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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
September 16, 1996
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(Date of earliest event reported)
PennFirst Bancorp, Inc.
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(Exact name of registrant as specified in its charter)
Pennsylvania 0-19345 25-1659846
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(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
600 Lawrence Avenue, Ellwood City, Pennsylvania 16117
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(Address of principal executive offices) (Zip Code)
(412) 758-5584
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(Registrant's telephone number, including area code)
Not Applicable
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(Former name, former address and former fiscal year, if changed
since last report)
Exhibit Index appears on page 6.
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ITEM 5. OTHER EVENTS
On September 16, 1996, PennFirst Bancorp, Inc. ("PennFirst"), a
Pennsylvania corporation headquartered in Ellwood City, Pennsylvania, and Troy
Hill Bancorp, Inc. ("THB"), a Pennsylvania corporation headquartered in
Pittsburgh, Pennsylvania, entered into an Agreement and Plan of Reorganization
(the "Agreement") (including an Agreement of Merger) which sets forth the terms
and conditions under which THB will merge with and into PennFirst (the
"Merger").
The Agreement provides that upon consummation of the Merger, and subject to
certain further terms, conditions, limitations and procedures set forth in the
Agreement, each outstanding share of Common Stock of THB ("THB Common Stock")
(other than (i) shares as to which dissenters' rights have been asserted and
duly perfected in accordance with Pennsylvania law and (ii) any shares held by
THB (including treasury shares) or PennFirst or any of their respective wholly-
owned subsidiaries) shall, by virtue of the Merger, and without any further
action by the holder thereof, be converted into and represent the right to
receive, at the election of the holder thereof,
(i) the number of shares of PennFirst Common Stock which is equal to (the
"Exchange Ratio") the quotient determined by dividing (x) $21.15 by (y) the
average of the high bid and low asked price per share of PennFirst Common
Stock, as reported on the Nasdaq Stock Market's National Market (as
reported by an authoritative source), for the 20 trading days ending on the
date PennFirst and THB receive all requisite regulatory approvals and
satisfy all applicable waiting periods, or
(ii) a cash amount equal to $21.15 per share of THB Common Stock,
subject to an overall requirement that 40% of the total outstanding Troy Hill
Common Stock be exchanged for cash.
The Agreement provides that PennFirst shall maintain Troy Hill Federal
Savings Bank ("Troy Hill"), a federally chartered savings bank and wholly-owned
subsidiary of THB, as a separate subsidiary of PennFirst for a period of not
less than one year from the Effective Time (as defined in the Agreement).
Following such one-year period, PennFirst may, in its sole discretion, determine
to merge or consolidate Troy Hill with ESB Bank, FSB ("ESBB"), a federally
chartered savings bank and wholly-owned subsidiary of PennFirst.
Concurrently with the execution and delivery of the Agreement, (i) THB
entered into a Stock Option Agreement with PennFirst (the "Stock Option
Agreement") whereby THB granted to PennFirst an option to purchase up to 213,000
shares of THB Common Stock, representing 19.9% of the outstanding shares of THB
Common Stock, at a price of $15.75 per share, which is exercisable only upon the
occurrence of certain events. The Stock Option Agreement provides the grantee
with the right to require the issuer to register the
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Common Stock acquired by or issuable upon exercise of the option under the
Securities Act of 1933, as amended.
Consummation of the Merger is subject to the approval of the respective
shareholders of PennFirst and THB and the receipt of all required regulatory
approvals, as well as other customary conditions.
The Agreement, the Stock Option Agreement and the press release issued by
PennFirst and THB on September 16, 1996 regarding the Merger are attached as
exhibits to this report and are incorporated herein by reference. The foregoing
summaries of the Agreement and the Stock Option Agreement do not purport to be
complete and are qualified in their entirety by reference to such agreements.
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
The following exhibits are filed with this report:
Exhibit Number Description
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2 Agreement and Plan of Reorganization, dated
as of September 16, 1996, between PennFirst
and THB (including the Agreement of Merger,
dated as of September 16, 1996, between
PennFirst and THB and attached as Appendix A
thereto)
10 Stock Option Agreement, dated as of September
16, 1996, between PennFirst (as grantee) and
THB (as issuer) and attached as Exhibit A to
the Agreement
20 Press Release issued on September 16, 1996
with respect to the Agreement
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PENNFIRST BANCORP, INC.
Date: September 25, 1996 By: /s/ Charlotte A. Zuschlag
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Charlotte A. Zuschlag
President and Chief Executive Officer
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EXHIBIT INDEX
Exhibit Number Description
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2 Agreement and Plan of Reorganization, dated
as of September 16, 1996, between PennFirst
and THB (including the Agreement of Merger,
dated as of September 16, 1996, between
PennFirst and THB and attached as Appendix A
thereto)
10 Stock Option Agreement, dated as of September
16, 1996, between PennFirst (as grantee) and
THB (as issuer) and attached as Exhibit A to
the Agreement
20 Press Release issued on September 16, 1996
with respect to the Agreement
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EX-2
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION, dated as of September 16, 1996
("Agreement"), between PennFirst Bancorp, Inc. ("PennFirst"), a Pennsylvania
corporation headquartered in Ellwood City, Pennsylvania, and Troy Hill Bancorp,
Inc. ("THB"), a Pennsylvania corporation headquartered in Pittsburgh,
Pennsylvania.
WITNESSETH:
WHEREAS, the Boards of Directors of PennFirst and THB have determined that
it is in the best interests of their respective companies and their shareholders
to consummate the business combination transactions provided for herein,
including the merger of THB with and into PennFirst subject to the terms and
conditions set forth herein; and
WHEREAS, the parties desire to provide for certain undertakings,
conditions, representations, warranties and covenants in connection with the
transactions contemplated hereby; and
WHEREAS, as a condition and inducement to PennFirst's willingness to enter
into this Agreement, (i) THB is concurrently entering into a Stock Option
Agreement with PennFirst (the "Stock Option Agreement"), in substantially the
form attached hereto as Exhibit A, pursuant to which THB is granting to
PennFirst the option to purchase shares of THB Common Stock (as defined herein)
under certain circumstances and (ii) certain stockholders of THB are
concurrently entering into a Stockholder Agreement with PennFirst (the
"Stockholder Agreement"), in substantially the form attached hereto as Exhibit
B, pursuant to which, among other things, such stockholders agree to vote their
shares of THB Common Stock in favor of this Agreement and the transactions
contemplated hereby.
NOW, THEREFORE, in consideration of the premises and the mutual covenants,
representations, warranties and agreements herein contained, the parties hereto
agree as follows:
ARTICLE I
THE MERGER
1.01. THE MERGER. Subject to the terms and conditions of this Agreement
and the Agreement of Merger, dated as of the date hereof, between PennFirst and
THB, a copy of which is attached hereto as Appendix A, at the Effective Time (as
defined in Section 1.02 hereof), THB shall be merged with and into PennFirst in
accordance with Chapter 19, Subchapter C of the Pennsylvania Business
Corporation Law ("PBCL") (the "Merger"), with PennFirst as the surviving
corporation (hereinafter sometimes called the "Surviving Corporation"). Each
share
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of common stock, par value $.01 per share, of THB ("THB Common Stock")
outstanding immediately prior to the Effective Time (other than shares as to
which dissenters' rights have been asserted and duly perfected in accordance
with Pennsylvania law (the "THB Dissenting Shares") and shares held by THB
(including treasury shares) or PennFirst or any of their respective wholly-owned
subsidiaries) shall, by virtue of the Merger and without any further action by
the holder thereof, be converted into and represent the right to receive shares
of common stock, par value $.01 per share, of PennFirst ("PennFirst Common
Stock") or $21.15 in cash ("Merger Consideration"), as provided in Section 1.03
hereof and subject to the terms, conditions, limitations and procedures set
forth in this Agreement and the Agreement of Merger.
1.02. EFFECTIVE TIME. The Merger shall become effective on the date and
at the time that Articles of Merger are filed with the Secretary of State of the
Commonwealth of Pennsylvania pursuant to Section 1927 of the PBCL, unless a
later date and time is specified as the effective time in such Articles of
Merger ("Effective Time"). A closing (the "Closing") shall take place
immediately prior to the Effective Time at 10:00 a.m., on the fifth business day
following the receipt of all necessary regulatory or governmental approvals and
consents and the expiration of all statutory waiting periods in respect thereof
and the satisfaction or waiver, to the extent permitted hereunder, of the
conditions to the consummation of the Merger specified in Article V of this
Agreement (other than the delivery of certificates, opinions and other
instruments and documents to be delivered at the Closing), at the offices of
PennFirst, 600 Lawrence Avenue, Ellwood City, Pennsylvania, or at such other
place, at such other time, or on such other date as the parties may mutually
agree upon. At the Closing, there shall be delivered to PennFirst and THB the
opinions, certificates and other documents required to be delivered under
Article V hereof.
1.03 CONVERSION OF SHARES. At the Effective Time, by virtue of the
Merger and without any action on the part of a holder of shares of THB Common
Stock:
(a) Each share of PennFirst Common Stock that is issued and outstanding
immediately prior to the Effective Time shall remain issued and outstanding and
shall be unchanged by the Merger.
(b) All shares of THB Common Stock owned by THB (including treasury
shares) or PennFirst or any of their respective wholly-owned subsidiaries shall
be cancelled and retired and shall not represent capital stock of the Surviving
Corporation and shall not be exchanged for shares of PennFirst Common Stock,
cash or other consideration.
(c) (1) Subject to Sections 1.08, 1.05 and 1.09 each share of THB
Common Stock issued and outstanding at the Effective Time (other than shares to
be cancelled in accordance with Section 1.03(b)) shall be converted into, and
shall be cancelled in exchange for, the right to receive, at the election of the
holder thereof:
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(i) the number of shares of PennFirst Common Stock which is equal
to (the "Exchange Ratio"), the quotient determined by dividing (x) $21.15
by (y) the Average Share Price (the "Per Share Stock Consideration"), or
(ii) a cash amount equal to $21.15 per share of THB Common Stock
(the "Per Share Cash Consideration").
(2) For purposes of this Agreement:
(i) the "Aggregate Cash Consideration" shall amount to the product
of the number of shares of THB Common Stock (other than THB Common Stock
owned by THB (including treasury shares) or PennFirst) outstanding at the
Effective Time times .40 times $21.15; and
(ii) the "Average Share Price" shall mean the average of the high
bid and low asked price per share of PennFirst Common Stock, as reported
on the Nasdaq Stock Market's National Market (as reported by an
authoritative source), for the 20 trading days ending on the date
PennFirst and THB receive all requisite regulatory approvals and satisfy
all applicable waiting periods.
1.04 ELECTION AND EXCHANGE PROCEDURES
(a) The parties shall designate an exchange agent to act as agent (the
"Exchange Agent") for purposes of conducting the election procedure and the
exchange procedure as described in Sections 1.04 and 1.05. No later than seven
business days following the Effective Time, PennFirst shall cause the Exchange
Agent to mail or make available to each holder of record of a certificate or
certificates which immediately prior to the Effective Time represented issued
and outstanding shares of THB Common Stock (i) a notice and letter of
transmittal (which shall specify that delivery shall be effected and risk of
loss and title to the certificates theretofore representing shares of THB Common
Stock shall pass only upon proper delivery of such certificates to the Exchange
Agent) advising such holder of the effectiveness of the Merger and the procedure
for surrendering to the Exchange Agent such certificate or certificates which
immediately prior to the Effective Time represented issued and outstanding
shares of THB Common Stock in exchange for the consideration set forth in
Section 1.03(c) hereof deliverable in respect thereof pursuant to this Agreement
and (ii) an election form in such form as PennFirst and THB shall mutually agree
("Election Form"). Each Election Form shall permit the holder (or in the case
of nominee record holders, the beneficial owner through proper instructions and
documentation) (i) to elect to receive PennFirst Common Stock with respect to
all such holder's THB Common Stock as hereinabove provided (the "Stock Election
Shares"), (ii) to elect to receive cash with respect to all such holder's THB
Common Stock as hereinabove provided (the "Cash Election Shares"), or (iii) to
indicate that such holder makes no such election with respect to such holder's
shares of THB Common Stock (the "No-Election Shares"). Any shares of THB Common
Stock with respect to which the holder thereof shall not, as of the Election
Deadline, have made such an election by submission to the Exchange Agent of an
effective, properly
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completed Election Form shall be deemed to be No-Election Shares. Any THB
Dissenting Shares shall be deemed to be Cash Election Shares, and with respect
to such shares the holders thereof shall in no event be classified as
Reallocated Stock Shares (as hereinafter defined).
(b) The term "Election Deadline," as used below, shall mean 5:00 p.m.,
Eastern Time, on the 20th business day following but not including the date of
mailing of the Election Form or such other date as PennFirst and THB shall
mutually agree upon.
(c) Any election to receive PennFirst Common Stock or cash 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
will be properly completed only if accompanied by certificates representing all
shares of THB Common Stock covered thereby, subject to the provisions of
subsection (h) below of this Section 1.04. Any Election Form may be revoked or
changed by the person submitting such Election Form to the Exchange Agent by
written notice to the Exchange Agent only if such notice is actually received by
the Exchange Agent at or prior to the Election Deadline. The certificate or
certificates representing THB Common Stock relating to any revoked Election Form
shall be promptly returned without charge to the person submitting the Election
Form to the Exchange Agent. The Exchange Agent shall have reasonable discretion
to determine when any election, modification or revocation is received and
whether any such election, modification or revocation has been properly made.
(d) Within ten business days after the Election Deadline, the Exchange
Agent shall effect the allocation among holders of THB Common Stock of rights to
receive PennFirst Common Stock or cash in the Merger in accordance with the
Election Forms as follows:
(i) If the number of Cash Election Shares times the Per Share Cash
Consideration is less than the Aggregate Cash Consideration, then:
(1) all Cash Election Shares (subject to Section 1.08(a)
with respect to Company Dissenting Shares) will be converted into
the right to receive cash,
(2) the Exchange Agent will select first from among the
holders of No-Election Shares and then (if necessary) will allocate
among the holders of Stock Election Shares (by the method of
allocation described below), a sufficient number of Stock Election
Shares ("Reallocated Cash Shares") such that the sum of the number
of Cash Election Shares plus the number of Reallocated Cash Shares
times the Per Share Cash Consideration equals the Aggregate Cash
Consideration, and all Reallocated Cash Shares will be converted
into the right to receive cash, and
(3) the No-Election Shares and Stock Election Shares which
are not Reallocated Cash Shares will be converted into the right to
receive PennFirst Common Stock.
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(ii) If the number of Cash Election Shares times the Per Share Cash
Consideration is greater than the Aggregate Cash Consideration, then:
(1) all Stock Election Shares and all No-Election Shares
will be converted into the right to receive PennFirst Common Stock,
(2) the Exchange Agent will allocate among the holders of
Cash Election Shares (by the method of allocation described below),
a sufficient number of Cash Election Shares (excluding any THB
Dissenting Shares) ("Reallocated Stock Shares") such that the number
of remaining Cash Election Shares (including THB Dissenting Shares)
times the Per Share Cash Consideration equals the Aggregate Cash
Consideration, and all Reallocated Stock Shares shall be converted
into the right to receive PennFirst Common Stock, and
(3) the Cash Election Shares (subject to Section 1.08(a)
with respect to THB Dissenting Shares) which are not Reallocated
Stock Shares will be converted into the right to receive cash.
(iii) If the number of Cash Election Shares times the Per Share Cash
Consideration is equal to the Aggregate Cash Consideration, then
subparagraphs (d)(i) and (ii) above shall not apply and all No-Election
Shares and all Stock Election Shares will be converted into the right to
receive PennFirst Common Stock.
(e) In the event that the Exchange Agent is required pursuant to Section
1.04(d)(i)(2) to designate from among all Stock Election Shares the Reallocated
Cash Shares to receive cash, each holder of Stock Election Shares shall be
allocated a pro rata portion of the remainder of the total Reallocated Cash
Shares less the number of No Election Shares which are Reallocated Cash Shares.
In the event the Exchange Agent is required pursuant to Section 1.04(d)(ii)(2)
to designate from among all holders of Cash Election Shares the Reallocated
Stock Shares to receive PennFirst Common Stock, each holder of Cash Election
Shares shall be allocated a pro rata portion of the total Reallocated Stock
Shares.
(f) At the Effective Time, PennFirst shall issue to the Exchange Agent
the number of shares of PennFirst Common Stock issuable and the amount of cash
payable in the Merger (which shall be held by the Exchange Agent in trust for
the holders of THB Common Stock and invested only in deposit accounts issued by
the Exchange Agent (or an FDIC-insured affiliate of the Exchange Agent), direct
obligations of the U.S. Government or obligations issued or guaranteed by an
agency thereof which carry the full faith and credit of the United States).
Within 10 business days after the Election Deadline, the Exchange Agent shall
distribute PennFirst Common Stock and cash as provided herein. The Exchange
Agent shall not be entitled to vote or exercise any rights of ownership with
respect to the shares of PennFirst Common Stock held by it from time to time
hereunder, except that it shall receive and hold all dividends or other
distributions paid or distributed with respect to such shares for the account of
the persons entitled thereto.
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(g) After the completion of the foregoing allocation, each holder of an
outstanding certificate or certificates which prior thereto represented shares
of THB Common Stock who surrenders such certificate or certificates to the
Exchange Agent will, upon acceptance thereof by the Exchange Agent, be entitled
to a certificate or certificates representing the number of full shares of
PennFirst Common Stock or the amount of cash into which the aggregate number of
shares of THB Common Stock previously represented by such certificate or
certificates surrendered shall have been converted pursuant to this Agreement
and, if such holder's shares of THB Common Stock have been converted into
PennFirst Common Stock, any other distribution theretofore paid with respect to
PennFirst Common Stock issuable in the Merger, in each case without interest.
The Exchange Agent shall accept such certificates upon compliance with such
reasonable terms and conditions as the Exchange Agent may impose to effect an
orderly exchange thereof in accordance with normal exchange practices. Each
outstanding certificate which prior to the Effective Time represented THB Common
Stock and which is not surrendered to the Exchange Agent in accordance with the
procedures provided for herein shall, except as otherwise herein provided, until
duly surrendered to the Exchange Agent be deemed to evidence ownership of the
number of shares of PennFirst Common Stock or the right to receive the amount of
cash into which such THB Common Stock shall have been converted. After the
Effective Time, there shall be no further transfer on the records of THB of
certificates representing shares of THB Common Stock and if such certificates
are presented to THB for transfer, they shall be cancelled against delivery of
certificates for PennFirst Common Stock or cash as hereinabove provided. No
dividends which have been declared will be remitted to any person entitled to
receive shares of PennFirst Common Stock under this Section 1.04 until such
person surrenders the certificate or certificates representing THB Common Stock,
at which time such dividends shall be remitted to such person, without interest.
(h) PennFirst shall not be obligated to deliver cash and/or a
certificate or certificates representing shares of PennFirst Common Stock to
which a holder of THB Common Stock would otherwise be entitled as a result of
the Merger until such holder surrenders the certificate or certificates
representing the shares of THB Common Stock for exchange as provided in this
Section 1.04, or, in default thereof, an appropriate affidavit of loss and
indemnity agreement and/or a bond as may be required in each case by PennFirst.
