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Title: |
Agreement and Plan of Merger |
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Date: |
2002 |
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$46 |
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ID: |
#824526 |
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AGREEMENT AND PLAN OF MERGER
----------------------------
THIS AGREEMENT AND PLAN OF MERGER, dated as of September 24, 2002
("Agreement"), is made by and among NATIONAL PENN BANCSHARES, INC., a
Pennsylvania corporation ("NPB"), NATIONAL PENN BANK, a national banking
association ("NP Bank"), and FIRSTSERVICE BANK, a Pennsylvania bank
("FirstService").
BACKGROUND
----------
1. NPB owns directly all of the outstanding capital stock of
NP Bank.
2. NPB and FirstService desire for FirstService to merge with and into
NP Bank, with NP Bank surviving such merger as a wholly- owned subsidiary of
NPB, in accordance with the applicable laws of the United States, the
Commonwealth of Pennsylvania, and this Agreement.
3. As a condition and inducement to NPB to enter into this Agreement,
the directors and certain officers of FirstService are concurrently executing a
Letter Agreement in the form attached hereto as Exhibit 1.
4. As a condition and inducement to each of NPB, NP Bank and
FirstService to enter into this Agreement, NP Bank has entered into agreements
(the "Employment Agreements") with John C. Spier, Don P. Worthington and Blair
T. Rush (the "Key FirstService Management"), regarding the terms of their
employment following consummation of the transactions contemplated hereby, and
NP Bank has entered into an amendatory agreement ("Amendatory Agreement") with
A. Lee Roberts regarding the terms of his supplemental executive retirement
plan.
5. Each of the parties, by signing this Agreement, adopts it as a plan
of reorganization as defined in IRC Section 368(a), and intends the Merger to be
a reorganization as defined in IRC Section 368(a).
6. NPB and FirstService desire to provide the terms and
conditions governing the transactions contemplated herein.
{PAGE}
AGREEMENT
---------
NOW THEREFORE, in consideration of the premises and of the mutual
covenants, agreements, representations and warranties herein contained, the
parties, intending to be legally bound hereby, agree as follows:
ARTICLE I
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GENERAL
-------
1.01 Definitions. As used in this Agreement, the following terms shall
have the indicated meanings (such meanings to be equally applicable to both the
singular and plural forms of the terms defined):
Adjusted FirstService Option has the meaning given to that term in
Section 1.02(g) of this Agreement.
Affiliate means, with respect to any corporation, any person that
directly, or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, such corporation and, without
limiting the generality of the foregoing, includes any executive officer,
director or 10% equity owner of such corporation.
Agreement means this Agreement and Plan of Merger, including any
amendment or supplement hereto.
Amendatory Agreement has the meaning given to that term in the
Background Section of this Agreement.
Application means an application for regulatory approval which is
required by the transactions contemplated hereby.
Banking Code means the Pennsylvania Banking Code of 1965, as amended.
CRA means the Community Reinvestment Act of 1977, as amended, and the
rules and regulations promulgated from time to time thereunder.
2
{PAGE}
Closing Date means the date on which the last condition precedent
provided in this Agreement (other than those conditions which are to be
fulfilled at the Closing) has been fulfilled or waived, or as soon as
practicable thereafter.
Confidentiality Agreement means the confidentiality agreement dated
August 12, 2002 between NPB and Danielson Associates Inc., as agent for
FirstService.
Determination Date means the trading day sixteen (16) days prior to the
FirstService Shareholders Meeting.
Determination Period has the meaning given to such term in Section
1.02(f)(ii)(D) of this Agreement.
Dissenting FirstService Shares has the meaning given to that term in
Section 1.02(f)(ii)(F) of this Agreement.
Employment Agreements has the meaning given to that term in the
Background Section of this Agreement.
ERISA means the Employee Retirement Income Security Act of 1974, as
amended.
Effective Date means the date upon which all filings with governmental
agencies, as may be required under applicable laws and regulations for the
Merger to be effective, are made and accepted by such agencies, and shall be the
same as the Closing Date or as soon thereafter as is practicable.
