary course of
business or otherwise and whether written or oral, and there has not occurred
any event that, with the lapse of time or giving of notice or both, would
constitute such a default, except for such defaults which would not,
individually or in the aggregate, have a Material Adverse Effect on Seller.
2.15. LEGAL PROCEEDINGS
There are no actions, suits or proceedings instituted, pending or, to
the knowledge of Seller or any Seller Subsidiary, threatened against Seller or
any Seller Subsidiary or against any asset, interest or right of Seller or any
Seller Subsidiary which could reasonably be expected to, individually or in the
aggregate, have a Material Adverse Effect on Seller. To the knowledge of
Seller or any Seller Subsidiary, there are no actual or threatened actions,
suits or proceedings which present a claim to restrain or prohibit the
transactions contemplated herein or to impose any material liability in
connection therewith which could reasonably be expected to, individually or in
the aggregate, have a Material Adverse Effect on Seller. There are no actions,
suits or proceedings instituted, pending or, to the knowledge of Seller or any
Seller Subsidiary, threatened against any present or, to Seller's knowledge
former director or officer of Seller or any Seller Subsidiary, that would
reasonably be expected to give rise to a claim for indemnification and that
could reasonably be expected to, individually or in the aggregate, have a
Material Adverse Effect on Seller.
2.16. COMPLIANCE WITH LAWS
Except as Previously Disclosed, Seller and each Seller Subsidiary is
in compliance in all material respects with all statutes and regulations
applicable to the conduct of its business, and neither Seller nor any Seller
Subsidiary has received notification from any agency or department of federal,
state or local government (i) asserting a material violation of any such
statute or regulation, (ii) threatening to revoke any license, franchise,
permit or government authorization or (iii) restricting or in any way limiting
its operations, except for such noncompliance, violations, revocations,
limitations and restrictions which would not, individually or in the aggregate,
have a Material Adverse Effect on Seller. Neither Seller nor any Seller
Subsidiary is subject to any regulatory or supervisory cease and desist order,
agreement, directive, memorandum of understanding or commitment which would be
reasonably expected to have a Material Adverse Effect on Seller, and none of
them has received any communication requesting that they enter into any of the
foregoing.
2.17. LABOR MATTERS
With respect to their employees, neither Seller nor any Seller
Subsidiary is a party to any labor agreement with any labor organization, group
or association and has not engaged in any unfair labor practice. Since January
1, 2000 and prior to the date hereof, to Seller's knowledge, Seller and the
Seller Subsidiaries have not experienced any attempt by organized labor or its
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representatives to make Seller or any Seller Subsidiary conform to demands of
organized labor relating to their employees or to enter into a binding
agreement with organized labor that would cover the employees of Seller or any
Seller Subsidiary. To the knowledge of Seller and the Seller Subsidiaries,
there is no unfair labor practice charge or other complaint by any employee or
former employee of Seller or any Seller Subsidiary against any of them pending
before any court, arbitrator or governmental agency arising out of Seller's or
such Seller Subsidiary's activities, which charge or complaint would,
individually or in the aggregate, have a Material Adverse Effect on Seller;
there is no labor strike or labor disturbance pending or, to the knowledge of
Seller and the Seller Subsidiaries, threatened against any of them; and neither
Seller nor any Seller Subsidiary has experienced a work stoppage or other
material labor difficulty since January 1, 2000.
2.18. BROKERS AND FINDERS
Neither Seller nor any Seller Subsidiary, nor any of their respective
officers, directors or employees, has employed any broker, finder or financial
advisor or incurred any liability for any fees or commissions in connection
with the transactions contemplated herein or the Plan of Merger, except for
Seller's retention of Keefe, Bruyette & Woods, Inc. ("KBW") and J.P. Morgan &
Co. ("JP Morgan") to perform certain financial advisory services as Previously
Disclosed. Prior to the execution and delivery of this Agreement, JP Morgan has
delivered to the Board of Directors of Seller an opinion that the Merger
Consideration is fair from a financial point of view to the shareholders of
Seller.
2.19. INSURANCE
Seller and the Seller Subsidiaries each currently maintains insurance
in amounts considered by Seller and any Seller Subsidiary as applicable, to be
reasonably necessary for their operations. Neither Seller nor any Seller
Subsidiary has received any notice of a material premium increase over current
rates or cancellation with respect to any of its insurance policies or bonds,
and within the last three years, neither Seller nor any Seller Subsidiary has
been refused any insurance coverage sought or applied for, and Seller has no
reason to believe that existing insurance coverage cannot be renewed as and
when the same shall expire, upon terms and conditions substantially as
favorable as those presently in effect, other than possible increases in
premiums or unavailability in coverage that have not resulted from any
extraordinary loss experience of Seller or any Seller Subsidiary. Seller has
Previously Disclosed a list of all outstanding claims as of the date hereof by
Seller or any Seller Subsidiary under any insurance policy. The deposits of
Seller Bank are insured by the FDIC in accordance with the FDIA, and Seller
Bank and its predecessors have paid all assessments and filed all reports
required by the FDIA.
2.20. ENVIRONMENTAL LIABILITY
Neither Seller nor any Seller Subsidiary has received any written
notice of any legal, administrative, arbitral or other proceeding, claim or
action and, to the knowledge of Seller and the Seller Subsidiaries, there is no
governmental investigation of any nature ongoing, in each case that would
reasonably be expected to result in the imposition, on Seller or any Seller
Subsidiary of any liability arising under any local, state or federal
environmental statute,
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regulation or ordinance including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended,
which liability would have a Material Adverse Effect on Seller; except as
Previously Disclosed, there are no facts or circumstances known to Seller which
would reasonably be expected to form the basis for any such proceeding, claim,
action or governmental investigation that would impose any such liability; and
neither Seller nor any Seller Subsidiary is subject to any agreement, order,
judgment, decree or memorandum by or with any court, governmental authority,
regulatory agency or third party imposing any such liability.
2.21. ADMINISTRATION OF TRUST ACCOUNTS
Each Seller Subsidiary has properly administered all common trust
funds and collective investment funds and all accounts for which it acts as a
fiduciary or agent, including but not limited to accounts for which it serves
as a trustee, agent, custodian, personal representative, guardian, conservator
or investment advisor, in accordance with the terms of the governing documents
and applicable state and federal law and regulation and common law, except
where the failure to do so would not, individually or in the aggregate, have a
Material Adverse Effect on Seller. Neither Seller, any Seller Subsidiary, nor
any director, officer or employee of Seller or any Seller Subsidiary acting on
behalf of Seller or a Seller Subsidiary, has committed any breach of trust with
respect to any such common trust fund or collective investment fund or
fiduciary or agency account, and the accountings for each such common trust
fund or collective investment fund or fiduciary or agency account are true and
correct in all material respects and accurately reflect the assets of such
common trust fund or collective investment fund or fiduciary or agency account,
except for such breaches and failures to be true, correct and accurate which
would not, individually or in the aggregate, have a Material Adverse Effect on
Seller.
2.22. INTELLECTUAL PROPERTY
Except as Previously Disclosed, Seller or a Seller Subsidiary owns the
entire right, title and interest in and to, or has valid licenses with respect
to, all of the Intellectual Property necessary in all material respects to
conduct the business and operations of Seller and the Seller Subsidiaries as
presently conducted, except where the failure to do so would not, individually
or in the aggregate, have a Material Adverse Effect on Seller. The ownership,
licensing or use of Intellectual Property by Seller or its Subsidiaries does
not conflict with, infringe, misappropriate or otherwise violate the
Intellectual Property rights of any other person or entity. None of such
Intellectual Property is subject to any outstanding order, decree, judgment,
stipulation, settlement, lien, charge, encumbrance or attachment, which order,
decree, judgment, stipulation, settlement, lien, charge, encumbrance or
attachment would have a Material Adverse Effect on Seller. Except as
Previously Disclosed, upon consummation of the transactions contemplated by
this Agreement Purchaser and the Purchaser Subsidiaries will be entitled to
continue to use all such Intellectual Property without the payment of any fees,
licenses or other payments (other than ongoing payments required under license
agreements for software used by Seller or the Seller Subsidiaries in Previously
Disclosed amounts consistent with past practice).
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2.23. RISK MANAGEMENT INSTRUMENTS
All interest rate swaps, caps, floors, option agreements, futures and
forward contracts and other similar risk management arrangements to which
Seller or a Seller Subsidiary is a party, whether entered into for Seller's own
account, or for the account of one or more of the Seller Subsidiaries or their
customers, were entered into (i) in accordance with prudent business practices
and all applicable laws, rules, regulations and regulatory policies and (ii)
with counterparties believed to be financially responsible at the time; and
each of them constitutes the valid and legally binding obligation of Seller or
one of the Seller Subsidiaries, enforceable in accordance with its terms
(except as may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer and similar laws of general equity principles),
and neither Seller nor any Seller Subsidiary nor to Seller's knowledge, any
other party thereto, is in breach of any of its obligations under any such
agreement or arrangement. Seller has previously made available to Purchaser all
of such agreements and arrangements that are in effect as of the date of this
Agreement.
2.24. REPURCHASE AGREEMENTS
With respect to all agreements pursuant to which Seller or any Seller
Subsidiary has purchased securities subject to an agreement to resell, if any,
Seller or such Seller Subsidiary, as the case may be, has a valid, perfected
first lien or security interest in or evidence of ownership in book entry form
of the government securities or other collateral securing the repurchase
agreements, and the value of such collateral equals or exceeds the amount of
the debt secured thereby.
2.25. CERTAIN INFORMATION
When the Registration Statement or any post-effective amendment
thereto shall become effective, and at all times subsequent to such
effectiveness up to and including the time of the Seller shareholders' meeting
to vote upon the Merger, such Registration Statement and all amendments or
supplements thereto, with respect to all information set forth or incorporated
by reference therein furnished by Seller relating to Seller and the Seller
Subsidiaries, (i) shall comply in all material respects with the applicable
provisions of the Securities Laws, and (ii) shall not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements contained therein not
misleading. All information concerning Seller and its directors, officers,
shareholders and any Subsidiaries included (or submitted for inclusion) in any
application and furnished by it pursuant to Section 4.3 of this Agreement shall
be true, correct and complete in all material respects.
2.26. YEAR 2000
The computer software operated by Seller and any Seller Subsidiary
which is material to the conduct of the business of Seller and any Seller
Subsidiary is capable of providing uninterrupted millennium functionality to
record, store, process and present calendar dates falling on or after January
1, 2000 in substantially the same manner and with the same functionality as
such software records, stores, processes and presents such calendar dates
falling on or before December 31, 1999, and such software and Seller and any
Seller Subsidiary
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currently are otherwise in compliance with all relevant Regulatory Authority
guidance and requirements relating to the Year 2000 computer issues including
the statements of the Federal Financial Institutions Examination Council, dated
May 5, 1997, entitled "Year 2000 Project Management Awareness," and December
1997, entitled "Safety and Soundness Guidelines Concerning the Year 2000
Business Risk." The costs of the adaptations referred to in this clause have
not and will not have a Material Adverse Effect on Seller.
2.27. TAX TREATMENT
As of the date of this Agreement, Seller knows of no reason relating
to it or any of the Seller Subsidiaries which would reasonably cause it to
believe that the Merger will not qualify as a reorganization under Section
368(a) of the Code.
2.28. TAKEOVER LAWS
Seller has taken all action required to by taken by it in order to
exempt this Reorganization Agreement, the Plan of Merger and the Option
Agreement and the transactions contemplated hereby and thereby from, and this
Reorganization Agreement, the Plan of Merger and the Option Agreement and the
transactions contemplated hereby and thereby are exempt from, the requirements
of any "moratorium," "control share," "fair price," "affiliate transaction,"
"business combination," or other antitakeover laws and regulations of any state
(collectively, "Takeover Laws"), including, without limitation, the State of
New York.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF
PURCHASER AND MERGER SUB
Except as Previously Disclosed, Purchaser and Merger Sub hereby
jointly and severally represent and warrant to Seller as follows:
3.1. CAPITAL STRUCTURE OF PURCHASER
The authorized capital stock of Purchaser consists at March 31, 2000
of (i) 1,000,000 shares of preferred stock, par value $1.00 per share
("Purchaser Preferred Stock"), none of which were issued and outstanding and
(ii) 15,000,000 shares of common stock, par value $5.00 per share ("Purchaser
Common Stock"), of which, as of July 7, 2000, 7,650,380 shares were issued and
outstanding, 451,159 shares were held in treasury and approximately 234,439
shares were reserved for issuance under plans or arrangements relating to
options or other Rights. All outstanding shares of Purchaser capital stock have
been duly authorized and validly issued and are fully paid and nonassessable.
None of the shares of Purchaser's capital stock has been issued in violation of
the preemptive rights of any person. The shares of Purchaser Common Stock to
be issued in connection with the Merger have been duly authorized and, when
issued in accordance with the terms of this Reorganization Agreement and the
Plan of Merger, will be validly issued, fully paid, nonassessable and free and
clear of any preemptive rights.
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3.2. ORGANIZATION, STANDING AND AUTHORITY OF PURCHASER
Purchaser is a duly incorporated corporation, validly existing and in
good standing under the laws of New York, with full corporate power and
authority to carry on its business as now conducted and is duly licensed or
qualified to do business in the states of the United States and foreign
jurisdictions where its ownership or leasing of property or the conduct of its
business requires such qualification, except where the failure to have such
corporate power and authority or to be so licensed or qualified would not have
a Material Adverse Effect on Purchaser. Purchaser is registered as a bank
holding company under the Bank Holding Company Act.
3.3. OWNERSHIP OF PURCHASER SUBSIDIARIES; CAPITAL STRUCTURE OF
PURCHASER SUBSIDIARIES
Purchaser has no Subsidiary other than: (i) Subsidiaries disclosed in
Purchaser's Annual Report on Form 10-K for the year ended December 31, 1999;
(ii) Merger Sub; or (iii) any Subsidiary that, taken as a whole together with
other excluded Subsidiaries of Purchaser not Previously Disclosed, is not a
significant subsidiary under the SEC's Regulation S-X. Except as Previously
Disclosed, the outstanding shares of capital stock of the Purchaser
Subsidiaries have been duly authorized and validly issued and are fully paid
and (except as provided in 12 U.S.C. Section 55 or Section 114 of the New York
Banking Law) nonassessable and all such shares are directly or indirectly owned
by Purchaser free and clear of all liens, claims and encumbrances. No
Purchaser Subsidiary has or is bound by any Rights which are authorized, issued
or outstanding with respect to the capital stock of any Purchaser Subsidiary
and, except as Previously Disclosed, there are no agreements, understandings or
commitments relating to the right of Purchaser to vote or to dispose of said
shares. None of the shares of capital stock of any Purchaser Subsidiary has
been issued in violation of the preemptive rights of any person.
3.4. ORGANIZATION, STANDING AND AUTHORITY OF PURCHASER SUBSIDIARIES
Each Purchaser Subsidiary is a duly organized corporation or banking
corporation, validly existing and in good standing under applicable laws,
except where the failure to be duly organized, validly existing and in good
standing would not have a Material Adverse Effect on Purchaser. Each Purchaser
Subsidiary (i) has full power and authority to carry on its business as now
conducted, and (ii) is duly licensed or qualified to do business in the states
of the United States and foreign jurisdictions where its ownership or leasing
of property or the conduct of its business requires such licensing or
qualification and where failure to have such corporate power and authority or
to be licensed or qualified would have a Material Adverse Effect on Purchaser.
Each Purchaser Subsidiary has all federal, state, local and foreign
governmental authorizations necessary for it to own or lease its properties and
assets and to carry on its business as it is now being conducted, except where
the failure to be so authorized would not have a Material Adverse Effect on
Purchaser.
3.5. AUTHORIZED AND EFFECTIVE AGREEMENT
(a) Each of Purchaser and Merger Sub has all requisite
corporate power and authority to enter into and perform all of its obligations
under this Reorganization Agreement and the Plan of Merger. The execution and
delivery of this Reorganization Agreement and the
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Plan of Merger and the consummation of the transactions contemplated hereby and
thereby have been duly and validly authorized by all necessary corporate action
in respect thereof on the part of Purchaser and Merger Sub.
(b) Assuming the accuracy of the representation contained
in Section 2.5(b) hereof, this Reorganization Agreement and the Plan of Merger
constitute legal, valid and binding obligations of each of Purchaser and Merger
Sub, in each case enforceable against it in accordance with their respective
terms subject, as to enforceability, to bankruptcy, insolvency and other laws
of general applicability relating to or affecting creditors' rights and to
general equity principles.
(c) Neither the execution and delivery of this
Reorganization Agreement or the Plan of Merger, nor consummation of the
transactions contemplated hereby or thereby, nor compliance by Purchaser or
Merger Sub with any of the provisions hereof or thereof shall (i) conflict with
or result in a breach of any provision of the articles or certificate of
incorporation or association, charter or bylaws of Purchaser or any Purchaser
Subsidiary, (ii) assuming the consents and approvals contemplated by Section
4.3 hereof and the consents and approvals which are Previously Disclosed are
duly obtained, constitute or result in a breach of any term, condition or
provision of, or constitute a default under, or give rise to any right of
termination, cancellation or acceleration with respect to, or result in the
creation of any lien, charge or encumbrance upon any property or asset of
Purchaser or any Purchaser Subsidiary pursuant to, any note, bond, mortgage,
indenture, license, agreement or other instrument or obligation, or (iii)
assuming the consents and approvals contemplated by Section 4.3 hereof and the
consents and approvals which are Previously Disclosed are duly obtained,
violate any order, writ, injunction, decree, statute, rule or regulation
applicable to Purchaser or any Purchaser Subsidiary, except (in the case of
clauses (ii) and (iii) above) for such violations, rights, conflicts, breaches,
creations or defaults which, either individually or in the aggregate, will not
have a Material Adverse Effect on Purchaser.
(d) Except for approvals specified in Section 4.3 hereof
and except as expressly referred to in this Reorganization Agreement, no
consent, approval or authorization of, or declaration, notice, filing or
registration with, any governmental or regulatory authority, or any other
person, is required to be made or obtained by Purchaser or Merger Sub on or
prior to the Closing Date in connection with the execution, delivery and
performance of this Agreement and the Plan of Merger or the consummation of the
transactions contemplated hereby or thereby. As of the date hereof, Purchaser
is not aware of any reason that the condition set forth in Section 5.1(b) of
this Agreement, including the proviso thereto, would not be satisfied.
3.6. SEC DOCUMENTS; REGULATORY FILINGS
Purchaser has filed all SEC Documents required by the Securities Laws
since December 31, 1994, and such SEC Documents complied, as of their
respective dates, in all material respects with the Securities Laws. Purchaser
and each of the Purchaser Subsidiaries has filed all reports required by
statute or regulation to be filed with any federal or state bank regulatory
agency, except where the failure to so file would not have a Material Adverse
Effect on Purchaser, and such reports were prepared in accordance with the
applicable statutes, regulations and instructions in existence as of the date
of filing of such reports in all material respects.