If any certificates evidencing shares of PennFirst Common Stock are to be issued
in a name other than that in which the certificate evidencing THB Common Stock
surrendered in exchange therefor is registered, it shall be a condition of the
issuance thereof that the certificate so surrendered shall be properly endorsed
or accompanied by an executed form of assignment separate from the certificate
and otherwise in proper form for transfer and that the person requesting such
exchange pay to the Exchange Agent any transfer or other tax required by reason
of the issuance of a certificate for shares of PennFirst Common Stock in any
name other than that of the registered holder of the certificate surrendered or
otherwise establish to the satisfaction of the Exchange Agent that such tax has
been paid or is not payable.
(i) Any portion of the shares of PennFirst Common Stock and cash
delivered to the Exchange Agent by PennFirst pursuant to Section 1.04(f) that
remains unclaimed by the shareholders of THB for six months after the Effective
Time (as well as any proceeds from any
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investment thereof) shall be delivered by the Exchange Agent to PennFirst. Any
shareholders of THB who have not theretofore complied with Section 1.04(g) shall
thereafter look only to PennFirst for the consideration deliverable in respect
of each share of THB Common Stock such shareholder holds as determined pursuant
to this Agreement without any interest thereon. If outstanding certificates for
shares of THB Common Stock are not surrendered or the payment for them is not
claimed prior to the date on which such shares of PennFirst Common Stock or cash
would otherwise escheat to or become the property of any governmental unit or
agency, the unclaimed items shall, to the extent permitted by abandoned property
and any other applicable law, become the property of PennFirst (and to the
extent not in its possession shall be delivered to it), free and clear of all
claims or interest of any person previously entitled to such property. Neither
the Exchange Agent nor any party to this Agreement shall be liable to any holder
of stock represented by any certificate for any consideration paid to a public
official pursuant to applicable abandoned property, escheat or similar laws.
PennFirst and the Exchange Agent shall be entitled to rely upon the stock
transfer books of THB to establish the identity of those persons entitled to
receive consideration specified in this Agreement, which books shall be
conclusive with respect thereto. In the event of a dispute with respect to
ownership of stock represented by any certificate, PennFirst and the Exchange
Agent shall be entitled to deposit any consideration represented thereby in
escrow with an independent third party and thereafter be relieved with respect
to any claims thereto.
1.05 NO FRACTIONAL SHARES. Notwithstanding any other provision of this
Agreement, neither certificates nor scrip for fractional shares of PennFirst
Common Stock shall be issued in the Merger. Each holder who otherwise would
have been entitled to a fraction of a share of PennFirst Common Stock shall
receive in lieu thereof cash (without interest) in an amount determined by
multiplying the fractional share interest to which such holder would otherwise
be entitled by the Average Share Price. No such holder shall be entitled to
dividends, voting rights or any other rights in respect of any fractional share.
1.06 STOCK OPTIONS.
(a) Immediately before the Effective Time, each option with respect to
THB Common Stock (a "THB Stock Option") that has been issued pursuant to THB's
1994 Stock Option Plan and is outstanding and exercisable at the Effective Time
shall be cancelled and converted into the right to receive from THB or
PennFirst, subject to required withholding taxes, if any, (x) cash in an amount
equal to the difference between the exercise price of such THB Stock Option and
the Per Share Cash Consideration for each share of THB Common Stock subject to
such THB Stock Option or (y) an option to purchase shares of PennFirst Common
Stock in an amount and at an exercise price determined as provided below (and
otherwise subject to the terms of THB's 1994 Stock Option Plan):
(1) the number of shares of PennFirst Common Stock to be subject
to the new option shall be equal to the product of the number of shares of
THB Common Stock subject to the original option and the Exchange Ratio,
provided
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that any fractional shares of PennFirst Common Stock resulting from such
multiplication shall be rounded down to the nearest share; and
(2) the exercise price per share of PennFirst Common Stock under
the new option shall be equal to the exercise price per share of THB
Common Stock under the original option divided by the Exchange Ratio,
provided that such exercise price shall be rounded up to the nearest cent.
The duration and other terms of the new option shall be the same as the original
option, except that all references to THB shall be deemed to be references to
PennFirst.
(b) Within thirty (30) business days after the Effective Time,
PennFirst shall file with the Securities and Exchange Commission (the "SEC") a
registration statement on an appropriate form under the Securities Act of 1933,
as amended (the "Securities Act") with respect to the shares of PennFirst Common
Stock subject to options to acquire PennFirst Common Stock issued pursuant to
Section 1.06(a) hereof, and shall use its reasonable best efforts to maintain
the current status of the prospectus contained therein, as well as comply with
applicable state securities or "blue sky" law, for so long as such options
remain outstanding.
1.07 WITHHOLDING RIGHTS. PennFirst (through the Exchange Agent, if
applicable) shall be entitled to deduct and withhold from any amounts otherwise
payable pursuant to this Agreement to any holder of shares of THB Common Stock
such amounts as PennFirst is required under the Internal Revenue Code of 1986,
as amended ("Code") or any provision of state, local or foreign tax law to
deduct and withhold with respect to the making of such payment. Any amounts so
withheld shall be treated for all purposes of this Agreement as having been paid
to the holder of THB Common Stock in respect of which such deduction and
withholding was made by PennFirst.
1.08 DISSENTING SHARES. Each outstanding share of THB Common Stock the
holder of which has perfected his right to dissent under the PBCL and has not
effectively withdrawn or lost such right as of the Effective Time (the "THB
Dissenting Shares") shall not be converted into or represent a right to receive
shares of PennFirst Common Stock or cash hereunder, and the holder thereof shall
be entitled only to such rights as are granted by the PBCL. THB shall give
PennFirst prompt notice upon receipt by THB of any such written demands for
payment of the fair value of such shares of THB Common Stock and of withdrawals
of such demands and any other instruments provided pursuant to the PBCL (any
shareholder duly making such demand being hereinafter called a "Dissenting
Shareholder"). Any payments made in respect of THB Dissenting Shares shall be
made by PennFirst. If any Dissenting Shareholder shall effectively withdraw or
lose (through failure to perfect or otherwise) his right to such payment at or
prior to the Effective Time, such holder's shares of THB Common Stock shall be
converted into a right to receive cash or PennFirst Common Stock in accordance
with the applicable provisions of this Agreement. If such holder shall
effectively withdraw or lose (through failure to perfect or otherwise) his right
to such payment after the Effective Time, each share of THB
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Common Stock of such holder shall be converted on a share by share basis into
either the right to receive cash or PennFirst Common Stock as PennFirst shall
determine.
1.09 ANTI-DILUTION PROVISIONS. The Exchange Ratio, the Per Share Stock
Consideration, the Per Share Cash Consideration and the Stock Amount shall be
subject to appropriate adjustments as mutually agreed to by PennFirst and THB in
the event that, subsequent to the date of this Agreement but prior to the
Effective Time, the outstanding shares of PennFirst Common Stock shall have been
increased, decreased, changed into or exchanged for a different number or kind
of shares or securities through reorganization, recapitalization,
reclassification, stock dividend, stock split, reverse stock split or other like
changes in PennFirst's capitalization. Nothing contained herein shall be deemed
to permit any action which may be proscribed by this Agreement.
1.10 ADDITIONAL ACTIONS. If at any time after the Effective Time the
Surviving Corporation shall consider that any further assignments or assurances
in law or any other acts are necessary or desirable to (i) vest, perfect or
confirm, of record or otherwise, in the Surviving Corporation its rights, title
or interest in, to or under any of the rights, properties or assets of THB
acquired or to be acquired by the Surviving Corporation as a result of, or in
connection with, the Merger, or (ii) otherwise carry out the purposes of this
Agreement, THB and its proper officers and directors shall be deemed to have
granted to the Surviving Corporation an irrevocable power of attorney to execute
and deliver all such proper deeds, assignments and assurances in law and to do
all acts necessary or proper to vest, perfect or confirm title to and possession
of such rights, properties or assets in the Surviving Corporation and otherwise
to carry out the purposes of this Agreement; and the proper officers and
directors of the Surviving Corporation are fully authorized in the name of THB
or otherwise to take any and all such action.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THB
References to "THB Disclosure Schedules" shall mean all of the disclosure
schedules required by this Article II, dated as of the date hereof and
referenced to the specific sections and subsections of Article II of this
Agreement, which have been delivered by THB to PennFirst. THB hereby represents
and warrants to PennFirst as follows as of the date hereof:
2.01. CORPORATE ORGANIZATION.
(a) THB is a corporation duly organized, validly existing and in good
standing under the laws of the Commonwealth of Pennsylvania. THB has the
corporate power and authority to own or lease all of its properties and assets
and to carry on its business as it is now being conducted and is duly licensed
or qualified to do business and is in good standing in each jurisdiction in
which the nature of the business conducted by it or the character or location of
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the properties and assets owned or leased by it makes such licensing or
qualification necessary, except where the failure to be so licensed, qualified
or in good standing would not have a material adverse effect on the business,
operations, assets or financial condition of THB and the THB Subsidiaries (as
defined below) taken as a whole. THB is registered as a thrift holding company
under the Home Owners' Loan Act, as amended ("HOLA"). THB Disclosure Schedule
2.01(a) sets forth true and complete copies of the Articles of Incorporation or
other governing instrument and Bylaws of THB and the THB Subsidiaries as in
effect on the date hereof.
(b) The only direct or indirect subsidiaries of THB are Troy Hill
Federal Savings Bank ("Troy Hill") and THF, Inc. (together the "THB
Subsidiaries"). Each of the THB Subsidiaries (i) is duly organized, validly
existing and in good standing under the laws of its respective jurisdiction of
incorporation, (ii) has the corporate power and authority to own or lease all of
its properties and assets and to conduct its business as it is now being
conducted, and (iii) is duly licensed or qualified to do business and is in good
standing in each jurisdiction in which the nature of the business conducted by
it or the character or location of the properties and assets owned or leased by
it makes such licensing or qualification necessary, except where the failure to
be so licensed, qualified or in good standing would not have a material adverse
effect on the business, operations, assets or financial condition of THB and the
THB Subsidiaries taken as a whole. THB and Troy Hill are in good standing with
their appropriate federal thrift regulatory agencies and each has satisfied in
all material respects all commitments, financial or otherwise, as may have been
agreed upon with such thrift regulatory agencies. Except as set forth in THB
Disclosure Schedule 2.01(b) and other than the THB Subsidiaries, THB does not
own or control, directly or indirectly, greater than a 5% equity interest in any
corporation, company, association, partnership, joint venture or other entity.
2.02. CAPITALIZATION. The authorized capital stock of THB consists of
10,000,000 shares of THB Common Stock, of which 1,067,917 are issued and
outstanding and 56,208 of which are held in treasury as of the date hereof, and
5,000,000 shares of preferred stock, of which no shares are issued and
outstanding as of the date hereof. All issued and outstanding shares of capital
stock of THB, and all issued and outstanding shares of capital stock of each of
the THB Subsidiaries, have been duly authorized and validly issued and are fully
paid, nonassessable and free of preemptive rights. All of the outstanding
shares of capital stock of each of the THB Subsidiaries are owned by THB free
and clear of any liens, encumbrances, charges, restrictions or rights of third
parties of any kind whatsoever, and, except for options granted to PennFirst
pursuant to the Option Agreement and for options to purchase 70,253 shares of
THB Common Stock which have been granted pursuant to THB's 1994 Stock Option
Plan, and which are outstanding, none of THB or either of the THB Subsidiaries
has or is bound by any outstanding subscriptions, options, warrants, calls,
commitments or agreements of any character calling for the transfer, purchase or
issuance of any shares of capital stock of THB or either of the THB Subsidiaries
or any securities representing the right to purchase or otherwise receive any
shares of such capital stock or any securities convertible into or representing
the right to purchase or subscribe for any such stock.
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2.03. AUTHORITY; NO VIOLATION.
(a) Subject to the approval of this Agreement and the Agreement of
Merger and the transactions contemplated hereby and thereby by the stockholders
of THB, THB has full corporate power and authority to execute and deliver this
Agreement and the Agreement of Merger and to consummate the transactions
contemplated hereby and thereby in accordance with the terms hereof and thereof.
The execution and delivery of this Agreement and the Agreement of Merger and the
consummation of the transactions contemplated hereby and thereby have been duly
and validly approved by the Board of Directors of THB. Except for the approval
of THB's stockholders of this Agreement and the Agreement of Merger, no other
corporate proceedings on the part of THB are necessary to consummate the
transactions so contemplated. This Agreement and the Agreement of Merger have
been duly and validly executed and delivered by THB and constitute valid and
binding obligations of THB, enforceable against it in accordance with and
subject to their terms, except as limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors' rights
generally, and except that the availability of equitable remedies (including,
without limitation, specific performance) is within the discretion of the
appropriate court.
(b) None of the execution and delivery of this Agreement and the
Agreement of Merger by THB, nor the consummation by THB of the transactions
contemplated hereby and thereby in accordance with the terms hereof and thereof,
or compliance by THB with any of the terms or provisions hereof or thereof, will
(i) violate any provision of the Articles of Incorporation or other governing
instrument or Bylaws of THB or any of the THB Subsidiaries, (ii) assuming that
the consents and approvals set forth below are duly obtained, violate any
statute, code, ordinance, rule, regulation, judgment, order, writ, decree or
injunction applicable to THB or any of the THB Subsidiaries or any of their
respective properties or assets, or (iii) except as disclosed in THB Disclosure
Schedule 2.03(b), violate, conflict with, result in a breach of any provisions
of, constitute a default (or an event which, with notice or lapse of time, or
both, would constitute a default) under, result in the termination of,
accelerate the performance required by, or result in the creation of any lien,
security interest, charge or other encumbrance upon any of the respective
properties or assets of THB or either of the THB Subsidiaries under any of the
terms, conditions or provisions of any note, bond, mortgage, indenture, deed of
trust, license, lease, agreement or other instrument or obligation to which THB
or any of the THB Subsidiaries is a party, or by which any of their respective
properties or assets may be bound or affected, except, with respect to (ii) and
(iii) above, such as individually or in the aggregate will not have a material
adverse effect on the business, operations, assets or financial condition of THB
and the THB Subsidiaries taken as a whole and which will not prevent or delay
the consummation of the transactions contemplated hereby. Except as set forth
in THB Disclosure Schedule 2.03(b) and for consents and approvals of or filings
or registrations with or notices to the Securities and Exchange Commission
("Commission"), the Secretary of State of the Commonwealth of Pennsylvania, the
Office of Thrift Supervision ("OTS") and the stockholders of THB, no consents or
approvals of or filings or registrations with or notices to any federal, state,
municipal or other governmental or regulatory commission, board, agency, or
non-governmental third party are required on behalf of THB in connection with
(a) the execution and
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delivery of this Agreement and the Agreement of Merger by THB and (b) the
consummation by THB of the Merger and the other transactions contemplated hereby
and by the Agreement of Merger.
2.04. FINANCIAL STATEMENTS.
(a) THB has previously delivered to PennFirst copies of the consolidated
statements of financial condition of THB as of June 30, 1995, 1994 and 1993 and
the related consolidated statements of income, changes in stockholders' equity
and cash flows for the years ended June 30, 1995, 1994 and 1993 in each case
accompanied by the audit reports of Grant Thornton LLP, independent public
accountants, as well as the unaudited consolidated statement of financial
condition of THB as of March 31, 1996 and the related unaudited consolidated
statement of income, changes in stockholders' equity and cash flows for the nine
months ended March 31, 1996 and 1995. The consolidated statements of financial
condition of THB referred to herein (including the related notes, where
applicable), as well as the consolidated financial statements contained in the
reports of THB to be delivered by THB pursuant to Section 4.04 hereof, fairly
present or will fairly present, as the case may be, the consolidated financial
condition of THB as of the respective dates set forth therein, and the related
consolidated statements of income, changes in stockholders' equity and cash
flows (including the related notes, where applicable) fairly present or will
fairly present, as the case may be, the results of the consolidated operations,
changes in stockholders' equity and cash flows of THB for the respective periods
or as of the respective dates set forth therein (it being understood that THB's
interim financial statements are not audited and are not prepared with related
notes but reflect all adjustments which are, in the opinion of THB, necessary
for a fair presentation of such financial statements).
(b) Each of the financial statements referred to in this Section 2.04
(including the related notes, where applicable) has been or will be, as the case
may be, prepared in accordance with generally accepted accounting principles
consistently applied during the periods involved. The books and records of THB
and the THB Subsidiaries are being maintained in material compliance with
applicable legal and accounting requirements and reflect only actual
transactions.
(c) Except to the extent reflected, disclosed or reserved against in the
consolidated financial statements referred to in the first sentence of Section
2.04(a) or the notes thereto or liabilities incurred since March 31, 1996 in the
ordinary course of business and consistent with past practice, none of THB or
either of the THB Subsidiaries has any obligation or liability, whether
absolute, accrued, contingent or otherwise, material to the business,
operations, assets or financial condition of THB and the THB Subsidiaries taken
as a whole.
2.05. ABSENCE OF CERTAIN CHANGES OR EVENTS.
(a) There has not been any material adverse change in the business,
operations, prospects, assets or financial condition of THB and the THB
Subsidiaries taken as a whole since
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March 31, 1996 and to the best knowledge of THB, no fact or condition exists
which THB believes will cause such a material adverse change in the future.
(b) Neither THB nor either of the THB Subsidiaries has taken or
permitted any of the actions set forth in Section 4.02 hereof between March 31,
1996 and the date hereof.
2.06. LEGAL PROCEEDINGS. Except as disclosed in THB Disclosure Schedule
2.06, none of THB or either of the THB Subsidiaries is a party to any, and there
are no pending or, to the best knowledge of THB, threatened legal,
administrative, arbitration or other proceedings, claims, actions or
governmental investigations of any nature against THB or either of the THB
Subsidiaries, except such proceedings, claims, actions or governmental
investigations which in the good faith judgment of THB will not have a material
adverse effect on the business, operations, assets or financial condition of THB
and the THB Subsidiaries taken as a whole. None of THB or any of the THB
Subsidiaries is a party to any order, judgment or decree which materially
adversely affects the business, operations, assets or financial condition of THB
and the THB Subsidiaries taken as a whole.
2.07. TAXES AND TAX RETURNS.
(a) Each of THB and the THB Subsidiaries, or the affiliated, combined or
unitary group (within the meaning of applicable federal income tax law) of which
any such corporation is or was a member, as the case may be (individually an
"Affiliate" and collectively, "Affiliates"), has duly filed (and until the
Effective Time will so file) all returns, declarations, reports, information
returns and statements ("Returns") required to be filed or sent by or with
respect to them in respect of any Taxes (as hereinafter defined), and has duly
paid (and until the Effective Time will so pay) all Taxes due and payable other
than Taxes or other charges which (i) are being contested in good faith (and
disclosed in writing to PennFirst) and (ii) have not finally been determined.
