Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
OMEGA FINANCIAL CORPORATION
AND
SUN BANCORP, INC.
DATED APRIL 20, 2004
AGREEMENT AND PLAN OF MERGER
TABLE OF CONTENTS
ARTICLE 1 TERMS OF THE MERGER.................................................9
1.1 The Merger..............................................................9
1.2 Articles of Incorporation, Bylaws, Directors, Officers and Name
of the Surviving Corporation............................................9
1.3 Availability of Information............................................11
1.4 Anti-dilution Provisions...............................................11
ARTICLE 2 DESCRIPTION OF TRANSACTION.........................................12
2.1 Terms of the Merger....................................................12
2.2 Conversion of Stock....................................................12
2.3 Election and Allocation Procedures.....................................14
2.4 Election Procedures....................................................15
2.5 Mechanics of Payment of Consideration..................................15
2.6 Time and Place of Closing..............................................17
2.7 Voting Agreements......................................................17
2.8 Reservation of Shares..................................................17
2.9 Certain Actions Relating to Rule 16b-3.................................17
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF SUN..............................17
3.1 Organization and Qualification of Sun and Sun Subsidiaries.............18
3.2 Authorization, Execution and Delivery; Agreement Not in Breach.........18
3.3 No Legal Bar...........................................................19
3.4 Consents and Approvals.................................................19
3.5 Licenses, Franchises and Permits.......................................19
3.6 Charter Documents......................................................20
3.7 Sun Financial Statements...............................................20
3.8 Absence of Certain Changes.............................................20
3.9 Deposits...............................................................21
3.10 Properties............................................................21
3.11 Intellectual Property.................................................21
3.12 Condition of Fixed Assets and Equipment...............................22
3.13 Tax Matters...........................................................22
3.14 Litigation............................................................23
3.15 Environmental Matters.................................................23
3.16 Insurance.............................................................24
3.17 Books and Records.....................................................24
3.18 Capitalization of Sun and the Sun Subsidiaries........................24
3.19 Sole Agreement........................................................25
3.20 Disclosure............................................................25
3.21 Absence of Undisclosed Liabilities....................................26
3.22 Allowance for Loan Losses.............................................26
3.23 Loan Portfolio........................................................27
3.24 Compliance with Laws..................................................27
3.25 Employee and Director Benefit Plans...................................28
3.26 Labor Relations.......................................................30
3.27 Material Contracts....................................................30
3.28 Material Contract Defaults............................................31
3.29 Exchange Act and NASDAQ Listing.......................................31
3.30 Certain Regulatory Matters............................................31
3.31 Disclosure Controls and Procedures....................................31
3.32 Corporate Approval....................................................32
3.33 Broker's and Finder's Fees............................................32
3.34 Delays................................................................32
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF OMEGA............................32
4.1 Organization and Qualification of Omega and Subsidiaries...............32
4.2 Authorization, Execution and Delivery; Agreement Not in Breach.........33
4.3 No Legal Bar...........................................................34
4.4 Consents and Approvals.................................................34
4.5 Licenses, Franchises and Permits.......................................34
4.6 Omega Financial Statements.............................................35
4.7 Charter Documents......................................................35
4.8 Tax Matters............................................................35
4.9 Litigation.............................................................36
4.10 Insurance.............................................................36
4.11 Books and Records.....................................................36
4.12 Capitalization of Omega and the Omega Subsidiaries....................36
4.13 Disclosure............................................................37
4.14 Absence of Undisclosed Liabilities....................................38
4.15 Allowance for Loan Losses.............................................38
4.16 Compliance with Laws..................................................38
4.17 Employee Benefit Plans................................................39
4.18 Material Contracts....................................................39
4.19 Material Contract Defaults............................................39
4.20 Exchange Act and NASDAQ Listing.......................................39
4.21 Certain Regulatory Matters............................................40
4.22 Disclosure Controls and Procedures....................................40
4.23 Corporate Approval....................................................40
4.24 Broker's and Finder's Fees............................................41
4.25 Delays................................................................41
ARTICLE 5 COVENANTS OF SUN...................................................41
5.1 Preparation of Registration Statement and Applications for
Required Consents......................................................41
5.2 Conduct of Business - Affirmative Covenants............................42
5.3 Conduct of Business - Negative Covenants...............................43
5.4 Conduct of Business - Certain Actions..................................46
5.5 Delivery of Information................................................47
5.6 Notification...........................................................47
5.7 Inspections Permitted..................................................47
ARTICLE 6 COVENANTS OF OMEGA.................................................47
6.1 Banking Approvals and Other Consents...................................47
6.2 Approvals and Registrations............................................48
6.3 Employee Benefits; Directors Deferred Compensation Plan;
Severance Agreements...................................................48
6.4 Notification...........................................................49
6.5 Directors and Officers Indemnification and Insurance Coverage..........50
6.6 Conduct of Omega Prior to the Effective Time...........................50
6.7 Inspections Permitted..................................................50
ARTICLE 7 CONDITIONS TO CLOSING..............................................51
7.1 Conditions to the Obligations of Omega.................................51
7.2 Conditions to the Obligations of Sun...................................52
7.3 Conditions to Obligations of Each Party................................54
ARTICLE 8 TERMINATION........................................................55
8.1 Termination............................................................55
8.2 Effect of Termination..................................................56
8.3 Fees...................................................................56
ARTICLE 9 GENERAL PROVISIONS.................................................57
9.1 Notices................................................................57
9.2 Governing Law..........................................................58
9.3 Counterparts...........................................................58
9.4 Publicity..............................................................58
9.5 Entire Agreement; No Third Party Beneficiaries; Assignment.............59
9.6 Severability...........................................................59
9.7 Modifications, Amendments and Waivers..................................59
9.8 Interpretation.........................................................59
9.9 Payment of Expenses....................................................60
9.10 Provisions Which Survive..............................................60
9.11 No Waiver.............................................................60
9.12 Remedies Cumulative...................................................60
9.13 Confidentiality.......................................................60
EXHIBITS
Form of Voting Agreement Exhibit A
Form of Opinions of Sun's Counsel Exhibit B-1
Form of Opinions of Omega's Counsel Exhibit B-2
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Agreement Exhibit C
▇▇▇▇▇▇ Severance Agreement Exhibit ▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Agreement Exhibit E
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of April
20, 2004 is entered into by and between Omega Financial Corporation ("Omega" or
the "Surviving Corporation" as the context may require), a corporation organized
and existing under the laws of Pennsylvania, which is registered as a bank
holding company and whose principal offices are located at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and Sun Bancorp, Inc. ("Sun"), a corporation
organized and existing under the laws of the Commonwealth of Pennsylvania, which
is registered as a financial holding company and whose principal offices are
located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇.
Omega and Sun are sometimes referred to herein as the "Parties."
RECITALS
A. The Board of Directors of Sun deems it desirable and in the best
interests of Sun and its shareholders that Sun be merged with and into Omega
(which would survive the merger as the Surviving Corporation) on the terms and
subject to the conditions set forth in this Agreement and in the manner provided
in this Agreement.