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3.7. FINANCIAL STATEMENTS; BOOKS AND RECORDS; MINUTE BOOKS
The Purchaser Financial Statements filed by Purchaser in SEC documents
prior to the date of this Agreement fairly present, and the Purchaser Financial
Statements filed by Purchaser in SEC Documents after the date of the Agreement
will fairly present the consolidated financial position of Purchaser and its
consolidated Subsidiaries as of the dates indicated and the consolidated
results of operations, changes in shareholders' equity and cash flows of
Purchaser and its consolidated Subsidiaries for the periods then ended and each
such financial statement has been or will be, as the case may be, prepared in
conformity with generally accepted accounting principles applicable to
financial institutions applied on a consistent basis except as disclosed
therein and except in the case of unaudited statements, as permitted by Form
10-Q and subject to normal recurring year-end adjustments. The books and
records of Purchaser and each Purchaser Subsidiary fairly reflect in all
material respects the transactions to which it is a party or by which its
properties are subject or bound. Such books and records have been properly
kept and maintained and are in compliance in all material respects with all
applicable legal and accounting requirements. The minute books of Purchaser
and the Purchaser Subsidiaries contain records which are accurate in all
material respects of all corporate actions of its shareholders and Board of
Directors (including committees of its Board of Directors).
3.8. MATERIAL ADVERSE CHANGE
Purchaser has not, on a consolidated basis, suffered any change in its
financial condition, results of operations or business since December 31, 1999
which individually or in the aggregate with any other such changes would
constitute a Material Adverse Effect with respect to Purchaser.
3.9. ABSENCE OF UNDISCLOSED LIABILITIES
Neither Purchaser nor any Purchaser Subsidiary has any liability
(contingent or otherwise), excluding contractually assumed contingencies, that
is material to Purchaser on a consolidated basis, or that, when combined with
all similar undisclosed liabilities, would be material to Purchaser on a
consolidated basis, except as Previously Disclosed, as disclosed in the
Purchaser Financial Statements filed with the SEC prior to the date hereof and
except for liabilities incurred in the ordinary course of business subsequent
to December 31, 1999.
3.10. EMPLOYEE BENEFIT PLANS
Each of the Purchaser Plans complies in all material respects with the
requirements of applicable law, including ERISA and the Code. For purposes of
this Agreement, the term "Purchaser Plan" means each bonus, incentive
compensation, severance pay, medical or other insurance program, retirement
plan, or other employee benefit plan program, agreement or arrangement
sponsored, maintained or contributed to by Purchaser or any trade or business,
whether or not incorporated, that together with Purchaser or any of the
Purchaser Subsidiaries would be deemed a "single employer" under Section 414 of
the Code (an "ERISA Affiliate") or under which Purchaser or any ERISA
Affiliate has any liability or obligation. No liability under Title IV of
ERISA has been incurred by Purchaser or any ERISA Affiliate that has not been
satisfied in full, and no condition exists that presents a material risk to
Purchaser or any ERISA
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Affiliate of incurring any such liability. Full payment has been made, or will
be made in accordance with Section 404(a)(6) of the Code of all amounts that
Purchaser or any ERISA Affiliate is required to pay under Section 412 of the
Code or under the terms of the Purchaser Plans, and no accumulated funding
deficiency (within the meaning of Section 412 of the Code) exists with respect
to any Purchaser Plan.
3.11. LEGAL PROCEEDINGS
There are no actions, suits or proceedings instituted, pending or, to
the knowledge of Purchaser and Merger Sub, threatened against Purchaser, Merger
Sub or any Purchaser Subsidiary or against any asset, interest or right of
Purchaser or any Purchaser Subsidiary which could reasonably be expected to,
individually or in the aggregate, have a Material Adverse Effect on Purchaser.
There are no actual or, to the knowledge of Purchaser or any Purchaser
Subsidiary, threatened actions, suits or proceedings which present a claim to
restrain or prohibit the transactions contemplated herein or to impose any
material liability in connection therewith which could reasonably be expected
to, individually or in the aggregate, have a Material Adverse Effect on
Purchaser.
3.12. COMPLIANCE WITH LAWS
Except as Previously Disclosed, each of Purchaser and the Purchaser
Subsidiaries is in compliance in all material respects with all statutes and
regulations applicable to the conduct of its business, and none of them has
received notification from any agency or department of federal, state or local
government (i) asserting a material violation of any such statute or
regulation, (ii) threatening to revoke any license, franchise, permit or
government authorization or (iii) restricting or in any way limiting its
operations, except for such noncompliance, violations, revocations, limitations
and restrictions which would not, individually or in the aggregate, have a
Material Adverse Effect on Purchaser. None of Purchaser or any Purchaser
Subsidiary is subject to any regulatory or supervisory cease and desist order,
agreement, directive, memorandum of understanding or commitment which could be
reasonably anticipated to have a Material Adverse Effect on Purchaser, and none
of them has received any communication requesting that they enter into any of
the foregoing.
3.13. TAX MATTERS
(a) Purchaser and each Purchaser Subsidiary have timely
filed, or have timely requested filing extensions for, federal income tax
returns for each year through December 31, 1998 and have timely filed, or
caused to be filed, or have timely requested filing extensions for, all other
Tax Returns required to be filed with respect to Purchaser or any Purchaser
Subsidiary, except where the failure to file timely such federal income and
other Tax Returns would not, in the aggregate, have a Material Adverse Effect
on Purchaser. All Taxes due by or on behalf of Purchaser or any Purchaser
Subsidiary have been paid or adequate reserves have been established on the
Purchaser Financial Statements for the payment of such Taxes, except where any
such failure to pay or establish adequate reserves would not, in the aggregate,
have a Material Adverse Effect on Purchaser. Neither Purchaser nor any
Purchaser Subsidiary will have any material liability for any such Taxes in
excess of the amounts so paid or reserves or accruals so established except
where such liability would not have a Material Adverse Effect on Purchaser.
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(b) All Tax Returns filed by Purchaser and each Purchaser
Subsidiary are complete and accurate in all material respects. Neither
Purchaser nor any Purchaser Subsidiary is delinquent in the payment of any
material Tax, and, except as Previously Disclosed, none of them has requested
any extension of time within which to file any Tax Returns which have not since
been filed. Except as Previously Disclosed or as fully settled and paid or
accrued on the Purchaser Financial Statements, to Purchaser's knowledge, no
material audit examination, deficiency, adjustment, refund claim or litigation
with respect to Tax Returns, paid Taxes, unpaid Taxes or Tax attributes of
Purchaser or any Purchaser Subsidiary has been proposed, asserted or assessed
(tentatively or otherwise).
(c) Neither Purchaser nor any Purchaser Subsidiary is a
party to any agreement (other than an agreement exclusively among Purchaser and
the Purchaser Subsidiaries) providing for the allocation or sharing of, or
indemnification for, Taxes.
(d) Neither Purchaser nor any Purchaser Subsidiary is
required to include in income any adjustment in any taxable period ending after
the date hereof pursuant to Section 481(a) of the Code other than any
adjustment for which it already has made an accrual.
(e) Neither Purchaser nor any Purchaser Subsidiary has
executed or entered into any written agreement with any Tax authority conceding
or agreeing to any treatment of Taxes or Tax attributes, including, without
limitation, Internal Revenue Service Form 870 or Form 870-AD, closing agreement
or special closing agreement, affecting the Purchaser or any Purchaser
Subsidiary pursuant to Section 7121 of the Code or any predecessor provision
thereof or any similar provision of state, local or foreign law, which
agreement would have a Material Adverse Effect on Purchaser or any Purchaser
Subsidiary.
(f) For purposes of this Section 3.13 and Section 3.19,
(i) references to Purchaser and any Purchaser Subsidiary shall include
predecessors thereof and (ii) "Purchaser Subsidiary" shall include each
Subsidiary (as defined in Article 1 hereof) of Purchaser, and each corporation,
partnership, limited liability company, joint venture or other entity which
Purchaser controls directly or indirectly (through one or more intermediaries).
For purposes of the previous sentence, "control" means the possession, direct
or indirect, of the power either (1) to vote fifty percent (50%) or more of the
voting interests of a corporation, partnership, limited liability company,
joint venture or other entity, or (2) to direct or cause the direction of the
management and policies of a corporation, partnership, limited liability
company, joint venture or other entity, whether by contract or otherwise.
3.14. BROKERS AND FINDERS
Neither Purchaser nor any Purchaser Subsidiary, nor any of their
respective officers, directors or employees, has employed any broker, finder or
financial advisor or incurred any liability for any fees or commissions in
connection with the transactions contemplated herein or the Plan of Merger.
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3.15. INSURANCE
Purchaser and the Purchaser Subsidiaries each currently maintains
insurance in amounts considered by Purchaser and any Purchaser Subsidiary as
applicable, to be reasonably necessary for their operations. Neither Purchaser
nor any Purchaser Subsidiary has received any notice of a material premium
increase or cancellation with respect to any of its insurance policies or
bonds, and within the last three years, neither Purchaser nor any Purchaser
Subsidiary has been refused any insurance coverage sought or applied for, and
Purchaser has no reason to believe that existing insurance coverage cannot be
renewed as and when the same shall expire, upon terms and conditions
substantially as favorable as those presently in effect, other than possible
increases in premiums or unavailability in coverage that have not resulted from
any extraordinary loss experience of Purchaser or any Purchaser Subsidiary.
3.16. ENVIRONMENTAL LIABILITY
Neither Purchaser nor any Purchaser Subsidiary has received any
written notice of any legal, administrative, arbitral or other proceeding,
claim or action and, to the knowledge of Purchaser and the Purchaser
Subsidiaries, there is no governmental investigation of any nature ongoing, in
each case that could reasonably be expected to result in the imposition, on
Purchaser or any Purchaser Subsidiary of any liability arising under any local,
state or federal environmental statute, regulation or ordinance including,
without limitation, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, which liability would have a Material
Adverse Effect on Purchaser; except as Previously Disclosed, there are no facts
or circumstances known to Purchaser which could reasonably be expected to form
the basis for any such proceeding, claim, action or governmental investigation
that would impose any such liability; and neither Purchaser nor any Purchaser
Subsidiary is subject to any agreement, order, judgment, decree or memorandum
by or with any court, governmental authority, regulatory agency or third party
imposing any such liability.
3.17. CERTAIN INFORMATION
When the Registration Statement or any post-effective amendment
thereto shall become effective, and at all times subsequent to such
effectiveness up to and including the time of the Seller shareholders' meeting
to vote upon the Merger, such Registration Statement and all amendments or
supplements thereto, except with respect to all information set forth or
incorporated by reference therein furnished by Seller relating to Seller and
the Seller Subsidiaries, (i) shall comply in all material respects with the
applicable provisions of the Securities Laws, and (ii) shall not contain any
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements contained therein not
misleading. All information concerning Purchaser and its directors, officers,
shareholders and any Subsidiaries included (or submitted for inclusion) in any
application and furnished by it pursuant to Section 4.3 of this Agreement shall
be true, correct and complete in all material respects.
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3.18. YEAR 2000
The computer software operated by Purchaser or any Purchaser
Subsidiary which is material to the conduct of Purchaser's or any Purchaser
Subsidiary's business is capable of providing uninterrupted millennium
functionality to record, store, process and present calendar dates falling on
or after January 1, 2000 in substantially the same manner and with the same
functionality as such software records, stores, processes and presents such
calendar dates falling on or before December 31, 1999, and such software and
Purchaser or any Purchaser Subsidiary currently are otherwise in compliance
with all relevant Regulatory Authority guidance and requirements relating to
the Year 2000 computer issues including the statements of the Federal Financial
Institutions Examination Council, dated May 5, 1997, entitled "Year 2000
Project Management Awareness," and December 1997, entitled "Safety and
Soundness Guidelines Concerning the Year 2000 Business Risk." The costs of the
adaptations referred to in this clause will not have a Material Adverse Effect
on Purchaser.
3.19. TAX TREATMENT
As of the date of this Agreement, Purchaser knows of no reason
relating to it or any of the Purchaser Subsidiaries which would reasonably
cause it to believe that the Merger will not qualify as a reorganization under
Section 368(a) of the Code.
3.20. MERGER CONSIDERATION
Purchaser will have, at the Effective Time, unissued shares of Common
Stock and shares of Common Stock held in its treasury that are not reserved for
any other purpose sufficient to provide the Stock Consideration and also will
have available to it at the Effective Time funds sufficient to provide the Cash
Consideration.
ARTICLE 4.
COVENANTS
4.1. SHAREHOLDERS' MEETING
Seller shall submit this Reorganization Agreement and the Plan of
Merger to its shareholders for approval at a special meeting to be held as soon
as practicable. Subject to the fiduciary duties of the Board of Directors of
Seller as determined after consultation with counsel, the Board of Directors of
Seller shall recommend that the shareholders of Seller vote in favor of such
approval. At such meeting, subject to the fiduciary or contractual duties of
Purchaser with respect to shares of Seller Common Stock held in fiduciary
accounts, Purchaser shall, and shall cause its Subsidiaries to, cause all
shares of Seller Common Stock then owned by Purchaser or any such Subsidiary,
if any, to be voted in favor of the adoption of this Reorganization Agreement
and the Plan of Merger.
4.2. PROXY STATEMENT; REGISTRATION STATEMENT
As promptly as practicable after the date hereof, Purchaser and Seller
shall cooperate in the preparation of the Proxy Statement to be mailed to the
shareholders of Seller in connection with this Agreement and the transactions
contemplated hereby and to be filed by Purchaser as
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part of the Registration Statement. Purchaser and Seller shall cooperate in
the preparation of the Registration Statement and shall file with the
Commission the Registration Statement and cause the Registration Statement to
become effective as promptly as practicable after the date hereof. Purchaser
will advise Seller, promptly after it receives notice thereof, of the time when
the Registration Statement or any post-effective amendment thereto has become
effective or any supplement or amendment has been filed, of the issuance of any
stop order, of the suspension of qualification of the Purchaser Common Stock
issuable in connection with the Merger for offering or sale in any
jurisdiction, or the initiation or threat of any proceeding for any such
purpose, or of any comments or request by the SEC for the amendment or
supplement of the Registration Statement or for additional information. If at
any time prior to the Effective Time any event shall occur that should be set
forth in an amendment of or a supplement to the Registration Statement or the
Proxy Statement, Purchaser, Merger Sub and Seller shall cooperate with each
other in the preparation of any amendment or supplement thereto, and each shall
notify the other of the receipt of any comments of the SEC with respect to the
Registration Statement or the Proxy Statement and of any requests by the SEC
for any amendment or supplement thereto or for additional information, and
shall provide to the other promptly copies of all correspondence between
Purchaser or Seller, as the case may be, or any of its Representatives with
respect to the Registration Statement or the Proxy Statement. Purchaser shall
give Seller and its counsel the opportunity to review the Registration
Statement and all responses to requests for additional information by and
replies to comments of the SEC before their being filed with, or sent to, the
SEC, and Purchaser shall prepare and file with the SEC such amendment or
supplement as soon thereafter as is reasonably practicable. Each of Seller,
Purchaser and Merger Sub agrees to use its best efforts, after consultation
with the other parties hereto, to respond promptly to all such comments of and
requests by the SEC and to cause (x) the Registration Statement to be declared
effective by the SEC at the earliest practicable time and to be kept effective
as long as is necessary to consummate the Merger, and (y) the Proxy Statement
to be mailed to the holders of Seller Common Stock entitled to vote at the
meeting of the stockholders of Seller at the earliest practicable time.
Purchaser shall take all actions necessary to register or qualify the shares of
Purchaser Common Stock to be issued in the Merger pursuant to all applicable
state "blue sky" or securities laws and shall maintain such registrations or
qualifications in effect for all purposes hereof. Purchaser shall apply for,
and shall use reasonable best efforts to obtain, approval to list the shares of
Purchaser Common Stock to be issued in the Merger on the NYSE, subject to
official notice of issuance, prior to the Effective Date.
4.3. APPLICATIONS
As promptly as practicable after the date hereof, and after a
reasonable opportunity for review by counsel to Seller, Purchaser shall submit
any requisite applications for prior approval of, and notices with respect to,
the transactions contemplated herein, in the Plan of Merger and in the Bank
Merger Agreement, to (i) the Federal Reserve Board pursuant to Sections 3 and 4
of the Bank Holding Company Act and the Bank Merger Act, (ii) the New York
Banking Board pursuant to Section 142 of the New York Banking Law, and (iii)
the OCC pursuant to 12 C.F.R. Section 5.33(g)(3), and each of the parties
hereto shall, and they shall cause their respective subsidiaries to, submit any
applications, notices or other filings to any other state or federal government
agency, department or body the approval of which is required for consummation
of the Merger and the Bank Merger. Seller and Purchaser each represents and
warrants to the other that all information concerning it and its directors,
officers, shareholders and subsidiaries
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included (or submitted for inclusion) in any such application and furnished by
it shall be true, correct and complete in all material respects. Purchaser
will provide all information and communications requested by the applicable
governmental or regulatory authorities, and Purchaser will proceed diligently
and in good faith to obtain the requisite regulatory approvals.
4.4. BEST EFFORTS
(a) Subject to the terms and conditions of this
Agreement, Purchaser, Merger Sub, and Seller shall each use its reasonable best
efforts in good faith, and each of them shall cause its Subsidiaries to use
their reasonable best efforts in good faith, to (i) furnish such information as
may be required in connection with the preparation of the documents referred to
in Sections 4.2 and 4.3 above, and (ii) take or cause to be taken all action
necessary or desirable on its part so as to permit consummation of the Merger
on or at the earliest possible date, including, without limitation, (1)
obtaining the consent or approval of each individual, partnership, corporation,
association or other business or professional entity whose consent or approval
is required for consummation of the transactions contemplated hereby, provided
that neither Seller nor any Seller Subsidiary shall agree to make any payments
or modifications to agreements in connection therewith without the prior
written consent of Purchaser, which consent shall not be unreasonably withheld
and (2) requesting the delivery of appropriate opinions, consents and letters
from its counsel and independent auditors. Subject to the terms and conditions
of this Agreement, no party hereto shall take or fail to take, or cause or
permit its Subsidiaries to take or fail to take, or to the best of its ability
permit to be taken or omitted to be taken by any third persons, any action that
would substantially impair the prospects of completing the Merger pursuant to
this Reorganization Agreement and the Plan of Merger, that would materially
delay such completion, or that would adversely affect the qualification of the
Merger as a reorganization within the meaning of Section 368(a) of the Code;
provided that nothing herein contained shall preclude Purchaser from exercising
its rights under the Option Agreement. In the event that either party has
taken any action, whether before, on or after the date hereof, that would
adversely affect such qualification, each party shall take such action as the
other party may reasonably request to cure such effect to the extent curable
without a Material Adverse Effect on either of the parties.
(b) Unless prohibited by applicable law, Seller shall
give prompt notice to Purchaser, and Purchaser shall give prompt notice to
Seller, of (i) the occurrence, or failure to occur, of any event known to it
which occurrence or failure would be reasonably likely to cause any
representation or warranty contained in this Agreement to be untrue or
inaccurate at any time from the date hereof to the Closing Date such that the
condition set forth in Section 5.2(a) or 5.3(a), as applicable, would not be
met if such failure to be true or accurate were to occur or be continuing on
the Closing Date, and (ii) any material failure of Seller or Purchaser known to
Seller or Purchaser, as the case may be, to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder, and each party shall use all reasonable best efforts to remedy such
failure.