THB and its Affiliates have established (and until the Effective Time will
establish) on their books and records reserves that are adequate for the payment
of all Taxes not yet due and payable, whether or not disputed, accrued or
applicable. Except as set forth in THB Disclosure Schedule 2.07(a), (i) the
federal income tax returns of THB and its Affiliates have been examined by the
Internal Revenue Service ("IRS") (or are closed to examination due to the
expiration of the applicable statute of limitations), and (ii) the Pennsylvania
income tax returns of THB and its Affiliates have been examined by applicable
authorities (or are closed to examination due to the expiration of the statute
of limitations), and in the case of both (i) and (ii) no deficiencies were
asserted as a result of such examinations which have not been resolved and paid
in full. There are no audits or other administrative or court proceedings
presently pending nor any other disputes pending, or claims asserted for, Taxes
or assessments upon THB or any of its Affiliates, nor has THB or any of its
Affiliates given any currently outstanding waivers or comparable consents
regarding the application of the statute of limitations with respect to any
Taxes or Returns.
(b) Except as set forth in THB Disclosure Schedule 2.07(b), none of THB
or any of its Affiliates (i) has requested any extension of time within which to
file any Return which
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Return has not since been filed, (ii) is a party to any agreement providing for
the allocation or sharing of Taxes, (iii) is required to include in income any
adjustment pursuant to Section 481(a) of the Internal Revenue Code of 1986, as
amended (the "Code"), by reason of a voluntary change in accounting method
initiated by THB or any Affiliate (nor does THB have any knowledge that the IRS
has proposed any such adjustment or change of accounting method), or (iv) has
filed a consent pursuant to Section 341(f) of the Code or agreed to have Section
341(f)(2) of the Code apply.
(c) For purposes of this Agreement, "Taxes" shall mean all taxes,
charges, fees, levies or other assessments, including, without limitation, all
net income, gross income, gross receipts, sales, use, ad valorem, transfer,
franchise, profits, license, withholding, payroll, employment (including
withholding, payroll and employment taxes required to be withheld with respect
to income paid to employees), excise, estimated, severance, stamp, occupation,
property or other taxes, customs duties, fees, assessments or charges of any
kind whatsoever, together with any interest and any penalties, additions to tax
or additional amounts imposed by any taxing authority (domestic or foreign) upon
THB or any of its Affiliates.
2.08. EMPLOYEE BENEFIT PLANS.
(a) Each employee benefit plan or arrangement of THB or either of the
THB Subsidiaries which is an "employee benefit plan" within the meaning of
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), is listed in THB Disclosure Schedule 2.08(a) ("THB Plans"). THB has
previously furnished to PennFirst true and complete copies of each of the THB
Plans together with (i) the most recent actuarial and financial reports prepared
with respect to any qualified THB Plans, (ii) the most recent annual reports
filed with any government agency, and (iii) all rulings and determination
letters and any open requests for rulings or letters that pertain to any
qualified THB Plans.
(b) Each THB Plan has been operated in compliance in all material
respects with the applicable provisions of ERISA, the Code, all regulations,
rulings and announcements promulgated or issued thereunder, and all other
applicable governmental laws and regulations.
(c) Neither THB nor any THB Subsidiary participates in or has incurred
any liability under Section 4201 of ERISA for a complete or partial withdrawal
from a multi-employer plan (as such term is defined in ERISA).
(d) The present value of all accrued benefits under each of the THB
Plans subject to Title IV of ERISA did not, as of the latest valuation date of
each such Plan, exceed the then current value of the assets of such plans
allocable to such accrued benefits, based upon the actuarial and accounting
assumptions currently utilized for such THB Plans.
(e) Neither THB nor either of the THB Subsidiaries, nor, to the best
knowledge of THB, any trustee, fiduciary or administrator of an THB Plan or any
trust created thereunder, has engaged in a "prohibited transaction," as such
term is defined in Section 4975 of the Code,
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which could subject THB or either of the THB Subsidiaries, or, to the best
knowledge of THB, any trustee, fiduciary or administrator thereof, to the tax or
penalty on prohibited transactions imposed by said Section 4975.
(f) No THB Plan or any trust created thereunder has been terminated, nor
have there been any "reportable events" with respect to any THB Plan, as that
term is defined in Section 4043(b) of ERISA.
(g) No THB Plan or any trust created thereunder has incurred any
"accumulated funding deficiency," as such term is defined in Section 302 of
ERISA.
(h) Each of the THB Plans which is intended to be a qualified plan
within the meaning of Section 401(a) of the Code has been determined by the IRS
to be so qualified, and THB is not aware of any fact or circumstance which would
adversely affect the qualified status of any such Plan.
2.09. SECURITIES DOCUMENTS AND REGULATORY REPORTS.
(a) THB has previously delivered or made available to PennFirst a
complete copy of each final registration statement, prospectus, annual,
quarterly or current report and definitive proxy statement or other
communication (other than general advertising materials) filed pursuant to the
Securities Act of 1933, as amended ("1933 Act"), or the Securities Exchange Act
of 1934, as amended ("1934 Act"), or mailed by THB to its stockholders as a
class since January 1, 1994, and each such final registration statement,
prospectus, annual, quarterly or current report and definitive proxy statement
or other communication, as of its date, complied in all material respects with
all applicable statutes, rules and regulations and did not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements made therein, in
light of the circumstances under which they were made, not misleading; provided
that information as of a later date shall be deemed to modify information as of
an earlier date.
(b) THB and each of the THB Subsidiaries has duly filed with the OTS and
the Federal Deposit Insurance Corporation ("FDIC") in correct form the monthly,
quarterly and annual reports required to be filed under applicable laws and
regulations, and THB has delivered or made available to PennFirst accurate and
complete copies of such reports. THB Disclosure Schedule 2.09(b) lists all
examinations of THB or of the THB Subsidiaries conducted by the applicable
thrift regulatory authorities since January 1, 1990 and the dates of any
responses thereto submitted by THB. In connection with the most recent
examinations of THB or the THB Subsidiaries by the applicable thrift regulatory
authorities, neither THB nor any THB Subsidiary was required to correct or
change any action, procedure or proceeding which THB or such THB Subsidiary
believes has not been now corrected or changed as required.
2.10. THB INFORMATION. None of the information relating to THB and
the THB Subsidiaries to be contained in (i) the Registration Statement on Form
S-4 to be filed by
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PennFirst in connection with the issuance of shares of PennFirst Common Stock
pursuant to the Merger, as amended or supplemented (or on any successor or other
appropriate form) ("Form S-4"), will, at the time the Form S-4 becomes
effective, contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and (ii) the joint
proxy statement/prospectus contained in the Form S-4, as amended or
supplemented, and to be delivered to stockholders of PennFirst and THB in
connection with the solicitation of their approval of this Agreement, the
Agreement of Merger and the transactions contemplated hereby and thereby ("Joint
Proxy Statement/Prospectus"), as of the date(s) such Joint Proxy
Statement/Prospectus is mailed to stockholders of PennFirst and THB and up to
and including the date(s) of the meetings of stockholders to which such Joint
Proxy Statement/Prospectus relates, will contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, provided that information as of a later date shall be deemed to
modify information as of an earlier date.
2.11. COMPLIANCE WITH APPLICABLE LAW.
(a) THB and each of the THB Subsidiaries has all permits, licenses,
certificates of authority, orders and approvals of, and has made all filings,
applications and registrations with, federal, state, local and foreign
governmental or regulatory bodies that are required in order to permit it to
carry on its business as it is presently being conducted and the absence of
which could have a material adverse effect on the business, operations, assets
or financial condition of THB and the THB Subsidiaries taken as a whole; all
such permits, licenses, certificates of authority, orders and approvals are in
full force and effect; and to the best knowledge of THB and the THB
Subsidiaries, no suspension or cancellation of any of the same is threatened.
(b) Neither THB nor any of the THB Subsidiaries is in violation of its
respective Articles of Incorporation or other governing instrument or Bylaws, or
of any applicable federal, state or local law or ordinance or any order, rule or
regulation of any federal, state, local or other governmental agency or body
(including, without limitation, all banking, securities, municipal securities,
safety, health, zoning, anti-discrimination, antitrust, and wage and hour laws,
ordinances, orders, rules and regulations), or in default with respect to any
order, writ, injunction or decree of any court, or in default under any order,
license, regulation or demand of any governmental agency, any of which
violations or defaults could have a material adverse effect on the business,
operations, assets or financial condition of THB and the THB Subsidiaries taken
as a whole; and neither THB nor any THB Subsidiary has received any notice or
communication from any federal, state or local governmental authority asserting
that THB or any THB Subsidiary is in violation of any of the foregoing which
could have a material adverse effect on the business, operations, assets or
financial condition of THB and the THB Subsidiaries taken as a whole. Neither
THB nor any THB Subsidiary is subject to any regulatory or supervisory cease and
desist order, agreement, written directive, memorandum of understanding or
written commitment (other than those of general applicability to all savings
associations issued
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by governmental authorities), and none of them has received any written
communication requesting that they enter into any of the foregoing.
2.12. DEPOSIT INSURANCE AND OTHER REGULATORY MATTERS.
(a) The deposit accounts of Troy Hill are insured by the Savings
Association Insurance Fund administered by the FDIC to the maximum extent
permitted by the Federal Deposit Insurance Act, as amended ("FDIA"), and Troy
Hill has paid all premiums and assessments required by the FDIA and the
regulations thereunder.
(b) Troy Hill is a member in good standing of the Federal Home Loan Bank
("FHLB") of Pittsburgh and owns the requisite amount of stock in the FHLB of
Pittsburgh.
(c) Troy Hill is a "qualified thrift lender," as such term is defined in
the HOLA and the regulations thereunder.
(d) Troy Hill has at all times qualified as a "domestic building and
loan association," as such term is defined in Section 7701(a)(19) of the Code,
for purposes of Section 593 of the Code.
2.13. CERTAIN CONTRACTS.
(a) Except as disclosed in THB Disclosure Schedule 2.13(a), neither THB
nor any THB Subsidiary is a party to, is bound or affected by, receives, or is
obligated to pay benefits under, (i) any agreement, arrangement or commitment,
including without limitation, any agreement, indenture or other instrument
relating to the borrowing of money by THB or any THB Subsidiary or the guarantee
by THB or any THB Subsidiary of any obligation, (ii) any agreement, arrangement
or commitment relating to the employment of a consultant or the employment,
election or retention in office of any present or former director or officer of
THB or any THB Subsidiary, (iii) any contract, agreement or understanding with a
labor union, (iv) any agreement, arrangement or understanding pursuant to which
any payment (whether of severance pay or otherwise) became or may become due to
any director, officer or employee of THB or any of the THB Subsidiaries upon
execution of this Agreement or upon or following consummation of the
transactions contemplated by this Agreement (either alone or in connection with
the occurrence of any additional acts or events), (v) any agreement, arrangement
or understanding to which THB or any of the THB Subsidiaries is a party or by
which any of the same is bound which limits the freedom of THB or any of the THB
Subsidiaries to compete in any line of business or with any person, (vi) any
assistance agreement, supervisory agreement, memorandum of understanding,
consent order, cease and desist order or condition of any regulatory order or
decree with or by the OTS, the FDIC or any other regulatory agency, (vii) any
other agreement, arrangement or understanding which would be required to be
filed as an exhibit to THB's Annual Report on Form 10-K (or Form 10-KSB) under
the 1934 Act and which has not been so filed, or (viii) any other agreement,
arrangement or understanding to which THB or any THB Subsidiary is a party and
which is material to the business, operations,
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assets or financial condition of THB and the THB Subsidiaries taken as a whole
(excluding loan agreements or agreements relating to deposit accounts), in each
of the foregoing cases whether written or oral.
(b) Neither THB nor any THB Subsidiary is in default or in
non-compliance, which default or non-compliance would have a material adverse
effect on the business, operations, assets or financial condition of THB and the
THB Subsidiaries taken as a whole or the transactions contemplated hereby, under
any contract, agreement, commitment, arrangement, lease, insurance policy or
other instrument to which it is a party or by which its assets, business or
operations may be bound or affected, whether entered into in the ordinary course
of business or otherwise and whether written or oral, and there has not occurred
any event that with the lapse of time or the giving of notice, or both, would
constitute such a default or non-compliance.
2.14. PROPERTIES AND INSURANCE.
(a) All real and personal property owned by THB or any of the THB
Subsidiaries or presently used by any of them in their respective business is in
an adequate condition (ordinary wear and tear excepted) and is sufficient to
carry on the business of THB and the THB Subsidiaries in the ordinary course of
business consistent with their past practices. THB and the THB Subsidiaries
have good and, as to owned real property, marketable title to all material
assets and properties, whether real or personal, tangible or intangible,
reflected in THB's consolidated statement of financial condition as of March 31,
1996, or owned and acquired subsequent thereto (except to the extent that such
assets and properties have been disposed of for fair value in the ordinary
course of business since March 31, 1996), subject to no encumbrances, liens,
mortgages, security interests or pledges, except (i) those items that secure
liabilities that are reflected in said consolidated statement of financial
condition or the notes thereto or have been incurred in the ordinary course of
business after the date of such consolidated statement of financial condition,
(ii) statutory liens for amounts not yet delinquent or which are being contested
in good faith, (iii) such encumbrances, liens, mortgages, security interests,
pledges and title imperfections that are not in the aggregate material to the
business, operations, assets or financial condition of THB and the THB
Subsidiaries taken as a whole, and (iv) with respect to owned real property,
title imperfections noted in title reports prior to the date hereof. THB and
the THB Subsidiaries as lessees have the right under valid and subsisting leases
to occupy, use, possess and control all property leased by them in all material
respects as presently occupied, used, possessed and controlled by THB and the
THB Subsidiaries and the consummation of the transactions contemplated hereby
and by the Agreement of Merger will not affect any such right. THB Disclosure
Schedule 2.14(a) sets forth an accurate listing of each lease pursuant to which
THB or any of the THB Subsidiaries acts as lessor or lessee, including the
expiration date and the terms of any renewal options which relate to the same.
(b) The business operations and all insurable properties and assets of
THB and the THB Subsidiaries are insured for their benefit against all risks
which, in the reasonable judgment of the management of THB, should be insured
against, in each case under valid, binding and enforceable policies or bonds
issued by insurers of recognized responsibility, in such amounts
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with such deductibles and against such risks and losses as are in the opinion of
the management of THB adequate for the business engaged in by THB and the THB
Subsidiaries. As of the date hereof, neither THB nor either of the THB
Subsidiaries has received any notice of cancellation or notice of a material
amendment of any such insurance policy or bond or is in default under such
policy or bond, no coverage thereunder is being disputed and all material claims
thereunder have been filed in a timely fashion.
2.15. ENVIRONMENTAL MATTERS. For purposes of this Agreement, the
following terms shall have the indicated meaning:
"Environmental Law" means any federal, state or local law, statute,
ordinance, rule, regulation, code, license, permit, authorization, approval,
consent, order, judgment, decree, injunction or agreement with any governmental
entity relating to (1) the protection, preservation or restoration of the
environment (including, without limitation, air, water vapor, surface water,
groundwater, drinking water supply, surface soil, subsurface soil, plant and
animal life or any other natural resource), and/or (2) the use, storage,
recycling, treatment, generation, transportation, processing, handling,
labeling, production, release or disposal of Hazardous Substances. The term
Environmental Law includes without limitation (1) the Comprehensive
Environmental Response, Compensation and Liability Act, as amended, 42 U.S.C.
Section 9601, ET SEQ; the Resource Conservation and Recovery Act, as amended, 42
U.S.C. Section 6901, ET SEQ; the Clean Air Act, as amended, 42 U.S.C. Section
7401, ET SEQ; the Federal Water Pollution Control Act, as amended, 33 U.S.C.
Section 1251 ET SEQ; the Toxic Substances Control Act, as amended, 15 U.S.C.
Section 9601, ET SEQ; the Emergency Planning and Community Right to Know Act,
42 U.S.C. Section 11001 ET SEQ; the Safe Drinking Water Act, 42 U.S.C.
Section 300f, ET SEQ; and all comparable state and local laws, and (2) any
common law (including without limitation common law that may impose strict
liability) that may impose liability or obligations for injuries or damages
due to, or threatened as a result of, the presence of or exposure to any
Hazardous Substance.
"Hazardous Substance" means any substance presently listed, defined,
designated or classified as hazardous, toxic, radioactive or dangerous, or
otherwise regulated, under any Environmental Law, whether by type or by
quantity, including any regulated material containing any such substance as a
component. Hazardous Substances include without limitation petroleum (including
crude oil or any fraction thereof), asbestos, radioactive material, and
polychlorinated biphenyls.
"Loan Portfolio Properties and Other Properties Owned" means those
properties owned, leased or operated by THB or any of the THB Subsidiaries or
those properties which serve as collateral for loans owned by THB or any of the
THB Subsidiaries.
(a) To the best knowledge of THB and the THB Subsidiaries, neither THB
nor any of the THB Subsidiaries has been or is in violation of or liable under
any Environmental Law, except any such violations or liabilities which would not
singly or in the aggregate have a material adverse effect on the business,
operations, assets or financial condition of THB and the THB Subsidiaries taken
as a whole.
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(b) To the best knowledge of THB and the THB Subsidiaries, none of the
Loan Portfolio Properties and Other Properties Owned by THB or the THB
Subsidiaries has been or is in violation of or liable under any Environmental
Law, except any such violations or liabilities which singly or in the aggregate
would not have a material adverse effect on the business, operations, assets or
financial condition of THB and the THB Subsidiaries taken as a whole.
(c) To the best knowledge of THB and the THB Subsidiaries, there are no
actions, suits, demands, notices, claims, investigations or proceedings pending
or threatened relating to the liability of the Loan Portfolio Properties and
Other Properties Owned by THB or the THB Subsidiaries under any Environmental
Law, including without limitation any notices, demand letters or requests for
information from any federal or state environmental agency relating to any such
liabilities under or violations of Environmental Law, except such which would
not have or result in a material adverse effect on the business, operations,
assets or financial condition of THB and the THB Subsidiaries taken as a whole.
2.16. ALLOWANCE FOR LOAN LOSSES AND REAL ESTATE OWNED. The allowance
for loan losses reflected on THB's consolidated statements of financial
condition included in the consolidated financial statements referred to in
Section 2.04 hereof is, or will be in the case of subsequently delivered
financial statements, as the case may be, in the opinion of THB's management
adequate in all material respects as of their respective dates under the
requirements of generally accepted accounting principles to provide for
reasonably anticipated losses on outstanding loans net of recoveries. The real
estate owned reflected on the consolidated statements of financial condition
included in the consolidated financial statements referred to in Section 2.04
hereof is, or will be in the case of subsequently delivered financial
statements, as the case may be, carried at the lower of cost or fair value, or
the lower of cost or net realizable value, as required by generally accepted
accounting principles.
2.17. MINUTE BOOKS. Since January 1, 1992, the minute books of THB and
the THB Subsidiaries contain complete and accurate records of all meetings and
other corporate action held or taken by their respective Boards of Directors
(including committees of their respective Boards of Directors) and stockholders.
2.18. AFFILIATE TRANSACTIONS.
(a) Except as disclosed in THB Disclosure Schedule 2.18(a) or in THB's
proxy statements, and except as specifically contemplated by this Agreement,
since January 1, 1992, neither THB nor either of the THB Subsidiaries has
engaged in or agreed to engage in (whether in writing or orally) any transaction
with any "affiliated person" or "affiliate" of Troy Hill, as such terms are
defined in 12 C.F.R Section 561.5 and 12 C.F.R. Section 563.41, respectively.
(b) THB Disclosure Schedule 2.18(b) sets forth the name and number of
shares of THB Common Stock owned as of the date hereof beneficially or of record
by any persons THB considers to be affiliates of THB ("THB Affiliates") as that
term is defined for purposes of Rule 145 under the 1933 Act.