B. The Board of Directors of Omega deems it desirable and in the best
interests of Omega and its shareholders that Sun be merged with and into Omega
on the terms and subject to the conditions set forth in this Agreement and in
the manner provided in this Agreement.
C. Pursuant to this Agreement, each share of Sun Common Stock
outstanding at the Effective Time will be converted into either (i) cash in the
amount of $23.25, or (ii) 0.664 shares of Omega Common Stock. Holders of Sun
Common Stock will be entitled to elect their preference with respect to each
share of Sun Common Stock held by them, subject to pro rata allocation, such
that 20% of Sun Common Stock shall be paid in cash, and 80% of Sun Common Stock
will be in the form of Omega Common Stock, including the effect of cash paid in
lieu of fractional shares of Omega Common Stock, if any.
D. As an inducement and condition to Omega entering into this
Agreement, each director and executive officer of Sun is agreeing to vote all
shares of Sun Common Stock owned by them in favor of the transactions
contemplated by this Agreement at the meeting of Sun Shareholders at which this
Agreement is considered pursuant to a voting agreement in the form attached
hereto as Exhibit A ("Voting Agreement").
E. The Parties desire to make certain representations, warranties and
agreements in connection with the Merger and also to prescribe certain
conditions to the Merger, all as set forth herein.
DEFINITIONS
Except as otherwise provided herein, as used in this Agreement, the
following terms shall have the indicated meanings (which shall be applicable to
both the singular and plural forms of the terms defined).
"Acquisition Proposal" means a proposed tender offer, written agreement,
understanding or other proposal of any nature pursuant to which any Person or
group, other than Omega or any Omega Subsidiary, would directly or indirectly
(i) acquire or participate in a merger, share exchange, consolidation or any
other business combination involving Sun or any Sun Subsidiary; (ii) acquire the
right to vote 10% or more of the outstanding voting securities of Sun or any Sun
Subsidiary; (iii) acquire 25% or more of the assets or earning power of Sun or
of any Sun Subsidiary; or (iv) acquire in excess of 10% of any class of capital
stock of Sun or any Sun Subsidiary.
"Acquisition Transaction" means any of the following events:
(i) the acquisition by any Person, other than Omega or any Omega
Subsidiary, alone or together with such Person's Affiliates or any group, of
beneficial ownership of 10% or more of the outstanding shares of Sun Common
Stock or the right to vote 10% or more of the outstanding voting securities of
Sun or any Sun Subsidiary (for purposes of this Subsection (i), the terms
"group" and "beneficial ownership" shall be as defined in Section 13(d) of the
Exchange Act and regulations promulgated thereunder and as interpreted
thereunder);
(ii) a merger, consolidation, share exchange, business combination or any
other similar transaction involving Sun or any Sun Subsidiary; or
(iii) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition of 25% or more of the assets or earning power of the Sun or any Sun
Subsidiary, in a single transaction or series of transactions.
"Affiliate" means, with respect to any Person, any other Person that,
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such Person. For the purposes of
this definition, "control" means, when used with respect to any Person, the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract, or otherwise, and the terms
"controlling" and "controlled" have correlative meanings.
"Aggregate Consideration" shall mean the amount that is equal to the sum
of (i) the number of Cash Election Shares multiplied by the Cash Merger
Consideration, plus (ii) the number of Stock Election Shares multiplied by the
dollar amount of the Stock Merger Consideration, determined based upon the
Determination Price. The Aggregate Consideration shall be determined after all
adjustments and pro rations required to be made under this Agreement.
"Aggregate Shares" shall mean the number of shares of Sun Common Stock
issued and outstanding on the Closing Date, excluding shares for which no
consideration is payable as described in Section 2.2(a).
"Applicable Law" means any statute, law, code, rule, or regulation, or any
judgment, order, ordinance, writ, injunction, or decree of, any Governmental
Authority to which a specified Person or its property or activities is subject.
"Balance Sheet Date" means December 31, 2003.
"Banking Approvals" means (a) the approval of the application filed with
the FDIC under the Bank Merger Act and (b) any other approvals and/or Consents
required to be obtained from or made to or with the Banking Department, the
FDIC, the FRB or the OCC.
"Banking Department" means the Pennsylvania Department of Banking.
"Cash Election" means the election by a Sun Shareholder to receive the
Cash Merger Consideration for such Shareholder's shares of Sun Common Stock.
"Cash Election Shares" means shares of Sun Common Stock as to which a Cash
Election has been made.
"Cash Merger Consideration" means $23.25.
"Charter Documents" means, with respect to a particular Person that is not
an individual, such Person's articles or certificate of incorporation or
formation, organization certificate, bylaws and any other similar governing
documents, all as may be amended or amended and restated from time to time.
"Closing" means consummation of the Merger.
"Closing Date" means the date of the Closing, which shall be on the eighth
business day after the last condition precedent pursuant to this Agreement has
been fulfilled or waived (including the expiration of any applicable waiting
period) or such other date upon which the Parties may mutually agree.
"Code" means the Internal Revenue Code of 1986, as amended.
"Consent" means any consent, non-objection after notice to, approval or
authorization of, notice to, or designation, registration, declaration or filing
with, any Person.
"Determination Date" means the day which is eight business days before the
Closing Date.
"Determination Price" means the mean average market price of Omega Common
Stock for the twenty trading days immediately preceding the Determination Date.
In calculating the average market price of Omega Common Stock, the market price
on any trading day for which there are trades reported on the NASDAQ National
Market shall be the last quoted trading price on that day, and the market price
on any trading day for which no trades have been reported on the NASDAQ National
Market shall be the average of the high bid and low asked prices on that day as
reported by NASDAQ.
"Effective Time" shall be the close of business on the date on which the
Merger is consummated by the filing of Articles of Merger with the Secretary of
State of the Commonwealth of Pennsylvania.
"Election Form" shall mean the form mutually prepared by Omega and Sun
which shall be distributed to the Sun Shareholders and by which the Sun
Shareholders can indicate their election to receive the Cash Merger
Consideration or the Stock Merger Consideration.
"Election Deadline" means 4:00 p.m. eastern standard time on the business
day immediately preceding the date of the meeting of Sun Shareholders to approve
the transactions contemplated by this Agreement, or such other date as may be
mutually agreed upon by Omega and Sun.
"Environmental Laws" mean all federal, state and local laws, including
statutes, regulations, ordinances, codes, rules and other governmental
restrictions, standards and requirements relating to the discharge of air
pollutants, water pollutants or process waste water or substances, as now or at
any time hereafter in effect, including, but not limited to, the Federal Solid
Waste Disposal Act, the Federal Hazardous Materials Transportation Act, the
Federal Clean Air Act, the Federal Clean Water Act, the Federal Resource
Conservation and Recovery Act of 1976, the Federal Comprehensive Environmental
Responsibility Cleanup and Liability Act of 1980, as amended ("CERCLA"),
regulations of the Environmental Protection Agency, regulations of the Nuclear
Regulatory Agency, regulations of the Occupational Safety and Health
Administration, and any so-called "Superfund" or "Superlien" Laws.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated from time to time thereunder.