Environmental Law means any federal, state or local law, statute,
ordinance, rule, regulation, code, license, permit, authorization, approval,
consent, order, judgment, decree, injunction or agreement with any Regulatory
Authority relating to (i) the protection, preservation or restoration of the
environment, including, without limitation, air, water vapor, surface water,
groundwater, drinking water supply, surface soil, subsurface soil, plant and
animal life or any other natural resource, and/or (ii) the use, storage,
recycling, treatment, generation, transportation, processing, handling,
labeling, production, release or disposal of any substance presently listed,
defined, designated or classified as hazardous, toxic, radioactive or dangerous,
or otherwise regulated, whether by type or by quantity, including any material
containing any such substance as a component.
3
{PAGE}
Exchange Act means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated from time to time thereunder.
Exchange Agent has the meaning given to such term in Section 1.02(h) of
this Agreement.
Exchange Ratio means the exchange ratio set forth in Section
1.02(f)(ii)(A) or (E) or Section 6.01(c), whichever is in effect, in each case
as it may be adjusted pursuant to Section 1.02(i).
FDIC means the Federal Deposit Insurance Corporation.
FRB means the Federal Reserve Board.
FirstService means FirstService Bank, a Pennsylvania bank.
FirstService Benefit Plan has the meaning given to that term in Section
2.12 of this Agreement.
FirstService Board has the meaning given to that term in Section
4.07(c)(v)(C) of this Agreement.
FirstService Board Member means a director of FirstService immediately
prior to the Closing Date who becomes, and on the date of determination is, a
member of the FirstService Board.
FirstService Certificate has the meaning given to that term in Section
1.02(h)(i) of this Agreement.
FirstService Common Stock has the meaning given to that term in Section
2.02(a) of this Agreement.
FirstService Disclosure Schedule means, collectively, the disclosure
schedules delivered by FirstService to NPB at or prior to the execution and
delivery of this Agreement.
FirstService Division has the meaning given to that term in Section
4.07(c)(v)(A) of this Agreement.
FirstService ERISA Affiliate has the meaning given to such term in
Section 2.12(a) of this Agreement.
4
{PAGE}
FirstService ESPP means the FirstService Employee Stock Purchase Plan
in effect on the date hereof.
FirstService Financials means (a) the audited consolidated financial
statements of FirstService as of December 31, 2001 and 2000 and for each of the
three years in the period ended December 31, 2001, and (b) the unaudited interim
consolidated financial statements of FirstService for each calendar quarter
after December 31, 2001, including the quarter ending June 30, 2002.
FirstService Nominee has the meaning given to that term in Section
1.02(e)(i) of this Agreement.
FirstService Option has the meaning given to that term in Section
1.02(g) of this Agreement.
FirstService Option Conversion Ratio means the conversion ratio set
forth in Section 1.02(g)(i), as it may be adjusted pursuant to Section
1.02(g)(ii).
FirstService Option Plans means each stock option plan maintained by
FirstService immediately prior to the Effective Date.
FirstService Shareholders Meeting means the meeting of the holders of
FirstService Common Stock concerning the Merger pursuant to the Prospectus/Proxy
Statement.
GAAP means accounting principles generally accepted in the United
States.
IRC means the Internal Revenue Code of 1986, as amended, and the
regulations promulgated thereunder.
IRS means the Internal Revenue Service.
Key FirstService Management has the meaning given to that term in the
Background Section of this Agreement.
Knowledge of FirstService means the knowledge of FirstService's
executive officers and directors.
Knowledge of NPB means the knowledge of NPB's executive officers and
directors.
5
{PAGE}
Material Adverse Effect means a material adverse effect on (a) the
business, financial condition or results of operations of FirstService on a
consolidated basis (when such term is used in Article 2 hereof) or NPB on a
consolidated basis (when such term is used in Article 3 hereof) other than, in
each case, any change, circumstance or effect relating to (i) the economy or
financial markets in general or (ii) the banking industry and not specifically
related to FirstService or NPB, or (b) the ability of such party to consummate
the transactions contemplated by this Agreement.