(c) From the date of this Agreement through the Effective
Date, to the extent permitted by law, Seller shall, and shall cause the Seller
Subsidiaries to, provide such assistance to Purchaser at Purchaser's expense
and as it shall reasonably request to assist Purchaser in converting and
transferring as soon as practicable after the Effective Date all information
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concerning the loans, deposits and other assets and liabilities of Seller and
the Seller Subsidiaries into Purchaser's own data processing system, with a
view to facilitating the integration of Purchaser's and Seller's systems and
otherwise combining Purchaser's and Seller's operations upon consummation of
the Merger; provided, however, that neither Seller nor any Seller Subsidiary
shall be required to take any action pursuant to this sentence that would
interfere unreasonably with the ongoing operations of Seller or such Seller
Subsidiary. After execution of this Agreement, to the extent permitted by law
and contracts to which they are a party, Seller shall provide Purchaser with
computer file instructions with respect to the information in its data
processing system regarding the assets and liabilities of Seller and the Seller
Subsidiaries, together with operational procedures designed to implement the
transfer of such information to Purchaser, with a view to facilitating the
integration of Purchaser's and Seller's systems and otherwise combining
Purchaser's and Seller's operations upon consummation of the Merger. After
execution of this Agreement, Seller and Purchaser shall each designate an
individual to serve as liaison concerning the transfer of data processing
information and other similar operational matters and to consult as to whether
and when Seller will proceed with its pending data processing conversion.
(d) In the event that this Agreement is terminated
without the transactions contemplated hereby having been consummated, upon the
request of Seller, Purchaser will and will cause its representatives to
promptly redeliver or cause to be redelivered, or, at its sole discretion,
destroy or caused to be destroyed, all copies of documents and information
furnished by Seller, as the case may be, or its representatives to such party
and its representatives in connection with this Agreement or the transactions
contemplated hereby and destroy or cause to be destroyed all notes, memoranda,
summaries, analyses, compilations and other writings related thereto or based
thereon prepared by Purchaser or its representatives.
(e) Each party shall provide and shall request its
auditors to provide the other party with such historical financial information
regarding it (and related audit reports and consents) as the other party may
reasonably request for disclosure purposes under the Securities Laws.
4.5. INVESTIGATION AND CONFIDENTIALITY
Seller and Purchaser each will keep the other advised of all material
developments relevant to its business and to consummation of the transactions
contemplated herein and in the Plan of Merger. Purchaser and Seller each may
make or cause to be made such investigation of the financial and legal
condition of the other as such party reasonably deems necessary or advisable in
connection with the transactions contemplated herein and in the Plan of Merger,
provided, however, that such investigation shall be conducted during normal
business hours on reasonable notice and shall be reasonably related to such
transactions and shall not interfere unnecessarily with normal operations.
Purchaser and Seller agree to furnish the other and the other's advisors with
such financial data and other information with respect to its business and
properties as such other party shall from time to time reasonably request. No
investigation pursuant to this Section 4.5 shall affect or be deemed to modify
any representation or warranty made by, or the conditions to the obligations to
consummate the Merger of, any party hereto. Each party hereto shall hold all
information furnished by the other party or any of such party's Subsidiaries or
representatives pursuant to this Agreement in confidence to the extent required
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by, and in accordance with, the provisions of the confidentiality agreement,
dated June 14, 2000, between Seller and Purchaser (the "Confidentiality
Agreement").
4.6. PRESS RELEASES
Seller and Purchaser shall agree with each other as to the form and
substance of any press release related to this Reorganization Agreement and the
Plan of Merger or the transactions contemplated hereby or thereby, and shall
consult each other as to the form and substance of other public disclosures
related thereto, provided, however, that nothing contained herein shall
prohibit any party, following notification to the other parties, from making
any disclosure which is required by applicable law or NYSE or Amex rules.
4.7. ACTIONS PENDING THE MERGER
(a) Prior to the Closing Date, and except as otherwise
provided for by this Reorganization Agreement, the Plan of Merger, the Option
Agreement, or consented to or approved by the other party hereto, each of
Purchaser and Seller shall, and shall cause each of its Subsidiaries to, use
its reasonable best efforts to preserve in all material respects its
properties, business and relationships with customers, employees and other
persons.
(b) Seller shall not, and shall not permit any of the
Seller Subsidiaries to, except with the prior written consent of Purchaser and
except as Previously Disclosed or expressly contemplated or permitted by this
Agreement, the Plan of Merger, or the Option Agreement:
(1) carry on its business other than in the
usual, regular and ordinary course in substantially the same manner as
heretofore conducted;
(2) in the case of Seller only, declare, set
aside, make or pay any dividend or other distribution in respect of its capital
stock other than its regular quarterly cash dividends on Seller Common Stock in
amounts not in excess of $0.15 per share except as permitted by Section 4.14;
(3) issue any shares of its capital stock or
permit any treasury shares to become outstanding other than pursuant to the
Option Agreement or pursuant to Seller's Dividend Reinvestment Plan or Rights
outstanding at the date hereof or that become outstanding hereafter in
accordance with the terms of this Agreement;
(4) incur any additional debt obligation or other
obligation for borrowed money other than in the ordinary course of business
consistent with past practice;
(5) issue, grant or authorize any Rights or
effect any recapitalization, reclassification, stock dividend, stock split or
like change in capitalization, or redeem, repurchase or otherwise acquire any
shares of its capital stock except for Trust Account Shares and DPC Shares, and
except for shares to be used to fulfill Seller's obligations under the Seller
Stock Option Plans, the Premier National Bancorp Retirement & Thrift Plan and
the Seller Dividend Reinvestment Plan; provided, however, that in order to
fulfill such obligations, Seller shall acquire the necessary shares of Seller
Common Stock solely through open market purchases or shall use
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shares of Seller Common Stock then held in treasury; notwithstanding the
foregoing, Seller may continue to purchase and place into treasury Seller
Common Stock in accordance with Seller's past practice, as Previously
Disclosed, subject to applicable legal restrictions;
(6) amend its articles or certificate of
incorporation or association or bylaws; impose, or suffer the imposition, on
any share of stock of any Seller Subsidiary held by Seller of any lien, charge
or encumbrance, or permit any such lien, charge or encumbrance to exist except,
in each case, for liens, charges and encumbrances which have been Previously
Disclosed;
(7) merge with any other corporation, savings
association or bank or permit any other corporation, savings association or
bank to merge into it or consolidate with any other corporation, savings
association or bank; acquire control over any other firm, bank, corporation,
savings association or organization or create any Subsidiary;
(8) waive or release any right or cancel or
compromise any debt or claim that is material to Seller on a consolidated
basis;
(9) liquidate or sell or dispose of any material
assets or acquire any material assets; except as Previously Disclosed, make any
capital expenditure in excess of $100,000 in any instance or $500,000 in the
aggregate; or, except as Previously Disclosed, establish new branches or other
similar facilities, close existing branches or similar facilities or enter into
or modify any leases or other contracts relating thereto;
(10) increase the rate of compensation of, pay or
agree to pay any bonus to, or provide any other employee benefit or incentive
to, any of its directors, officers or employees, except in a manner consistent
with past practice or as required by law or contractual obligation in effect as
of the date hereof, except that Seller may pay, in the ordinary course of
business in amounts consistent with Seller's past practice, all annual bonuses
for calendar 2000 to such employees who remain employed by Seller as of the
Closing Date in accordance with past practice and the terms of any bonus plan,
up to the aggregate amount Previously Disclosed to Purchaser.
(11) change its lending, investment,
asset/liability management or other material banking policies in any material
respect except as may be required by applicable law, regulation or order;
(12) change its methods of accounting in effect at
December 31, 1999, except as required by changes in generally accepted
accounting principles concurred in by its independent certified public
accountants, or change any of its methods of reporting income, deductions or
other items for federal income tax purposes from those employed in the
preparation of its federal income tax returns for the year ended December 31,
1999, except as required by applicable law;
(13) authorize or permit any of its officers,
directors, employees or agents to directly or indirectly solicit, initiate or
encourage any inquiries relating to, or the making of any proposal which
constitutes, a "Takeover Proposal" (as defined below), or, except to the extent
its Board of Directors determines to be legally required for the discharge of
its fiduciary duties, (i) recommend or endorse any Takeover Proposal, (ii)
participate in any discussions or negotiations, (iii) provide third parties
with any nonpublic information, relating to any such inquiry or proposal,
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or (iv) otherwise facilitate any effort or attempt to make or implement a
Takeover Proposal; provided, however, that Seller may communicate information
about any such Takeover Proposal to its shareholders if, in the judgment of
Seller's Board of Directors, after consultation with outside counsel, such
communication is necessary in order to comply with its fiduciary duties to
Seller's shareholders required under applicable law. Seller will take all
actions necessary or advisable to inform the appropriate individuals or
entities referred to in the first sentence hereof of the obligations undertaken
herein. Seller will notify Purchaser immediately if any such inquiries or
Takeover Proposals are received by, any such information is requested from, or
any such negotiations or discussions are sought to be initiated or continued
with, Seller, and Seller will promptly inform Purchaser in writing of all of
the relevant details with respect to the foregoing. As used in this Agreement,
"Takeover Proposal" shall mean any tender or exchange offer, proposal for a
merger, consolidation or other business combination involving Seller or any
Seller Subsidiary or any proposal or offer to acquire in any manner a
substantial equity interest in, or a substantial portion of the assets of,
Seller or any Seller Subsidiary other than the transactions contemplated or
permitted by this Agreement, the Plan of Merger and the Option Agreement; or
(14) agree to do any of the foregoing.
(c) Purchaser shall not, and shall not permit any of the
Purchaser Subsidiaries to, except with the prior written consent of Seller or
as expressly contemplated or permitted by this Agreement, the Plan of Merger or
the Option Agreement, carry on its business other than in the usual, regular
and ordinary course in substantially the same manner as heretofore conducted.
(d) For purposes of this Section 4.7, consent or written
consent, as the case may be, shall be deemed to have been given by a party if
such party has received a request for consent hereunder from the other party
and has not in any way responded to that request within 10 business days of the
receipt of such request. Purchaser will make available Michael P. Pinto, Gary
Paul and Michael Piemonte with respect to facilitating such consents.
4.8. CERTAIN POLICIES
Prior to the Effective Date, to the extent permitted by law, Seller
shall, consistent with generally accepted accounting principles and on a basis
mutually satisfactory to it and Purchaser, modify and change its loan,
litigation and real estate valuation policies and practices (including loan
classifications and levels of reserves) so as to be applied on a basis that is
consistent with that of Purchaser; provided, however, that Seller shall not be
obligated to take any such action pursuant to this Section 4.8 unless and until
(i) Purchaser irrevocably acknowledges to Seller in writing that all conditions
to its obligation to consummate the Merger have been satisfied; and (ii)
Purchaser irrevocably waives in writing any and all rights that it may have to
terminate this Agreement and Plan of Merger and Seller has obtained the
approval of this Reorganization Agreement and the Plan of Merger from its
shareholders.
4.9. CLOSING; ARTICLES OF MERGER
The transactions contemplated by this Reorganization Agreement and the
Plan of Merger shall be consummated at a closing to be held at the offices of
the law firm of Arnold & Porter, 399 Park Avenue, New York, New York on a date
between January 2, 2001 and February 15, 2001
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determined by the Purchaser with 5 days prior notice to Seller, or if later,
the first business day following satisfaction of the conditions to consummation
of the Merger set forth in Article 5 hereof other than conditions to be
satisfied at the Closing (such later date, the "Closing Date"). In connection
with such Closing, Merger Sub and Seller shall execute a certificate of merger
and shall cause such certificate to be delivered, as soon as practicable on the
Closing Date, to (i) the Delaware Secretary of State in accordance with Section
251(c) of the Delaware General Corporation Law, and (ii) the New York
Department of State in accordance with Section 904 of the New York Business
Corporation Law. The Merger shall be effective at the time and on the date
(the "Effective Date"), not later than two business days after the Closing
Date, specified in such certificate of merger.
4.10. AFFILIATES
Seller and Purchaser shall cooperate and use their best efforts to
identify those persons who may be deemed to be "affiliates" of Seller within
the meaning of Rule 145 promulgated by the Commission under the Securities Act.
Seller shall use its reasonable best efforts to cause each person so identified
to deliver to Purchaser, no later than 30 days prior to the Effective Date, a
written Affiliate Agreement in the form attached hereto as Exhibit A.
4.11. SELLER EMPLOYEES; DIRECTORS AND MANAGEMENT; INDEMNIFICATION
(a) On and after the Effective Date (or as soon
thereafter as may be practicable), all persons who are employed by Seller
and/or any of the Seller Subsidiaries on such date ("Seller Employees") shall
be employed on terms and conditions (including benefits) that in the aggregate
are no less favorable (as determined by Purchaser in its reasonable discretion
and good faith after consultation with Seller) with respect to their employment
by Purchaser and its Subsidiaries after the Effective Date than those generally
afforded to other similarly situated employees of Purchaser or its
Subsidiaries, subject to the terms and conditions under which those employee
benefits are made available to such employees and provided that (i) for
purposes of (A) determining eligibility for and vesting of such employee
benefits (and not for pension benefit accrual purposes), (B) determining levels
of short-term disability benefits, vacation benefits and severance benefits
under any severance pay arrangement (to the extent any such arrangement applies
to employees generally and gives credit for length of service with Purchaser or
a Purchaser Subsidiary), and (C) if applicable, satisfying any waiting periods
concerning "preexisting conditions," service with Seller or a Seller Subsidiary
or any predecessor thereto prior to the Effective Date shall be treated as
service with an "employer" to the same extent as if such persons had been
employees of Purchaser, and (ii) copayments and expenses paid by the Seller
Employees prior to the Effective Date under the Seller Plans that provide
medical benefits shall be treated as if paid under Purchaser's employee benefit
plans that provide medical benefits for purposes of determining satisfaction of
copayment and deductible requirements under such Purchaser plans, and provided,
further, that this Section 4.11(a) shall not be construed (A) to limit the
ability of Purchaser and its Subsidiaries to terminate the employment of any
employee at any time for any reason or to review employee benefits programs
from time to time and to make such changes as they deem appropriate or (B) to
require Purchaser or its Subsidiaries to provide employees or former employees
of Seller or any of its Subsidiaries with post-retirement medical benefits more
favorable than those provided to new hires at Purchaser. Purchaser agrees to
honor, or to cause the appropriate Purchaser Subsidiary
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to honor, in accordance with their terms all employment, severance and employee
benefit plans, contracts, agreements and arrangements, and understandings
Previously Disclosed, provided, however, that the foregoing shall not prevent
Purchaser from amending or terminating any such plan, contract, or agreement in
accordance with its terms and applicable law. The continued coverage of the
Seller Employees under the employee benefit plans maintained by Seller and/or
any Seller Subsidiary immediately prior to the Effective Date (the "Seller
Plans") during a transition period of no more than 6 months shall be deemed to
provide the Seller Employees with benefits that are no less favorable than
those offered to other employees of Purchaser and any Purchaser Subsidiary;
provided, that after the Effective Date there is no material reduction in the
benefits provided under the Seller Plans. No provision of this Section 4.11(a)
shall create any third party beneficiary rights in any employee or former
employee of Seller (including any beneficiary or dependent thereof) in respect
of continued employment (or resumed employment) or any other matter.
(b) The Merger shall be deemed to constitute a "change in
control" for purposes of each Seller Plan, employment, severance, consulting
and change in control agreement that, as Previously Disclosed to Purchaser,
contains "change in control" provisions. On and after the Effective Date, the
individuals Previously Disclosed to Purchaser (the "Previously Disclosed
Individuals") shall be deemed to have "good reason" or to have experienced a
"triggering event" as the case may be under their respective employment
agreements with Seller, all as Previously Disclosed to Purchaser.
(c) Prior to the Effective Date, Seller shall take all
actions that may be requested by Purchaser in writing upon advance notice of
not less than 45 days with respect to (i) causing one or more Seller Plans to
terminate as of the Effective Date or for benefit accrual and entitlements to
cease as of the Effective Date, (ii) causing the continuation on and after the
Effective Date of any contract, arrangement or insurance policy relating to any
Seller Plan for such period as may be requested by Purchaser, or (iii)
cooperating with Purchaser to facilitate the merger of any Seller Plan into any
Purchaser Plan on or following the Effective Date. ; provided, however, that
with respect to any such action: (1) Purchaser shall, at Seller's request,
reimburse Seller for reasonable out-of-pocket expenses incurred by Seller with
respect to such action; (2) such action shall have no material effect on the
Seller Plans prior to the Effective Date; (3) Seller shall not be required to
take any action that would result in a breach of its obligations under this
Agreement; and (4) Seller shall not be required to take any action that would
result in a violation of the terms of any Seller Plan or of any applicable law
or regulation.
(d) Purchaser's Board of Directors shall take all
requisite action to elect, as of the Effective Date, Mr. T. Jefferson
Cunningham III as a director of Purchaser, and, subject to the Board's
fiduciary duties, shall nominate Mr. Cunningham for re-election as a director
of Purchaser for the next succeeding three years.
(e) Purchaser shall cause Purchaser Bank's Board of
Directors to take all requisite action to elect, as of the Effective Date, Mr.
T. Jefferson Cunningham III as a director of Purchaser Bank, and shall cause
the board of directors of Purchaser Bank, subject to the board's fiduciary
duties, to nominate Mr. Cunningham for re-election as a director of Purchaser
Bank for the next succeeding three years.
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(f) In the event of any threatened or actual claim,
action, suit, proceeding or investigation, whether civil, criminal or
administrative, including, without limitation, any such claim, action, suit,
proceeding or investigation in which any person who is now, or has been at any
time prior to the date of this Agreement, or who becomes prior to the Effective
Date, a director or officer of Seller (the "Indemnified Parties") is, or is
threatened to be, made a party based in whole or in part on, or arising in
whole or in part out of, or pertaining to (i) the fact that he is or was a
director, officer or employee of Seller, or any Seller Subsidiary or any of
their respective predecessors or (ii) this Agreement, the Plan of Merger, the
Option Agreement or any of the transactions contemplated hereby or thereby,
whether in any case asserted or arising before or after the Effective Date, the
parties hereto agree to cooperate and use their best efforts to defend against
and respond thereto. On and after the Effective Date, Purchaser shall
indemnify and hold harmless, as and to the fullest extent permitted by law,
each such Indemnified Party against any losses, claims, damages, liabilities,
costs, expenses (including reasonable attorney's fees and expenses in advance
of the final disposition of any claim, suit, proceeding or investigation to
each Indemnified Party to the fullest extent permitted by law upon receipt of
any undertaking required by applicable law), judgments, fines and amounts paid
in settlement in connection with any such threatened or actual claim, action,
suit, proceeding or investigation, and in the event of any such threatened or
actual claim, action, suit, proceeding or investigation (whether asserted or
arising before or after the Effective Date), the Indemnified Parties may retain
counsel reasonably satisfactory to them after consultation with Purchaser;
provided, however, that (1) Purchaser shall have the right to assume the
defense thereof and upon such assumption Purchaser shall not be liable to any
Indemnified Party for any legal expenses of other counsel or any other expenses
subsequently incurred by any Indemnified Party in connection with the defense
thereof, except that if Purchaser elects not to assume such defense or counsel
for the Indemnified Parties reasonably advises the Indemnified Parties that
there are issues which raise conflicts of interest between Purchaser and the
Indemnified Parties, the Indemnified Parties may retain counsel reasonably
satisfactory to them after notification, and Purchaser shall pay the reasonable
fees and expenses of such counsel for the Indemnified Parties, (2) Purchaser
shall be obligated pursuant to this paragraph to pay for only one firm of
counsel for all Indemnified Parties, (3) Purchaser shall not be liable for any
settlement effected without its prior written consent (which consent shall not
be unreasonably withheld), and (4) Purchaser shall have no obligation hereunder
to any Indemnified Party when and if a court of competent jurisdiction shall
ultimately determine, and such determination shall have become final and
nonappealable, that indemnification of such Indemnified Party in the manner
contemplated hereby is prohibited by applicable law. Any Indemnified Party
wishing to claim Indemnification under this Section 4.11(f), upon learning of
any such claim, action, suit, proceeding or investigation, shall promptly
notify Purchaser thereof, provided that the failure of any Indemnified Party to
so notify Purchaser shall not relieve it of its obligations hereunder except
(and only) to the extent that such failure materially prejudices Purchaser.