"Exchange Agent" means such bank, trust company, transfer agent or other
entity selected by Omega, with the consent of Sun, not to be unreasonably
withheld.
"Expenses" means all reasonable in amount and reasonably incurred
out-of-pocket expenses (including all reasonable fees and reasonable expenses of
counsel, accountants, investment bankers, experts and consultants to the
applicable Party and its Affiliates) incurred by or on behalf of a Party to this
Agreement in connection with this Agreement or the transactions contemplated by
this Agreement.
"FDIC" means the Federal Deposit Insurance Corporation.
"FRB" means the Board of Governors of the Federal Reserve System.
"GAAP" means generally accepted accounting principles, as in effect at the
relevant date.
"Governmental Approvals" means all Consents of Governmental Authorities
that are necessary so that the consummation of the Merger and the other
transactions contemplated hereby will be in compliance with Applicable Law,
other than the Banking Approvals.
"Governmental Authority" shall mean any court or tribunal in any domestic
jurisdiction or any federal, state, municipal or local government or other
domestic governmental body, agency, authority, department, commission, board,
bureau, instrumentality, arbitrator or arbitral body, including, without
limitation, the Banking Department, the FDIC, the FRB and the OCC.
"Intellectual Property" means (i) trademarks, service marks, trade names,
Internet domain names, designs, logos, slogans, and general intangibles of like
nature, together with all goodwill, registrations and applications related to
the foregoing; (ii) patents and industrial designs (including any continuations,
divisionals, continuations-in-part, renewals, reissues, and
applications for any of the foregoing); (iii) copyrights (including any
registrations and applications for any of the foregoing); (iv) Software; and (v)
technology, trade secrets and other confidential information, know-how,
proprietary processes, formulae, algorithms, models, and methodologies.
"knowledge" or "aware" or any term of similar import means, (i) with
respect to Sun, the actual knowledge of each director and officer of Sun or any
Sun Subsidiary after all due and reasonable inquiry, and (ii) with respect to
Omega, the actual knowledge of each director and officer of Omega or any Omega
Subsidiary after all due and reasonable inquiry.
"Material Adverse Effect" shall mean, with respect to a Party, an effect
that is material and adverse to (a) the assets, properties, business, future
prospects, financial condition or results of operations of such Party and its
Subsidiaries, taken as a whole; provided, however, that, for purposes of this
clause (a), a Material Adverse Effect shall not be deemed to include (i) any
change in the value of the respective investment and loan portfolios of either
Party resulting from a change in interest rates generally within the banking
industry, (ii) any change occurring after the date of this Agreement in any
Applicable Law or in GAAP, which change affects banking institutions generally,
including any changes affecting the Bank Insurance Fund, (iii) changes in
general economic (except in the context of determining a Material Adverse Effect
for purposes of asset quality), legal, regulatory or political conditions
affecting banking institutions generally, (iv) actions or omissions of a Party
(or any of its Subsidiaries) taken pursuant to the terms of this Agreement with
the prior written consent of the other Party in contemplation of the
transactions contemplated hereby; or (b) the ability of such Party to consummate
the transactions contemplated hereby .
"Merger" means the merger of Sun with and into Omega, with Omega surviving
the merger.
"NASDAQ Bank Index" means the NASDAQ Bank Index as currently published by
the Nasdaq Stock Market, Inc., or, if not then published, a comparable index as
mutually agreed upon by Omega and Sun.
"Non-Election" means the failure of a Sun Shareholder to indicate a
preference as to the form of Per Share Merger Consideration to be received for
its shares of Sun Common Stock.
"Non-Electing Shares" means outstanding shares of Sun Common Stock, as to
which there is a Non-Election.
"OCC" means the Office of Comptroller of the Currency, an agency of the
United States Department of the Treasury.
"Omega Bank" means Omega Bank N.A.
"Omega Benefit Plans" means (i) each pension, profit sharing, stock bonus,
thrift, savings, employee stock ownership or other plan, program or arrangement,
which constitutes an "employee pension benefit plan" within the meaning of
Section 3(2) of ERISA, which is maintained by Omega or any Omega Subsidiary or
to which Omega or any Omega Subsidiary contribute, or are obligated to
contribute, for the benefit of any current or former employee, officer,
director, consultant or agent; and (ii) every other retirement or deferred
compensation
plan, bonus or incentive compensation plan or arrangement, stock option plan,
stock purchase plan, severance or vacation pay arrangement, or other fringe
benefit plan, program, agreement or arrangement through which Omega or any Omega
Subsidiary provide benefits for or on behalf of any current or former employee,
officer, director, consultant or agent, and, with respect to each such plan, the
amounts contributed but not yet paid to participants or beneficiaries
thereunder, and the amount of any contribution deficiencies with respect
thereto.
"Omega Common Stock" means the common stock of Omega, $5.00 par value.
"Omega Financial Statements" means the audited financial statements of
Omega for the years ended December 31, 2003, 2002 and 2001, together with all
notes to such financial statements, as included in Omega's annual report on Form
10-K filed with the SEC for the fiscal year ended December 31, 2003.
"Omega Schedule" means the schedule of exceptions and other information
prepared by Omega and delivered to Sun as described in the introductory
paragraph of Article 4.
"Omega Subsidiaries" means Omega Bank and the other Subsidiaries of Omega
referenced in Section 4.1(c).
"PBCL" means Pennsylvania Business Corporation Law.
"Person" means an individual, partnership (general or limited),
corporation, joint venture, business trust, limited liability company,
cooperative association or other form of business organization, trust, estate or
any other entity.
"Per Share Merger Consideration" means either the Cash Merger
Consideration or Stock Merger Consideration.
"Proceeding" means any proceeding, action, claim, suit, arbitration,
mediation, investigation or inquiry by or before any Governmental Authority.
"Prospectus/Proxy" means the combined prospectus and proxy statement
constituting the prospectus for the issuance of the Omega Common Stock as the
Stock Merger Consideration pursuant to this Agreement and also constituting the
proxy statement sent to the shareholders of Omega and Sun to solicit their votes
on the approval of the Merger, as the same is included in the Registration
Statement, as declared effective by the SEC, together with any supplement or
amendment thereto included as part of any post-effective amendment.
"Registration Statement" means the Securities Act registration statement
on Form S-4 as filed with the SEC in order to register the offering of the Omega
Common Stock constituting the offering of the aggregate Stock Merger
Consideration, together with all filed amendments to such registration
statement.
"SEC" means the United States 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.
"Securities Laws" means the Securities Act and the Exchange Act.
"Sentry Plans" means the Sentry Trust Company 1997 Stock Incentive Plan,
as amended, and the Sentry Trust Company 1999 Stock Incentive Plan assumed by
Sun in connection with the acquisition of Sentry Trust Company pursuant to that
certain Agreement and Plan of Reorganization dated as of April 23, 2003, as
amended, by and among Sun, Sun Interim Trust Company (In Organization), Sentry
Trust Company and Patriot Federal Credit Union.