Merger means the merger of FirstService with and into NP Bank, with NP
Bank surviving such merger as a wholly-owned subsidiary of NPB, contemplated by
this Agreement.
Merger Consideration has the meaning given to such term in Section
1.02(g)(i) of this Agreement.
NASD means the National Association of Securities Dealers, Inc.
Nasdaq means the National Market tier of The Nasdaq Stock Market
operated by the NASD.
NP Bank means National Penn Bank, a national banking association, all
the outstanding capital stock of which is owned by NPB.
NPB means National Penn Bancshares, Inc., a Pennsylvania corporation.
NPB/NP Bank Bylaws Restrictions has the meaning given to such term in
Section 1.02(e)(i) of this Agreement.
NPB Certificate has the meaning given to such term in Section
1.02(h)(ii) of this Agreement.
NPB Common Stock means the shares of common stock, without par value,
of NPB.
NPB Disclosure Schedule means, collectively, the disclosure schedules
delivered by NPB to FirstService at or prior to the execution and delivery of
this Agreement.
6
{PAGE}
NPB ERISA Affiliate has the meaning given to such term in Section
3.12(a) of this Agreement.
NPB Financials means (a) the audited consolidated financial statements
of NPB as of December 31, 2001 and 2000 and for each of the three years in the
period ended December 31, 2001, and (b) the unaudited interim consolidated
financial statements of NPB for each calendar quarter after December 31, 2001,
including the quarter ending June 30, 2002.
NPB Market Value has the meaning given to such term in Section
1.02(f)(ii)(D) of this Agreement.
OCC means the Office of the Comptroller of the Currency.
PDB means the Department of Banking of the Commonwealth of
Pennsylvania.
Prospectus/Proxy Statement means the prospectus/proxy statement,
together with any supplements thereto, to be sent to holders of FirstService
Common Stock in connection with the transactions contemplated by this Agreement.
Registration Statement means the registration statement on Form S-4,
including any pre-effective or post-effective amendments or supplements thereto,
as filed with the SEC under the Securities Act with respect to the NPB Common
Stock to be issued in connection with the transactions contemplated by this
Agreement.
Regulatory Agreement has the meaning given to that term in Sections
2.11 and 3.10 of this Agreement.
Regulatory Authority means any agency or department of any federal,
state or local government or of any self-regulatory organization, including
without limitation the SEC, the PDB, the OCC, the FDIC, the NASD, and the
respective staffs thereof.
Rights means warrants, options, rights, convertible securities and
other capital stock equivalents which obligate an entity to issue its
securities.
Rights Agreement means the rights agreement dated August 23, 1989, as
amended August 21, 1999, between NPB and NP Bank, as Rights Agent.
7
{PAGE}
SEC means the Securities and Exchange Commission.
Securities Act means the Securities Act of 1933, as amended, and the
rules and regulations promulgated from time to time thereunder.
Subsidiary means any corporation, 50% or more of the capital stock of
which is owned, either directly or indirectly, by another entity, except any
corporation the stock of which is held in the ordinary course of the lending
activities of a bank.
Surviving Bank has the meaning given to that term in Section 1.02(b) of
this Agreement.
1.02 The Merger.
(a) Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") will take place on the Closing Date at a time and
place to be agreed upon by the parties hereto; provided, in any case, that all
conditions to closing set forth in Article V of this Agreement (other than the
delivery of certificates, opinions, and other instruments and documents to be
delivered at the Closing) have been satisfied or waived at or prior to the
Closing Date.