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2.19. BROKER FEES. Except as set forth in THB Disclosure Schedule 2.19,
none of THB, either of the THB Subsidiaries or any of the respective directors
or officers of such companies has employed any consultant, broker or finder or
incurred any liability for any consultant's, broker's or finder's fees or
commissions in connection with any of the transactions contemplated by this
Agreement.
2.20. DISCLOSURES. No representation or warranty contained in Article
II of this Agreement, and no statement contained in the THB Disclosure
Schedules, contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements herein or therein not
misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PENNFIRST
References to "PennFirst Disclosure Schedules" shall mean all of the
disclosure schedules required by this Article III, dated as of the date hereof
and referenced to the specific sections and subsections of Article III of this
Agreement, which have been delivered by PennFirst to THB. PennFirst hereby
represents and warrants to THB as follows as of the date hereof:
3.01. CORPORATE ORGANIZATION.
(a) PennFirst is a corporation duly organized, validly existing and in
good standing under the laws of the Commonwealth of Pennsylvania. PennFirst has
the corporate power and authority to own or lease all of its properties and
assets and to carry on its business as it is now being conducted and is duly
licensed or qualified to do business and is in good standing in each
jurisdiction in which the nature of the business conducted by it or the
character or location of the properties and assets owned or leased by it makes
such licensing or qualification necessary, except where the failure to be so
licensed, qualified or in good standing would not have a material adverse effect
on the business, operations, assets or financial condition of PennFirst and the
PennFirst Subsidiaries (as defined below) taken as a whole. PennFirst is
registered as a thrift holding company under the HOLA. PennFirst Disclosure
Schedule 3.01(a) sets forth true and complete copies of the Articles of
Incorporation or other governing instrument and Bylaws of PennFirst and the
PennFirst Subsidiaries as in effect on the date hereof.
(b) The only direct or indirect subsidiaries of PennFirst are ESB Bank,
FSB ("ESBB"), PennFirst Financial Services, Inc., Ellwood Service Corporation,
Amsco, Inc. and Shady Park II Townhouse Associates (a limited partnership)
(together the "PennFirst Subsidiaries"). Each of the PennFirst Subsidiaries (i)
is duly organized, validly existing and in good standing under the laws of its
respective jurisdiction of incorporation, (ii) has the corporate power and
authority to own or lease all of its properties and assets and to conduct its
business as it is now being conducted, and (iii) is duly licensed or qualified
to do business and is in good standing in each jurisdiction in which the nature
of the business conducted by it or the character
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or location of the properties and assets owned or leased by it makes such
licensing or qualification necessary, except where the failure to be so
licensed, qualified or in good standing would not have a material adverse effect
on the business, operations, assets or financial condition of PennFirst and the
PennFirst Subsidiaries taken as a whole. PennFirst and ESBB are in good
standing with their appropriate federal thrift regulatory agencies and each has
satisfied in all material respects all commitments, financial or otherwise, as
may have been agreed upon with such thrift regulatory agencies. Other than the
PennFirst Subsidiaries, PennFirst does not own or control, directly or
indirectly, greater than a 5% equity interest in any corporation, company,
association, partnership, joint venture or other entity.
3.02. CAPITALIZATION. The authorized capital stock of PennFirst
consists of 10,000,000 shares of PennFirst Common Stock, of which 3,909,184 are
issued and outstanding as of the date hereof, and 5,000,000 shares of preferred
stock, par value $.01 per share, of which no shares are issued and outstanding
as of the date hereof. All issued and outstanding shares of capital stock of
PennFirst, and all issued and outstanding shares of capital stock of each of the
PennFirst Subsidiaries, have been duly authorized and validly issued and are
fully paid, nonassessable and free of preemptive rights. All of the outstanding
shares of capital stock of each of the PennFirst Subsidiaries are owned by
PennFirst free and clear of any liens, encumbrances, charges, restrictions or
rights of third parties of any kind whatsoever, and, except for options to
purchase 250,521 shares of PennFirst Common Stock which have been granted
pursuant to PennFirst's Stock Option Plan or 1992 Stock Incentive Plan (or
options granted by PennFirst pursuant thereto after the date hereof), none of
PennFirst or any of the PennFirst Subsidiaries has or is bound by any
outstanding subscriptions, options, warrants, calls, commitments or agreements
of any character calling for the transfer, purchase or issuance of any shares of
capital stock of PennFirst or any of the PennFirst Subsidiaries or any
securities representing the right to purchase or otherwise receive any shares of
such capital stock or any securities convertible into or representing the right
to purchase or subscribe for any such stock.
3.03. AUTHORITY; NO VIOLATION.
(a) Subject to the approval of this Agreement and the Agreement of
Merger and the transactions contemplated hereby and thereby by the stockholders
of PennFirst, PennFirst has full corporate power and authority to execute and
deliver this Agreement and the Agreement of Merger and to consummate the
transactions contemplated hereby and thereby in accordance with the terms hereof
and thereof. The execution and delivery of this Agreement and the Agreement of
Merger and the consummation of the transactions contemplated hereby and thereby
have been duly and validly approved by the Board of Directors of PennFirst and,
except for the approval of PennFirst's stockholders of this Agreement and the
Agreement of Merger, no other corporate proceedings on the part of PennFirst
are necessary to consummate the transactions so contemplated. This Agreement
and the Agreement of Merger have been duly and validly executed and delivered by
PennFirst and constitute valid and binding obligations of PennFirst, enforceable
against it in accordance with and subject to their terms, except as limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting
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creditors' rights generally, and except that the availability of equitable
remedies (including, without limitation, specific performance) is within the
discretion of the appropriate court.
(b) None of the execution and delivery of this Agreement and the
Agreement of Merger by PennFirst, nor the consummation by PennFirst of the
transactions contemplated hereby and thereby in accordance with the terms hereof
and thereof, or compliance by PennFirst with any of the terms or provisions
hereof or thereof, will (i) violate any provision of the Articles of
Incorporation or other governing instrument or Bylaws of PennFirst or any of the
PennFirst Subsidiaries, (ii) assuming that the consents and approvals set forth
below are duly obtained, violate any statute, code, ordinance, rule, regulation,
judgment, order, writ, decree or injunction applicable to PennFirst or any of
the PennFirst Subsidiaries or any of their respective properties or assets, or
(iii) violate, conflict with, result in a breach of any provisions of,
constitute a default (or an event which, with notice or lapse of time, or both,
would constitute a default) under, result in the termination of, accelerate the
performance required by, or result in the creation of any lien, security
interest, charge or other encumbrance upon any of the respective properties or
assets of PennFirst or any of the PennFirst Subsidiaries under any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, deed of trust,
license, lease, agreement or other instrument or obligation to which PennFirst
or any of the PennFirst Subsidiaries is a party, or by which any of their
respective properties or assets may be bound or affected, except, with respect
to (ii) and (iii) above, such as individually or in the aggregate will not have
a material adverse effect on the business, operations, assets or financial
condition of PennFirst and the PennFirst Subsidiaries taken as a whole and which
will not prevent or delay the consummation of the transactions contemplated
hereby. Except for consents and approvals of or filings or registrations with
or notices to the Commission, the Secretary of State of the Commonwealth of
Pennsylvania, the OTS and the stockholders of PennFirst, no consents or
approvals of or filings or registrations with or notices to any federal, state,
municipal or other governmental or regulatory commission, board, agency or
non-governmental third party are required on behalf of PennFirst in connection
with (a) the execution and delivery of this Agreement and the Agreement of
Merger by PennFirst and (b) the consummation by PennFirst of the transactions
contemplated hereby and by the Agreement of Merger.
3.04. FINANCIAL STATEMENTS.
(a) PennFirst has previously delivered to THB copies of the consolidated
statements of financial condition of PennFirst as of December 31, 1993, 1994 and
1995, and the related consolidated statements of income, changes in
stockholders' equity and cash flows for the years ended December 31, 1993, 1994
and 1995, in each case accompanied by the audit reports of KPMG Peat Marwick,
independent public accountants, as well as the unaudited consolidated statement
of financial condition of PennFirst as of June 30, 1996 and the related
unaudited consolidated statements of income, changes in stockholders' equity and
cash flows for the six months ended June 30, 1995 and 1996. The consolidated
statements of financial condition of PennFirst referred to herein (including the
related notes, where applicable), as well as the consolidated financial
statements contained in the reports of PennFirst to be delivered by PennFirst
pursuant to Section 4.04 hereof, fairly present or will fairly present, as the
case may be, the consolidated financial condition of PennFirst as of the
respective dates set forth therein, and the related consolidated statements of
operations, changes in stockholders' equity and cash
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flows (including the related notes, where applicable) fairly present or will
fairly present, as the case may be, the results of the consolidated operations,
changes in stockholders' equity and cash flows of PennFirst for the respective
periods or as of the respective dates set forth therein (it being understood
that PennFirst's interim financial statements are not audited and are not
prepared with related notes but reflect all adjustments which are, in the
opinion of PennFirst, necessary for a fair presentation of such financial
statements).
(b) Each of the financial statements referred to in this Section 3.04
(including the related notes, where applicable) has been or will be, as the case
may be, prepared in accordance with generally accepted accounting principles
consistently applied during the periods involved. The books and records of
PennFirst and the PennFirst Subsidiaries are being maintained in material
compliance with applicable legal and accounting requirements and reflect only
actual transactions.
(c) Except to the extent reflected, disclosed or reserved against in the
consolidated financial statements referred to in the first sentence of this
Section 3.04 or the notes thereto or liabilities incurred since June 30, 1996 in
the ordinary course of business and consistent with past practice, none of
PennFirst or any of the PennFirst Subsidiaries has any obligation or liability,
whether absolute, accrued, contingent or otherwise, material to the business,
operations, assets or financial condition of PennFirst and the PennFirst
Subsidiaries taken as a whole.
3.05. ABSENCE OF CERTAIN CHANGES OR EVENTS. There has not been any
material adverse change in the business, operations, prospects, assets or
financial condition of PennFirst and the PennFirst Subsidiaries taken as a whole
since June 30, 1996 and to the best knowledge of PennFirst, no fact or condition
exists which PennFirst believes will cause such a material adverse change in the
future.
3.06. LEGAL PROCEEDINGS. None of PennFirst or any of the PennFirst
Subsidiaries is a party to any, and there are no pending or, to the best
knowledge of PennFirst, threatened legal, administrative, arbitration or other
proceedings, claims, actions or governmental investigations of any nature
against PennFirst or any of the PennFirst Subsidiaries, except such proceedings,
claims actions or governmental investigations which in the good faith judgment
of PennFirst will not have a material adverse effect on the business,
operations, assets or financial condition of PennFirst and the PennFirst
Subsidiaries taken as a whole. None of PennFirst or any of the PennFirst
Subsidiaries is a party to any order, judgment or decree which materially
adversely affects the business, operations, assets or financial condition of
PennFirst and the PennFirst Subsidiaries taken as a whole.
3.07. TAXES AND TAX RETURNS.
(a) Each of PennFirst and the PennFirst Subsidiaries, or the affiliated,
combined or unitary group (within the meaning of applicable federal income tax
law) of which any such corporation is or was a member, as the case may be
(individually an "Affiliate" and collectively,
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"Affiliates"), has duly filed (and until the Effective Time will so file) all
returns, declarations, reports, information returns and statements ("Returns")
required to be filed or sent by or with respect to them in respect of any Taxes,
and has duly paid (and until the Effective Time will so pay) all Taxes due and
payable other than Taxes or other charges which (i) are being contested in good
faith (and disclosed in writing to THB and (ii) have not finally been
determined. PennFirst and its Affiliates have established (and until the
Effective Time will establish) on their books and records reserves that are
adequate for the payment of all Taxes not yet due and payable, whether or not
disputed, accrued or applicable. Except as set forth in PennFirst Disclosure
Schedule 3.07(a), (i) the federal income tax returns of PennFirst and its
Affiliates have been examined by the IRS (or are closed to examination due to
the expiration of the applicable statute of limitations), and (ii) the
Pennsylvania income tax returns of PennFirst and its Affiliates have been
examined by applicable authorities (or are closed to examination due to the
expiration of the statute of limitations), and in the case of both (i) and (ii)
no deficiencies were asserted as a result of such examinations which have not
been resolved and paid in full. There are no audits or other administrative or
court proceedings presently pending nor any other disputes pending, or claims
asserted for, Taxes or assessments upon PennFirst or any of its Affiliates, nor
has PennFirst or any of its Affiliates given any currently outstanding waivers
or comparable consents regarding the application of the statute of limitations
with respect to any Taxes or Returns.
(b) Except as set forth in PennFirst Disclosure Schedule 3.07(b), none
of PennFirst or any of its Affiliates (i) has requested any extension of time
within which to file any Return which Return has not since been filed, (ii) is a
party to any agreement providing for the allocation or sharing of Taxes, (iii)
is required to include in income any adjustment pursuant to Section 481(a) of
the Code, by reason of a voluntary change in accounting method initiated by
PennFirst or any Affiliate (nor does PennFirst have any knowledge that the IRS
has proposed any such adjustment or change of accounting method), or (iv) has
filed a consent pursuant to Section 341(f) of the Code or agreed to have Section
341(f)(2) of the Code apply.
3.08. EMPLOYEE BENEFIT PLANS.
(a) Each employee benefit plan or arrangement of PennFirst or either of
the PennFirst Subsidiaries which is an "employee benefit plan" within the
meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), is listed in PennFirst Disclosure Schedule 3.08(a)
("PennFirst Plans"). PennFirst has previously furnished or made available to
THB true and complete copies of each of the PennFirst Plans together with (i)
the most recent actuarial and financial reports prepared with respect to any
qualified PennFirst Plans, (ii) the most recent annual reports filed with any
government agency, and (iii) all rulings and determination letters and any open
requests for rulings or letters that pertain to any qualified PennFirst Plans.
(b) Each PennFirst Plan has been operated in compliance in all material
respects with the applicable provisions of ERISA, the Code, all regulations,
rulings and announcements promulgated or issued thereunder, and all other
applicable governmental laws and regulations.
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(c) Neither PennFirst nor any PennFirst Subsidiary participates in or
has incurred any liability under Section 4201 of ERISA for a complete or partial
withdrawal from a multi-employer plan (as such term is defined in ERISA).
(d) The present value of all accrued benefits under each of the
PennFirst Plans subject to Title IV of ERISA did not, as of the latest valuation
date of each such Plan, exceed the then current value of the assets of such
plans allocable to such accrued benefits, based upon the actuarial and
accounting assumptions currently utilized for such PennFirst Plans.
(e) Neither PennFirst nor any of the PennFirst Subsidiaries, nor, to the
best knowledge of PennFirst, any trustee, fiduciary or administrator of a
PennFirst Plan or any trust created thereunder, has engaged in a "prohibited
transaction," as such term is defined in Section 4975 of the Code, which could
subject PennFirst or any of the PennFirst Subsidiaries, or, to the best
knowledge of PennFirst, any trustee, fiduciary or administrator thereof, to the
tax or penalty on prohibited transactions imposed by said Section 4975.
(f) No PennFirst Plan or any trust created thereunder has been
terminated, nor have there been any "reportable events" with respect to any
PennFirst Plan, as that term is defined in Section 4043(b) of ERISA.
(g) No PennFirst Plan or any trust created thereunder has incurred any
"accumulated funding deficiency," as such term is defined in Section 302 of
ERISA.
(h) Each of the PennFirst Plans which is intended to be a qualified plan
within the meaning of Section 401(a) of the Code has been determined by the IRS
to be so qualified, and PennFirst is not aware of any fact or circumstance which
would adversely affect the qualified status of any such Plan.
3.09. SECURITIES DOCUMENTS AND REGULATORY REPORTS.
(a) PennFirst has previously delivered or made available to THB a
complete copy of each final registration statement, prospectus, annual,
quarterly or current report and definitive proxy statement or other
communication (other than general advertising materials) filed pursuant to the
1933 Act or the 1934 Act or mailed by PennFirst to its stockholders as a class
since January 1, 1993, and each such final registration statement, prospectus,
annual, quarterly or current report and definitive proxy statement or other
communication, as of its date, complied in all material respects with all
applicable statutes, rules and regulations and did not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements made therein, in
light of the circumstances under which they were made, not misleading; provided
that information as of a later date shall be deemed to modify information as of
an earlier date.
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(b) PennFirst and each of the PennFirst Subsidiaries has duly filed with
the OTS and the FDIC in correct form the monthly, quarterly and annual reports
required to be filed under applicable laws and regulations, and PennFirst has
delivered or made available to THB accurate and complete copies of such reports.
PennFirst Disclosure Schedule 3.09(b) lists all examinations of PennFirst or of
the PennFirst Subsidiaries conducted by the applicable thrift regulatory
authorities since January 1, 1993 and the dates of any responses thereto
submitted by PennFirst. In connection with the most recent examinations of
PennFirst or the PennFirst Subsidiaries by the applicable thrift regulatory
authorities, neither PennFirst nor any PennFirst Subsidiary was required to
correct or change any action, procedure or proceeding which PennFirst or such
PennFirst Subsidiary believes has not been now corrected or changed as required.
3.10. PENNFIRST INFORMATION. None of the information relating to
PennFirst and the PennFirst Subsidiaries to be contained in (i) the Form S-4
will, at the time the Form S-4 becomes effective, contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, and (ii) the Joint Proxy Statement/Prospectus, as of the date(s)
such Joint Proxy Statement/Prospectus is mailed to stockholders of PennFirst and
THB and up to and including the date(s) of the meetings of stockholders to which
such Joint Proxy Statement/Prospectus relates, will contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, provided that information as of a later date shall be deemed to
modify information as of an earlier date.
3.11. COMPLIANCE WITH APPLICABLE LAW.
(a) PennFirst and each of the PennFirst Subsidiaries has all permits,
licenses, certificates of authority, orders and approvals of, and has made all
filings, applications and registrations with, federal, state, local and foreign
governmental or regulatory bodies that are required in order to permit it to
carry on its business as it is presently being conducted and the absence of
which could have a material adverse effect on the business, operations, assets
or financial condition of PennFirst and the PennFirst Subsidiaries taken as a
whole; all such permits, licenses, certificates of authority, orders and
approvals are in full force and effect; and to the best knowledge of PennFirst
and the PennFirst Subsidiaries, no suspension or cancellation of any of the same
is threatened.
(b) Neither PennFirst nor any of the PennFirst Subsidiaries is in
violation of its respective Articles of Incorporation or other governing
instrument or Bylaws, or of any applicable federal, state or local law or
ordinance or any order, rule or regulation of any federal, state, local or other
governmental agency or body (including, without limitation, all banking,
securities, municipal securities, safety, health, zoning, anti-discrimination,
antitrust, and wage and hour laws, ordinances, orders, rules and regulations),
or in default with respect to any order, writ, injunction or decree of any
court, or in default under any order, license, regulation or demand of any
governmental agency, any of which violations or defaults could have a
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material adverse effect on the business, operations, assets or financial
condition of PennFirst and the PennFirst Subsidiaries taken as a whole; and
neither PennFirst nor any PennFirst Subsidiary has received any notice or
communication from any federal, state or local governmental authority asserting
that PennFirst or any PennFirst Subsidiary is in violation of any of the
foregoing which could have a material adverse effect on the business,
operations, assets or financial condition of PennFirst and the PennFirst
Subsidiaries taken as a whole. Neither PennFirst nor any PennFirst Subsidiary
is subject to any regulatory or supervisory cease and desist order, agreement,
written directive, memorandum of understanding or written commitment (other than
those of general applicability to all savings associations issued by
governmental authorities), and none of them has received any written
communication requesting that they enter into any of the foregoing.