"Shareholder Materials" means a letter of transmittal, an instruction
sheet and a return mailing envelope sent or made available to Sun Shareholders
who have not duly submitted the certificates for shares of Sun Common Stock by
the Election Deadline.
"Shares" means the shares of Omega Common Stock issued, or to be issued,
to Sun Shareholders as consideration for the Merger pursuant to this Agreement.
"Software" means computer programs, whether in source code or object code
form (including any and all software implementation of algorithms, models and
methodologies), databases and compilations (including any and all data and
collections of data), and all documentation (including user manuals and training
materials) related to the foregoing.
"Stock Election" means the election by a Sun Shareholder to receive the
Stock Merger Consideration for such Shareholder's shares of Sun Common Stock.
"Stock Election Shares" means shares of Sun Common Stock as to which a
Stock Election has been made.
"Stock Merger Consideration" means 0.664 shares of Omega Common Stock.
"Subsidiary" means, with respect to a Person, a corporation, partnership,
limited liability company or other business entity in which such Person owns,
directly or indirectly, 50% or more of any class of equity securities or a
comparable percentage equity ownership interest.
"SunBank" means SunBank, a Pennsylvania state-chartered bank.
"Sun Common Stock" means the common stock of Sun, no par value.
"Sun Financial Statements" means the audited financial statements of Sun
for the years ended December 31, 2003, 2002 and 2001, together with all notes to
such financial statements, as included in Sun's annual report on Form 10-K filed
with the SEC for the fiscal year ended December 31, 2003.
"Sun Intellectual Property" means the Intellectual Property used in or
held for use in the conduct of the business of Sun or any Sun Subsidiary.
"Sun Real Property" means the real property owned, leased, rented,
occupied or operated by Sun or any Sun Subsidiary.
"Sun Schedule" means the schedule of exceptions and other information
prepared by Sun and delivered to Omega as described in the introductory
paragraph of Article 3.
"Sun Stock Options" mean options or other rights to purchase shares of Sun
Common Stock granted pursuant to (i) Sun's 1998 Stock Incentive Plan, 1998
Employee Stock Purchase Plan or 1998 Independent Directors Stock Option Plan,
each as approved by shareholders of Sun on April 23, 1998 or (ii) the Sentry
Plans.
"Sun Shareholder" means a record holder of one or more shares of Sun
Common Stock.
"Sun Subsidiaries" means SunBank and any other Subsidiaries of Sun,
including, without limitation, the Subsidiaries identified on Section 3.1(c) to
the Sun Schedule.
"Superior Proposal" means an unsolicited, bona fide proposal to enter into
an Acquisition Transaction that the board of directors of Sun determines in its
good faith business judgment (after consultation with its financial advisors and
legal counsel) (i) would result in a transaction that is more favorable to its
shareholders, from a financial point of view, and its other stakeholders than
the transactions contemplated by this Agreement, (ii) that the Person proposing
such Acquisition Transaction is reasonably likely to have or obtain, any
necessary funds or customary commitments to provide any funds necessary to
consummate such Acquisition Proposal, and (iii) that any Consents required in
order to consummate such Acquisition Transaction are reasonably likely to be
obtained; provided, however, that, for the purposes of this definition, the term
"Acquisition Transaction" shall have the meaning ascribed to it herein except
that the references therein to 10% and 25% shall be deemed to be a reference to
50%.
"Tax" means any federal, state, local or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental, customs duties, capital stock, franchise,
profits withholding, social security (or similar), unemployment, disability,
real property, personal property, sales, use, transfer, registration, value
added, alternative or add-on minimum, estimated, or other tax of any kind
whatsoever, including any interest, penalty, or addition thereto, whether
disputed or not.
"Tax Return" means any returns, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
NOW THEREFORE, in consideration of the foregoing premises and the mutual
representations, warranties, covenants and agreements herein contained and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the Parties agree as follows:
ARTICLE 1
TERMS OF THE MERGER
1.1 The Merger. Subject to the satisfaction (or lawful waiver) of each of
the conditions to the obligations of each Party specified herein, at the
Effective Time, Sun shall be merged with and into Omega, which latter
corporation shall survive the Merger and is referred to herein in such capacity
as the "Surviving Corporation." The Merger shall have the effects set forth here
and the provisions of the PBCL relating to mergers of corporate entities.
(a) Effects of the Merger. At the Effective Time, the separate
existence of Sun shall cease, and Omega, as the Surviving Corporation, shall
thereupon and thereafter possess all of the assets, rights, privileges,
appointments, powers, licenses, permits and franchises of the two merged
corporations, whether of a public or a private nature, and shall be subject to
all of the liabilities, restrictions, disabilities and duties of Sun. The Merger
is intended to be treated by the Parties as a reorganization within the meaning
of Section 368(a) of the Code.
(b) Transfer of Assets. At the Effective Time, all rights, assets,
licenses, permits, franchises and interests of Sun in and to every type of
property, whether real, personal, or mixed, whether tangible or intangible, and
choses in action shall be deemed to be vested in Omega as the Surviving
Corporation by virtue of the Merger becoming effective and without any deed or
other instrument or act of transfer whatsoever.
(c) Assumption of Liabilities. At the Effective Time, the Surviving
Corporation shall become and be liable for all debts, liabilities, obligations
and contracts of Sun whether the same shall be matured or unmatured; whether
accrued, absolute, contingent or otherwise; and whether or not reflected or
reserved against in the balance sheets, other financial statements, books of
account or records of Sun.
1.2 Articles of Incorporation, Bylaws, Directors, Officers and Name of the
Surviving Corporation.
(a) Articles of Incorporation. At and after the Effective Time, the
Articles of Incorporation of Omega, as in effect immediately prior to the
Effective Time, shall continue to be the Articles of Incorporation of Omega as
the Surviving Corporation, unless and until amended thereafter as provided by
Applicable Law and the terms of such Articles of Incorporation.
(b) Bylaws. At and after the Effective Time, the Bylaws of Omega, as in
effect immediately prior to the Effective Time, shall continue to be the Bylaws
of Omega as the Surviving Corporation, unless and until amended or repealed as
provided by Applicable Law, the Articles of Incorporation of Omega and such
Bylaws.
(c) Directors and Officers. The directors and officers of Omega in
office immediately prior to the Effective Time shall continue to be directors
and officers of the Surviving Corporation, to hold office as provided in the
Articles of Incorporation and Bylaws of the Surviving Corporation, unless and
until their successors shall have been elected or appointed and shall have
qualified or until they shall have been removed in the manner provided in said
Articles of Incorporation and Bylaws; provided, however, that the Board of
Directors of Omega shall appoint, as of the Effective Time, three directors of
Sun, as mutually agreed by Sun and Omega, as directors of Omega (each, a "Sun
Director"). Each Sun Director shall be appointed to one of the three classes of
directors of the Omega Board of Directors and shall serve the remaining term of
the class to which such Sun Director was appointed. The Omega Board of Directors
shall recommend, subject to its fiduciary duties, the nomination of each Sun
Director for election, by the shareholders of Omega, for one additional term of
three years after such Sun Director's initial term expires. If one or more Sun
Director is unable or unwilling to serve as a member of Omega's Board of
Directors, such person shall be replaced by another person
mutually selected by Omega and Sun who was a director of Sun immediately prior
to the Effective Time.