(g) Purchaser agrees that all rights to indemnification
and all limitations on liability existing in favor of the directors, officers
and employees of Seller and any Seller Subsidiary (the "Covered Parties") as
provided in their respective Certificates of Incorporation, Bylaws or similar
governing documents as in effect as of the date of this Agreement with respect
to matters occurring prior to the Effective Date shall survive the Merger and
shall continue in full force and effect, and shall be honored by such entities
or their respective successors as if they were the indemnifying party
thereunder, without any amendment thereto, for a period of six
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years from the Effective Date; provided, however, that all rights to
indemnification in respect of any claim ("Claim") asserted or made within such
period shall continue until the final disposition of such Claim; provided,
further, however, that nothing contained in this Section 4.11(g) shall be
deemed to preclude the liquidation, consolidation or merger of Seller or any
Seller Subsidiary, in which case all of such rights to indemnification and
limitations on liability shall be deemed to so survive and continue as an
obligation of Purchaser or the successor to Seller or the Seller Subsidiary
notwithstanding any such liquidation, consolidation or merger.
(h) Purchaser, from and after the Effective Date will use
its reasonable best efforts directly or indirectly to cause the persons who
served as directors or officers of Seller on or before the Effective Date to be
covered by Seller's existing directors' and officers' liability insurance
policy (provided that Purchaser may substitute therefor policies of at least
the same coverage and amounts containing terms and conditions which are not
less advantageous than such policy) but in no event shall any insured person be
entitled under this Section 4.11(h) to insurance coverage more favorable than
that provided to him or her in such capacities as of the date hereof with
respect to acts or omissions resulting from their service as such on or prior
to the Effective Date. Such insurance coverage, if available, shall commence
on the Effective Date and will be provided for a period of no less than four
years after the Effective Date; provided, however, that in no event shall
Purchaser be required to expend more than 200% of the current amount expended
by Seller (the "Insurance Amount") to maintain or procure insurance coverage
pursuant hereto and, provided, further, that the Insurance Amount shall be
deemed reasonable for purposes of this Section 4.11(h). Seller agrees to renew
any such existing insurance or to purchase any "discovery period" insurance
provided for thereunder at Purchaser's request.
(i) In the event Purchaser or any of its successors or
assigns (i) consolidates with or merges into any other person and shall not be
the continuing or surviving corporation or entity of such consolidation or
merger, or (ii) transfers or conveys all or substantially all of its properties
and assets to any person, then, and in each such case, to the extent necessary,
proper provision shall be made so that the successors and assigns of Purchaser
assume the obligations set forth in this section.
(j) The provisions of Section 4.11(f), (g), (h) and (i)
are intended to be for the benefit of, and shall be enforceable by, each
Indemnified Party and their respective heirs and representatives and shall be
in addition to the provisions regarding indemnification and insurance contained
in the New York Business Corporation Law, in contracts or otherwise.
4.12. SELLER SUBSIDIARIES
Seller undertakes and agrees that, if reasonably so requested by
Purchaser, it shall take all necessary action to facilitate the merger of
Seller Subsidiaries with Subsidiaries of Purchaser or the dissolution of such
Seller Subsidiaries effective at or after the Effective Date; provided however,
that in no event shall the Closing be delayed in order to facilitate any such
merger or dissolution and provided, further, however, that Seller shall not be
required to take any action that could adversely affect the qualification of
the Merger as a reorganization within the meaning of Section 368(a) of the
Code.
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4.13. VOTING AGREEMENTS
Each director of Seller shall, within 30 days of the date hereof,
enter into a voting agreement with Purchaser pursuant to which such director
agrees to vote all shares of Seller Common Stock with respect to which such
director shall have voting rights on the record date for the special meeting of
Seller in favor of the Merger and further agrees not to dispose of any shares
of Seller Common Stock he or she holds as of the date of such voting agreement
prior to the close of business on such record date.
4.14. DIVIDENDS
After the date of this Agreement, each of Purchaser and Seller shall
coordinate with the other the declaration of any dividends in respect of
Purchaser Common Stock and Seller Common Stock and the record dates and payment
dates relating thereto, it being the intention of the parties hereto that
holders of Purchaser Common Stock or Seller Common Stock shall not receive two
dividends, or fail to receive one dividend, for any single calendar quarter
with respect to their shares of Purchaser Common Stock and/or Seller Common
Stock and any shares of Purchaser Common Stock any such holder receives in
exchange therefor in the Merger. Notwithstanding the foregoing limitation, the
holders of Seller Common Stock shall be entitled to receive dividends at the
current level on a pro rata basis for any period less than a calendar quarter
up to the Effective Date, provided that in determining the amount of any
special dividend on Seller Common Stock, Seller shall deduct the pro rata
portion of any dividend in respect of Purchaser Common Stock for the same
period at the current rate to be received by such holders with respect to such
period, taking into account the expected Exchange Ratio.
4.15. ADVISORY BOARDS
Promptly following the Effective Date, Purchaser shall cause (i) 10
members of Seller's Board of Directors, identified by Seller prior to the
Effective Date and reasonably acceptable to Purchaser to become members of the
Hudson Valley Advisory Board of Purchaser Bank (the "Advisory Board"), (ii) Mr.
T. Jefferson Cunningham III to be elected Chairman of the Advisory Board and
(iii) such members to be appointed or elected for a period of not less than 24
months after the Effective Date as members of the Advisory Board, the function
of which is to advise Purchaser Bank on business conditions and opportunities
in the Hudson Valley region and on such other matters as Purchaser Bank may
reasonably or customarily request of such a Board. Each such advisory director
shall be paid for such services a fee according to a fee schedule to be
established by Purchaser; provided, however, that notwithstanding anything else
in this Section 4.15, no fee shall be paid for meetings of the Advisory Board
not actually attended; and Purchaser Bank shall have no obligation to continue
the services of any member of the Advisory Board who acts in a manner
detrimental to Purchaser Bank.
4.16. SECTION 16
Seller shall, reasonably promptly following the date hereof, provide
to Purchaser a list of (a) the directors and officers (as such terms are used
under Section 16 of the Exchange Act and the rules and regulations of the SEC
thereunder) of Seller, (b) the number of shares of Purchaser Common Stock and
options thereon expected to be received pursuant to the Merger, as
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appropriate, by each such officer or director on the Effective Date on account
of shares of Seller Common Stock, and options thereon, reasonably expected to
be held by such directors and officers immediately prior to the Effective Date
and (c) a description of the material terms of such options. Prior to the
Effective Date, (a) the Seller Board of Directors shall take such actions
consistent with the SEC's interpretive guidance to approve the disposition of
Seller Common Stock, and options thereon, by each director and officer of
Seller for purposes of Rule 16b-3(e) such that the deemed "sale" of such Seller
Common Stock and options thereon by such persons pursuant to the Merger shall
be exempt from liability pursuant to Section 16(b) of the Exchange Act, and (b)
the Purchaser Board of Directors shall take such action consistent with the
SEC's interpretive guidance to approve the acquisition of Purchaser Common
Stock by each director and officer of Purchaser for purposes of Rule 16b-3(d)
under the Exchange Act such that the deemed "purchase" of such Purchaser Common
Stock, and options thereon, by such persons pursuant to the Merger shall be
exempt from liability pursuant to Section 16(b) of the Exchange Act.
4.17. TAKEOVER LAWS
No party hereto shall take any action that would cause the
transactions contemplated by this Reorganization Agreement, the Plan of Merger
or the Option Agreement to be subject to the 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 Reorganization Agreement, the Plan of Merger and the
Option Agreement from, or if necessary challenge the validity or applicability
of, any applicable Takeover Law, as now or hereafter in effect.
ARTICLE 5.
CONDITIONS PRECEDENT
5.1. CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER, MERGER SUB
AND SELLER
The respective obligations of the parties to effect the Merger shall
be subject to satisfaction or waiver of the following conditions at or prior to
the Closing Date:
(a) The stockholder approval contemplated by Section 2.5
hereof, shall have been duly and validly taken;
(b) The parties hereto shall have received all regulatory
approvals required or mutually deemed necessary in connection with the
transactions contemplated by this Reorganization Agreement, the Plan of Merger
and the Bank Merger Agreement, all notice periods and waiting periods required
after the granting of any such approvals shall have passed and all conditions
contained in any such approval required to have been satisfied prior to
consummation of such transactions shall have been satisfied, provided, however,
that no such approval shall have imposed any condition or requirement that, in
the reasonable opinion of the Board of Directors of Purchaser or Seller so
materially and adversely affects the anticipated economic and business benefits
to Purchaser or Seller, respectively, of the transactions contemplated by this
Agreement as to render consummation of such transactions inadvisable;
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(c) The Registration Statement (including any
post-effective amendment thereto) shall be effective under the Securities Act,
and no proceeding shall be pending, or to the knowledge of Purchaser,
threatened by the Commission to suspend the effectiveness of such Registration
Statement, and Purchaser shall have received all state securities or "Blue Sky"
permits or other authorizations, or confirmations as to the availability of an
exemption from registration requirements as may be necessary;
(d) To the extent that any lease, license, loan,
financing agreement or other contract or agreement to which Seller or any
Seller Subsidiary is a party requires the consent of or waiver from the other
party thereto as a result of the transactions contemplated by this Agreement,
such consent or waiver shall have been obtained, unless the failure to obtain
such consents or waivers, individually or in the aggregate, would not have a
Material Adverse Effect on Seller;
(e) None of the parties hereto shall be subject to any
order, decree or injunction of a court or agency of competent jurisdiction
which enjoins or prohibits the consummation of the transactions contemplated by
this Reorganization Agreement and the Plan of Merger;
(f) The shares of Purchaser Common Stock that may be
issued in the Merger shall have been approved for listing on the NYSE, subject
to official notice of issuance; and
(g) Purchaser shall have received an opinion of Arnold &
Porter, and Seller shall have received an opinion from Milbank, Tweed, Hadley &
McCloy LLP, in each case in form and substance reasonably satisfactory to
Purchaser and Seller, as the case may be, dated as of the Effective Date,
substantially to the effect that, on the basis of facts, representations and
assumptions set forth or referred to in such opinion, the Merger will be
treated for federal income tax purposes as a reorganization or part of a
reorganization within the meaning of Section 368(a) of the Code, and that,
provided the Merger is such a reorganization:
(i) Seller, Purchaser and Merger Sub will each be
a party to such reorganization within the meaning of Section 368(b) of the
Code;
(ii) No gain or loss will be recognized by
Purchaser, Merger Sub or Seller as a result of the Merger (except for amounts
resulting from any required change in accounting methods, any income and
deferred gain recognized pursuant to Treasury regulations issued under Section
1502 of the Code, or other exceptions as set forth in such opinion);
(iii) No gain or loss will be recognized by Seller
shareholders with respect to shares of Purchaser Common Stock received in
exchange for all of their shares of Seller Common Stock;
(iv) The gain, if any, realized by Seller
shareholders who receive Purchaser Common Stock and cash (other than cash in
lieu of a fractional share interest of Purchaser Common Stock) in exchange for
their shares of Seller Common Stock, will be recognized by each such
shareholder, but in an amount not in excess of the amount of cash received. If
the exchange has the effect of the distribution of a dividend, then the amount
of the
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gain recognized shall be treated as a dividend. No loss will be recognized by
such Seller shareholders on the exchange;
(v) Each seller shareholder's aggregate tax basis
in any shares of Purchaser Common Stock received in the transaction will be the
same as the aggregate tax basis of the shares of Seller Common Stock such
shareholder surrendered in the exchange therefor, decreased by the amount of
any cash received by the shareholder and increased by the amount of any income
or gain recognized by the shareholder in the exchange; and
(vi) Each Seller shareholder's holding period in
any shares of Purchaser Common Stock received in the transaction will, in each
instance, include the period during which the shares of Seller Common Stock
surrendered in exchange therefor were held, provided that such shares of Seller
Common Stock were held as capital assets by the shareholder on the Effective
Date.
In rendering the opinions described in this subsection (g), Arnold &
Porter and Milbank, Tweed, Hadley & McCloy LLP may rely on representations and
facts as provided by Purchaser and Seller, including, without limitation, the
representations set forth in Revenue Procedure 86-42, 1986-2 C.B. 722.
5.2. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
The obligations of Seller to effect the Merger shall be subject to
satisfaction of the following additional conditions at or prior to the Closing
Date unless waived by Seller pursuant to Section 6.4 hereof:
(a) The representations and warranties of Purchaser and
Merger Sub set forth in Article 3 hereof shall be true and correct in all
material respects as of the date of this Reorganization Agreement and as of the
Closing Date as though made on and as of the Closing Date (or on the date when
made in the case of any representation and warranty which specifically relates
to an earlier date), except as otherwise contemplated by this Reorganization
Agreement or consented to in writing by Seller; provided, however, that (i) in
determining whether or not the condition contained in this paragraph (a) shall
be satisfied, no effect shall be given to any exceptions in such
representations and warranties relating to materiality or Material Adverse
Effect and (ii) the condition contained in this paragraph (a) shall be deemed
to be satisfied unless the failure of such representations and warranties to be
so true and correct constitute, individually or in the aggregate, a Material
Adverse Effect on Purchaser;
(b) Purchaser and Merger Sub shall have in all material
respects performed all obligations and complied with all covenants required by
this Reorganization Agreement and the Plan of Merger to be performed or
complied with at or prior to the Closing Date;
(c) Each of Purchaser and Merger Sub shall have delivered
to Seller a certificate, dated the Closing Date and signed by its respective
Chairman, CEO, Executive Vice President or Senior Vice President to the effect
that the conditions set forth in paragraphs (a) and (b) of this section have
been satisfied; and
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(d) T. Jefferson Cunningham III shall have been elected
as a member of the Board of Directors of Purchaser and Purchaser Bank,
effective upon the Effective Date, and the Consulting Agreement between Mr.
Cunningham and Purchaser dated the date hereof shall remain in full force and
effect unless terminated in accordance with the terms thereof.
5.3. CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER AND MERGER SUB
The respective obligations of Purchaser and Merger Sub to effect the
Merger shall be subject to satisfaction of the following additional conditions
at or prior to the Closing Date unless waived by Purchaser pursuant to Section
6.4 hereof:
(a) The representations and warranties of Seller set
forth in Article 2 hereof shall be true and correct in all material respects as
of the Closing Date as though made on and as of the Closing Date (or on the
date when made in the case of any representation and warranty which
specifically relates to an earlier date), except as affected by the
transactions contemplated by this Reorganization Agreement or consented to in
writing by Purchaser; provided, however, that (i) in determining whether or not
the condition contained in this paragraph (a) shall be satisfied, no effect
shall be given to any exceptions in such representations and warranties
relating to materiality or Material Adverse Effect and (ii) the condition
contained in this paragraph (a) shall be deemed to be satisfied unless the
failure of such representations and warranties to be so true and correct
constitute, individually or in the aggregate, a Material Adverse Effect on
Seller;
(b) Seller shall have in all material respects performed
all obligations and complied with all covenants required by this Reorganization
Agreement and the Plan of Merger to be performed or complied with at or prior
to the Closing Date; and
(c) Seller shall have delivered to Purchaser and Merger
Sub a certificate, dated the Closing Date and signed by its Chairman, President
and Chief Executive Officer or any Executive Vice President to the effect that
the conditions set forth in paragraphs (a) and (b) of this section have been
satisfied.
ARTICLE 6.
TERMINATION, WAIVER AND AMENDMENT
6.1. TERMINATION
This Reorganization Agreement and the Plan of Merger may be
terminated, either before or after approval by the shareholders of Seller:
(a) At any time on or prior to the Effective Date, by the
mutual consent in writing of the parties hereto;
(b) At any time on or prior to the Closing Date, by
Purchaser in writing, if Seller has, or by Seller in writing, if Purchaser or
Merger Sub has, in any material respect, breached (i) any covenant or agreement
contained herein or in the Plan of Merger or (ii) any representation or
warranty contained herein, and in either case (x) such breach has not been
cured by 30 days after the date on which written notice of such breach is given
to the party
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committing such breach and (y) such breach would entitle the non-breaching
party not to consummate the transactions contemplated hereby under Article 5
hereof;
(c) At any time, by any party hereto in writing, if the
applications for prior approval referred to in Section 4.3 hereof have been
finally denied, and the time period for appeals and requests for
reconsideration has run, or if any governmental entity of competent
jurisdiction shall have issued a final nonappealable order enjoining or
otherwise prohibiting the Merger;
(d) At any time, by any party hereto in writing, if the
shareholders of Seller do not approve the transactions contemplated herein upon
a vote held at the special meeting duly called for that purpose or any
adjournment thereof;
(e) By any party hereto in writing, if the Closing Date
has not occurred by the close of business on June 30, 2001 unless the failure
of the Closing to occur by such date shall be due to the failure of the party
seeking to terminate this Agreement to perform or observe the covenants and
agreements set forth herein;
(f) By Seller, upon the execution by Seller of a
definitive agreement relating to a Takeover Proposal (as defined in Section
4.7(b)(13)), provided that (i) Seller shall have complied with its obligations
under Section 4.7(b)(13) hereof, (ii) the Board of Directors of Seller shall
have determined, after having received the advice of outside legal counsel to
Seller and the advice of Seller's financial advisor, that such action is
necessary for the Board of Directors to act in a manner consistent with its
fiduciary duties under applicable law and (iii) concurrent with its
notification of termination, Seller will wire to an account designated by
Purchaser $24 million in immediately available funds, less Total Profit as
defined in the Option Agreement, if any, theretofor actually realized by
Purchaser, whereupon the option granted to Purchaser pursuant to the Option
Agreement shall lapse (including with respect to shares as to which an exercise
has been made under the Stock Option Agreement but which shares have not yet
been issued); or
(g) At any time, by Seller, if there is a "change of
control" of Purchaser (as defined below). A "change of control" shall mean any
business combination involving Purchaser following which the shareholders of
Purchaser immediately before the business combination own less than 60% of the
shares of the survivor.