3.12. DEPOSIT INSURANCE AND OTHER REGULATORY MATTERS.
(a) The deposit accounts of ESBB are insured by the Savings Association
Insurance Fund administered by the FDIC to the maximum extent permitted by the
FDIA, and ESBB has paid all premiums and assessments required by the FDIA and
the regulations thereunder.
(b) ESBB is a member in good standing of the FHLB of Pittsburgh and owns
the requisite amount of stock in the FHLB of Pittsburgh.
(c) ESBB is a "qualified thrift lender," as such term is defined in the
HOLA and the regulations thereunder.
(d) ESBB has at all times qualified as a "domestic building and loan
association," as such term is defined in Section 7701(a)(19) of the Code, for
purposes of Section 593 of the Code.
3.13. PROPERTIES AND INSURANCE.
(a) All real and personal property owned by PennFirst or any of the
PennFirst Subsidiaries or presently used by any of them in their respective
business is in an adequate condition (ordinary wear and tear excepted) and is
sufficient to carry on the business of PennFirst and the PennFirst Subsidiaries
in the ordinary course of business consistent with their past practices.
PennFirst and the PennFirst Subsidiaries have good and, as to owned real
property, marketable title to all material assets and properties, whether real
or personal, tangible or intangible, reflected in PennFirst's consolidated
statement of financial condition as of June 30, 1996, or owned and acquired
subsequent thereto (except to the extent that such assets and properties have
been disposed of for fair value in the ordinary course of business since June
30, 1996), subject to no encumbrances, liens, mortgages, security interests or
pledges, except (i) those items that secure liabilities that are reflected in
said consolidated statement of financial condition or the notes thereto or have
been incurred in the ordinary course of business after the date of such
consolidated statement of financial condition, (ii) statutory liens for amounts
not yet delinquent or which are being contested in good faith, (iii) such
encumbrances, liens, mortgages,
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security interests, pledges and title imperfections that are not in the
aggregate material to the business, operations, assets or financial condition of
PennFirst and the PennFirst Subsidiaries taken as a whole, and (iv) with respect
to owned real property, title imperfections noted in title reports prior to the
date hereof. PennFirst and the PennFirst Subsidiaries as lessees have the right
under valid and subsisting leases to occupy, use, possess and control all
property leased by them in all material respects as presently occupied, used,
possessed and controlled by PennFirst and the PennFirst Subsidiaries and the
consummation of the transactions contemplated hereby and by the Agreement of
Merger will not affect any such right.
(b) The business operations and all insurable properties and assets of
PennFirst and the PennFirst Subsidiaries are insured for their benefit against
all risks which, in the reasonable judgment of the management of PennFirst,
should be insured against, in each case under valid, binding and enforceable
policies or bonds issued by insurers of recognized responsibility, in such
amounts with such deductibles and against such risks and losses as are in the
opinion of the management of PennFirst adequate for the business engaged in by
PennFirst and the PennFirst Subsidiaries. As of the date hereof, neither
PennFirst nor either of the PennFirst Subsidiaries has received any notice of
cancellation or notice of a material amendment of any such insurance policy or
bond or is in default under such policy or bond, no coverage thereunder is being
disputed and all material claims thereunder have been filed in a timely fashion.
3.14. ENVIRONMENTAL MATTERS.
(a) To the best knowledge of PennFirst and the PennFirst Subsidiaries,
neither PennFirst nor any of the PennFirst Subsidiaries has been or is in
violation of or liable under any Environmental Law, except any such violations
or liabilities which would not singly or in the aggregate have a material
adverse effect on the business, operations, assets or financial condition of
PennFirst and PennFirst Subsidiaries taken as a whole.
(b) To the best knowledge of PennFirst and the PennFirst Subsidiaries,
none of the Loan Portfolio Properties and Other Properties Owned by PennFirst or
the PennFirst Subsidiaries has been or is in violation of or liable under any
Environmental Law, except any such violations or liabilities which singly or in
the aggregate would not have a material adverse effect on the business,
operations, assets or financial condition of PennFirst and the PennFirst
Subsidiaries taken as a whole.
(c) To the best knowledge of PennFirst and the PennFirst Subsidiaries,
there are no actions, suits, demands, notices, claims, investigations or
proceedings pending or threatened relating to the liability of the Loan
Portfolio Properties and Other Properties Owned by PennFirst or the PennFirst
Subsidiaries under any Environmental Law, including without limitation any
notices, demand letters or requests for information from any federal or state
environmental agency relating to any such liabilities under or violations of
Environmental Law, except such which would not have or result in a material
adverse effect on the business, operations, assets or financial condition of
PennFirst and the PennFirst Subsidiaries taken as a whole.
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3.15. ALLOWANCE FOR LOAN LOSSES AND REAL ESTATE OWNED. The allowance
for loan losses reflected on PennFirst's consolidated statements of financial
condition included in the consolidated financial statements referred to in
Section 3.04 hereof is, or will be in the case of subsequently delivered
financial statements, as the case may be, in the opinion of PennFirst's
management adequate in all material respects as of their respective dates under
the requirements of generally accepted accounting principles to provide for
reasonably anticipated losses on outstanding loans net of recoveries. The real
estate owned reflected on the consolidated statements of financial condition
included in the consolidated financial statements referred to in Section 3.04
hereof is, or will be in the case of subsequently delivered financial
statements, as the case may be, carried at the lower of cost or fair value, or
the lower of cost or net realizable value, as required by generally accepted
accounting principles.
3.16. MINUTE BOOKS. Since January 1, 1992, the minute books of
PennFirst and the PennFirst Subsidiaries contain complete and accurate records
of all meetings and other corporate action held or taken by their respective
Boards of Directors (including committees of their respective Boards of
Directors) and stockholders.
3.17. BROKER FEES. Except as set forth in PennFirst Disclosure Schedule
3.17, neither PennFirst nor any of its directors or officers has employed any
consultant, broker or finder or incurred any liability for any consultant's,
broker's or finder's fees or commissions in connection with any of the
transactions contemplated by this Agreement.
3.18. DISCLOSURES. No representation or warranty contained in Article
III of this Agreement, and no statement contained in the PennFirst Disclosure
Schedules, contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements herein or therein not
misleading.
ARTICLE IV
COVENANTS OF THE PARTIES
4.01. CONDUCT OF THE BUSINESS OF THB. During the period from the date
hereof to the Effective Time, THB shall, and shall cause each of the THB
Subsidiaries to, conduct its businesses and engage in transactions permitted
hereunder or only in the ordinary course and consistent with past practice,
except with the prior written consent of PennFirst, which consent shall not be
unreasonably withheld. THB shall use its best efforts to (i) preserve its
business organization and that of the THB Subsidiaries intact, (ii) keep
available to itself and PennFirst the present services of the employees of THB
and the THB Subsidiaries, and (iii) preserve for itself and PennFirst the
goodwill of the customers of itself and the THB Subsidiaries and others with
whom business relationships exist.
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4.02. NEGATIVE COVENANTS. THB agrees that from the date hereof to the
Effective Time, except as otherwise approved by PennFirst in writing or as
permitted or required by this Agreement, THB will not, nor will THB permit any
of the THB Subsidiaries to:
(i) change any provision of the Articles of Incorporation or other
governing instrument or Bylaws of THB or either of the THB Subsidiaries;
(ii) except for the issuance of THB Common Stock pursuant to the present
terms of stock options which are outstanding as of the date hereof (and
identified on THB Disclosure Schedule 4.02) and compliance with the terms of the
Option Agreement of even date herewith, change the number of shares of its
authorized or issued capital stock or issue or grant any option, warrant, call,
commitment, subscription, award, right to purchase or agreement of any character
relating to the authorized or issued capital stock of THB or either of the THB
Subsidiaries, or any securities convertible into shares of such capital stock,
or split, combine or reclassify any shares of its capital stock, or redeem or
otherwise acquire any shares of such capital stock;
(iii) declare, set aside or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect of
the capital stock of THB or either of the THB Subsidiaries, except for regular
quarterly cash dividends not in excess of $0.10 per share of THB Common Stock
(but THB shall not alter its practices as to payment and record dates without
PennFirst's consent);
(iv) grant any severance or termination pay (other than pursuant to
binding contracts of THB in effect on the date hereof and disclosed to PennFirst
on THB Disclosure Schedule 2.13(a)), to, or enter into or amend any employment,
consulting or compensation agreement with, any of its directors, officers or
employees; or award any increase in compensation or benefits to its directors,
officers or employees, except, in the case of employees, such as may be granted
in the ordinary course of business and consistent with past practices and
policies;
(v) enter into or modify (except as may be required by applicable law or
as may be required by Section 4.12 hereof, with the prior written consent of
PennFirst, which shall not be unreasonably withheld) any pension, retirement,
stock option, stock purchase, stock grant, stock appreciation right, savings,
profit sharing, deferred compensation, consulting, bonus, group insurance or
other employee benefit, incentive or welfare contract, plan or arrangement, or
any trust agreement related thereto, in respect of any of its directors,
officers or employees; or make any contributions to THB's Employee Stock
Ownership Plan or any other defined contribution plan or any defined benefit
pension or retirement plan other than in the ordinary course of business
consistent with past practice;
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(vi) sell or dispose of any significant assets or incur any significant
liabilities other than in the ordinary course of business consistent with past
practices and policies, or acquire in any manner whatsoever (other than to
realize upon collateral for a defaulted loan) any business or entity;
(vii) make any capital expenditures in excess of $25,000 in the aggregate,
other than pursuant to binding commitments existing on the date hereof, other
than expenditures necessary to maintain existing assets in good repair and other
than as set forth in THB Disclosure Schedule 4.02(vii);
(viii)except as set forth on THB Disclosure Schedule 4.02(viii), file any
applications or make any contract with respect to branching or site location or
relocation;
(ix) make any material change in its accounting methods or practices,
other than changes required by generally accepted accounting principles, or
change any of its methods of reporting income and deductions for federal income
tax purposes, except as required by changes in laws or regulations;
(x) change its lending, investment, deposit or asset and liability
management or other banking policies in any material respect except as may be
required by applicable law;
(xi) engage in any transaction with an "affiliated person" or
"affiliate," in each case as defined in Section 2.18(a) hereof;
(xii) enter into any futures contract, option or other agreement or take
any other action for purposes of hedging the exposure of its interest-earning
assets and interest-bearing liabilities to changes in market rates of interest;
(xiii)take any action that would result in any of its representations and
warranties contained in Article II of this Agreement not being true and correct
in any material respect at the Effective Time; or
(xiv) agree to do any of the foregoing.
4.03. NO SOLICITATION. Neither THB nor either of the THB Subsidiaries
shall, nor shall THB or either of the THB Subsidiaries authorize or permit any
of its directors, officers or employees or any investment banker, financial
advisor, attorney, accountant or other representative of THB or either of the
THB Subsidiaries to, directly or indirectly, encourage or solicit or hold
discussions or negotiations with, or provide any information to, any person,
entity or group (other than PennFirst) concerning any merger, sale of
substantial assets or liabilities not in the ordinary course of business, sale
of shares of capital stock or similar transactions involving THB or either of
the THB Subsidiaries (an "Acquisition Transaction"); provided, however, that THB
may provide information in connection with an unsolicited possible Acquisition
Transaction if the Board of Directors of THB, after consulting with counsel,
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determines in the exercise of its fiduciary responsibilities that such
information should be furnished. THB will promptly communicate to PennFirst the
terms of any proposal which it may receive in respect of any such Acquisition
Transaction and shall provide PennFirst with copies of (i) any written legal
advice provided to the Board of Directors of THB, (ii) all such written
inquiries or proposals and (iii) an accurate and complete written synopsis of
all such oral inquiries or proposals.
4.04. CURRENT INFORMATION. During the period from the date hereof to
the Effective Time, each party will cause one or more of its designated
representatives to confer on a monthly or more frequent basis with
representatives of the other party regarding its business, operations,
prospects, assets and financial condition and matters relating to the completion
of the transactions contemplated hereby. As soon as reasonably available, but
in no event more than 45 days after the end of each calendar quarter (other than
the last quarter of each calendar year) ending after the date of this Agreement,
each party will deliver to the other party its quarterly report on Form 10-Q (or
Form 10-QSB) under the 1934 Act, and, as soon as reasonably available, but in no
event more than 90 days after the end of each fiscal year, each party will
deliver to the other party its Annual Report on Form 10-K (or Form 10-KSB).
Within 25 days after the end of each month, each party shall provide the other
party with a consolidated statement of financial condition and a consolidated
statement of operations, without related notes, for such month prepared in
accordance with generally accepted accounting principles.
4.05. ACCESS TO PROPERTIES AND RECORDS; CONFIDENTIALITY.
(a) THB shall permit PennFirst and its representatives reasonable access
to its properties and those of the THB Subsidiaries, and shall disclose and make
available to PennFirst all books, papers and records relating to the assets,
stock ownership, properties, operations, obligations and liabilities of THB and
the THB Subsidiaries, including, but not limited to, all books of account
(including the general ledger), tax records, minute books of directors' and
stockholders' meetings, organizational documents, bylaws, material contracts and
agreements, filings with any regulatory authority, accountants' work papers,
litigation files, plans affecting employees, and any other business activities
or prospects in which PennFirst may have a reasonable interest. Neither THB nor
either of the THB Subsidiaries shall be required to provide access to or to
disclose information where such access or disclosure would violate or prejudice
the rights of any customer or would contravene any law, rule, regulation, order
or judgment. THB will use its best efforts to obtain waivers of any such
restriction and in any event make appropriate substitute disclosure arrangements
under circumstances in which the restrictions of the preceding sentence apply.
THB and the THB Subsidiaries shall make their respective directors, officers,
employees and agents and authorized representatives (including counsel and
independent public accountants) available to confer with PennFirst and its
representatives, provided that such access shall be reasonably related to the
transactions contemplated hereby and not unduly interfere with normal
operations. Similar access shall be provided by PennFirst to THB and its
representatives to the extent necessary to enable THB to satisfy its due
diligence obligations with respect to PennFirst.
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(b) All information furnished previously in connection with the
transactions contemplated by this Agreement or pursuant hereto shall be treated
as the sole property of the party furnishing the information until consummation
of the Merger and, if such Merger shall not occur, the party receiving the
information shall, at the request of the party which furnished such information,
either return to the party which furnished such information or destroy all
documents or other materials containing, reflecting or referring to such
information; shall use its best effort to keep confidential all such
information; shall use such information only for the purpose of consummating the
transactions contemplated by this Agreement; and shall not directly or
indirectly use such information for any competitive or commercial purposes. The
obligation to keep such information confidential shall continue for three years
from the date the proposed Merger is abandoned but shall not apply to (i) any
information which (A) the party receiving the information can establish by
convincing evidence was already in its possession prior to the disclosure
thereof to it by the party furnishing the information; (B) was then generally
known to the public; (C) became known to the public through no fault of the
party receiving the information; or (D) was disclosed to the party receiving the
information by a third party not bound by an obligation of confidentiality; or
(ii) disclosures pursuant to a legal requirement or in accordance with an order
of a court of competent jurisdiction.
(c) From the date hereof until the earlier of the Effective Time or the
termination of this Agreement in accordance with the terms hereof, THB may
invite one person (to be designated by PennFirst) to attend all meetings of the
Board of Directors of THB and the THB Subsidiaries.
4.06. REGULATORY MATTERS.
(a) The parties hereto will cooperate with each other and use their best
efforts to prepare all necessary documentation (including without limitation the
Form S-4 and the Joint Proxy Statement/Prospectus), to effect all necessary
filings and to obtain all necessary permits, consents, approvals and
authorizations of all third parties and governmental bodies necessary to
consummate the transactions contemplated by this Agreement as soon as
practicable. The parties shall each have the right to review and approve in
advance all information relating to the other, as the case may be, and any of
their respective subsidiaries, which appears in any filing made with, or written
material submitted to, any third party or governmental body in connection with
the transactions contemplated by this Agreement.
(b) Each of the parties will furnish each other with all information
concerning themselves, their subsidiaries, directors, officers and stockholders
and such other matters as may be necessary or advisable in connection with any
statement or application made by or on behalf of them, or any of their
respective subsidiaries to any governmental body in connection with the Merger
and the other transactions, applications or filings contemplated by this
Agreement.
(c) Each of the parties will promptly furnish each other with copies of
written communications received by them or any of their respective subsidiaries
from, or delivered by
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any of the foregoing to, any governmental body in connection with the Merger and
the other transactions, applications or filings contemplated by this Agreement.
4.07. APPROVAL OF STOCKHOLDERS. Each party will (a) take all steps
(including, without limitation, the preparation of the Form S-4 and Joint Proxy
Statement/Prospectus in accordance with all applicable requirements) necessary
to duly call, give notice of, convene and hold a meeting of its stockholders as
soon as reasonably practicable for the purposes of securing the approval of such
stockholders of this Agreement and the Agreement of Merger, (b) recommend to its
stockholders the approval of this Agreement and the Agreement of Merger and the
transactions contemplated hereby and thereby, and use its best efforts to
obtain, as promptly as practicable, such approvals, and (c) cooperate and
consult with the other party with respect to the foregoing matters.
4.08. FURTHER ASSURANCES. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use its best efforts to take, or
cause to be taken, all reasonable action and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
satisfy the conditions to closing contained herein and to consummate and make
effective the transactions contemplated by this Agreement and the Agreement of
Merger. In case at any time after the Effective Time any further action is
necessary or desirable to carry out the purposes of this Agreement, the proper
officers and directors of each party to this Agreement shall take all such
necessary action. Nothing in this section shall be construed to require any
party to participate in any threatened or actual legal, administrative or other
proceedings (other than proceedings, actions or investigations to which it is a
party or subject or threatened to be made a party or subject) in connection with
consummation of the transactions contemplated by this Agreement unless such
party shall consent in advance and in writing to such participation and the
other party agrees to reimburse and indemnify such party for and against any and
all costs and damages related thereto.
4.09. DISCLOSURE SUPPLEMENTS. From time to time prior to the Effective
Time, each party will promptly supplement or amend its respective Disclosure
Schedules delivered pursuant hereto with respect to any matter hereafter arising
which, if existing, occurring or known as of the date hereof, would have been
required to be set forth or described in such Schedules or which is necessary to
correct any information in such Schedules which has been rendered inaccurate
thereby. No supplement or amendment to such Schedules shall have any effect
for the purpose of determining satisfaction of the conditions set forth in
Article V or the compliance by THB with the covenants set forth in Section 4.01
hereof.
4.10. PUBLIC ANNOUNCEMENTS. The parties hereto shall approve in advance
the substance of and cooperate with each other in the development and
distribution of all news releases and other public disclosures with respect to
this Agreement or any of the transactions contemplated hereby, except as may be
otherwise required by law or regulation and as to which the parties releasing
such information have used their best efforts to discuss with the other parties
in advance.