(d) SunBank Board of Directors; SunBank Advisory Board; Omega Bank
Board of Directors.
(i) For a period of two years following the Effective Time, Omega
shall offer the current directors of SunBank either seats on the SunBank Board
of Directors if SunBank has not been merged with Omega Bank or any other Omega
Subsidiary or, in the event that SunBank is merged with Omega Bank or any other
Omega Subsidiary, seats on a to-be-formed Advisory Board of SunBank (the
"Advisory Board") which shall, in either case, address and deal with issues in
the market area served by SunBank. For a period of one year following the
Effective Time, the members of the SunBank Board of Directors or the Advisory
Board, as applicable, will receive board fees (excluding any stock option
grants) for each meeting actually attended equal to the fees for each meeting
attended payable to the members of the SunBank Board of Directors immediately
prior to the Effective Time. Omega shall have the right to appoint one or more
representatives to seats on the SunBank Board of Directors and, if formed, the
Advisory Board, and/or to send one or representatives to attend meetings
thereof. After the Effective Time, the Board of Directors of SunBank and, if
formed, the Advisory Board, shall give Omega at least five (5) days notice of
the date, time and place of all meetings thereof.
(ii) In the event that SunBank is merged with Omega Bank or any
other Omega Subsidiary within two years of the Effective Time, the Board of
Directors of the entity surviving such merger ("Surviving Bank") shall appoint
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ (provided that he is then employed as an executive officer
of either Omega or Omega Bank) and three other directors of SunBank (each, a
"SunBank Director"), as mutually agreed by Omega and the directors of SunBank
immediately prior to the effectiveness of such merger, to serve on the Board of
Directors of Surviving Bank until the next election of directors of Surviving
Bank. The Board of Directors of Surviving Bank shall recommend, subject to its
fiduciary duties, the nomination of each SunBank Director for election as a
director of Surviving Bank for three additional terms of one year each after
such SunBank Director's initial term expires. If one or more SunBank Director is
unable or unwilling to serve as a member of Surviving Bank's Board of Directors,
such person shall be replaced by another person who was a director of SunBank
immediately prior to the Effective Time, as mutually selected by Omega and the
directors of SunBank immediately prior to the effectiveness of the merger of
SunBank with Omega Bank (or any other Omega Subsidiary). All directors described
in this Section 1.2(d)(ii) shall be entitled to the same fees and benefits as
other directors of Surviving Bank, but no director of Surviving Bank shall be
entitled to receive any directors fees while an employee of Surviving Bank.
(e) Fees. All directors described in Sections 1.2(c) shall be entitled
to the same fees and benefits as other directors of Omega, but no director of
Omega shall be entitled to receive any directors fees while an employee of
Omega.
(f) Name. The name of the Surviving Corporation following the Merger
shall be "Omega Financial Corporation."
1.3 Availability of Information. Promptly after the execution by the
Parties of this Agreement, each Party shall provide to the other Party, its
officers, employees, agents, and
representatives, access, on reasonable notice and during customary business
hours, to the books, records, properties and facilities of the Party and shall
use its best efforts to cause its officers, employees, agents and
representatives to cooperate with any of the reviewing Party's reasonable
requests for information.
1.4 Anti-dilution Provisions. In the event Omega changes the number of
shares of Omega Common Stock issued and outstanding prior to the Effective Time
as a result of a stock split, stock dividend, recapitalization or any other
distribution to shareholders of Omega, the Stock Merger Consideration shall be
proportionately adjusted; provided, however, that no such adjustments shall be
made for issuances of Omega Common Stock (a) under any benefit or compensatory
plan of Omega or any Omega Subsidiary, or (b) as consideration in connection
with an acquisition of a controlling interest in any Person (by merger, business
combination or otherwise), or all or a portion of a Person's business or assets
by Omega or any Omega Subsidiary.
ARTICLE 2
DESCRIPTION OF TRANSACTION
2.1 Terms of the Merger.
(a) Satisfaction of Conditions to Closing. After the transactions
contemplated herein have been approved by the shareholders of Omega and Sun and
each other condition to the obligations of the Parties hereto, other than those
conditions which are to be satisfied by delivery of documents by either Party to
the other Party, has been satisfied or, if lawfully permitted, waived by the
Party entitled to the benefits thereof, the Closing will be held on the date and
at the time of day and place referred to in this Agreement. At the Closing, the
Parties shall deliver the certificates, letters and opinions which constitute
conditions to effecting the Merger and each Party will provide the other Party
with such proof or indication of satisfaction of the conditions to the
obligations of such other Party to consummate the Merger as such other Party may
reasonably require. If all conditions to the obligations of each Party shall
have been satisfied or lawfully waived by the Party entitled to the benefits
thereof, the Parties shall, at the Closing, duly execute the Articles of Merger
and such other documents as are required to be filed with the Secretary of State
of the Commonwealth of Pennsylvania to effect the Merger, and promptly
thereafter Sun and Omega shall take all steps necessary or desirable to
consummate the Merger in accordance with all Applicable Laws. The Parties shall
thereupon take such other and further actions as may be required by Applicable
Law or this Agreement to consummate the transactions contemplated herein.
(b) Effective Time. Upon the satisfaction of all conditions to Closing
set forth herein, the Merger shall become effective on the date and at the time
of filing of the Articles of Merger with the Secretary of State of the
Commonwealth of Pennsylvania or at such later date and/or time as may be agreed
upon by the Parties and set forth in the Articles of Merger so filed.
2.2 Conversion of Stock.
(a) Consideration. At the Effective Time, each share of Sun Common
Stock then issued and outstanding (other than shares held directly or indirectly
by Omega, excluding shares held in a fiduciary capacity or in satisfaction of a
debt previously contracted) shall, by virtue of the Merger and without any
action on the part of the holder thereof, be converted into and represent the
right to receive from Omega the Cash Merger Consideration and/or Stock Merger
Consideration of Omega constituting the Per Share Merger Consideration;
provided, however, that any shares of Sun Common Stock that are owned by any
trust created under Sun's Defined Contribution Plan or any other benefit plan
and that have not been contributed or awarded to employees or directors at the
Effective Time shall be canceled and no payment therefor shall be made. Omega
covenants and agrees to pay the Cash Merger Consideration and the Stock Merger
Consideration, as applicable, to Sun Shareholders, subject to the satisfaction
of the conditions set forth in this Agreement. As of the Effective Time, each
share of the Sun Common Stock held directly or indirectly by Omega, excluding
shares held in a fiduciary capacity or in satisfaction of a debt previously
contracted, shall be canceled, retired and cease to exist, and no exchange or
payment shall be made with respect thereto.