(b) The Merger. Subject to the terms and conditions of this Agreement
and in accordance with the applicable laws and regulations of the United States
and the Commonwealth of Pennsylvania, on the Effective Date:
(i) FirstService shall merge with and into NP Bank, under the
charter of NP Bank;
(ii) the separate existence of FirstService shall cease;
(iii) NP Bank shall be the surviving bank in the Merger (the
"Surviving Bank") and a wholly-owned subsidiary of NPB; and
(iv) all of the property (real, personal and mixed), rights,
powers, duties, obligations and liabilities of FirstService shall be taken and
deemed to be transferred to and vested in NP Bank, as the Surviving Bank,
without further act or deed.
8
{PAGE}
(c) NP Bank's Name and Business. The name of the Surviving Bank shall
be "National Penn Bank". The business of the Surviving Bank shall be that of a
national banking association, and it shall be conducted by the Surviving Bank at
its main office which shall be located at Philadelphia and Reading Avenues,
Boyertown, Pennsylvania 19512, and its legally established branches.
(d) NP Bank's Articles of Association and Bylaws.
(i) On and after the Effective Date, the articles of
association of the Surviving Bank shall read in their entirety as set forth on
NPB Disclosure Schedule 1.02(d) attached hereto and made a part hereof, until
changed in accordance with applicable law, such articles of association, and the
Surviving Bank's bylaws.
(ii) On and after the Effective Date, the bylaws of the
Surviving Bank, as set forth on NPB Disclosure Schedule 1.02(d), shall
automatically be and remain the bylaws of the Surviving Bank, until changed in
accordance with applicable law, the Surviving Bank's articles of association,
and such bylaws.
(e) NP Bank's Board of Directors and Officers.
(i) On and after the Effective Date, (A) the directors of NP
Bank duly elected and holding office immediately prior to the Effective Date and
(B) two persons (each a "FirstService Nominee") selected by FirstService's Board
of Directors and approved by NPB (which approval is hereby granted as to
Alexander Rankin and John C. Spier and will not otherwise be unreasonably
withheld) shall be the directors of the Surviving Bank, each to hold office
until his or her successor is elected and qualified or otherwise in accordance
with applicable law, the articles of association and bylaws of the Surviving
Bank. Subject to the provisions of the NPB and NP Bank bylaws that require the
retirement of a director as of the annual meeting next following that director's
reaching age 72 (the "NPB/NP Bank Bylaws Restrictions"), NPB and NP Bank shall
take all steps necessary to ensure that the FirstService Nominees, or their
successors, are elected to the Surviving Bank's Board of Directors annually for
six years following the Effective Date if such persons are in office as
directors of NPB on the annual election dates.
(ii) If either FirstService Nominee, or any successor,
resigns, dies or is otherwise removed from the Surviving Bank's
9
{PAGE}
Board of Directors at any time during the six one-year terms of office referred
to in Section 1.02(e)(i), the FirstService Board Members (determined pursuant to
Section 4.07(c)(v)(C) of this Agreement), by a plurality vote, shall have the
right to select the successor to such FirstService Nominee, subject to (A)
compliance with the NPB/NP Bank Bylaws Restrictions, and (B) approval of such
person by NPB (which approval will not be unreasonably withheld).
(iii) On and after the Effective Date, the officers of NP Bank
duly elected and holding office immediately prior to the Effective Date shall be
the officers of the Surviving Bank, together with the Key FirstService
Management and such other officers as may be appointed from time to time, each
to hold office until they shall resign or be removed in accordance with
applicable law, the articles of association and bylaws of the Surviving Bank.
10
{PAGE}
(f) Conversion of Shares.
(i) NP Bank Capital Stock. Each share of the capital stock of
NP Bank issued and outstanding immediately prior to the Effective Date shall, on
the Effective Date, continue to be issued and outstanding as a share of capital
stock of the Surviving Bank.
(ii) FirstService Common Stock.