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4.11. FAILURE TO FULFILL CONDITIONS. In the event that either of the
parties hereto determines that a condition to its respective obligations to
consummate the transactions contemplated hereby cannot be fulfilled on or prior
to September 30, 1997 and that it will not waive that condition, it will
promptly notify the other party. PennFirst and THB will promptly inform the
other of any facts applicable to them, or their respective directors or
officers, that would be likely to prevent or materially delay approval of the
Merger by any governmental authority or which would otherwise prevent or
materially delay completion of the Merger.
4.12. CERTAIN POST-MERGER AGREEMENTS.
The parties hereto agree to the following arrangements following the
Effective Time:
(a) OPERATIONS OF TROY HILL. PennFirst shall maintain Troy Hill as a
separate subsidiary of PennFirst for a period of not less than one year from the
Effective Time. Following such one-year period, PennFirst may, in its sole
discretion, determine to merge or consolidate Troy Hill with ESBB.
(b) BOARDS OF DIRECTORS OF PENNFIRST AND ESBB. Effective as of the
Effective Time, the number of directors of both PennFirst and ESBB shall be
increased by one and PennFirst shall nominate and elect one current director of
THB (to be designated by PennFirst) as a director of each of PennFirst and ESBB
for a term of not less than three years. In addition, in the event PennFirst
determines to merge or consolidate Troy Hill and ESBB on or after one year from
the Effective Time, two of the current directors of Troy Hill who continue as
directors of Troy Hill (but not PennFirst and ESBB) after the Effective Time
shall be elected to the Board of Directors of ESBB for a term of not less than
three years, and the current Chairman of the Board of Troy Hill will be
appointed to a newly created Troy Hill Advisory Board for a period of not less
than one year and shall receive advisory Board fees therefor in an amount not
less than $1,300 per month. The provisions of this Section 4.12(b) are intended
to be for the benefit of, and shall be enforceable by, current members of the
Board of Directors of Troy Hill.
(c) BOARD OF DIRECTORS OF TROY HILL. Effective as of the Effective
Time, Charlotte A. Zuschlag, the President and Chief Executive Officer of
PennFirst, shall be elected to the Board of Directors of Troy Hill.
(d) OFFICERS AND EMPLOYEES OF THB AND TROY HILL. The employment of
the current President and Chief Executive Officer of THB and Troy Hill, Ellry N.
Davis, will be terminated effective as of the Effective Date, and Mr. Davis will
thereupon be entitled to, and PennFirst agrees to provide, the payments and
benefits reflected on THB Disclosure Schedule 2.13(a). On or before the
Effective Date, in lieu of serving as a director of PennFirst, ESBB or Troy
Hill, PennFirst and Mr. Davis will negotiate and enter into a consulting
agreement on mutually acceptable terms. PennFirst agrees to continue the
employment of all other personnel of THB and the THB Subsidiaries as of the
Effective Date, except in the event of good cause for termination, for a period
of not less than twelve (12) months subsequent to the Effective Date. After the
Effective Time, Troy Hill shall not hire any additional employees without the
prior consent of PennFirst.
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(e) EMPLOYEE BENEFIT PLANS.
(1) Subject to the provisions of this Section 4.12, all employees of THB
or the THB Subsidiaries immediately prior to the Effective Time who are employed
by PennFirst, ESBB or Troy Hill (the "Employers") immediately following the
Effective Time ("Transferred Employees") will be covered by Employers' employee
benefit plans on substantially the same basis as any employee of the Employers
in a comparable position. Notwithstanding the foregoing, PennFirst may
determine to continue any of the THB benefit plans for Transferred Employees in
lieu of offering participation in the Employers' benefit plans providing similar
benefits (e.g., medical and hospitalization benefits), to terminate any of THB's
benefit plans, or to merge any such benefit plans with the Employers' benefit
plans, provided the result is the provision of benefits to Transferred Employees
that are substantially similar to the benefits provided to the Employers'
employees generally. Except as specifically provided in this Section 4.12 and
as otherwise prohibited by law, Transferred Employees' service with THB or Troy
Hill shall be recognized as service with the Employers for purposes of
eligibility to participate and vesting, if applicable (but not for purposes of
benefit accrual) under the Employers' benefit plans, subject to applicable
break-in-service rules. PennFirst agrees that any pre-existing condition,
limitation or exclusion in its medical, long-term disability and life insurance
plans shall not apply to Transferred Employees or their covered dependents who
are covered under a medical or hospitalization indemnity plan maintained by THB
or Troy Hill on the Effective Time and who then change coverage to the
Employers' medical or hospitalization indemnity health plan at the time such
Transferred Employees are first given the option to enroll. Notwithstanding
anything herein to the contrary, after the Effective Time, (x) any amendment to,
or grant of additional benefits under, any THB or Troy Hill benefit plan,
including stock based plans, which continues to exist subsequent to the
Effective Time, shall require the prior consent of the PennFirst, and (y)
PennFirst may cause any of the THB or Troy Hill benefit plans which continue to
exist, including stock based plans, to be amended in order to provide that
employees of PennFirst or ESBB may be participants in such plans.
(2) On or after the Effective Time, the THB employee stock ownership
plan ("THB ESOP") may, at PennFirst's discretion, be combined with the PennFirst
employee stock ownership plan ("PennFirst ESOP"); provided, however, that prior
to any such combination of the THB ESOP and the PennFirst ESOP, the parties
shall take all necessary action in order to amend the THB ESOP in order to
ensure that any such combination does not accelerate (other than as required by
law or regulation) or materially increase the benefits available to any
participant in the THB ESOP. Notwithstanding anything herein to the contrary,
the parties hereto will take all necessary action to amend the THB ESOP in order
to provide that the Merger will not accelerate (other than as required by law or
regulation) or materially increase the benefits available to any participant in
the THB ESOP.
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ARTICLE V
CLOSING CONDITIONS
5.01. CONDITIONS TO THE PARTIES' OBLIGATIONS UNDER THIS AGREEMENT.
The respective obligations of the parties under this Agreement shall be subject
to the fulfillment at or prior to the Effective Time of the following
conditions:
(a) All necessary regulatory or governmental approvals and consents
(including without limitation any required approval of the OTS required to
consummate the transactions contemplated hereby) shall have been obtained
without any term or condition which would materially impair the value of THB and
the THB Subsidiaries to PennFirst; all conditions required to be satisfied prior
to the Effective Time by the terms of such approvals and consents shall have
been satisfied; and all waiting periods in respect thereof shall have expired.
(b) All corporate action necessary to authorize the execution and
delivery of this Agreement and consummation of the transactions contemplated
hereby and by the Agreement of Merger shall have been duly and validly taken by
PennFirst and THB, including approval by the requisite vote of the stockholders
of PennFirst and THB of this Agreement and the Agreement of Merger.
(c) No order, judgment or decree shall be outstanding against a party
hereto or a third party that would have the effect of preventing completion of
the Merger; no suit, action or other proceeding shall be pending or threatened
by any governmental body in which it is sought to restrain or prohibit the
Merger; and no suit, action or other proceeding shall be pending before any
court or governmental agency in which it is sought to restrain or prohibit the
Merger or obtain other substantial monetary or other relief against one or more
of the parties hereto in connection with this Agreement and which PennFirst or
THB determines in good faith, based upon the advice of their respective counsel,
makes it inadvisable to proceed with the Merger because any such suit, action or
proceeding has a significant potential to be resolved in such a way as to
deprive the party electing not to proceed of any of the material benefits to it
of the Merger.
(d) The Form S-4 shall have become effective under the 1933 Act, and
PennFirst shall have received all state securities laws or "blue sky" permits
and other authorizations or there shall be exemptions from registration
requirements necessary to issue the PennFirst Common Stock in connection with
the Merger, and neither the Form S-4 nor any such permit, authorization or
exemption shall be subject to a stop order or threatened stop order by the
Commission or any state securities authority.
(e) The parties shall have received, in form and substance reasonably
satisfactory to them, an opinion of Elias, Matz, Tiernan & Herrick to the effect
that, for federal income tax purposes, the Merger will qualify as a
"reorganization" under Section 368(a) of the Code; no taxable gain will be
recognized by PennFirst or THB (i) upon the transfer of THB's assets to
PennFirst in exchange for PennFirst Common Stock, cash and the assumption of
THB's
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liabilities or (ii) upon the distribution of such PennFirst Common Stock and
cash to THB stockholders.
5.02. CONDITIONS TO THE OBLIGATIONS OF PENNFIRST UNDER THIS AGREEMENT.
The obligations of PennFirst under this Agreement shall be further subject to
the satisfaction, at or prior to the Effective Time, of the following
conditions, any one or more of which may be waived by PennFirst:
(a) Each of the obligations of THB required to be performed by it at or
prior to the Closing pursuant to the terms of this Agreement shall have been
duly performed and complied with in all material respects and the
representations and warranties of THB contained in this Agreement shall have
been true and correct as of the date hereof and as of the Effective Time as
though made at and as of the Effective Time, except (i) as to any representation
or warranty which specifically relates to an earlier date or (ii) where the
facts which caused the failure of any representation or warranty to be so true
and correct would not, either individually or in the aggregate, constitute a
material adverse change in the business, operations, assets or financial
condition of THB and the THB Subsidiaries taken as a whole, and PennFirst shall
have received a certificate to that effect signed by the President and Chief
Executive Officer of THB.
(b) All permits, consents, waivers, clearances, approvals and
authorizations of all regulatory or governmental authorities or third parties
which are necessary in connection with the consummation of the Merger shall have
been obtained, and none of such permits, consents, waivers, clearances,
approvals and authorizations shall contain any term or condition which would
materially impair the value of THB and the THB Subsidiaries to PennFirst.
(c) PennFirst shall have received, in form and substance satisfactory to
it, a letter dated the date of the Closing, from KPMG Peat Marwick to the effect
that the Merger will qualify for purchase accounting treatment.
(d) Holders of THB Common Stock who dissent from the Merger pursuant to
Chapter 15, Subchapter D of the PBCL by meeting the requirements set forth in
the PBCL shall not hold more than 15% of the THB Common Stock immediately prior
to the Effective Time.
(e) Each stockholder of THB who is a THB Affiliate shall have executed
and delivered a commitment and undertaking to the effect that (i) such
stockholder will dispose of the shares of PennFirst Common Stock received by him
in connection with the Merger only in accordance with the provisions of
paragraph (d) of Rule 145 under the 1933 Act; (ii) such stockholder will not
dispose of any of such shares until PennFirst has received an opinion of counsel
acceptable to it that such proposed disposition is in compliance with the
provisions of paragraph (d) of Rule 145 under the 1933 Act, which opinion shall
be rendered promptly following counsel's receipt of such stockholder's written
notice of its intention to sell shares of PennFirst Common Stock; and (iii) the
certificates representing said shares may bear a legend referring to the
foregoing restrictions.
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(f) THB shall have furnished PennFirst with such certificates of its
officers or others and such other documents to evidence fulfillment of the
conditions set forth in this Section 5.02 as PennFirst may reasonably request.
5.03. CONDITIONS TO THE OBLIGATIONS OF THB UNDER THIS AGREEMENT. The
obligations of THB under this Agreement shall be further subject to the
satisfaction, at or prior to the Effective Time, of the following
conditions, any one or more of which may be waived by THB:
(a) Each of the obligations of PennFirst required to be performed by it
at or prior to the Closing pursuant to the terms of this Agreement shall have
been duly performed and complied with in all material respects and the
representations and warranties of PennFirst contained in this Agreement shall
have been true and correct as of the date hereof and as of the Effective Time as
though made at and as of the Effective Time, except (i) as to any representation
or warranty which specifically relates to an earlier date or (ii) where the
facts which caused the failure of any representation or warranty to be so true
and correct would not, either individually or in the aggregate, constitute a
material adverse change in the business, operations, assets or financial
condition of PennFirst and the PennFirst Subsidiaries taken as a whole, and THB
shall have received a certificate to that effect signed by the President and
Chief Executive Officer of PennFirst.
(b) PennFirst shall have furnished THB with such certificates of its
officers or others and such other documents to evidence fulfillment of the
conditions set forth in this Section 5.03 as THB may reasonably request.
ARTICLE VI
TERMINATION, AMENDMENT AND WAIVER, ETC.
6.01. TERMINATION. This Agreement may be terminated at any time prior
to the Effective Time, whether before or after approval of this Agreement and
the Agreement of Merger by the stockholders of PennFirst and/or THB:
(a) by mutual written consent of the parties hereto;
(b) by PennFirst or THB (i) if the Effective Time shall not have
occurred on or prior to September 30, 1997 or (ii) if a vote of the stockholders
of PennFirst or THB is taken and either of such stockholders fails to approve
this Agreement and the Agreement of Merger at the meetings of stockholders (or
any adjournment thereof) of PennFirst and THB contemplated by Section 4.07
hereof; unless in each case the failure of such occurrence shall be due to the
failure of the party seeking to terminate this Agreement to perform or observe
its agreements set forth herein to be performed or observed by such party at or
before the Effective Time;
(c) by PennFirst or THB upon written notice to the other 30 or more days
after the date upon which any application for a regulatory or governmental
approval necessary to
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consummate the Merger and the other transactions contemplated hereby shall have
been denied or withdrawn at the request or recommendation of the applicable
regulatory agency or governmental authority, unless within such 30-day period a
petition for rehearing or an amended application is filed or noticed, or 30 or
more days after any petition for rehearing or amended application is denied;
(d) by PennFirst in writing if THB has, or by THB in writing if
PennFirst has, breached (i) any covenant or undertaking contained herein or in
the Agreement of Merger, or (ii) any representation or warranty contained
herein, which breach would have a material adverse effect on the business,
operations, assets or financial condition of THB and the THB Subsidiaries or
PennFirst and the PennFirst Subsidiaries, as applicable, taken as a whole, or
upon the consummation of the transactions contemplated hereby, in any case if
such breach has not been cured by the earlier of 30 days after the date on which
written notice of such breach is given to the party committing such breach or
the Effective Time; provided that it is understood and agreed that either party
may terminate this Agreement on the basis of any such material breach of any
representation or warranty contained herein, notwithstanding any qualification
therein relating to the knowledge of the other party;
(e) by PennFirst or THB in writing, if any of the applications for prior
approval referred to in Section 4.06 hereof are denied or are approved
contingent upon the satisfaction of any condition or requirement which, in the
reasonable opinion of the Board of Directors of PennFirst, would materially
impair the value of THB and the THB Subsidiaries to PennFirst, and the time
period for appeals and requests for reconsideration has run.
6.02. EFFECT OF TERMINATION. In the event of termination of this
Agreement by either PennFirst or THB as provided above, this Agreement shall
forthwith become void (other than Sections 4.05(b) and 7.01 hereof, which shall
remain in full force and effect) and there shall be no further liability on the
part of the parties or their respective officers or directors except for the
liability of the parties under Sections 4.05(b) and 7.01 hereof and except for
liability for any breach of this Agreement.
6.03. AMENDMENT, EXTENSION AND WAIVER. Subject to applicable law, at
any time prior to the consummation of the Merger, whether before or after
approval thereof by the stockholders of PennFirst and/or THB, the parties may
(a) amend this Agreement and the Agreement of Merger, (b) extend the time for
the performance of any of the obligations or other acts of the other parties
hereto, (c) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto, or (d) waive
compliance with any of the agreements or conditions contained herein; provided,
however, that after any approval of the Merger by the stockholders of PennFirst
and/or THB, there may not be, without further approval of such stockholders, any
amendment or waiver of this Agreement or the Agreement of Merger which modifies
either the amount or the form of the Merger Consideration to be delivered to
stockholders of THB. This Agreement and the Agreement of Merger may not be
amended except by an instrument in writing signed on behalf of each of the
parties hereto. Any agreement on the part of a party hereto to any extension or
waiver shall be valid only if set forth
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in an instrument in writing signed on behalf of such party, but such waiver or
failure to insist on strict compliance with such obligation, covenant, agreement
or condition shall not operate as a waiver of, or estoppel with respect to, any
subsequent or other failure.
ARTICLE VII
MISCELLANEOUS
7.01. EXPENSES.
(a) All costs and expenses incurred in connection with this Agreement
and the transactions contemplated hereby (including without limitation legal,
accounting, investment banking and printing expenses) shall be borne by the
party incurring such costs and expenses, provided that PennFirst shall bear all
costs of printing, mailing and filing the Form S-4 and Joint Proxy
Statement/Prospectus and all other registration and filing fees relating to the
Merger.
(b) Notwithstanding any provision in this Agreement to the contrary, in
the event that either of the parties shall default in its obligations hereunder,
the non-defaulting party may pursue any remedy available at law or in equity to
enforce its rights and shall be paid by the defaulting party for all damages,
costs and expenses, including without limitation legal, accounting, investment
banking and printing expenses, incurred or suffered by the non-defaulting party
in connection herewith or in the enforcement of its rights hereunder;
PROVIDED, FURTHER, HOWEVER, that in the event that, (x) PennFirst's Board
of Directors fails to recommend to its stockholders the approval of this
Agreement and the Agreement of Merger and such stockholders fail to approve this
Agreement and the Agreement of Merger at a duly held meeting of such
stockholders or at any adjournment or postponement thereof or (y) PennFirst
fails to duly hold a meeting of its stockholders for the purpose of voting on
this Agreement and the Agreement of Merger, then PennFirst will promptly
reimburse THB for its out-of-pocket costs and expenses (documented with
reasonable specificity) incurred by THB in connection with entering into this
Agreement and carrying out any and all acts contemplated hereunder up to a
maximum amount of $150,000 and shall also promptly pay THB a termination fee of
$150,000.
7.02. SURVIVAL. The respective representations, warranties and
covenants of the parties to this Agreement shall not survive the Effective Time
but shall terminate as of the Effective Time, except for the provisions of
Section 4.12 hereof.
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7.03. NOTICES. All notices or other communications hereunder shall be
in writing and shall be deemed given if delivered personally, sent by overnight
express or mailed by prepaid registered or certified mail (return receipt
requested) or by cable, telegram or telex addressed as follows:
(a) If to PennFirst, to:
PennFirst Bancorp, Inc.
600 Lawrence Avenue
Ellwood City, Pennsylvania 16117
Attn: Charlotte A. Zuschlag
Copy to:
Plowman, Spiegel & Lewis, P.C.
2nd Floor, The Grant Building
Pittsburgh, Pennsylvania 15219
Attn: Charles B. Jarrett, Jr.
(b) If to THB, to:
Troy Hill Bancorp, Inc.
1706 Lowrie Street
Pittsburgh, Pennsylvania 15212
Attn: Ellry N. Davis
Copy to:
Elias, Matz, Tiernan and Herrick L.L.P.
734 15th Street, N.W.
Washington, D.C. 20005
Attn: Raymond A. Tiernan, Esq.
Jeffrey D. Haas, Esq.
or such other address as shall be furnished in writing by any party, and any
such notice or communication shall be deemed to have been given as of the date
so mailed.
7.04. PARTIES IN INTEREST. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and assigns; provided, however, that neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any party hereto
without the prior written consent of the other party and, except as otherwise
expressly provided herein, that nothing in this Agreement is intended to confer,
expressly or by implication, upon any other person any rights or remedies under
or by reason of this Agreement.