(b) Cash or Stock Merger Consideration. Each Sun Shareholder shall have
the right to elect to receive the Cash Merger Consideration or the Stock Merger
Consideration as to each share of Sun Common Stock owned by such shareholder,
subject however to the election, allocation, adjustment and proration procedures
set forth below.
(c) Fractional Shares. Fractional shares of Omega Common Stock shall
not be issued and each holder of Sun Common Stock who would otherwise be
entitled to receive any such fractional shares (taking into account all share
amounts to which such holder is otherwise entitled hereunder) shall receive cash
(without interest) in lieu thereof in an amount equal to the fraction of the
share of Omega Common Stock to which such holder would otherwise be entitled
multiplied by the Determination Price. No Person entitled to receive a
fractional share of Omega Common Stock will be entitled to dividends, voting
rights or any other rights of a shareholder of Omega with respect to such
fractional share.
(d) Treatment of Options.
(i) At the Effective Time, each holder of an option
(collectively, "Sun Options") to purchase shares of Sun Common Stock that (i) is
outstanding at the Effective Time, (ii) has been granted pursuant to Sun's 1998
Stock Incentive Plan or 1998 Independent Directors Stock Option Plan or the
Sentry Plans; and (iii) would otherwise survive the Effective Time shall be
entitled to receive, in substitution for such Sun Option, an option to acquire
shares of Omega Common Stock on the terms set forth below (each Sun Option as
substituted, an "Omega Option").
(ii) An Omega Option shall be a stock option to acquire shares
of Omega Common Stock with the following terms: (i) the number of shares of
Omega Common Stock which may be acquired pursuant to such Omega Option shall be
equal to the product of the number of shares of Sun Common Stock covered by the
corresponding Sun Option multiplied by 0.664, provided that any fractional share
of Omega Common Stock resulting from such multiplication shall be rounded down
to the nearest whole share; (ii) the exercise price per share of Omega Common
Stock issuable upon exercise of the Omega Option shall be equal to the exercise
price of the corresponding Sun Option immediately prior to the conversion
thereof to an
Omega Option, divided by 0.664, provided that such exercise price shall be
rounded down to the nearest whole cent; (iii) the duration and other terms of
such Omega Option shall be identical to the duration and other terms of the
corresponding Sun Option immediately prior to the conversion thereof to an Omega
Option, except that all references to Sun shall be deemed to be references to
Omega and its affiliates, where the context so requires and shall remain
exercisable until the stated expiration date of the corresponding Sun Option;
(iv) Omega shall assume such Sun Option, whether vested or not vested, as
contemplated by the Code; and (v) to the extent Sun Options qualify as incentive
stock options under Section 422 of the Code, the Omega Options exchanged
therefor shall also so qualify.
(iii) On or within 15 days after the Effective Time, Omega
shall take appropriate action to reserve for issuance and, if not previously
registered pursuant to the Securities Act, register the number of shares of
Omega Common Stock necessary to satisfy Omega's obligations with respect to the
issuance of Omega Common Stock pursuant to the exercise of Omega Options.
(e) Calculation Schedule. The calculations of the respective amounts of
cash and Omega Common Stock payable and issuable pursuant to the terms of this
Agreement shall be calculated by the Exchange Agent and approved by Omega and
Sun as soon as practicable and no later than the Effective Time.
2.3 Election and Allocation Procedures.
(a) Election by Sun Shareholders. Subject to and in accordance with the
allocation and election procedures set forth herein, each Sun Shareholder shall,
prior to the Election Deadline, specify (i) the number of whole shares of Sun
Common Stock held by such Shareholder as to which such Shareholder shall desire
to receive the Cash Merger Consideration, and (ii) the number of whole shares of
Sun Common Stock held by such Shareholder as to which such Shareholder shall
desire to receive the Stock Merger Consideration.
(b) Allocation of Cash and Stock. Notwithstanding anything herein to
the contrary, and after taking into consideration cash paid in lieu of
fractional shares, and after excluding shares for which no consideration is
payable as described in Section 2.2(a), 80% of the outstanding Sun Common Stock
shall be exchanged for Omega Common Stock and all remaining outstanding Sun
Common Stock shall be converted into the right to receive cash. Such result
shall be accomplished through the following adjustments to the elections made by
Sun Shareholders, and by giving due consideration to cash payments for
fractional shares:
(1) If the number of Cash Election Shares is in excess of 20%
of the Aggregate Shares, then (i) Non-Electing Shares shall be deemed to be
Stock Election Shares, and (ii)(A) Cash Election Shares of each Sun Shareholder
who made the Cash Election shall be reduced pro rata by multiplying the number
of Cash Election Shares of such Sun Shareholder by a fraction, the numerator of
which is the number of shares of Sun Common Stock equal to 20% of the Aggregate
Shares, and the denominator of which is the aggregate number of Cash Election
Shares of all Sun Shareholders, and (B) the shares of such Sun Shareholder
representing the difference between such Sun Shareholder's initial Cash Election
Shares and such Sun Shareholder's reduced Cash Election Shares pursuant to
clause (A) shall be converted into and be deemed to be Stock Election Shares.
(2) If the number of Stock Election Shares is in excess of 80%
of the Aggregate Shares, then (i) Non-Electing Shares shall be deemed to be Cash
Election Shares and (ii) (A) Stock Election Shares of each Sun Shareholder shall
be reduced pro rata by multiplying the number of Stock Election Shares of such
Sun Shareholder by a fraction, the numerator of which is the number of shares of
Sun Common Stock equal to 80% of the Aggregate Shares and the denominator of
which is the aggregate number of Stock Election Shares of all Sun Shareholders,
and (B) the shares of such Sun Shareholder representing the difference between
such Sun Shareholder's initial Stock Election Shares and such Sun Shareholder's
reduced Stock Election Shares pursuant to clause (A) shall be converted into and
be deemed to be Cash Election Shares.
(3) If the number of Cash Election Shares is less than 20% of
the Aggregate Shares and the number of Stock Election Shares is less than 80% of
the Aggregate Shares, then (i) there shall be no adjustment to the elections
made by electing Sun Shareholders, and (ii) Non-Electing Shares of each Sun
Shareholder shall be treated as Stock Elections Shares and/or as Cash Election
Shares in proportion to the respective amounts by which the Cash Election Shares
and the Stock Election Shares are less than the 20% and 80% limits,
respectively.
(c) Receipt of Payment. After taking into account the foregoing
adjustment provisions, each Cash Election Share (including those deemed to be
Cash Election Shares) shall receive in the Merger the Cash Merger Consideration
pursuant to Section 2.5 and each Stock Election Share (including those deemed to
be Stock Election Shares) shall receive in the Merger the Stock Merger
Consideration (and cash in lieu of fractional shares) pursuant to Section 2.5.
2.4 Election Procedures.
(a) The Election Form shall be distributed to each Sun Shareholder at
such time as Sun and Omega shall determine and shall specify the Election
Deadline.