(A) Conversion. Subject to subsections (f)(ii)(B) and
(f)(ii)(C) below with respect to treasury stock and fractional shares, and to
subsection (f)(ii)(F) below with respect to dissenting shares of FirstService
Common Stock, each share of FirstService Common Stock issued and outstanding
immediately prior to the Effective Date, shall, on the Effective Date, by reason
of the Merger and without any action on the part of the holder thereof, cease to
be outstanding and be converted into the right to receive:
(1) subject to adjustment as provided in
subsection (f)(ii)(E) and subsection (i) below, .567 share of NPB Common Stock,
including the associated rights to purchase securities pursuant to the Rights
Agreement; and
(2) $3.90 in cash (the "Per Share Cash
Consideration").
(B) Treasury Stock. Each share of FirstService Common
Stock issued and held in the treasury of FirstService as of the Effective Date,
if any, shall be cancelled, and no cash, stock or other property shall be
delivered in exchange therefor.
(C) Fractional Shares. No fractional shares of NPB
Common Stock and no scrip or certificates therefor shall be issued in connection
with the Merger. Any former holder of FirstService Common Stock who would
otherwise be entitled to receive a fraction of a share of NPB Common Stock shall
receive, in lieu thereof, cash in an amount equal to such fraction of a share
multiplied by NPB Market Value (as defined in subsection (f)(ii)(D) below).
(D) Market Value of NPB Common Stock. For purposes of
this Agreement, the market value of a share of NPB Common Stock ("NPB Market
Value") shall be deemed to be the average of the closing sale price of a share
of NPB Common Stock, as reported on
11
{PAGE}
Nasdaq, as published in the Wall Street Journal, for the twenty trading days
(the "Determination Period") ending on the Determination Date.
(E) Exchange Ratio Adjustment. If NPB Market Value is
less than $24.75 per share, then the exchange ratio set forth in subsection
(f)(ii)(A) above shall be adjusted to:
(1) .575 share of NPB Common Stock, plus
(2) the Per Share Cash Consideration
in exchange for each share of FirstService Common Stock, subject to the
provisions of Section 6.01(c) below.
(F) Dissenting FirstService Shareholders. If there
are holders of FirstService Common Stock who dissent from the Merger and
exercise and perfect the right to obtain valuation of and payment for their
shares ("Dissenting FirstService Shares") pursuant to Section 215a(b) of the
National Bank Act (12 U.S.C. ss.215a(b)), the following provisions will govern
payments to be made in respect of Dissenting FirstService Shares:
(1) All payments in respect of Dissenting
FirstService Shares, if any, will be made by NPB or the Surviving Bank, as they
shall agree, taking into account the obligations under Section 3.20 below.
(2) Dissenting FirstService Shares, if any,
will be deemed to have been retired and cancelled immediately prior to the
Merger, with the effect that no conversion thereof will occur pursuant to
subsection (f)(ii)(A) above unless and until such holder shall have failed to
perfect or effectively shall have withdrawn or lost his right to appraisal and
payment under such section. If any such holder of FirstService Common Stock
shall have so failed to perfect or effectively shall have withdrawn or lost such
right, each of his shares of FirstService Common Stock shall thereupon be deemed
to have been converted into, on the Effective Date, the right to receive shares
of NPB Common Stock and cash in lieu of fractional shares and the Per Share Cash
Consideration, all as set forth in Section 1.02(f)(ii)(A) and (C) hereof.
(g) Stock Options.
12
{PAGE}
(i) On and after the Effective Date, each option (each, a
"FirstService Option") to purchase shares of FirstService Common Stock issued by
FirstService and outstanding on the Effective Date shall remain outstanding,
subject to the following adjustments made in a manner consistent with IRC
Section 424(a) and Treas. Reg. ss. 1.425-1(a)(4)(i):
(A) each FirstService Option will constitute a right
to purchase a number of shares of NPB Common Stock determined in accordance with
Section 1.02(g)(i)(B), below, at a price equal to the amount determined in
accordance with Section 1.02(g)(i)(C), below;
(B) the number of shares of NPB Common Stock subject
to each FirstService Option immediately following the Effective Date will be
equal to the quotient of: (1) the product of the number of shares of
FirstService Common Stock originally subject to that option times the original
exercise price of that option, divided by (2) the adjusted exercise price of
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