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7.05. COMPLETE AGREEMENT. This Agreement and the Agreement of Merger,
including the documents and other writings referred to herein or therein or
delivered pursuant hereto or thereto, contain the entire agreement and
understanding of the parties with respect to their subject matter and shall
supersede all prior agreements and understandings between the parties, both
written and oral, with respect to such subject matter. There are no
restrictions, agreements, promises, representations, warranties, covenants or
undertakings between the parties other than those expressly set forth herein or
therein.
7.06. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
each of which shall be deemed an original.
7.07. GOVERNING LAW. This Agreement shall be governed by the laws of
the Commonwealth of Pennsylvania, without giving effect to the principles of
conflicts of laws thereof.
7.08. HEADINGS. The Article and Section headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
IN WITNESS WHEREOF, PennFirst and THB have caused this Agreement to be
executed by their duly authorized officers as of the day and year first above
written.
PENNFIRST BANCORP, INC.
Attest:
/s/ Frank D. Martz By:/s/Charlotte A. Zuschlag
- ----------------------------------- -----------------------------------
Frank D. Martz Charlotte A. Zuschlag
Senior Vice President of Operations President and Chief Executive
and Secretary Officer
TROY HILL BANCORP, INC.
Attest:
/s/ Nancy H. Kufner By:/s/ Ellry N. Davis
- ----------------------------------- -----------------------------------
Nancy H. Kufner Ellry N. Davis
Secretary President and Chief Executive
Officer
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APPENDIX A
AGREEMENT OF MERGER
This Agreement of Merger is dated as of September 16, 1996, by and between
PennFirst Bancorp, Inc. ("PennFirst"), a Pennsylvania corporation, and Troy Hill
Bancorp, Inc. ("THB"), a Pennsylvania corporation.
W I T N E S S E T H:
WHEREAS, PennFirst and THB have entered into an Agreement and Plan of
Reorganization, dated as of the date hereof (the "Reorganization Agreement");
and
WHEREAS, pursuant to the Reorganization Agreement and this Agreement of
Merger, and subject to the terms and conditions set forth therein and herein,
THB shall be merged with and into PennFirst, with PennFirst the surviving
corporation of such merger;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements contained herein and in the Reorganization Agreement, the parties
hereto do mutually agree as follows:
ARTICLE I
DEFINITIONS
Except as otherwise provided herein, the capitalized terms set forth below
shall have the following meanings:
1.1 "EFFECTIVE TIME" shall mean the date and time at which the Merger
contemplated by this Agreement of Merger becomes effective as provided in
Section 2.2 of this Agreement of Merger.
1.2 "THB COMMON STOCK" shall mean the common stock, par value $.01 per
share, of THB.
1.3 "MERGER" shall refer to the merger of THB with and into PennFirst
as provided in Section 2.1 of this Agreement of Merger.
1.4 "MERGING CORPORATIONS" shall collectively refer to PennFirst and
THB.
1.5 "PENNFIRST COMMON STOCK" shall mean the common stock, par value
$.01 per share, of PennFirst.
<PAGE>
1.6 "STOCKHOLDER MEETINGS" shall mean the respective meetings of the
stockholders of PennFirst and THB held pursuant to Section 4.07 of the
Agreement.
1.7 "SURVIVING CORPORATION" shall mean PennFirst as the surviving
corporation of the Merger.
ARTICLE II
TERMS OF THE MERGER
2.1 THE MERGER. Subject to the terms and conditions set forth in the
Reorganization Agreement, at the Effective Time, THB shall be merged with and
into PennFirst pursuant to Chapter 19, Subchapter C of the Pennsylvania Business
Corporation Law ("PBCL"). PennFirst shall be the Surviving Corporation of the
Merger and shall continue to be governed by the laws of the Commonwealth of
Pennsylvania. At the Effective Time, the separate existence and corporate
organization of THB shall cease, and PennFirst shall thereupon and thereafter
possess all the rights, privileges, powers and franchises of a public as well as
of a private nature of each of THB and PennFirst; and be subject to all the
restrictions, disabilities and duties of each of THB and PennFirst; and all and
singular, the rights, privileges, powers and franchises of each of THB and
PennFirst, and all property, real, personal and mixed, and all debts due to
either THB or PennFirst on whatever account, as well for stock subscriptions and
all other things in action or belonging to each of THB and PennFirst shall be
vested in the Surviving Corporation; and all property, rights, privileges,
powers and franchises, and all and every other interest shall be thereafter as
effectually the property of the Surviving Corporation as they were of,
respectively, THB and PennFirst, and the title to any real estate vested by deed
or otherwise, under the laws of the Commonwealth of Pennsylvania or elsewhere in
either THB or PennFirst shall not revert or be in any way impaired by reason of
the Merger, but all rights of creditors and all liens upon any property of
either of THB or PennFirst shall be preserved unimpaired, and all debts,
liabilities and duties of THB and PennFirst shall thenceforth attach to the
Surviving Corporation and may be enforced against it to the same extent as if
said debts, liabilities and duties had been incurred or contracted by it.
2.2 EFFECTIVE TIME. The Merger shall become effective on the date and
at the time that Articles of Merger are executed and filed with the Secretary of
State of the Commonwealth of Pennsylvania pursuant to Section 1927 of the PBCL,
unless a later date and time is specified as the Effective Time in such Articles
of Merger.
2.3 NAME OF THE SURVIVING CORPORATION. The name of the Surviving
Corporation shall be "PennFirst Bancorp, Inc."
2.4 ARTICLES OF INCORPORATION. On and after the Effective Time, the
Articles of Incorporation of PennFirst shall be the Articles of Incorporation of
the Surviving Corporation
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until amended in accordance with applicable law.
2.5 BYLAWS. On and after the Effective Time, the Bylaws of PennFirst
shall be the Bylaws of the Surviving Corporation until amended in accordance
with applicable law.
ARTICLE III
CONVERSION OF SHARES
3.1 CONVERSION OF THB COMMON STOCK AND OPTIONS TO PURCHASE THB COMMON
Stock.
(a) Subject to Section 3.2 hereof, each share of THB Common Stock
outstanding immediately prior to the Effective Time, other than (i) shares held
by THB (including Treasury shares) or PennFirst or any of their respective
wholly owned subsidiaries and (ii) THB Dissenting Shares (as hereinafter
defined), shall be converted into the number of shares of PennFirst Common Stock
equal to the Exchange Ratio (as defined in the Reorganization Agreement) or
$21.15 in cash in accordance with the terms of Section 1.03 of the
Reorganization Agreement.
(b) Notwithstanding any other provision hereof, no fractional shares of
PennFirst Common Stock shall be issued to holders of THB Common Stock. In lieu
thereof, each holder of shares of THB Common Stock entitled to a fraction of a
share of PennFirst Common Stock shall, at the time of surrender of the
certificate or certificates representing such holder's shares, receive an amount
of cash in accordance with the terms of Section 1.05 of the Reorganization
Agreement. No such holder shall be entitled to dividends, voting rights or any
other rights in respect of any fractional share.
(c) At or immediately prior to the Effective Time, each option to
purchase THB Common Stock issued pursuant to THB's 1994 Stock Option Plan shall
be cancelled, and each holder of any such option, whether or not then vested or
exercisable, shall be entitled to receive from PennFirst or THB either a new
option to acquire shares of PennFirst Common Stock or a cash amount determined
in accordance with Section 1.06 of the Reorganization Agreement. The payment of
the consideration referred to in this Section 3.1(c) to holders of options to
purchase THB Common Stock shall be subject to the execution by any such holder
of such instruments of cancellation as PennFirst may reasonably deem
appropriate.
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3.2 EXCHANGE OF CERTIFICATES FOR STOCK AND/OR CASH.
After the Effective Time, each holder of a certificate for theretofore
outstanding shares of THB Common Stock, shall be surrendered and exchanged for
cash or stock consideration in the manner provided in Section 1.04 of the
Reorganization Agreement.
3.3 DISSENTING SHARES. Notwithstanding anything in this Agreement of
Merger to the contrary, shares of THB Common Stock which are outstanding
immediately prior to the Effective Time and which are held by stockholders
(other than PennFirst or any wholly-owned subsidiary thereof) who shall not have
voted such shares in favor of the Agreement and this Agreement of Merger and who
shall have satisfied all of the applicable requirements of Chapter 15,
Subchapter D of the PBCL ("THB Dissenting Shares"), shall not be converted into
the right to receive, or be exchangeable for, shares of PennFirst Common Stock
or cash as set forth in Section 3.1 hereof, but the holders thereof shall be
entitled to payment of the fair value of such shares in accordance with said
section of the PBCL, subject to the procedures and the conditions specified in
such provision of the PBCL, unless and until such holders shall have failed to
perfect or shall have effectively withdrawn or lost their right to appraisal and
payment under such law. If any such holder shall have failed to perfect or
shall have effectively withdrawn or lost such right of appraisal, the shares of
THB Common Stock held by such holder shall thereupon be deemed to have been
converted into the right to receive, or be exchangeable at the Effective Time
for, cash as provided in 1.08 of the Reorganization Agreement. PennFirst hereby
agrees to make, or cause to be made, payment in cash for any Dissenting Shares.
3.4 PENNFIRST COMMON STOCK. Each share of PennFirst Common Stock
issued and outstanding immediately prior to the Effective Time shall, on and
after the Effective Time, continue to be issued and outstanding as an identical
share of PennFirst Common Stock.
ARTICLE IV
MISCELLANEOUS
4.1 CONDITIONS PRECEDENT. The respective obligations of each party
under this Agreement of Merger shall be subject to the satisfaction, or waiver
by the party permitted to do so, of the conditions set forth in Article V of the
Reorganization Agreement.
4.2 TERMINATION. This Agreement of Merger shall be terminated
automatically without further act or deed of either of the parties hereto in the
event of the termination of the Reorganization Agreement in accordance with
Section 6.01 thereof.
4.3 AMENDMENTS. To the extent permitted by the PBCL, this Agreement of
Merger may be amended by a subsequent writing signed by each of the parties
hereto upon the approval of the Board of Directors of each of the parties
hereto; provided, however, that the provisions of Article III of this Agreement
of Merger relating to the consideration to be paid for the shares
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of THB Common Stock shall not be amended after either of the Stockholder
Meetings so as to modify either the amount or the form of such consideration or
to otherwise materially adversely affect the shareholders of PennFirst or THB
without the approval of the stockholders of PennFirst and THB who are so
affected.
4.4 SUCCESSORS. This Agreement of Merger shall be binding on the
successors of PennFirst and THB.
IN WITNESS WHEREOF, PennFirst and THB have caused this Agreement of
Merger to be executed by their duly authorized officers as of the day and year
first above written.
PENNFIRST BANCORP, INC.
Attest:
/s/ Frank D. Martz By: /s/ Charlotte A. Zuschlag
- ----------------------------------- -------------------------------
Frank D. Martz Charlotte A. Zuschlag
Senior Vice President of Operations President and Chief Executive
and Secretary Officer
TROY HILL BANCORP, INC.
Attest:
/s/ Nancy H. Kufner By: /s/ Ellry N. Davis
- ----------------------------------- -------------------------------
Nancy H. Kufner Ellry N. Davis
Secretary President and Chief
Executive Officer
5
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EXHIBIT 10
EXHIBIT A
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of September 16, 1996, by and between
PennFirst Bancorp, Inc. ("PennFirst"), a Pennsylvania corporation, and Troy Hill
Bancorp, Inc. ("THB"), a Pennsylvania corporation (the "Agreement").
WITNESSETH
WHEREAS, PennFirst and THB have entered into an Agreement and Plan of
Reorganization and related Agreement of Merger, each dated as of September 16,
1996 (collectively, the "Reorganization Agreement");
WHEREAS, PennFirst has requested the execution of this Agreement by THB in
order to increase the likelihood that the transactions contemplated by the
Reorganization Agreement will be consummated in accordance with its terms and as
a condition to PennFirst's obligation to complete the transactions contemplated
by the Reorganization Agreement and, in consideration for such execution, THB
has agreed to issue to PennFirst an option entitling PennFirst to purchase
shares of its common stock upon the terms and subject to the conditions set
forth herein; and
NOW, THEREFORE, in consideration of the execution of the Reorganization
Agreement and the premises therein and herein contained, the parties agree as
follows:
1. GRANT OF OPTION. Subject to the terms and conditions hereof, THB
irrevocably grants to PennFirst as of September 16, 1996 the option ("Option")
to purchase at one time or from time to time an aggregate of 213,000 shares of
common stock, par value $.01 per share, of THB ("Common Stock") at a price per
share equal to $15.75 (the price per share is referred to below as the "Purchase
Price" and the price when used with respect to a number of shares is referred to
below as the "aggregate Purchase Price" for such shares). As used in this
Agreement, the term "Shares" means the shares of Common Stock subject to the
Option.
2. EXERCISE OF OPTION.
(a) Subject to the terms and conditions hereof, PennFirst may exercise
the Option, in whole at any time or in part from time to time, to the extent not
previously exercised, if a Purchase Event (as defined below) shall have occurred
and be continuing, provided that to the extent the Option shall not have been
exercised, it shall terminate and be of no further effect, except as to notices
of exercise given prior thereto, on the Termination Date, which shall be the
date on which occurs the earliest of (i) immediately prior to the Effective
Time, as defined in Section 1.02 of the Reorganization Agreement, (ii) twelve
(12) months after the first occurrence of a Purchase Event, (iii) twelve (12)
months following a termination of the Reorganization Agreement by PennFirst
pursuant to Section 6.01(d) thereof prior to the occurrence of a Purchase Event;
and (iv) a termination of the Reorganization Agreement in accordance with its
terms (other
<PAGE>
than by PennFirst pursuant to Section 6.01(d) thereof) prior to the occurrence
of a Purchase Event, provided, however, that any purchase of shares upon
exercise of the Option shall be subject to compliance with applicable laws and
regulations.
(b) As used herein, a "Purchase Event" shall mean any of the following
events or transactions occurring after the date hereof:
(i) THB or any of its subsidiaries shall have entered into an
agreement with any person (other than PennFirst or any subsidiary thereof)
(a) to merge, consolidate or enter into any similar transaction with such
person, (b) for the disposition, by sale, lease, exchange or otherwise, of
all or substantially all of the consolidated assets or deposits of THB or
any of its subsidiaries or (c) for the issuance, sale or other disposition
(including by way of merger, consolidation, share exchange or any similar
transaction) of securities (or an option or right to acquire such
securities) representing 15% or more of the voting power of THB or any of
its subsidiaries;
(ii) any person (other than PennFirst or any subsidiary thereof)
shall have acquired beneficial ownership of, or any group of persons shall
have been formed which beneficially owns, 15% or more of the then
outstanding Common Stock (any of the foregoing in Section 2(b)(i) or (ii)
is hereinafter referred to as an "Acquisition Transaction");
(iii) any person (other than PennFirst or any subsidiary thereof)
shall have (a) commenced a tender offer or filed a registration statement
under the Securities Act of 1933, as amended ("Securities Act"), with
respect to an exchange offer to purchase or otherwise acquire control of
15% or more of the then outstanding shares of Common Stock (such offers
being referred to herein as a "Tender Offer" and an "Exchange Offer,"
respectively); or
(iv) the holders of the outstanding Common Stock shall not have
approved the Reorganization Agreement (including the related Agreement of
Merger) at the meeting of such holders called for such purpose pursuant to
the Reorganization Agreement, such meeting shall not have been held or
shall have been cancelled prior to the termination of the Reorganization
Agreement in accordance with its terms, or THB's Board of Directors shall
have withdrawn or modified in a manner which is adverse to PennFirst the
recommendation of THB's Board of Directors with respect to the
Reorganization Agreement and the Agreement of Merger, in each case after
it shall have been publicly announced that any person (other than
PennFirst or any subsidiary thereof) shall have (a) commenced a Tender
Offer or filed a registration statement under the Securities Act with
respect to an Exchange Offer, (b) made, or disclosed an intention to make,
a proposal to engage in an Acquisition Transaction, (c) filed an
application (or given notice), whether in draft or final form, under the
Bank Holding Company Act of 1956, the Home Owners' Loan Act, the Bank
Merger Act or the Change in Bank Control Act of 1978, for approval to
engage in an Acquisition Transaction or (d) any person shall have
solicited proxies in
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a proxy solicitation subject to Regulation 14A under the Securities
Exchange Act of 1934, as amended ("Exchange Act"), in opposition to
approval of the Reorganization Agreement by THB's stockholders.
(c) As used in this Agreement, (i) "beneficial ownership," "person" and
"group of persons" shall have the meanings conferred thereon by Section 13(d) of
the Exchange Act and the regulations promulgated thereunder and (ii) "commenced"
shall have the meaning conferred thereon by Rule 14d-2 under the Exchange Act.
(d) THB shall promptly give written notice to PennFirst of the
occurrence of a Purchase Event known to THB. However, the giving of such notice
by THB shall not be a condition to the right of PennFirst to exercise the
Option. If more than one transaction or event giving rise to a Purchase Event is
undertaken or effected, then all such transactions shall give rise to only one
Purchase Event, which Purchase Event shall be deemed continuing for all purposes
hereunder until all such transactions or events are abandoned.
(e) Notwithstanding the foregoing, THB shall not be obligated to issue
Shares upon exercise of the Option (i) in the absence of any required
governmental, regulatory or stockholder approval or consent necessary for THB to
issue the Shares or for PennFirst to exercise the Option or prior to the
expiration or termination of any waiting period required by law, or (ii) so long
as any injunction or other order, decree or ruling issued by any federal or
state court of competent jurisdiction is in effect which prohibits the sale or
delivery of the Shares. If the Option is otherwise exercisable but cannot be
exercised prior to termination as specified in Section 2(a) hereof solely
because of any injunction, order or similar restraint issued by a court of
competent jurisdiction, the Option shall continue and will expire on the
twentieth 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.
3. NOTICE OF EXERCISE; PAYMENT AND DELIVERY OF SHARES.
(a) In the event that PennFirst desires to exercise the Option,
PennFirst shall send a written notice (the date of which being herein referred
to as the "Notice Date") to THB specifying the total number of Shares it will
purchase and a place and date for the closing of such purchase, which date shall
be not later than 60 calendar days nor earlier than three business days from the
date such notice is given, unless additional time is needed to give notification
to or to obtain approval from any governmental or regulatory authority and, if
so required, three business days from the date on which the required
notification period has expired or been terminated or such approval has been
obtained and any requisite waiting period with respect thereto shall have
passed.
(b) At any closing hereunder, (a)(i) PennFirst shall make payment to THB
of the aggregate Purchase Price for the Shares to be purchased by delivery to
THB of a certified, cashier's or bank check payable to the order of THB in such
amount or, if mutually agreed, by wire transfer of funds in such amount to an
account designated in writing by THB, or (ii) if
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requested by PennFirst, in lieu of the payment set forth in (a)(i) above, THB
shall issue to PennFirst a number of whole Shares determined by (a) multiplying
the excess, if any, of the closing price of the Common Stock on the Notice Date
over the Purchase Price by the number of Shares with respect to which the Option
is being exercised, and (b) dividing such product by the Purchase Price; and (b)
THB shall deliver to PennFirst a certificate or certificates representing the
Shares so purchased, registered in the name of PennFirst or its designee. THB
shall pay any and all federal, state and local taxes, or other charges that may
be imposed upon PennFirst in connection with the preparation, issuance and
delivery of stock certificates hereunder.