(b) Elections shall be made by Sun Shareholders by mailing to the
Exchange Agent a completed Election Form. To be effective, an Election Form must
be properly completed, signed and submitted to the Exchange Agent accompanied by
certificates representing the shares of Sun Common Stock as to which the
election is being made (or by an appropriate guaranty of delivery by a
commercial bank or trust company in the United States or a member of a
registered national security exchange or the National Association of Securities
Dealers, Inc.), or by evidence that such certificates have been lost, stolen or
destroyed accompanied by such security or indemnity as shall reasonably be
requested by Omega. An Election Form and accompanying share certificates must be
received by the Exchange Agent by the close of business on the Election
Deadline. An election may be changed or revoked but only by written notice
received by the Exchange Agent prior to the Election Deadline including, in the
case of a change, a properly completed revised Election Form.
(c) Omega, or the Exchange Agent if so designated by Omega, shall
determine in the reasonable exercise of discretion, whether the Election Forms
have been properly completed, signed and submitted or changed or revoked and may
disregard immaterial defects in Election Forms. Omega or the Exchange Agent, as
applicable, will notify the applicable Sun Shareholders of any defect in an
Election Form by regular United States mail or
such other method of notice which can reasonably be expected to be at least as
prompt as notice by regular United States mail.
(d) For the purposes hereof, a Sun Shareholder who does not submit an
effective Election Form to the Exchange Agent prior to the Election Deadline
shall be deemed to have made a Non-Election.
(e) In the event that this Agreement is terminated pursuant to the
provisions hereof and any certificates for shares have been transmitted to the
Exchange Agent pursuant to the provisions hereof, Omega and Sun shall cause the
Exchange Agent to return such certificates to the Person submitting the same
promptly after such termination.
2.5 Mechanics of Payment of Consideration.
(a) Payment of the Merger Consideration. Omega shall deposit with the
Exchange Agent sufficient certificates representing Omega Common Stock and
sufficient cash to enable the Exchange Agent to distribute the Aggregate
Consideration as determined pursuant to this Agreement. Within three business
days after the Effective Time, the Exchange Agent shall distribute, to all Sun
Shareholders who have properly submitted Election Forms together with their
share certificates or proper proofs with respect to lost certificates, the Cash
Merger Consideration and the Stock Merger Consideration to which each such Sun
Shareholder is entitled. Within five business days after receiving properly
completed Shareholder Materials, as set forth in Section 2.5(b), from any Sun
Shareholder who made a Non-Election, the Exchange Agent shall likewise
distribute to such Sun Shareholder the Cash Merger Consideration or Stock Merger
Consideration, or a combination of both, which such Sun Shareholder is entitled
to receive pursuant to this Agreement.
(b) Submission Procedures for Non-Electing Shares. Within five business
days after the Effective Time, the Exchange Agent shall send the Shareholder
Materials to each Sun Shareholder who has made a Non-Election. All Shareholder
Materials shall be sent by first class United States mail to such Sun
Shareholders at the addresses set forth on the official shareholder records of
Sun. Omega shall also make appropriate provisions with the Exchange Agent to
enable Sun Shareholders to obtain the Shareholder Materials from, and to deliver
the certificates formerly representing shares of Sun Common Stock to, the
Exchange Agent in person, commencing on or not later than the second business
day following the Effective Time. Upon receipt of the appropriate Shareholder
Materials, together with the certificates formerly evidencing and representing
all of the shares of Sun Common Stock which were validly held of record by such
Sun Shareholder, the Exchange Agent shall take prompt action to process such
certificates formerly evidencing and representing shares of Sun Common Stock
received by it (including the prompt return of any defective submissions with
instructions as to those actions which may be necessary to remedy any defects)
and to mail to the Sun Shareholders in exchange for the certificate(s)
surrendered by them, the consideration to be issued or paid for such Sun
Shareholder's shares pursuant to the terms hereof.
(c) Rights Appurtenant to Certificates Lost Certificates. After the
Effective Time and until properly surrendered to the Exchange Agent, each
outstanding certificate or certificates which formerly evidenced and represented
Sun Common Stock shall be deemed for all purposes to represent and evidence only
the right to receive the aggregate Cash Merger
Consideration or aggregate Stock Merger Consideration into which such Sun Common
Stock was converted. The aggregate Cash Merger Consideration or aggregate Stock
Merger Consideration shall not be paid to the record holder of any Sun Common
Stock until the certificate therefor is surrendered in the manner required. Each
Sun Shareholder will be responsible for all federal, state and local taxes which
may be incurred by him or her on account of his or her receipt of the
consideration to be paid in the Merger. A Sun Shareholder whose certificate(s)
have been lost or destroyed may nevertheless, subject to the provisions of this
Article, receive the aggregate Cash Merger Consideration or aggregate Stock
Merger Consideration to which such Sun Shareholder is entitled, provided that
such Sun Shareholder must first deliver to Omega or to the Exchange Agent: (i) a
sworn statement certifying such loss or destruction and specifying the
circumstances thereof, and (ii) a lost instrument bond in form satisfactory to
Omega and the Exchange Agent which has been duly executed by a corporate surety
satisfactory to Omega and the Exchange Agent, indemnifying the Surviving
Corporation, Omega, the Exchange Agent (and their respective successors) to
their satisfaction against any loss or expense which any of them may incur as a
result of such lost or destroyed certificates being presented. Any costs or
expenses which may arise from such replacement procedure, including the premium
on the lost instrument bond, shall be paid by the Sun Shareholder.
(d) Stock Transfer Books. At the Effective Time, the stock transfer
books of Sun shall be closed and no transfer of shares of Sun Common Stock shall
be made thereafter.
(e) Right to Receive Dividends on Omega Common Stock. Each Sun
Shareholder who is entitled to receive the Stock Merger Consideration shall be
entitled, to the same extent as other holders of Omega Common Stock, to payments
of dividends, if any, on Omega Common Stock if the record date for such dividend
is on or after the Closing Date; provided, however, that such dividends shall be
paid, without interest, only after the Sun Shareholder submits his or her
certificate for Sun Common Stock pursuant to Sections 2.4(b) or 2.5(b) or
complies with the requirements of Section 2.5(c) with respect to lost stock
certificates. All dividends not paid on the dividend payment date pursuant to
this Section shall be paid by Omega to the Exchange Agent, which shall remit
them to the applicable shareholder upon satisfaction of the conditions set forth
in this Section 2.5(e).
2.6 Time and Place of Closing. Unless this Agreement shall have been
terminated and the transactions herein contemplated shall have been abandoned
pursuant to Section 8.1, and subject to the satisfaction or waiver of the
conditions set forth in Article 7, the Closing will take place at 10:00 a.m. on
the Closing Date, at Omega's corporate offices in State College, Pennsylvania,
unless another date, time or place is agreed to in writing by the parties
hereto.
2.7 Voting Agreements. As a material inducement for Omega entering into
this Agreement, simultaneously with the execution of this Agreement by the
Parties, each director and executive officer of Sun shall enter into a Voting
Agreement.
2.8 Reservation of Shares. Omega agrees that, prior to the Effective Time,
it will take appropriate action to reserve a sufficient number of authorized but
unissued shares of Omega Common Stock to be issued as Stock Merger Consideration
in accordance with this Agreement.