6.2. EFFECT OF TERMINATION
In the event this Reorganization Agreement and the Plan of Merger is
terminated pursuant to Section 6.1 hereof, this Agreement and the Plan of
Merger shall become void and have no effect, except that (i) the provisions
relating to confidentiality and expenses set forth in Sections 4.5 and 7.1
hereof, respectively, shall survive any such termination and (ii) a termination
pursuant to Section 6.1(b)(i) or (b)(ii) shall not relieve the breaching party
from liability for an uncured willful breach of such covenant or agreement or
representation or warranty giving rise to such termination.
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6.3. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS
All representations, warranties and covenants in this Reorganization
Agreement and the Plan of Merger or in any instrument delivered pursuant hereto
or thereto shall expire on, and be terminated and extinguished at, the
Effective Date other than covenants that by their terms are to survive or be
performed after the Effective Date; provided, that no such representations,
warranties or covenants shall be deemed to be terminated or extinguished so as
to deprive Purchaser, Merger Sub or Seller (or any director, officer or
controlling person thereof) of any defense in law or equity which otherwise
would be available against the claims of any person, including, without
limitation, any shareholder or former shareholder of either Purchaser or
Seller, the aforesaid representations, warranties and covenants being material
inducements to the consummation by Purchaser, Merger Sub and Seller of the
transactions contemplated herein.
6.4. WAIVER
Except where not permitted by law, Purchaser and Seller, respectively,
by written instrument signed by an executive officer of such party, may at any
time (whether before or after approval of this Reorganization Agreement and the
Plan of Merger by the shareholders of Purchaser and Seller) extend the time for
the performance of any of the obligations or other acts of Seller, on the one
hand, or Purchaser or Merger Sub, on the other hand, and may waive (i) any
inaccuracies of such parties in the representations or warranties contained in
this Agreement, the Plan of Merger or any document delivered pursuant hereto or
thereto, (ii) compliance with any of the covenants, undertakings or agreements
of such parties, or satisfaction of any of the conditions precedent to its
obligations, contained herein or in the Plan of Merger or (iii) the performance
by such parties of any of its obligations set out herein or therein; provided,
however, that no such waiver, or amendment or supplement contemplated by
Section 6.5, executed after approval of this Reorganization Agreement and the
Plan of Merger by the shareholders of Seller shall, without the further
approval thereof, change the amount or kind of Merger Consideration.
6.5. AMENDMENT OR SUPPLEMENT
This Reorganization Agreement and the Plan of Merger may be amended or
supplemented at any time only by mutual agreement of the parties hereto or
thereto. Any such amendment or supplement must be in writing and approved by
their respective Boards of Directors and/or officers authorized thereby and
shall be subject to the proviso in Section 6.4 hereto.
ARTICLE 7.
MISCELLANEOUS
7.1. EXPENSES
Each party hereto shall bear and pay all costs and expenses incurred
by it in connection with the transactions contemplated in this Reorganization
Agreement, including fees and expenses of its own financial consultants,
accountants and counsel, except that Purchaser and Seller each shall bear and
pay 50% of all printing and mailing costs and filing fees associated with the
Registration Statement and the Proxy Statement.
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7.2. ENTIRE AGREEMENT
This Reorganization Agreement, the Plan of Merger and the Option
Agreement contain the entire agreement between the parties with respect to the
transactions contemplated hereunder and thereunder and supersede all prior
arrangements or understandings with respect thereto, written or oral, other
than documents referred to herein or therein and the Confidentiality Agreement,
which shall survive the execution and delivery of this Agreement, except as
inconsistent herewith. The terms and conditions of this Reorganization
Agreement and the Plan of Merger shall inure to the benefit of and be binding
upon the parties hereto and thereto and their respective successors. Except as
specifically set forth herein (including as set forth in Section 4.11(j) hereof
and, with respect to the Previously Disclosed Individuals, Section 4.11(b)
hereof), or in the Plan of Merger, nothing in this Reorganization Agreement or
the Plan of Merger, expressed or implied, is intended to confer upon any party,
other than the parties hereto and thereto, and their respective successors, any
rights, remedies, obligations or liabilities. This Reorganization Agreement and
the Plan of Merger, taken together, shall constitute a plan of reorganization
within the meaning of Section 368 of the Code.
7.3. NO ASSIGNMENT
No party hereto may assign any of its rights or obligations under this
Reorganization Agreement to any other person.
7.4. ALTERNATIVE STRUCTURE
Notwithstanding any provision of this Reorganization Agreement to the
contrary, Purchaser may, with the written consent of Seller, which shall not be
unreasonably withheld, elect, subject to the filing of all necessary
applications and the receipt of all required regulatory approvals, to modify
the structure of the acquisition of Seller and the Seller Subsidiaries set
forth herein, provided, that (i) the federal income tax consequences of any
transactions created by such modification shall not be other than those set
forth in Section 5.1(g) hereof, (ii) the consideration to be paid to the
holders of the Seller Common Stock is not thereby changed in kind or reduced in
amount as a result of such modification and (iii) such modification will not
materially delay or jeopardize the consummation of the transactions
contemplated by the Reorganization Agreement and the Plan of Merger.
7.5. NOTICES
All notices or other communications which are required or permitted
hereunder shall be in writing and sufficient if delivered personally or sent
and received by facsimile transmission or overnight express or by registered or
certified mail, postage prepaid, addressed as follows:
If to Seller:
Premier National Bancorp, Inc.
P.O. Box 310
Route 55
Lagrangeville, New York 12540
Attn: T. Jefferson Cunningham III, Chairman
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Facsimile No: 914-471-1114
With a required copy to:
Milbank, Tweed, Hadley & McCloy LLP
1 Chase Manhattan Plaza
New York, New York 10005-1413
Attn: Robert O'Hara, Esq.
Facsimile No: 212-530-5219
If to Purchaser or Merger Sub:
M&T Bank Corporation
One M&T Plaza
Buffalo, New York 14240
Attn: Michael Pinto, Executive Vice President and Chief
Financial Officer
Facsimile No: 716-842-5177
With a required copy to:
M&T Bank Corporation
One M&T Plaza
Buffalo, New York 14240
Attn: Richard A. Lammert, Esq.
Facsimile No: 716-842-5177
and to:
Arnold & Porter
555 Twelfth Street, N.W.
Washington, D.C. 20004
Attn: Steven Kaplan, Esquire
Facsimile No: 202-942-5999
7.6. CAPTIONS
The captions contained in this Reorganization Agreement are for
reference purposes only and are not part of this Reorganization Agreement.
7.7. COUNTERPARTS
This Reorganization Agreement may be executed in any number of
counterparts, and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
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7.8. GOVERNING LAW
This Reorganization Agreement shall be governed by and construed in
accordance with the laws of the State of New York applicable to agreements made
and entirely to be performed within such jurisdiction, except to the extent
federal law may be applicable.
7.9. INVALID PROVISIONS
If any provision of this Agreement is held to be illegal, invalid or
unenforceable under any present or future law or order, and if the rights or
obligations of any party hereto under this Agreement will not be materially and
adversely affected thereby, (i) such provision will be fully severable, (ii)
this Agreement will be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part hereof, and (iii) the
remaining provision of this Agreement will remain in full force and effect and
will not be affected by illegal, invalid or unenforceable provision or by its
severance herefrom.
7.10. ENFORCEMENT OF AGREEMENT
The parties hereto agree that irreparable damage would occur in the
event that any of the provisions of this Agreement was not performed in
accordance with its specified terms or was otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof in any court of competent jurisdiction, this
being in addition to any other remedy to which they are entitled at law or in
equity.
[Remainder of this page left intentionally blank.]
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IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have caused this Reorganization Agreement to be executed in
counterparts by their duly authorized officers and their corporate seal to be
hereunto affixed and attested by their officers thereunto duly authorized, all
as of the day and year first above written.
<TABLE>
<S> <C>
Attest M&T BANK CORPORATION
/s/ Michael S. Piemonte By /s/ Michael P. Pinto
-------------------------- ------------------------------------------------------------------
Michael S. Piemonte Michael P. Pinto
Asst. Corporate Secretary Executive Vice President and Chief Financial Officer
(SEAL)
Attest OLYMPIA FINANCIAL CORP.
/s/ Michael S. Piemonte By /s/ Michael P. Pinto
-------------------------- ------------------------------------------------------------------
Michael S. Piemonte Michael P. Pinto
Asst. Corporate Secretary Executive Vice President and Chief Financial Officer
(SEAL)
Attest PREMIER NATIONAL BANCORP, INC.
/s/ Paul A. Maisch By /s/ T. Jefferson Cunningham III
-------------------------- -----------------------------------------------
T. Jefferson Cunningham III
Chairman
(SEAL)
</TABLE>
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ANNEX A
AGREEMENT AND PLAN OF MERGER OF
PREMIER NATIONAL BANCORP, INC.
WITH AND INTO OLYMPIA FINANCIAL CORP.
(As Amended)
AGREEMENT AND PLAN OF MERGER ("Plan of Merger") dated as of July 9, 2000
by and between Premier National Bancorp Inc. ("Seller"), a New York
corporation having its principal executive office at P.O. Box 310, Route 55
Lagrangeville, NY 12540 and Olympia Financial Corp. ("Merger Sub"), a Delaware
corporation and a direct wholly owned subsidiary of Purchaser having its
registered office at 1209 Orange Street, Wilmington, Delaware, and joined in by
M&T Bank Corporation ("Purchaser"), a New York corporation having its principal
executive office at One M&T Plaza, Buffalo, New York 14614.
WITNESSETH
WHEREAS, the respective Boards of Directors of Seller, Merger Sub and
Purchaser deem the merger of Seller with and into Merger Sub, under and
pursuant to the terms and conditions herein set forth or referred to, desirable
and in the best interests of the respective corporations and their respective
shareholders, and the respective Boards of Directors of Seller, Merger Sub and
Purchaser have adopted resolutions approving this Plan of Merger and an
Agreement and Plan of Reorganization dated of even date herewith
("Reorganization Agreement"); and
WHEREAS, the parties hereto desire that Seller shall be acquired by
Purchaser through the merger of Seller with and into Merger Sub, with Merger
Sub as the surviving corporation, subject to the terms and conditions of this
Plan of Merger and the Reorganization Agreement; and
WHEREAS, the parties hereto intend that the Merger shall qualify as a
reorganization under Section 368(a) of the Internal Revenue Code of 1986, as
amended ("the Code").
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements herein contained, the parties hereto do hereby agree as follows:
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ARTICLE 1.
MERGER
Subject to the terms and conditions of this Plan of Merger, at the
Effective Time (as hereinafter defined), Seller shall be merged with and into
Merger Sub, pursuant to the provisions of, and with the effect provided in the
New York Business Corporation Law and the Delaware General Corporation Law
(said transaction being hereinafter referred to as the "Merger"). At the
Effective Time, the separate existence of Seller shall cease and Merger Sub, as
the surviving entity, shall continue unaffected and unimpaired by the Merger.
(Merger Sub as existing at and after the Effective Time being hereinafter
sometimes referred to as the "Surviving Corporation").
ARTICLE 2.
CERTIFICATE OF INCORPORATION AND BY-LAWS
Subject to Section 4.11(g) of the Reorganization Agreement, the
Certificate of Incorporation and the Bylaws of Merger Sub in effect immediately
prior to the Effective Time shall be the Certificate of Incorporation and the
Bylaws of the Surviving Corporation, in each case until amended in accordance
with applicable law.
ARTICLE 3.
BOARD OF DIRECTORS
The directors and officers of Merger Sub immediately prior to the
Effective Time shall be the directors and officers of the Surviving
Corporation, each to hold office in accordance with the Certificate of
Incorporation and Bylaws of the Surviving Corporation.
ARTICLE 4.
CAPITAL
At the Effective Time, all of the shares of capital stock of Merger Sub
issued and outstanding immediately prior to the Effective Time shall remain
outstanding and unchanged by virtue of the Merger and shall constitute all of
the issued and outstanding shares of capital stock of the Surviving
Corporation.
ARTICLE 5.
CONVERSION AND EXCHANGE OF SELLER
SHARES; FRACTIONAL SHARE INTERESTS
1. At the Effective Time, each share of the common stock of Seller, par
value $0.80 per share ("Seller Common Stock"), issued and outstanding
immediately prior to the Effective Time (except as provided in Section 2 of
this Article 5, and subject to Sections 5 and 7 of this Article 5), shall, by
virtue of the Merger, automatically and without any action on the part of the
holder thereof, become and be converted into, at the election of the holder as
provided in and subject to the limitations set forth in this Article 5, either
(i) the right to receive $21 in cash without interest (the "Cash
Consideration") or (ii) an amount of common stock of Purchaser, par value $5.00
per share ("Purchaser Common Stock") equal to the quotient (the "Exchange
Ratio") of (A) $21 divided by (B) the Market Value (as defined below) of a
share of Purchaser Common Stock (the "Stock Consideration"). For purposes of
this Plan of Merger, the "Market Value" of the
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Purchaser Common Stock shall be the average of the average of the high and low
prices of the Purchaser Stock on the New York Stock Exchange-Composite
Transactions List (as reported by The Wall Street Journal or, if not reported
therein, another comparable authoritative source) for the 10 trading days
immediately preceding the date on which the Effective Time occurs. The Cash
Consideration and the Stock Consideration are sometimes referred to herein
collectively as the "Merger Consideration."
2. At the Effective Time, all shares of Seller Common Stock held in the
treasury of Seller or owned beneficially by any Subsidiary of Seller other than
in a fiduciary capacity ("Trust Account Shares") or in connection with a debt
previously contracted ("DPC Shares") and all shares of Seller Common Stock
owned by Purchaser or owned beneficially by any subsidiary of Purchaser other
than Trust Account Shares and DPC Shares shall be canceled and no cash, stock
or other property shall be delivered in exchange therefor.
3. (a) An election form (an "Election Form") and other appropriate and
customary transmittal materials, which shall specify that delivery shall be
effected, and risk of loss and title to the certificates theretofore
representing Seller Common Stock ("Certificates") shall pass, only upon proper
delivery of such Certificates to a bank or trust company designated by
Purchaser and reasonably satisfactory to Seller (the "Exchange Agent") in such
form as Seller and Purchaser shall mutually agree shall be mailed on the
Mailing Date (as defined below) to each holder of record of shares of Seller
Common Stock (other than holders of shares of Seller Common Stock to be
cancelled as provided in Section 2 of this Article 5) as of a record date which
shall be the same date as the record date for eligibility to vote on the
Merger. The "Mailing Date" shall be the date on which proxy materials relating
to the Merger are mailed to holders of shares of Seller Common Stock.
(b) Each Election Form shall entitle the holder of shares of Seller
Common Stock (or the beneficial owner through appropriate and customary
documentation and instructions) to (i) elect to receive the Cash Consideration
for all of such holder's shares (a "Cash Election"), (ii) elect to receive the
Stock Consideration for all of such holder's shares (a "Stock Election"), (iii)
elect to receive the Cash Consideration with respect to some of such holder's
shares and the Stock Consideration with respect to such holder's remaining
shares (a "Mixed Election"), or (iv) make no election or to indicate that such
holder has no preference as to the receipt of the Cash Consideration or the
Stock Consideration (a "Non-Election"). Holders of record of shares of Seller
Common Stock who hold such shares as nominees, trustees or in other
representative capacities (a "Representative") may submit multiple Election
Forms; provided, that such Representative certifies that each such Election
Form covers all the shares of Seller Common Stock held by that Representative
for a particular beneficial owner. Shares of Seller Common Stock as to which a
Cash Election has been made are referred to herein as "Cash Election Shares."
Shares of Seller Common Stock as to which a Stock Election has been made are
referred to herein as "Stock Election Shares." Shares of Seller Common Stock
as to which no election or a Non-Election has been made are referred to as
"Non-Election Shares." The aggregate number of shares of Seller Common Stock
with respect to which a Stock Election has been made is referred to herein as
the "Stock Election Number."
(c) To be effective, a properly completed Election Form shall be
submitted to the Exchange Agent on or before 5:00 p.m. New York City time on
the 30th calendar day following
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the Mailing Date (or such other time and date as Seller and Purchaser may
mutually agree) (the "Election Deadline"). An election shall have been
properly made only if the Exchange Agent shall have actually received a
properly completed Election Form by the Election Deadline. An Election Form
shall be deemed properly completed only if accompanied by one or more
Certificates (or customary affidavits and, if required by Purchaser pursuant to
Section 8 of this Article 5, indemnification regarding the loss or destruction
of such Certificates or the guaranteed delivery of such Certificates)
representing all shares of Seller Common Stock covered by such Election Form,
together with duly executed transmittal materials included with the Election
Form. Any Seller shareholder may at any time prior to the Election Deadline
change his or her election by written notice received by the Exchange Agent
prior to the Election Deadline accompanied by a properly completed and signed
revised Election Form. Any Seller shareholder may, at any time prior to the
Election Deadline, revoke his or her election by written notice received by the
Exchange Agent prior to the Election Deadline or by withdrawal prior to the
Election Deadline of his or her Certificates, or of the guarantee of delivery
of such Certificates, previously deposited with the Exchange Agent. All
elections shall be revoked automatically if the Exchange Agent is notified in
writing by Purchaser and Seller that this Plan of Merger has been terminated.
If a shareholder either (i) does not submit a properly completed Election Form
by the Election Deadline, or (ii) revokes its Election Form and does not
thereafter duly deliver a properly completed Election Form to the Exchange
Agent prior to the Election Deadline, the shares of Seller Common Stock held by
such shareholder shall be designated "Non-Election Shares." Purchaser shall
cause the Certificates representing Seller Common Stock described in (ii) to be
promptly returned without charge to the person submitting the Election Form
upon written request to that effect from the person who submitted the Election
Form. Subject to the terms of this Plan of Merger and of the Election Form,
the Exchange Agent shall have reasonable discretion to determine whether any
election, revocation or change has been properly or timely made and to
disregard immaterial defects in any Election Form, and any good faith decisions
of the Exchange Agent regarding such matters shall be binding and conclusive.
(d) Notwithstanding any other provision contained in this Plan of
Merger, 50% of the total number of shares of Seller Common Stock outstanding on
July 9, 2000, less (i) the aggregate number of shares of Seller Common Stock
acquired by Purchaser after July 9, 2000 and (ii) the greater of zero (0)
shares or the aggregate number of shares of Seller Common Stock acquired by
Seller after July 9, 2000 (other than shares acquired by Seller in accordance
with Seller's past practice as Previously Disclosed pursuant to Section
4.7(b)(5) of the Reorganization Agreement) net of the number of shares issued
after that date as permitted by the Reorganization Agreement prior to the
Effective Time (the "Stock Conversion Number"), shall be converted into the
Stock Consideration and the remaining outstanding shares of Seller Common
Stock, other than shares cancelled pursuant to Section 2 of this Article 5,
shall be converted into the Cash Consideration (the total of all shares of
Seller Common Stock to be converted into either the Stock Consideration or the
Cash Consideration constituting, for purposes of this Plan of Merger the
"Outstanding Seller Shares")); provided, however, that for federal income tax
purposes, it is intended that the Merger should qualify as a reorganization
under the provisions of Section 368(a) of the Code and, notwithstanding
anything to the contrary contained herein, in order that the Merger will not
fail to satisfy continuity of interest requirements under applicable federal
income tax principles relating to reorganizations under Section 368(a) of the
Code, as reasonably determined by Arnold & Porter and Milbank, Tweed, Hadley &
McCloy LLP, Purchaser shall increase the number of Outstanding Seller Shares
that will be converted into the Stock Consideration and reduce the number of
Outstanding Seller Shares that will be converted into the right to receive the
Cash Consideration.