4. REPRESENTATIONS AND WARRANTIES OF THB. THB hereby represents and
warrants to PennFirst as follows:
(a) This Agreement has been duly authorized, executed and delivered by
THB and constitutes a valid and binding agreement of THB, enforceable against
THB in accordance with its terms, except to the extent that the obligations of
THB set forth in Section 8(a) and (d) hereof may be unenforceable under
applicable federal and state securities laws.
(b) THB has taken all necessary corporate and other action (excluding
any required governmental or stockholder approvals) to authorize and reserve and
to permit it to issue, and at all times from the date hereof until such time as
the obligation to deliver Shares upon the exercise of the Option terminates,
will have reserved for issuance, upon any exercise of the Option, the number of
Shares subject to the Option (less the number of Shares previously issued upon
any partial exercise of the Option or as to which the Option may no longer be
exercised). All of the Shares to be issued pursuant to the Option are duly
authorized and, upon issuance and delivery thereof pursuant to this Agreement,
will be duly and validly issued, fully paid and nonassessable, free and clear of
all claims, liens, charges, encumbrances and security interests, and will not
have been issued in violation of, and will not be subject to, any preemptive
rights of any stockholders of THB.
(c) The execution, delivery and performance by THB of this Agreement and
the consummation of the transactions contemplated hereby (excluding any required
governmental approvals) do not contravene, or constitute a default under, (i)
the Articles of Incorporation or Bylaws of THB or (ii) any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation
binding upon THB or any of its subsidiaries.
5. REPRESENTATIONS AND WARRANTIES OF PENNFIRST. PennFirst hereby
represents and warrants to THB as follows:
(a) This Agreement has been duly authorized, executed and delivered by
PennFirst and constitutes a valid and binding agreement of PennFirst,
enforceable against PennFirst in accordance with its terms, except to the extent
that the obligations of PennFirst set forth in Section 8(b) and (d) hereof may
be unenforceable under applicable federal and state securities laws.
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(b) PennFirst is acquiring the Option for the purpose set forth in the
second Whereas clause of this Agreement and hereby acknowledges that (i) the
Option has not been, and the Shares may not be, registered under the Securities
Act or any other applicable securities registration requirements and (ii) the
Option and the Shares may not be transferred except in compliance with
applicable registration requirements or an available exemption therefrom.
6. ADJUSTMENT UPON CHANGE IN CAPITALIZATION, ETC. In the event of
any change in the Common Stock by reason of stock dividends, stock splits,
mergers, consolidations, recapitalizations, combinations, conversions, exchanges
of shares, extraordinary or liquidating dividends, or other changes in the
corporate or capital structure of THB which would have the effect of diluting or
changing PennFirst's rights hereunder, the number and kind of shares or
securities subject to the Option and the Purchase Price (but not the aggregate
Purchase Price of the Shares) shall be appropriately and equitably adjusted so
that PennFirst shall receive upon exercise of the Option the number and class of
shares or other securities or property that PennFirst would have received in
respect of the Shares that could have been purchased upon exercise of the Option
if the Option could have been and had been exercised immediately prior to such
event or the record date therefor, as applicable. In the event that after the
date hereof THB issues any additional shares of Common Stock other than pursuant
to any event described in the preceding sentence or pursuant to the exercise of
the Option, the number of shares of Common Stock which can be purchased pursuant
to the Option shall be increased by an amount so that after such issuance the
number of shares of Common Stock subject to the Option, less any shares
previously acquired upon exercise of the Option, shall equal (a) 20.0% of the
number of shares of Common Stock then issued and outstanding minus (b) one
share, without giving effect to any shares which may be issued pursuant to the
Option. THB shall take such steps in connection with any consolidation, merger,
liquidation or other such action as may be necessary to ensure that the
provisions hereof shall thereafter apply as nearly as possible to any securities
or property thereafter deliverable upon exercise of the Option. Nothing
contained in this Section 6 shall be deemed to authorize THB to effect any of
the changes contemplated by this Section 6 in breach of the provisions of the
Reorganization Agreement.
7. REGISTRATION OF THE SHARES.
(a) If PennFirst requests THB in writing to register under the
Securities Act or any other applicable securities registration requirements
Shares which have been purchased by PennFirst hereunder, THB will use its best
efforts to cause the Shares so specified in such request to be registered as
soon as practicable so as to permit the sale or other distribution by PennFirst
of such Shares (and to keep such registration in effect for a period of at least
180 days) and in connection therewith shall prepare and file as promptly as
reasonably possible (but in no event later than 45 days from receipt of
PennFirst's request) a registration statement under the Securities Act to effect
such registration on an appropriate form, which would permit the sale of the
Shares by PennFirst in the manner specified by PennFirst in its request. In
connection with such registration, THB shall use its best efforts to cause to be
delivered to PennFirst (and any other holder whose Shares are the subject of
such registration) such certificates, opinions, accountants' letters and other
documents as PennFirst (or any such other holder) shall reasonably
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request and are customarily rendered in connection with the registration of
securities under the Securities Act. PennFirst shall provide all information
reasonably requested by THB for inclusion in any documents to be prepared
hereunder. All expenses incurred by THB in complying with the provisions of
this Section 7, including, without limitation, all registration and filing fees,
printing expenses, fees and disbursements of counsel for THB and blue sky fees
and expenses shall be paid by THB. Underwriting discounts and commissions to
brokers and dealers relating to the Shares, fees and disbursements of counsel to
PennFirst and any other expenses incurred by PennFirst in connection with such
registration shall be borne by PennFirst. THB shall not be obligated to make
effective more than two registration statements pursuant to this Section 7(a).
(b) THB shall notify PennFirst in writing not less than ten business
days prior to filing a registration statement under the Securities Act with
respect to any Common Stock (other than a filing on Form S-4 or Form S-8) of
THB's intention so to file. If PennFirst wishes to have any portion of its
Shares purchased hereunder included in such registration statement, it shall
advise THB in writing to that effect within five business days following receipt
of such notice from THB pursuant to the preceding sentence, and THB will
thereupon include the number of shares indicated by PennFirst under such
registration statement, provided, however, that if the managing underwriter
determines and advises THB and PennFirst in writing that the inclusion in the
registration statement of the number of shares indicated by PennFirst would
interfere with the successful marketing of the Common Stock proposed to be
registered and sold by THB, then the number of shares indicated by PennFirst to
be included in the underwriting shall be reduced or eliminated pro rata among
all holders of shares of Common Stock requesting such registration, and further
provided, however, that nothing herein shall prevent THB from, at any time,
abandoning or delaying any registration.
(c) The rights provided under this Section 7 shall expire upon the third
annual anniversary of the first acquisition of Shares by PennFirst hereunder.
8. INDEMNIFICATION.
(a) In connection with any registration under the provisions of Section
7 hereof, THB shall indemnify and hold harmless PennFirst and any underwriter
(as defined in the Securities Act) for PennFirst and each person who controls
PennFirst or such underwriter within the meaning of the Securities Act, from and
against any and all loss, damage, liability, cost and expense to which PennFirst
or any such underwriter or controlling person may become subject under the
Securities Act or otherwise, insofar as such losses, damages, liabilities, costs
or expenses are caused by or arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained in such registration
statement, any preliminary or final offering prospectus contained therein or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading; provided, however, that
THB will not be liable in any such case to the extent that any such loss,
damage, liability, cost or expense arises out of or is based upon an untrue
statement or omission so made in conformity with information furnished by
PennFirst,
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such underwriter or such controlling persons in writing specifically for use in
the preparation thereof.
(b) PennFirst will indemnify and hold harmless THB, any underwriter for
THB and each person who controls THB or such underwriter within the meaning of
the Securities Act, from and against any and all loss, damage, liability, cost
and expense to which THB or any such underwriter or controlling person may
become subject under the Securities Act or otherwise, insofar as such losses,
damages, liabilities, costs or expenses are caused by or arise out of or are
based upon any untrue statement or alleged untrue statement of any material fact
contained in such registration statement, any preliminary or final offering
prospectus contained therein or any amendment or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances in which they were made, not misleading,
in each case to the extent, but only to the extent, that such untrue statement
or omission was so made in conformity with information furnished by PennFirst in
writing specifically for use in the preparation thereof.
(c) Promptly after receipt by an indemnified party pursuant to the
provisions of Section 8(a) or (b) of notice of the commencement of any action
involving the subject matter of the foregoing indemnity provisions, such
indemnified party will, if a claim in respect thereof is to be made against the
indemnifying party pursuant to the provisions of Section 8(a) or (b), promptly
notify the indemnifying party of the commencement thereof; except to the extent
of any actual prejudice to the indemnifying party, the omission to so notify the
indemnifying party will not relieve it from any liability which it may have to
any indemnified party otherwise hereunder. In case such action is brought
against any indemnified party and it notifies the indemnifying party of the
commencement thereof, the indemnifying party shall have the right to participate
in, and, to the extent that it may wish, jointly with any other indemnifying
party similarly notified, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party; provided, however, that if the
defendants in any action include both the indemnified party and the indemnifying
party and there is a conflict of interests which would prevent counsel for the
indemnifying party from also representing the indemnified party, the indemnified
party or parties shall have the right to select one separate counsel to
participate in the defense of such action on behalf of such indemnified party or
parties. After notice from the indemnifying party to such indemnified party of
its election so to assume the defense thereof, the indemnifying party will not
be liable to such indemnified party pursuant to the provisions of Section 8(a)
or (b) for any legal or other expenses subsequently incurred by such indemnified
party in connection with the defense thereof other than reasonable costs of
investigation, unless (i) the indemnified party shall have employed counsel in
accordance with the provisions of the preceding sentence, (ii) the indemnifying
party shall not have employed counsel reasonably satisfactory to the indemnified
party to represent the indemnified party within a reasonable time after the
notice of the commencement of the action, or (iii) the indemnifying party has
authorized the employment of counsel for the indemnified party at the expense of
the indemnifying party.
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(d) If recovery is not available under the foregoing indemnification
provisions, for any reason other than as expressly specified therein, the
parties entitled to indemnification by the terms thereof shall be entitled to
contribution to liabilities and expenses, except to the extent that contribution
is not permitted under Section 11(f) of the Securities Act. In determining the
amount of contribution to which the respective parties are entitled, there shall
be considered the parties' relative fault, knowledge and access to information
concerning the matter with respect to which the claim was asserted, the
opportunity to correct and/or prevent any statement or omission, and any other
equitable considerations appropriate under the circumstances.
9. QUOTATION. If the Common Stock or any other securities to be
acquired upon exercise of the Option are then authorized for quotation or
trading or listing on the Nasdaq National Market System ("Nasdaq NMS") or any
securities exchange, THB, upon the request of PennFirst after the occurrence of
a Purchase Event, will promptly file an application, if required, to authorize
for quotation or trading or listing the Shares of Common Stock (or other
securities to be acquired upon exercise of the Option pursuant to the terms of
Section 6 hereof) on the Nasdaq NMS or such other securities exchange and will
use its best efforts to obtain approval, if required, of such quotation or
listing as soon as practicable.
10. FURTHER ASSURANCES. THB agrees to execute and deliver such
documents and instruments and take such further actions as may be necessary or
appropriate or as PennFirst may reasonably request in order to ensure that
PennFirst receives the full benefits of this Agreement (including, without
limitation, the prompt filing of any required notice or application for approval
with any applicable federal or state regulatory agency and the expeditious
processing of the same). Prior to the Termination Date, THB will refrain from
taking any action which would have the effect of preventing or interfering with
the delivery by THB of the Shares (or other securities deliverable pursuant to
Section 6 hereof) to PennFirst upon any exercise of the Option or from otherwise
performing its obligations under this Agreement.
11. REMEDIES. The parties agree that PennFirst would be irreparably
damaged if for any reason THB failed to issue any of the Shares (or other
securities deliverable pursuant to Section 6 hereof) upon exercise of the Option
or to perform any of its other obligations under this Agreement, and that
PennFirst would not have an adequate remedy at law in such event. Accordingly,
PennFirst shall be entitled to specific performance and injunctive and other
equitable relief to enforce the performance of this Agreement by THB. This
provision is without prejudice to any other rights that PennFirst may have
against THB for any failure to perform its obligations under this Agreement.
12. MISCELLANEOUS.
(a) Expenses. Except as otherwise 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.
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(b) Notices. All notices or other communications hereunder shall be in
writing and shall be deemed given if delivered personally, sent by overnight
express or mailed by prepaid registered or certified mail (return receipt
requested) or by cable, telegram, telecopy or telex addressed as follows:
(i) If to PennFirst, to:
PennFirst Bancorp, Inc.
600 Lawrence Avenue
Ellwood City, Pennsylvania 16117
ATTN: Charlotte A. Zuschlag
Copy to:
Plowman, Spiegal & Lewis, P.C.
2nd Floor, The Grant Building
Pittsburgh, Pennsylvania 15219
ATTN: Charles B. Jarrett, Jr.
(ii) If to THB, to:
Troy Hill Bancorp, Inc.
1706 Lowrie Street
Pittsburgh, Pennsylvania 15212
ATTN: Ellry N. Davis
Copy to:
Elias, Matz, Tiernan and Herrick L.L.P.
734 15th Street, N.W.
Washington, D.C. 20005
ATTN: Raymond A. Tiernan, Esq.
Philip R. Bevan, Esq.
Hugh T. Wilkinson, Esq.
or such other address as shall be furnished in writing by any party, and any
such notice or communication shall be deemed to have been given as of the date
so mailed.
(c) Severability. If any term, provision, covenant or restriction of
this Agreement is held to be invalid, void or unenforceable, the remainder of
the terms, provisions, covenants and restrictions of this Agreement shall remain
in full force and effect and shall in no way be affected, impaired or
invalidated.
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If for any reason any court or regulatory agency determines that the
Option will not permit the holder to acquire the full number of Shares, it is
the express intention of THB to allow the holder to acquire such lesser number
of shares as may be permissible, without any amendment or modification hereof.
(d) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania without giving
effect to the principles of conflicts of laws thereof.
(e) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same agreement.
(f) Headings. The section headings herein are for convenience only and
shall not affect the construction hereof.
(g) Assignment. PennFirst may assign this Agreement to any wholly owned
subsidiary of PennFirst. PennFirst may not, without the prior written consent
of THB, assign this Agreement to any other person in whole or in part, provided
that upon the occurrence of and following a Purchase Event, PennFirst may sell,
transfer, assign or otherwise dispose of its rights and obligations hereunder in
whole or in part without such consent. In the case of any permitted sale,
transfer, assignment or disposition in part of this Option, THB shall do all
things necessary to facilitate the same and the person to whom this Option is
sold, transferred assigned or disposed of shall agree in writing to the terms
and conditions hereof. This Agreement shall not be assignable by THB except by
operation of law. Subject to the foregoing, this Agreement shall be binding
upon, inure to the benefit of and be enforceable by the parties and their
respective successors and assigns.
(h) Parties in Interest. This Agreement shall be binding upon and inure
solely to the benefit of each party hereto, and nothing in this Agreement,
express or implied, is intended to confer upon any other person (other than an
assignee or transferee of PennFirst pursuant to Section 12(g) hereof) any rights
or remedies of any nature whatsoever under or by any reason of this Agreement.
13. ENTIRE AGREEMENT. This Agreement, including the documents and
other writings referred to herein or delivered pursuant hereto, contains the
entire agreement and understanding of the parties with respect to its subject
matter. There are no restrictions, agreements, promises, warranties, covenants
or undertakings between the parties other than those expressly set forth herein
or therein. This Agreement supersedes all prior agreements and understandings
between the parties, both written and oral, with respect to its subject matter.
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IN WITNESS WHEREOF, PennFirst and THB have caused this Agreement to be
executed by their duly authorized officers as of the day and year first above
written.
PENNFIRST BANCORP, INC.
Attest:
/s/ Frank D. Martz By: /s/ Charlotte A. Zuschlag
- --------------------------------- ---------------------------------
Frank D. Martz Charlotte A. Zuschlag
Senior Vice President of Operations President and Chief Executive
and Secretary Officer
TROY HILL BANCORP, INC.
Attest:
/s/ Nancy H. Kufner By: /s/ Ellry N. Davis
- --------------------------------- ---------------------------------
Nancy H. Kufner Ellry N. Davis
Secretary President and Chief Executive
Officer
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[LOGO]
PRESS RELEASE
FOR IMMEDIATE RELEASE CONTACT:
- --------------------- --------
September 16, 1996 Charlotte A. Zuschlag
President and Chief Executive Officer
PennFirst Bancorp, Inc.
412-758-5584
Ellry N. Davis
President and Chief Executive Officer
Troy Hill Bancorp, Inc.
412-231-8238
PENNFIRST BANCORP, INC. AND TROY HILL BANCORP, INC. ANNOUNCE PLANS TO MERGE.
PennFirst Bancorp, Inc. ("PennFirst") and Troy Hill Bancorp, Inc. ("Troy Hill")
jointly announced today the execution of a definitive merger agreement by which
PennFirst will acquire Troy Hill, a $92.2 million thrift holding company
headquartered in the Troy Hill area of Pittsburgh, Pennsylvania. Troy Hill
Federal Savings Bank, a wholly owned subsidiary of Troy Hill, has two offices
located in the Allegheny County communities of Troy Hill and Wexford. PennFirst
is the parent holding company of ESB Bank.
Under the terms of the agreement, Troy Hill, will merge into PennFirst and Troy
Hill Federal Savings Bank will continue to operate as a separate bank subsidiary
of PennFirst for a minimum period of one year. Each shareholder of Troy Hill
will receive $21.15 in cash or in PennFirst common stock for each share of Troy
Hill common stock owned, subject to an overall requirement that 40% of the total
outstanding Troy Hill common stock be exchanged for cash. In addition,
PennFirst will elect a Troy Hill board member to serve as a PennFirst board
member.
<PAGE>
Charlotte A. Zuschlag, President and Chief Executive Officer of PennFirst stated
"We are delighted that Troy Hill will be joining PennFirst. Troy Hill is a
quality and profitable institution with a long tradition of serving its
communities." Ms. Zuschlag also noted that "this merger will combine two
community-oriented banks with similar customer service strategies and serves an
area consistent with PennFirst's business and strategic growth plans. It
should also allow PennFirst to further enhance shareholder value and will
increase our market presence in Allegheny County."
Ellry N. Davis, President and Chief Executive Officer of Troy Hill indicated
that "Troy Hill is pleased to be joining forces with such a strong institution
as PennFirst. I am extremely confident that Troy Hill's shareholders, customers
and employees will continue to be well served by this merger."
The total value of the acquisition is estimated to be $23.6 million and is
subject to regulatory and stockholders' approval. Upon completion of the
merger, anticipated to occur in the first quarter of 1997, PennFirst will have
approximately $790 million in consolidated assets, $62 million in consolidated
stockholders' equity and will operate 11 offices in the contiguous Pennsylvania
counties of Allegheny, Lawrence, Beaver and Butler.
PennFirst is a Pennsylvania-chartered thrift holding company which has total
consolidated assets of $696.5 million and total consolidated stockholders'
equity of $48.5 million as of June 30, 1996. PennFirst common stock is quoted
on the National Association of Securities Dealers Automated Quotation ("NASDAQ")
National Market System under the symbol "PWBC".