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(e) Within five (5) business days after the later to occur of the
Election Deadline or the Effective Time, Purchaser shall cause the Exchange
Agent to effect the allocation among holders of Seller Common Stock of rights
to receive the Cash Consideration and the Stock Consideration as follows:
(i) If the Stock Election Number exceeds the Stock Conversion
Number, then all Cash Election Shares and all Non-Election Shares
shall be converted into the right to receive the Cash Consideration,
and, subject to Section 7 of this Article 5, each holder of Stock
Election Shares will be entitled to receive the Stock Consideration
in respect of that number of Stock Election Shares equal to the
product obtained by multiplying (x) the number of Stock Election
Shares held by such holder by (y) a fraction, the numerator of which
is the Stock Conversion Number and the denominator of which is the
Stock Election Number, with the remaining number of such holder's
Stock Election Shares being converted into the right to receive the
Cash Consideration;
(ii) If the Stock Election Number is less than the Stock
Conversion Number (the amount by which the Stock Conversion Number
exceeds the Stock Election Number being referred to herein as the
"Shortfall Number"), then all Stock Election Shares shall be
converted into the right to receive the Stock Consideration and the
Non-Election Shares and Cash Election Shares shall be treated in the
following manner:
(A) if the Shortfall Number is less than or equal to the
number of Non-Election Shares, then all Cash Election Shares
shall be converted into the right to receive the Cash
Consideration and, subject to Section 7 of Article 5, each
holder of Non-Election Shares shall receive the Stock
Consideration in respect of that number of Non-Election Shares
equal to the product obtained by multiplying (x) the number of
Non-Election Shares held by such holder by (y) a fraction, the
numerator of which is the Shortfall Number and the denominator
of which is the total number of Non-Election Shares, with the
remaining number of such holder's Non-Election Shares being
converted into the right to receive the Cash Consideration; or
(B) if the Shortfall Number exceeds the number of
Non-Election Shares, then all Non-Election Shares shall be
converted into the right to receive the Stock Consideration,
and, subject to Section 7 of this Article 5, each holder of
Cash Election Shares shall receive the Stock Consideration in
respect of that number of Cash Election Shares equal to the
product obtained by multiplying (x) the number of Cash Election
Shares held by such holder by (y) a fraction, the numerator of
which is the amount by which (1) the Shortfall Number exceeds
(2) the total number of Non-Election Shares and the denominator
of which is the total number of Cash Election Shares, with the
remaining number of such holder's Cash Election Shares being
converted into the right to receive the Cash Consideration.
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For purposes of this Section 3(e), if Purchaser is obligated to increase
the number of Outstanding Seller Shares to be converted into shares of
Purchaser Common Stock as a result of the application of the last clause of
Section 3(d) above, then the higher number shall be substituted for the Stock
Conversion Number in the calculations set forth in this Section 3(e).
(f) All of the shares of Seller Common Stock converted into and
exchangeable for the Merger Consideration pursuant to this Article 5 shall no
longer be outstanding and shall automatically be cancelled and cease to exist
as of the Effective Time, subject, however, to the Purchaser's obligation to
pay, in accordance with and subject to the limitations of Section 4.14 of the
Reorganization Agreement, any dividends which may have been declared by Seller
on such shares of Purchaser Common Stock in accordance with the terms of this
Plan of Merger and which remained unpaid as of the Effective Time. Each
Certificate previously representing any such shares of Seller Common Stock
shall thereafter represent the right to receive the Merger Consideration
pursuant to this Article 5, as allocated among the holders of Seller Common
Stock in accordance with this Section 3.
(g) At the Effective Time, Purchaser shall deposit, or shall cause
to be deposited, with the Exchange Agent, for exchange in accordance with this
Section 3, certificates representing the aggregate number of shares of
Purchaser Common Stock into which the outstanding shares of Seller Common Stock
shall be converted pursuant to this Article 5, and cash in the amount of the
aggregate Cash Consideration and the aggregate amount of cash to be paid in
lieu of fractional shares. As soon as practicable after the Effective Time,
the Exchange Agent shall mail to all holders of record of Seller Common Stock
who did not previously submit completed Election Forms letters of transmittal
specifying the procedures for the delivery of such holders' certificates to the
Exchange Agent and describing the Merger Consideration such holders will
receive therefor. Also as soon as practicable after the Effective Time (with
allowance for the mailing of the letters of transmittal described in the
preceding sentence), the Exchange Agent shall distribute to holders of shares
of Seller Common Stock, upon surrender to the Exchange Agent (to the extent not
previously surrendered with an Election Form) of one or more Certificates for
cancellation, (i) a certificate representing that number of whole shares of
Purchaser Common Stock, if any, that such holder has the right to receive
pursuant to this Plan of Merger, and (ii) a check for an amount equal to the
cash, if any, which such holder has the right to receive pursuant to this Plan
of Merger (including any cash in lieu of any fractional shares of Purchaser
Common Stock to which such holder is entitled pursuant to Section 7 hereof and
any dividends or other distributions to which such holder is entitled pursuant
to the provisions set forth below). In no event shall the holder of any such
surrendered Certificates be entitled to receive interest on any of the Cash
Consideration or cash in lieu of fractional share interests to be received in
the Merger. If a check is to be issued in the name of a person other than the
person in whose name the Certificates surrendered for exchange therefor are
registered, it shall be a condition of the exchange that the person requesting
such exchange shall pay to the Exchange Agent any transfer taxes required by
reason of issuance of such check to a person other than the registered holder
of the Certificates surrendered, or shall establish to the reasonable
satisfaction of the Exchange Agent that such tax has been paid or is not
applicable. No dividends or other distributions declared after the Effective
Time with respect to Purchaser Common Stock shall be paid to the holder of any
unsurrendered Certificate until the holder thereof shall surrender such
Certificate in accordance with this Article 5. After the surrender of a
Certificate in accordance with this Article 5, the record holder thereof shall
be entitled to receive any such dividends or other distributions, without any
interest thereon,
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which theretofore had become payable with respect to shares of Purchaser Common
Stock, if any, represented by such Certificate. Certificates surrendered for
exchange by any person who is an "affiliate" of Seller for purposes of Rule
145(c) under the Securities Act of 1933, as amended, shall not be exchanged for
certificates representing shares of Purchaser Common Stock until Purchaser has
received the written agreement of such person contemplated by Section 4.10 of
the Reorganization Agreement. If any certificate for shares of Purchaser
Common Stock is to be issued in a name other than that in which a Certificate
surrendered for exchange is issued, the Certificate so surrendered shall be
properly endorsed and otherwise in proper form for transfer and the person
requesting such exchange shall affix any requisite stock transfer tax stamps to
the Certificate surrendered or provide funds for their purchase or establish to
the reasonable satisfaction of Purchaser or its agent that such taxes have been
paid or are not payable. Any portion of the Merger Consideration which remains
undistributed to the shareholders of Seller for six months after the Effective
Time shall be delivered to Purchaser, upon demand, and any shareholders of
Seller who have not theretofore complied with this Article 5 shall thereafter
look only to Purchaser (subject to abandoned property, escheat and other
similar laws) as general creditors for payment of their claim for Purchaser
Common Stock or Cash Consideration and any cash in lieu of fractional shares of
Purchaser Common Stock and any dividends or distributions with respect to
Seller Common Stock. The Exchange Agent shall send notice to the shareholders
of Seller who have not submitted their Certificates 90 days after the Effective
Time, and again 120 days after such time.
4. At the Effective Time, the stock transfer books of Seller shall be
closed and no transfer of Seller Common Stock shall thereafter be made or
recognized. If, after the Effective Time, Certificates representing such
shares are presented for transfer to the Exchange Agent, they shall be
cancelled and exchanged for the Merger Consideration as provided in this
Article 5. Any other provision of this Plan of Merger notwithstanding, neither
Purchaser or its agent nor any party to the Merger shall be liable to a holder
of Seller Common Stock for any amount paid or properly delivered in good faith
to a public official pursuant to any applicable abandoned property, escheat or
similar law.
5. In the event that prior to the Effective Time, the outstanding
shares of Purchaser Common Stock shall have been increased, decreased or
changed into or exchanged for a different number or kind of shares or
securities by reorganization, recapitalization, reclassification, stock
dividend, stock split or other like changes in Purchaser's capitalization, then
an appropriate and proportionate adjustment shall be made to the Stock
Consideration (including the Exchange Ratio) and the formulas contained in
Section 6 of this Article 5.
6. (a) At the Effective Time, each option to acquire Seller Common
Stock or stock appreciation rights with respect to Seller Common Stock (each a
"Seller Option") granted under the Community Bancorp, Inc. 1988 Non-Qualified
Stock Option Plan, the Community Bancorp, Inc. Incentive Stock Option Plan, the
Progressive Bank, Inc. 1997 Employee Stock Option Plan, the Progressive Bank,
Inc. Non-Qualified Stock Option Plans for Directors, the Pawling Savings Bank
Incentive Stock Option Plan, the Premier National Bancorp, Inc. 1995 Incentive
Stock Plan and the Fishkill National Corporation Incentive Stock Option Plan
(collectively, the "Seller Stock Option Plans") which is outstanding
immediately prior to the Effective Time, whether vested or unvested, will be
assumed by Purchaser. Each Seller Option so assumed by Purchaser shall
continue to have, and be subject to, the same terms and conditions set
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forth in the Seller Stock Option Plan (and any agreement) under which it was
granted and as in existence immediately prior to the Effective Time, except
that (i) such Seller Option shall be exercisable (when vested) for that number
of whole shares of Purchaser Common Stock equal to the product of the number of
shares of Seller Common Stock covered by the Seller Option multiplied by the
Exchange Ratio; provided that any fractional shares of Purchaser Common Stock
resulting from such multiplication shall be rounded down to the nearest share;
and (ii) the exercise price per share of Purchaser Common Stock shall be equal
to the exercise price per share of Seller Common Stock of such Seller Option
divided by the Exchange Ratio; provided that such exercise price shall be
rounded up to the nearest cent. Notwithstanding the foregoing, the adjustment
provided herein will comply with the adjustment provisions in the Seller Stock
Option Plans and with respect to any Seller Options that are "incentive stock
options" (as defined in Section 422 of the Code) shall be and is intended to be
effected in a manner which is consistent with Section 424(a) of the Code.
(b) As soon as practicable after the Effective Time, Purchaser shall
deliver to the persons who hold stock options or stock appreciation rights
granted under the Seller Stock Option Plans notices describing the effect of
the Merger on stock options or stock appreciation rights granted under the
Seller Stock Option Plans.
(c) Purchaser shall take all corporate action necessary to reserve
for issuance a sufficient number of shares of Purchaser Common Stock for
delivery under the Seller Stock Option Plans as adjusted in accordance with
this Section. As soon as practicable after the Effective Time, Purchaser shall
file a registration statement on Form S-8 promulgated by the SEC under the
Securities Act (or any successor or other appropriate form) with respect to the
Purchaser Common Stock subject to such options or stock appreciation rights and
shall use its best efforts to maintain the effectiveness of such registration
statement or registration statements (and maintain the current status of the
prospectus or prospectuses contained therein) for so long as such options or
stock appreciation rights remain outstanding. With respect to those
individuals who subsequent to the Merger will be subject to the reporting
requirements under Section 16(a) of the Exchange Act, where applicable,
Purchaser shall administer the Seller Stock Option Plans in a manner that
complies with Rule 16b-3 promulgated under the Exchange Act.
7. Notwithstanding any other provision hereof, each holder of shares of
Seller Common Stock who would otherwise have been entitled to receive pursuant
to this Article 5 a fraction of a share of Purchaser Common Stock (after taking
into account all Certificates delivered by such holder) shall receive, in lieu
thereof, cash in an amount equal to such fraction of a share of Purchaser
Common Stock multiplied by the Market Value of Purchaser Common Stock. No such
holder shall be entitled to dividends, voting rights or any other shareholder
right in respect of such fractional share.
8. 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 Purchaser,
the posting by such person of a bond in such amount as Purchaser may reasonably
direct as indemnity against any claim that may be made against it with respect
to such Certificate, the Exchange Agent will issue in exchange for such lost,
stolen or destroyed Certificate the shares of Purchaser Common Stock
constituting the Stock Consideration and cash
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in lieu of fractional shares and/or the cash constituting the Cash
Consideration deliverable in respect thereof pursuant to this Plan of Merger.
ARTICLE 6.
EFFECTIVE TIME OF THE MERGER
A certificate or articles of merger evidencing the transactions
contemplated herein shall be delivered to the New York Department of State and
the Delaware Secretary of State for filing as provided in the Reorganization
Agreement. The Merger shall be effective at the time and on the date specified
in such certificate or articles of merger (such date and time being herein
referred to as the "Effective Time").
ARTICLE 7.
CONDITIONS PRECEDENT
The obligations of Purchaser, Merger Sub and Seller to effect the Merger
as herein provided shall be subject to satisfaction, unless duly waived, of the
conditions to the obligations of such person set forth in Article 5 of the
Reorganization Agreement.
ARTICLE 8.
TERMINATION
Anything contained in the Plan of Merger to the contrary notwithstanding,
and notwithstanding adoption hereof by the shareholders of Seller or Merger
Sub, this Plan of Merger may be terminated and the Merger abandoned as provided
in the Reorganization Agreement.
ARTICLE 9.
MISCELLANEOUS
1. This Plan of Merger may be amended or supplemented at any time prior
to the Effective Time by mutual agreement of Merger Sub, Purchaser and Seller.
Any such amendment or supplement must be in writing and approved by their
respective Boards of Directors and/or by officers authorized thereby and shall
be subject to the proviso in Section 6.4 of the Reorganization Agreement.
2. Any notice or other communication required or permitted under this
Plan of Merger shall be given, and shall be effective, in accordance with the
provisions of the Reorganization Agreement.
3. The headings of the several Articles herein are inserted for
convenience of reference only and are not intended to be a part of or to affect
the meaning or interpretation of this Plan of Merger.
4. This Plan of Merger shall be governed by and construed in accordance
with the laws of New York and Delaware applicable to the internal affairs of
Seller and Merger Sub.
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5. This Plan of Merger, taken together with the Reorganization
Agreement, shall constitute a "plan of reorganization" within the meaning of
Section 1.368-2(g) of the Treasury Regulations promulgated under the Code.
[Remainder of this page left intentionally blank.]
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IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have caused this Plan of Merger to be executed in counterparts by their
duly authorized officers and attested by their officers thereunto duly
authorized, all as of the day and year first above written.
<TABLE>
<S> <C>
Attest M&T BANK CORPORATION
/s/ Michael S. Piemonte By /s/ Michael P. Pinto
-------------------------- --------------------------------------------
Michael S. Piemonte Michael P. Pinto
Asst. Corporate Secretary Executive Vice President and Chief Financial Officer
(SEAL)
Attest OLYMPIA FINANCIAL CORP.
/s/ Michael S. Piemonte By /s/ Michael P. Pinto
-------------------------- --------------------------------------------
Michael S. Piemonte Michael P. Pinto
Asst. Corporate Secretary Executive Vice President and Chief Financial Officer
(SEAL)
Attest PREMIER NATIONAL BANCORP, INC.
/s/ Paul A. Maisch By /s/ T. Jefferson Cunningham III
--------------------- --------------------------------------------
T. Jefferson Cunningham III
Chairman
(SEAL)
</TABLE>
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<PAGE> 113
APPENDIX B
STOCK OPTION AGREEMENT
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STOCK OPTION AGREEMENT
THE TRANSFER OF THIS AGREEMENT IS SUBJECT TO
CERTAIN PROVISIONS CONTAINED HEREIN AND TO
RESALE RESTRICTIONS UNDER THE
SECURITIES ACT OF 1933, AS AMENDED
STOCK OPTION AGREEMENT, dated July 9, 2000, between Premier National
Bancorp Inc., a New York corporation ("Issuer"), and M&T Bank Corporation, a
New York corporation ("Grantee").
W I T N E S S E T H:
WHEREAS, Grantee, Issuer and Olympia Financial Corp., a Delaware
corporation and a wholly owned subsidiary of Grantee ("Merger Sub") have
entered into an Agreement and Plan of Reorganization of even date herewith (the
"Reorganization Agreement"), which agreement has been executed by the parties
hereto immediately prior to this Stock Option Agreement (the "Agreement"), and
will enter into an Agreement and Plan of Merger to be dated as of the date of
this Agreement (the "Plan of Merger," and, together with the Reorganization
Agreement, the "Merger Agreements"); and
WHEREAS, as a condition to Grantee's entering into the Merger
Agreements and in consideration therefor, Issuer has agreed to grant Grantee
the Option (as hereinafter defined);
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth herein and in the Merger Agreements, the
parties hereto agree as follows:
1. (a) Issuer hereby grants to Grantee an
unconditional, irrevocable option (the "Option") to purchase, subject to the
terms hereof, up to 3,144,107 fully paid and nonassessable shares of Issuer's
Common Stock, par value $0.80 per share ("Common Stock"), at a price of $13.375
per share (the "Option Price"); provided, however, that in no event shall the
number of shares of Common Stock for which this Option is exercisable exceed
19.9% of the Issuer's issued and outstanding shares of Common Stock without
giving effect to any shares subject to or issued pursuant to the Option. The
number of shares of Common Stock that may be received upon the exercise of the
Option and the Option Price are subject to adjustment as herein set forth.
Notwithstanding anything else in this Agreement to the contrary, the number of
shares of Common Stock subject to the Option shall be reduced to such lesser
number, if any, as may from time to time be necessary, but only for so long as
may be necessary, to cause Grantee not to become an "interested shareholder"
for purposes of Section 912 of the New York Business Corporation Law.
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(b) In the event that any additional shares of
Common Stock are either (i) issued or otherwise become outstanding after the
date of this Agreement (other than pursuant to this Agreement or as permitted
under the terms of the Merger Agreements) or (ii) redeemed, repurchased,
retired or otherwise cease to be outstanding after the date of the Agreement,
the number of shares of Common Stock subject to the Option shall be increased
or decreased, as appropriate, so that, after such issuance, such number equals
19.9% of the number of shares of Common Stock then issued and outstanding
without giving effect to any shares subject or issued pursuant to the Option.
Nothing contained in this Section 1(b) or elsewhere in this Agreement shall be
deemed to authorize Issuer or Grantee to breach any provision of the Merger
Agreements.
2. (a) The Holder (as hereinafter defined) may exercise
the Option, in whole or part, and from time to time, if, but only if, both an
Initial Triggering Event (as hereinafter defined) and a Subsequent Triggering
Event (as hereinafter defined) shall have occurred prior to the occurrence of
an Exercise Termination Event (as hereinafter defined), provided, however, that
the Holder shall have sent the written notice of such exercise (as provided in
subsection (e) of this Section 2) within six months following such Subsequent
Triggering Event; provided, further, however, that if the Option cannot be
exercised on any day because of any injunction, order or similar restraint
issued by a court of competent jurisdiction, the period during which the Option
may be exercised shall be extended so that the Option shall expire no earlier
than on the 10th business day after such injunction, order or restraint shall
have been dissolved or when such injunction, order or restraint shall have
become permanent and no longer subject to appeal, as the case may be, but in
any event within one year following the Subsequent Triggering Event. Each of
the following shall be an "Exercise Termination Event": (i) the Effective Date
(as defined in the Plan of Merger) of the Merger; (ii) termination of the
Merger Agreements in accordance with the provisions thereof if such termination
occurs prior to the occurrence of an Initial Triggering Event; or (iii) the
passage of twelve months after termination of the Merger Agreements if such
termination follows the occurrence of an Initial Triggering Event. The term
"Holder" shall mean the holder or holders of the Option. Notwithstanding
anything to the contrary contained herein, the Option may not be exercised (nor
may Grantee's rights under Section 10 hereof be exercised) at any time when
Grantee shall be in breach of any of its covenants or agreements contained in
the Merger Agreements under circumstances that would entitle Issuer to
terminate the Merger Agreements (without regard to any grace period provided
for in Section 6.1(b)(x) of the Reorganization Agreement). In the event that
Issuer terminates the Merger Agreement pursuant to Section 6.1(f) of the
Reorganization Agreement, then immediately upon Grantee's receipt of the wire
transfer contemplated by such Section 6.1(f), this Agreement shall terminate
and shall become void and have no further force or effect and Grantee shall
surrender this Agreement to Issuer.
(b) The term "Initial Triggering Event" shall
mean any of the following events or transactions occurring after the date
hereof:
(i) Issuer or any of its Subsidiaries
(each an "Issuer Subsidiary"), without having received Grantee's prior written
consent, shall have entered
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into an agreement to engage in an Acquisition Transaction (as hereinafter
defined) with any person (the term "person" for purposes of this Agreement
having the meaning assigned thereto in Sections 3(a)(9) and 13(d)(3) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules
and regulations thereunder) other than Grantee or any of its Subsidiaries (each
a "Grantee Subsidiary"). For purposes of this Agreement, "Acquisition
Transaction" shall mean (w) a merger or consolidation, or any similar
transaction, involving Issuer or any Significant Subsidiary (as defined in Rule
1-02 of Regulation S-X promulgated by the Securities and Exchange Commission
(the "SEC")) of Issuer, (x) a purchase, lease or other acquisition or
assumption of all or a substantial portion of the assets or deposits of Issuer
or any Significant Subsidiary of Issuer, (y) a purchase or other acquisition
(including by way of merger, consolidation, share exchange or otherwise) of
securities representing 10% or more of the voting power of Issuer, or (z) any
substantially similar transaction; provided, however, that in no event shall
any merger, consolidation, purchase or similar transaction involving only the
Issuer and one or more of its Subsidiaries or involving only two or more of
such Subsidiaries, be deemed to be an Acquisition Transaction; provided that
any such transaction is not entered into in violation of the terms of the
Merger Agreements;
(ii) Issuer or any Issuer Subsidiaries,
without having received Grantee's prior written consent, shall have authorized,
recommended, proposed, or publicly announced its intention to authorize,
recommend or propose to engage in an Acquisition Transaction with any person
other than Grantee or a Grantee Subsidiary;
(iii) Any person (other than Grantee or any
Subsidiary of Grantee) shall have acquired beneficial ownership or the right
to acquire beneficial ownership of 10% or more of the outstanding shares of
Common Stock (the term "beneficial ownership" for purposes of this Agreement
having the meaning assigned thereto in Section 13(d) of the Exchange Act, and
the rules and regulations thereunder) or any person other than Grantee or any
Subsidiary of Grantee shall have commenced (as such term is defined under the
rules and regulations of the SEC), or shall have filed or publicly disseminated
a registration statement or similar disclosure statement 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 beneficially own,
directly or indirectly, 10% 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);
(iv) (A) the holders of Issuer Common
Stock shall not have approved the Merger Agreements and the transactions
contemplated thereby, at the meeting of such stockholders at which such
agreement is voted on, (B) such meeting shall not have been held or shall have
been cancelled prior to termination of the Merger Agreements, or (C) the Board
of Directors of Issuer shall have publicly withdrawn or modified, or publicly
announced its intent to withdraw or modify, in any manner adverse to Grantee,
its recommendation that the stockholders of Issuer approve the transactions
contemplated by the Merger Agreements, in each case after it shall have been
publicly announced that any person other than Grantee or any Subsidiary of
Grantee shall have (x) made, or disclosed an intention to make, a proposal to
engage in an Acquisition
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Transaction, (y) commenced a Tender Offer, or filed or publicly disseminated a
registration statement or similar disclosure statement with respect to an
Exchange Offer, or (z) filed an application (or given a notice), whether in
draft or final form, under any federal or state banking laws seeking regulatory
approval to engage in an Acquisition Transaction; or
(v) After an overture is made by a third
party to Issuer or its stockholders to engage in an Acquisition Transaction,
Issuer shall have breached any covenant or obligation contained in the
Reorganization Agreement and such breach (x) would entitle Grantee to terminate
the Merger Agreements and (y) shall not have been cured prior to the later of
30 days after written notice of breach is delivered or the Notice Date (as
defined below).
(c) The term "Subsequent Triggering Event" shall mean
either of the following events or transactions occurring after the date hereof:
(i) The acquisition by any person of beneficial
ownership of 25% or more of the then outstanding shares of Common Stock; or
(ii) The occurrence of the Initial Triggering
Event described in paragraph (i) of subsection (b) of this Section 2, except
that the percentage referred to in clause (y) shall be 25%.
(d) Issuer shall notify Grantee promptly in writing of
the occurrence of any Initial Triggering Event or Subsequent Triggering Event
of which it has knowledge (together, a "Triggering Event"), it being understood
that the giving of such notice by Issuer shall not be a condition to the right
of the Holder to exercise the Option.
(e) In the event the Holder is entitled to and wishes to
exercise the Option, it shall send to Issuer a written notice (the date of
which being herein referred to as the "Notice Date") specifying (i) the total
number of shares it will purchase pursuant to such exercise and (ii) a place
and date not earlier than three business days nor later than 60 business days
from the Notice Date for the closing of such purchase (the "Closing Date");
provided, that if prior notification to or approval of the Federal Reserve
Board or any other regulatory agency is required in connection with such
purchase, the Holder shall promptly file the required notice or application for
approval and shall expeditiously process the same and the period of time that
otherwise would run pursuant to this sentence shall run instead from the date
on which any required notification periods have expired or been terminated or
such approvals have been obtained and any requisite waiting period or periods
shall have passed. Any exercise of the Option shall be deemed to occur on the
Notice Date relating thereto, except that the Common Stock issuable pursuant to
the Option shall not be deemed outstanding until they are issued in accordance
with the provisions herein.
(f) At the closing referred to in subsection (e) of this
Section 2, the Holder shall pay to Issuer the aggregate purchase price for the
shares of Common Stock
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purchased pursuant to the exercise of the Option in immediately available funds
by wire transfer to a bank account designated by Issuer; provided, that failure
or refusal of Issuer to designate such a bank account shall not preclude the
Holder from exercising the Option.
(g) At such closing, simultaneously with the delivery of
immediately available funds as provided in subsection (f) of this Section 2,
Issuer shall deliver to the Holder a certificate or certificates representing
the number of shares of Common Stock purchased by the Holder and, if the Option
should be exercised in part only, a new Option evidencing the rights of the
Holder thereof to purchase the balance of the shares purchasable hereunder, and
the Holder shall deliver to Issuer a copy of this Agreement and a letter
agreeing that the Holder will not offer to sell or otherwise dispose of such
shares in violation of applicable law or the provisions of this Agreement.
(h) Certificates for Common Stock delivered at a closing
hereunder may be endorsed with a restrictive legend that shall read
substantially as follows:
"THE TRANSFER OF THE SHARES REPRESENTED BY THIS CERTIFICATE IS
SUBJECT TO CERTAIN PROVISIONS OF AN AGREEMENT BETWEEN THE
REGISTERED HOLDER HEREOF AND ISSUER AND TO RESALE RESTRICTIONS
ARISING UNDER THE SECURITIES ACT OF 1933, AS AMENDED. A COPY
OF SUCH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE OF ISSUER
AND WILL BE PROVIDED TO THE HOLDER HEREOF WITHOUT CHARGE UPON
RECEIPT BY ISSUER OF A WRITTEN REQUEST THEREFOR."
It is understood and agreed that: (i) the reference to the resale restrictions
of the Securities Act of 1933, as amended (the "Securities Act"), in the above
legend shall be removed by delivery of substitute certificate(s) without such
reference if the Holder shall have delivered to Issuer a copy of a letter from
the staff of the SEC, or an opinion of counsel, in form and substance
reasonably satisfactory to Issuer, to the effect that such legend is not
required for purposes of the Securities Act; (ii) the reference to the
provisions to this Agreement in the above legend shall be removed by delivery
of substitute certificate(s) without such reference if the shares have been
sold or transferred in compliance with the provisions of this Agreement and
under circumstances that do not require the retention of such reference; and
(iii) the legend shall be removed in its entirety if the conditions in the
preceding clauses (i) and (ii) are both satisfied. In addition, such
certificates shall bear any other legend as may be required by law.
(i) Upon the giving by the Holder to Issuer of the
written notice of exercise of the Option provided for under subsection (e) of
this Section 2 and the tender of the applicable purchase price in immediately
available funds and obtaining all regulatory approvals and the expiration of
all statutory waiting periods, the Holder shall be deemed to be the holder of
record of the shares of Common Stock issuable upon such exercise,
notwithstanding that the stock transfer books of Issuer shall then be closed or
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that certificates representing such shares of Common Stock shall not then be
actually delivered to the Holder. Issuer shall pay all expenses, and any and
all United States federal, state and local taxes and other charges that may be
payable in connection with the preparation, issue and delivery of stock
certificates under this Section 2 in the name of the Holder or its assignee,
transferee or designee.
3. Issuer agrees: (i) that it shall at all times
maintain, free from preemptive rights, sufficient authorized but unissued or
treasury shares of Common Stock so that the Option may be exercised without
additional authorization of Common Stock after giving effect to all other
options, warrants, convertible securities and other rights to purchase Common
Stock; (ii) that it will not, by charter amendment or through reorganization,
consolidation, merger, dissolution or sale of assets, or by any other voluntary
act, avoid or seek to avoid the observance or performance of any of the
covenants, stipulations or conditions to be observed or performed hereunder by
Issuer; (iii) promptly to take all commercially reasonable action as may from
time to time be required (including (x) complying with all premerger
notification, reporting and waiting period requirements specified in 15 U.S.C.
Section 18a and regulations promulgated thereunder and (y) in the event, under
federal or state banking law, prior approval of or notice to the Federal
Reserve Board or any other federal or state regulatory authority is necessary
before the Option may be exercised, cooperating fully with the Holder in
preparing such applications or notices and providing such information to the
Federal Reserve Board or such other federal or state regulatory authority as
they may require) in order to permit the Holder to exercise the Option and
Issuer duly and effectively to issue shares of Common Stock pursuant hereto;
and (iv) promptly to take all action provided herein to protect the rights of
the Holder against dilution.
4. This Agreement (and the Option granted hereby) are
exchangeable, without expense, at the option of the Holder, upon presentation
and surrender of this Agreement at the principal office of Issuer, for other
Agreements providing for Options of different denominations entitling the
holder thereof to purchase, on the same terms and subject to the same
conditions as are set forth herein, in the aggregate the same number of shares
of Common Stock purchasable hereunder. The terms "Agreement" and "Option" as
used herein include any Stock Option Agreements and related Options for which
this Agreement (and the Option granted hereby) may be exchanged. Upon receipt
by Issuer of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Agreement, and (in the case of loss, theft or
destruction) of reasonably satisfactory indemnification, and upon surrender and
cancellation of this Agreement, if mutilated, Issuer will execute and deliver a
new Agreement of like tenor and date. Any such new Agreement executed and
delivered shall constitute an additional contractual obligation on the part of
Issuer, whether or not the Agreement so lost, stolen, destroyed or mutilated
shall at any time be enforceable by anyone.
5. In addition to the adjustment in the number of shares
of Common Stock that are purchasable upon exercise of the Option pursuant to
Section 1 of this Agreement, the number of shares of Common Stock purchasable
upon the exercise of the Option and the Option Price shall be subject to
adjustment from time to time as provided
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in this Section 5. In the event of any change in, or distributions in respect
of, the Common Stock by reason of stock dividends, split-ups, mergers,
recapitalizations, combinations, subdivisions, conversions, exchanges of
shares, distributions on or in respect of the Common Stock that would be
prohibited under the terms of the Merger Agreement, or the like, the type and
number of shares of Common Stock purchasable upon exercise hereof and the
Option Price shall be appropriately adjusted so that Grantee on exercise will
receive what it would have received had it exercised and held Common Stock
immediately before such event.
6. Upon the occurrence of a Subsequent Triggering Event
that occurs prior to an Exercise Termination Event, Issuer shall, at the
request of Grantee delivered within six months of such Subsequent Triggering
Event (whether on its own behalf or on behalf of any subsequent holder of this
Option (or part thereof) or any of the shares of Common Stock issued pursuant
hereto), promptly prepare, file and keep current a registration statement under
the Securities Act covering this Option and any shares issued and issuable
pursuant to this Option and shall use its reasonable best efforts to cause such
registration statement to become effective and remain current in order to
permit the sale or other disposition of this Option and any shares of Common
Stock issued upon total or partial exercise of this Option ("Option Shares") in
accordance with any plan of disposition requested by Grantee. Issuer will use
its reasonable best efforts to cause such registration statement first to
become effective and then to remain effective for such period not in excess of
180 days from the day such registration statement first becomes effective or
such shorter time as may be reasonably necessary to effect such sales or other
dispositions. The foregoing notwithstanding, Issuer may postpone filing or
updating such registration for a reasonable period of time after receipt of the
original request (not exceeding 180 days) if, in the good faith opinion of
Issuer's board of directors, effecting the registration statement would
adversely affect a material financing, acquisition, disposition of assets or
stock, merger or other comparable transaction or would require Issuer to make
public disclosure of information the public disclosure of which would have a
material adverse effect upon Issuer, provided that the Issuer shall not delay
such action pursuant to this sentence more than once in any twelve-month
period. Grantee shall have the right to demand two such registrations. The
foregoing notwithstanding, if, at the time of any request by Grantee for
registration of the Option or Option Shares as provided above, Issuer is in
registration with respect to an underwritten public offering of shares of
Common Stock, and if in the good faith judgment of the managing underwriter or
managing underwriters, or, if none, the sole underwriter or underwriters, of
such offering the inclusion of the Holder's Option or Option Shares would
interfere with the successful marketing of the shares of Common Stock offered
by Issuer, the number of Option Shares otherwise to be covered in the
registration statement contemplated hereby may be reduced; and provided,
however, that after any such required reduction the number of Option Shares to
be included in such offering for the account of the Holder or Holders shall
constitute at least 25% of the total number of shares to be sold by the Holder
or Holders and Issuer in the aggregate; and provided, further, however, that
if such reduction occurs, then the Issuer shall file a registration statement
for the balance as promptly as practicable and no reduction shall thereafter
occur. Each such Holder shall provide all information reasonably requested by
Issuer for inclusion in any registration
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statement to be filed hereunder. If requested by any such Holder in connection
with such registration, Issuer shall become a party to any underwriting
agreement relating to the sale of such shares, but only to the extent of
obligating itself in respect of representations, warranties, indemnities and
other agreements customarily included in secondary offering underwriting
agreements for the Issuer. Upon receiving any request under this Section 6
from Grantee, Issuer agrees to send a copy thereof to any other person known to
Issuer to be entitled to registration rights under this Section 6, in each case
by promptly mailing the same, postage prepaid, to the address of record of the
persons entitled to receive such copies. Notwithstanding anything to the
contrary contained herein, in no event shall Issuer be obligated to effect more
than two registrations pursuant to this Section 6 by reason of the fact that
there shall be more than one Holder as a result of any assignment or division
of this Agreement. In addition, Grantee agrees to use all reasonable efforts
to cause, and to cause any underwriters of any safe or other disposition to
cause, any sale or other disposition pursuant to such registration statement to
be effected on a widely distribution basis so that upon consummation thereof no
purchaser or transferee shall own beneficially more than 2% of the then
outstanding voting power of the Issuer.
7. The periods for exercise of certain rights under
Sections 2, 6, 10 and 12 shall be extended: (i) to the extent necessary to
obtain all regulatory approvals for the exercise of such rights, and for the
expiration of all statutory waiting periods; and (ii) to the extent necessary
to avoid liability under Section 16(b) of the Exchange Act by reason of such
exercise.
8. Issuer hereby represents and warrants to Grantee as
follows:
(a) 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 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) Issuer has taken all necessary corporate action to
authorize and reserve and to permit it to issue, and at all times from the date
hereof through the termination of this Agreement in accordance with its terms
will have reserved for issuance upon the exercise of the Option, that number of
shares of Common Stock equal to the maximum number of shares of Common Stock at
any time and from time to time issuable hereunder, and all such shares, upon
issuance pursuant hereto, will be duly authorized, validly issued, fully paid,
nonassessable, and will be delivered free and clear of all claims, liens,
encumbrance and security interests and not subject to any preemptive rights.
9. Grantee hereby represents and warrants to Issuer
that:
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(a) Grantee has all requisite corporate power and
authority to enter into this Agreement and, subject to any approvals or
consents referred to herein, to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Grantee. This Agreement has been duly executed
and delivered by Grantee.
(b) The Option is not being, and any shares of Common
Stock or other securities acquired by Grantee upon exercise of the Option will
not be, acquired 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.
10. Neither of the parties hereto may assign any of its
rights or obligations under this Agreement or the Option created hereunder to
any other person, without the express written consent of the other party,
except that in the event a Subsequent Triggering Event shall have occurred
prior to an Exercise Termination Event, Grantee, subject to the express
provisions hereof, may assign in whole or in part its rights and obligations
hereunder within six months following such Subsequent Triggering Event (or such
later period as provided in Section 7); provided, however, that until the date
fifteen days following the date on which the Federal Reserve Board approves an
application by Grantee to acquire the shares of Common Stock subject to the
Option (proof of which approval shall be furnished promptly to Issuer), Grantee
may not assign its rights under the Option except in (i) a widely dispersed
public distribution, (ii) a private placement in which no one party acquires
the right to purchase in excess of 2% of the voting shares of Issuer, (iii) an
assignment to a single party (e.g., a broker or investment banker) for the
purpose of conducting a widely dispersed public distribution on Grantee's
behalf, or (iv) any other manner approved by the Federal Reserve Board.
11. Each of Grantee and Issuer will use its reasonable
best efforts to make all filings with, and to obtain consents of, all third
parties and governmental authorities necessary to the consummation of the
transactions contemplated by this Agreement, including without limitation
making application to list the shares of Common Stock issuable hereunder on the
Amex upon official notice of issuance and applying to the Federal Reserve
Board, for approval to acquire the shares issuable hereunder, and Grantee's
ability to exercise the Option is conditioned on obtaining all such consents
and approvals, but Grantee shall not be obligated to apply to state banking
authorities for approval to acquire the shares of Common Stock issuable
hereunder until such time, if ever, as it deems appropriate to do so.
12. (a) Upon the occurrence of a Subsequent
Triggering Event that occurs prior to an Exercise Termination Event, (i) at the
request of any Holder, delivered within thirty days following such occurrence
(or such later period as provided in Section 7), Issuer shall repurchase the
Option from the Holder at a price (the "Option Repurchase Price") equal to the
amount by which (A) the market/offer price (as defined below) exceeds (B) the
Option Price, multiplied by the number of shares for which this Option may then
be exercised, plus, to the extent not previously reimbursed, Grantee's
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reasonable documented out-of-pocket expenses incurred in connection with the
transactions contemplated by, and the enforcement of Grantee's rights under,
the Merger Agreements, including without limitation reasonable legal,
accounting and investment banking fees (the "Grantee's Out-of-Pocket
Expenses"), and (ii) at the request of any owner of Option Shares from time to
time (the "Owner"), delivered within thirty days following such occurrence (or
such later period as provided in Section 7), Issuer shall repurchase such
number of the Option Shares from such Owner as the Owner shall designate at a
price per share ("Option Share Repurchase Price") equal to the greater of (A)
the market/offer price and (B) the average option price per share paid by the
Owner for the Option Shares so designated, plus, to the extent not previously
reimbursed, Grantee's Out-of-Pocket Expenses. The term "market/offer price"
shall mean the highest of (w) the price per share of the Common Stock at which
a tender offer or exchange offer therefor constituting the Subsequent Trigger
Event has been consummated, (x) the price per share of the Common Stock to be
paid by any Person, other than Grantee or a subsidiary of Grantee, pursuant to
an agreement with Issuer, (y) the highest closing price for shares of Common
Stock within the 60-day period immediately preceding the required repurchase of
Options or Option Shares, as the case may be, or (z) in the event of a sale of
all or substantially all of Issuer's assets, the sum of the price paid in such
sale for such assets and the current market value of the remaining net assets
of Issuer as determined by a nationally recognized investment banking firm
selected by a majority in the interest of the Holders or the Owners, as the
case may be, and reasonably acceptable to Issuer, divided by the number of
shares of Common Stock of Issuer outstanding at the time of such sale. In
determining the market/offer price, the value of consideration other than cash
shall be determined by a nationally recognized investment banking firm selected
by a majority in interest of the Holders or the Owners, as the case may be, and
reasonably acceptable to Issuer.
(b) Each Holder and Owner, as the case may be,
may exercise its right to require Issuer to repurchase the Option and any
Option Shares pursuant to this Section 12 by surrendering for such purpose to
Issuer, at its principal office, a copy of this Agreement or certificates for
Option Shares, as applicable, accompanied by a written notice or notices
stating that such Holder or Owner elects to require Issuer to repurchase this
Option and/or Option Shares in accordance with the provisions of this Section
12 and a representation as to the ownership and freedom from liens. As
promptly as practicable, and in any event within ten business days after the
surrender of the Option and/or certificates representing Option Shares and the
receipt of such notice or notices relating thereto, Issuer shall deliver or
cause to be delivered to each Holder the Option Repurchase Price and/or to each
Owner the Option Share Repurchase Price therefor or the portion thereof that
Issuer is not then prohibited under applicable law and regulation from so
delivering; provided, however, that the Holder may not exercise its right to
require Issuer to repurchase the Option or any Option Shares more than one
time.
(c) To the extent that Issuer is prohibited under
applicable law or regulation, or as a consequence of administrative policy, or
as a result of a written agreement or other binding obligation with a
governmental or regulatory body or agency, from repurchasing the Option and/or
the Option Shares in full, Issuer shall immediately so notify each Holder
and/or each Owner and thereafter deliver or cause to be delivered,
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from time to time, to such Holder and/or Owner, as appropriate, the portion of
the Option Repurchase Price and the Option Share Repurchase Price,
respectively, that it is no longer prohibited from delivering, within ten
business days after the date on which Issuer is no longer so prohibited;
provided, however, that if Issuer at any time after delivery of a notice of
repurchase pursuant to paragraph (b) of this Section 12 is prohibited under
applicable law or regulation, or as a consequence of administrative policy,
from delivering to any Holder and/or Owner, as appropriate, the Option
Repurchase Price and the Option Share Repurchase Price, respectively, in part
or in full (and Issuer hereby undertakes to use its best efforts to receive any
required regulatory and legal approvals and to file any required notices as
promptly as practicable in order to accomplish such repurchase), such Holder or
Owner may revoke its notice of repurchase of the Option or the Option Shares
either in whole or to the extent of the prohibition, whereupon Issuer shall
promptly (i) deliver to such Holder and/or Owner, as appropriate, that portion
of the Option Purchase Price or the Option Share Repurchase Price that Issuer
is not prohibited from delivering; and (ii) deliver, as appropriate, either (A)
to such Holder, a new Stock Option Agreement evidencing the right of such
Holder to purchase that number of shares of Common Stock obtained by
multiplying the number of shares of Common Stock for which the surrendered
Stock Option Agreement was exercisable at the time of delivery of the notice of
repurchase by a fraction, the numerator of which is the Option Repurchase Price
less the portion thereof theretofore delivered to the Holder and the
denominator of which is the Option Repurchase Price, or (B) to such Owner, a
certificate for the Option Shares it is then so prohibited from repurchasing.
(d) At any time after the occurrence of a
Subsequent Triggering Event and prior to the later of (a) the expiration of 24
months immediately following the first purchase of shares of Common Stock
pursuant to the Option and (b) the termination of the Option, if Grantee shall
desire to sell, assign, transfer or otherwise dispose of all or any of the
Option or the shares of Common Stock or other securities acquired by it
pursuant to the Option, it shall give Issuer written notice of the proposed
transaction, identifying the proposed transferee, accompanied by a copy of a
binding offer to purchase such shares or other securities signed by such
transferee and setting forth the terms of the proposed transaction. Upon
receipt of such notice, Issuer shall for a period of 10 business days have the
right of first refusal to purchase the Option or the Common Stock then held by
the Grantee that is proposed to be sold at the purchase price set forth in such
notice. The purchase of any such shares or other securities shall be settled
within 10 business days of the date of the acceptance of the offer and the
purchase price shall be paid to Grantee in immediately available funds;
provided that, if prior notification to or approval of any governmental or
regulatory authority is required in connection with such purchase, Issuer shall
promptly file the required notice or application for approval and shall
expeditiously process the same (and Grantee shall cooperate with Issuer in the
filing of any such notice or application and the obtaining of any such
approval) and the period of time that otherwise would run pursuant to this
sentence shall run instead from the date on which, as the case may be, (a) any
required notification period has expired or been terminated or (b) such
approval has been obtained and, in either event, any requisite waiting period
shall have passed. In the event of the failure or refusal of Issuer to
purchase all the shares or other securities covered by such notice or if any
such governmental or regulatory authority disapproves Issuer's proposed
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purchase of such shares or other securities, Grantee may, within 60 days from
the date of such notice (subject to any necessary extension for regulatory
notification, approval or waiting periods), sell all, but not less than all, of
such shares or other securities to the proposed transferee at no less than the
price specified and on terms no more favorable than those set forth in such
notice. The requirements of this Section 12(d) shall not apply to (w) any
disposition as a result of which the proposed transferee would own beneficially
not more than 2% of the outstanding voting power of Issuer, (x) any disposition
of Common Stock or other securities by a person to whom Grantee has assigned
its rights under the Option with the consent of Issuer, (y) any sale by means
of public offering registered under the Securities Act in which steps are taken
to reasonably assure that no purchaser will acquire securities representing
more than 2% of the outstanding voting power of Issuer or (z) any transfer to a
wholly-owned subsidiary of Grantee which agrees in writing to be bound by the
terms thereof.
13. (a) Notwithstanding any other provision of this
Agreement, in no event shall the Grantee's Total Profit (as hereinafter
defined) exceed $24 million and, if it otherwise would exceed such amount, the
Grantee, at its sole election, shall either (i) reduce the number of shares of
Common Stock subject to this Option, (ii) deliver to the Issuer for
cancellation Option Shares previously purchased by Grantee valued at fair
market value at the time of delivery, (iii) pay cash to the Issuer, or (iv)
undertake any combination thereof, so that Grantee's actually realized Total
Profit shall not exceed $24 million after taking into account the foregoing
actions.
(b) Notwithstanding any other provision of this
Agreement, this Option may not be exercised for a number of shares as would, as
of the date of exercise, result in a Notional Total Profit (as defined below)
of more than $24 million; provided, that nothing in this sentence shall
restrict any exercise of the Option permitted hereby on any subsequent date.
(c) As used herein, the term "Total Profit" shall
mean the aggregate amount (before taxes) of (i)(x) the net cash amounts
received by Grantee pursuant to the sale of Option Shares (or any other
securities into which such Option Shares are converted or exchanged) to any
unaffiliated party, including the Issuer, less (y) the Grantee's purchase price
of such Option Shares, plus (ii) any amounts received by Grantee on the
transfer of the Option (or any portion thereof) to any unaffiliated party,
including the Issuer.
(d) As used herein, the term "Notional Total
Profit" with respect to any number of shares as to which Grantee may propose to
exercise this Option shall be the Total Profit determined as of the date of
such proposed exercise assuming that this Option were exercised on such date
for such number of shares and assuming that such shares, together with all
other Option Shares, including Shares underlying the Option itself, held by
Grantee and its affiliates as of such date, were sold for cash at the closing
market price for the Common Stock as of the close of business on the preceding
trading day (less customary brokerage commissions).
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14. The parties hereto acknowledge that damages would be
an inadequate remedy for a breach of this Agreement by either party hereto and
that the obligations of the parties hereto shall be enforceable by either party
hereto through injunctive or other equitable relief.
15. If any term, provision, covenant or restriction
contained in this Agreement is held by a court or a federal or state regulatory
agency of competent jurisdiction to be invalid, void or unenforceable, the
remainder of the terms, provisions and covenants and restrictions contained in
this Agreement shall remain in full force and effect, and shall in no way be
affected, impaired or invalidated. If for any reason such court or regulatory
agency determines that the Holder is not permitted to acquire the full number
of shares of Common Stock provided in Section 1(a) hereof (as adjusted pursuant
to Sections 1(b) or 5 hereof), it is the express intention of Issuer to allow
the Holder to acquire such lesser number of shares as may be permissible,
without any amendment or modification hereof.
16. All notices, requests, claims, demands and other
communications hereunder shall be deemed to have been duly given when delivered
in person, by cable, telegram, telecopy or telex, or by registered or certified
mail (postage prepaid, return receipt requested) at the respective addresses of
the parties set forth in the Reorganization Agreement.
17. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, regardless of the laws that
might otherwise govern under applicable principles of conflicts of laws
thereof.
18. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
19. Except as otherwise expressly provided herein, each
of the parties hereto shall bear and pay all costs and expenses incurred by it
or on its behalf in connection with the transactions contemplated hereunder,
including fees and expenses of its own financial consultants, investment
bankers, accountants and counsel.
20. Except as otherwise expressly provided herein or in
the Merger Agreements, this Agreement contains the entire agreement between the
parties with respect to the transactions contemplated hereunder and supersedes
all prior arrangements or understandings with respect thereto, written or oral.
The terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective successors and permitted
assigns. Nothing in this Agreement, expressed or implied, is intended to
confer upon any party, other than the parties hereto, and their respective
successors and permitted assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement, except as expressly provided
herein.
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21. Capitalized terms used in this Agreement and not
defined herein shall have the meanings assigned thereto in the Merger
Agreement.
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IN WITNESS WHEREOF, each of the parties has caused this
Agreement to be executed on its behalf by its officers thereunto duly
authorized, all as of the date first above written.
PREMIER NATIONAL BANCORP, INC.
By /s/ T. Jefferson Cunningham III
------------------------------------------
T. Jefferson Cunningham III
Chairman
M&T BANK CORPORATION
By /s/ Michael P. Pinto
------------------------------------------
Michael P. Pinto
Executive Vice President and Chief Financial Officer
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APPENDIX C
OPINION OF J.P. MORGAN SECURITIES, INC.
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July 9, 2000
The Board of Directors
Premier National Bancorp, Inc.
240 Route 55
P.O. Box 310
LaGrangeville, NY 12540
Attention: T. Jefferson Cunningham III
Chairman and Chief Executive Officer
Ladies and Gentlemen:
You have requested our opinion as to the fairness, from a financial point of
view, to the stockholders of Premier National Bancorp, Inc. (the "Company") of
the consideration proposed to be paid to them in connection with the proposed
merger (the "Merger") of the Company with M&T Bank Corporation (the "Buyer").
Pursuant to the Agreement and Plan of Reorganization, dated as of July 9, 2000
(the "Agreement"), among the Company and the Buyer, the Company will become a
wholly-owned subsidiary of the Buyer, and stockholders of the Company will
receive for each share of Common Stock, par value $0.80 per share, of the
Company held by them consideration equal to $10.50 in cash plus the equivalent
of $10.50 of the Buyer's shares (on a pre-split Buyer basis).
In arriving at our opinion, we have reviewed (i) the Agreement; (ii) certain
publicly available information concerning the business of the Company and of
certain other companies engaged in businesses comparable to those of the
Company, and the reported market prices for certain other companies' securities
deemed comparable; (iii) publicly available terms of certain transactions
involving companies comparable to the Company and the consideration received for
such companies; (iv) current and historical market prices of the common stock of
the Company and the Buyer; (v) the audited financial statements of the Company
and the Buyer for the fiscal year ended December 31, 1999, and the unaudited
financial statements of the Company and the Buyer for the period ended March 31,
2000; (vi) certain internal financial analyses and forecasts prepared by the
Company and the Buyer and their respective managements; and (vii) the terms of
other business combinations that we deemed relevant.
In addition, we have held discussions with certain members of the management of
the Company and the Buyer with respect to certain aspects of the Merger, and the
past and current business operations of the Company and the Buyer, the financial
condition and future prospects and operations of the Company and the Buyer, the
effects of the Merger on the financial condition and future prospects of the
Company and the Buyer, and certain other matters we believed necessary or
appropriate to our inquiry. We have reviewed such
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other financial studies and analyses and considered such other information as we
deemed appropriate for the purposes of this opinion.
In giving our opinion, we have relied upon and assumed, without independent
verification, the accuracy and completeness of all information that was publicly
available or was furnished to us by the Company and the Buyer or otherwise
reviewed by us, and we have not assumed any responsibility or liability
therefor. We have not conducted any valuation or appraisal of any assets or
liabilities, nor have any such valuations or appraisals been provided to us. In
relying on financial analyses and forecasts provided to us, we have assumed that
they have been reasonably prepared based on assumptions reflecting the best
currently available estimates and judgments by management as to the expected
future results of operations and financial condition of the Company and the
Buyer to which such analyses or forecasts relate. We have also assumed that the
Merger will have the tax consequences described in discussions with, and
materials furnished to us by, representatives of the Company, and that the other
transactions contemplated by the Agreement will be consummated as described in
the Agreement. We have relied as to all legal matters relevant to rendering our
opinion upon the advice of counsel.
Our opinion is necessarily based on economic, market and other conditions as in
effect on, and the information made available to us as of, the date hereof. It
should be understood that subsequent developments may affect this opinion and
that we do not have any obligation to update, revise, or reaffirm this opinion.
We are expressing no opinion herein as to the price at which the Buyer's stock
will trade at any future time.
We have acted as financial advisor to the Company with respect to the proposed
Merger and will receive a fee from the Company for our services. We will also
receive an additional fee if the proposed Merger is consummated. In the ordinary
course of their businesses, J.P. Morgan and its affiliates may actively trade
the debt and equity securities of the Company or the Buyer for their own account
or for the accounts of customers and, accordingly, they may at any time hold
long or short positions in such securities.
On the basis of and subject to the foregoing, it is our opinion as of the date
hereof that the consideration to be paid to the Company's stockholders is fair,
from a financial point of view, to the stockholders of the Company.
This letter is provided to the Board of Directors of the Company in connection
with and for the purposes of its evaluation of the Merger. This opinion does not
constitute a recommendation to any stockholder of the Company as to how such
stockholder should vote with respect to the Merger. This opinion may not be
disclosed, referred to, or communicated (in whole or in part) to any third party
for any purpose whatsoever except with our prior written consent in each
instance. This opinion may be reproduced in full in any proxy or information
statement mailed to stockholders of the Company but may not otherwise be
disclosed publicly in any manner without our prior written approval and must be
treated as confidential.
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Very truly yours,
J.P. MORGAN SECURITIES INC.
/s/ Edward J. Kelly, III
Managing Director
J.P. Morgan Securities Inc.
---------------------------------
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ZPNB4B
DETACH HERE
PROXY
PREMIER NATIONAL BANCORP, INC.
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS
JANUARY 25, 2001
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned shareholder of Premier National Bancorp, Inc. (the "Company")
hereby appoints Robert Apple and Gerardina Mirtuono, and each of them, as
proxies, each with full power of substitution, to vote all shares of common
stock of the Company which the undersigned is entitled to vote at the Special
Meeting of Shareholders to be held on Thursday, January 25, 2001, at 9:00 a.m.,
New York time, at the Sheraton Civic Center Hotel, 40 Civic Center Plaza,
Poughkeepsie, New York, or at any adjournment or postponement thereof ("Special
Meeting"), with all the powers the undersigned would possess if personally
present at such meeting, as follows on the reverse side.
SEE REVERSE (TO BE COMPLETED AND SIGNED ON REVERSE SIDE) SEE REVERSE
SIDE SIDE
<PAGE> 134
ZPNB4A
DETACH HERE
[X] PLEASE MARK VOTES AS IN THIS EXAMPLE.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR ITEM 1.
<TABLE>
<CAPTION>
PREMIER'S BOARD RECOMMENDS THAT YOU VOTE FOR THE PROPOSAL BELOW: FOR AGAINST ABSTAIN
<S> <C> <C> <C>
[ ] [ ] [ ]
</TABLE>
1. Approval and adoption of the Agreement and Plan of Reorganization, dated
as of July 9, 2000, by and among Premier National Bancorp, Inc., M&T Bank
Corporation and Olympia Financial Corp., a wholly-owned subsidiary of M&T
Bank Corporation, and approval and adoption of the related Agreement and
Plan of Merger, dated as of July 9, 2000, as amended, by and between
Premier National Bancorp, Inc. and Olympia Financial Corp. and joined in
by M&T Bank Corporation.
2. The proxies are authorized to vote in their discretion on such other
matters as may properly come before the meeting or any adjournment or
postponement thereof. As of the date of the Proxy Statement-Prospectus
for the Special Meeting, management of the Company is not aware of any
other such business.
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
PLEASE MARK, DATE, EXECUTE AND PROMPTLY RETURN
THIS PROXY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
Note: Please sign exactly as name appears hereon.
For joint accounts, each joint owner should sign.
When signing as attorney, executor,
administrator, trustee or guardian, please give
your full title as such. If a corporation, please
sign the full corporate name by President or
other authorized officer, giving your full title
as such. If a partnership, please sign in the
partnership name by authorized person, giving
your full title as such.
Signature: Date: Signature: Date:
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