2.9 Certain Actions Relating to Rule 16b-3. Prior to the Effective Time,
Omega and Sun shall take all such steps as may be required to cause any
dispositions of shares of Sun
Common Stock (including derivative securities with respect to such shares)
resulting from the transactions contemplated by Article 2 of this Agreement by
each individual who is subject to the reporting requirements of Section 16(a) of
the Exchange Act with respect to Sun to be exempt under Rule 16b-3 promulgated
under the Exchange Act.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SUN
Except as otherwise disclosed in one or more schedules numbered to
correspond to the following Sections of Article 3, and delivered concurrently
with this Agreement, both as of the date hereof and as of the Effective Time,
Sun hereby represents and warrants to Omega as follows:
3.1 Organization and Qualification of Sun and Sun Subsidiaries.
(a) Sun is a corporation duly organized, validly existing and in good
standing under the laws of the Commonwealth of Pennsylvania and (i) has all
requisite corporate power and authority to own, operate and lease its properties
and assets and to carry on its business as it is currently being conducted; (ii)
is in good standing and is duly qualified and licensed to conduct business in
each jurisdiction where the character of its properties owned or held under
lease or the nature of its business is such that a failure to be so qualified or
licensed would have, individually or in the aggregate, a Material Adverse
Effect; and (iii) is a financial holding company under the regulations of the
FRB.
(b) SunBank is a Pennsylvania state-chartered, non-member bank, duly
organized, validly existing and in good standing under the laws of the
appropriate jurisdiction in which it was organized and engages only in
activities (and holds properties and assets only of the types) permitted by the
laws of the Commonwealth of Pennsylvania, the United States, the rules and
regulations promulgated by the Banking Department and the FDIC for insured
depository institutions. SunBank's deposit accounts are insured by the Bank
Insurance Fund or Savings Association Insurance Fund as administered by the FDIC
to the fullest extent permitted under Applicable Law, and all premiums and
assessments required to be paid in connection therewith have been paid when due.
SunBank is the sole banking Subsidiary of Sun.
(c) Section 3.1(c) of the Sun Schedule specifically identifies each
Subsidiary of Sun and its jurisdiction of formation. Each Sun Subsidiary (other
than SunBank) is duly organized, validly existing and in good standing under the
laws of the appropriate jurisdiction in which it is incorporated or organized
and (i) has all requisite corporate power and authority to own, operate and
lease its properties and assets and to carry on its business as it is currently
being conducted; and (ii) is in good standing and is duly qualified and licensed
to conduct business in each jurisdiction where the character of its properties
owned or held under lease or the nature of its business is such that a failure
to be so qualified or licensed would have, individually or in the aggregate, a
Material Adverse Effect.
3.2 Authorization, Execution and Delivery; Agreement Not in Breach
(a) Sun has all requisite corporate power and authority to execute
and deliver this Agreement and, subject to the approval of Sun Shareholders and
the Banking Approvals, to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the proposed
transactions have been duly authorized by the requisite vote of Sun's Board of
Directors and no other corporate proceedings of the part of Sun or any Sun
Subsidiary are necessary to authorize the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby, except
for the approval of the holders of Sun Common Stock entitled to vote thereon.
This Agreement and all other agreements and instruments herein contemplated to
be executed by Sun have been (or upon execution will have been) duly executed
and delivered by Sun and constitute (or upon execution will constitute) legal,
valid and enforceable obligations of Sun, subject, as to enforceability, to
applicable bankruptcy, insolvency, receivership, conservatorship,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and to the application of equitable principles.
(b) The execution and delivery of this Agreement, the consummation
of the transactions contemplated hereby, and the fulfillment of the terms hereof
will not result in a material violation or material breach of any of the terms
or provisions of, or constitute a material default under (or an event which,
with the passage of time or the giving of notice, or both, would constitute such
a default under), or conflict with, or permit the acceleration of, any material
obligation under, any mortgage, lease, covenant, agreement, indenture or other
instrument to which Sun or any Sun Subsidiary is a party or by which any of them
or their respective properties or assets is bound, the Charter Documents of Sun
or any Sun Subsidiary; or any judgment, decree, order, regulatory letter of
understanding or award of any Governmental Authority by which Sun or any Sun
Subsidiary, or their respective properties or assets, is bound, or any material
Consent, permit, concession, grant, franchise, license, law, statute, ordinance,
rule or regulation applicable to Sun or any Sun Subsidiary or the properties or
assets of any of them; or result in the creation of any material lien, claim,
security interest, encumbrance, charge, restriction or right of any third party
of any kind whatsoever upon the properties or assets of Sun or any Sun
Subsidiary; except that the approval of Sun Shareholders and the Banking
Approvals must be obtained in order for Sun to consummate the Merger.
3.3 No Legal Bar. Neither Sun nor any Sun Subsidiary is a party to, or
subject to or bound by, any agreement, judgment, order, letter of understanding,
writ, prohibition, injunction or decree of any Governmental Authority, or any
Applicable Law which would prevent the execution of this Agreement by Sun, the
delivery hereof to Omega or the consummation of the transactions contemplated
hereby (except for such laws as require that the approval of Sun Shareholders
and the Banking Approvals be obtained), and no Proceeding is pending against Sun
or any Sun Subsidiary in which the validity of this Agreement, any of the
transactions contemplated hereby or any action which has been taken by either of
the Parties in connection herewith, or, in connection with any of the
transactions contemplated hereby, is at issue.
3.4 Consents and Approvals. Except for (a) the Banking Approvals, (b)
the filing with the SEC and declaration of effectiveness by the SEC of the
Registration Statement, (c) the approval of this Agreement by the requisite vote
of the shareholders of Omega and Sun, (d) the approval of the listing of Omega
Common Stock to be issued in the Merger on the NASDAQ National Market, (e) such
filings and approvals as are required to be made or obtained under the
securities or "Blue Sky" laws of various states in connection with the issuance
of the shares of
Omega Common Stock pursuant to this Agreement and (f) such Consents as may be
set forth in Section 3.4 of the Sun Schedule, no Consents of any Governmental
Authority or any other third Person are necessary in connection with the
execution and delivery by Sun of this Agreement or the consummation by Sun of
the Merger and the other transactions contemplated hereby, except where the
failure to obtain such Consents would not reasonably be expected to have a
Material Adverse Effect.
3.5 Licenses, Franchises and Permits. Sun and each Sun Subsidiary holds
all licenses, franchises, permits and authorizations necessary for the lawful
conduct of their respective businesses, except where the failure to hold such
licenses, franchises, permits and authorizations would not reasonably be
expected to have a Material Adverse Effect. All of such licenses, franchises,
permits and authorizations are in full force and effect and are transferable to
a successor to Sun or any Sun Subsidiary in connection with or subsequent to the
Closing of the transactions contemplated herein without any Consent, other than
the Banking Approvals, subject to the legal right and authority of such
successor to engage in the activities licensed, franchised, permitted or
authorized thereby and except where the failure of such licenses, franchises,
permits and authorizations to be in full force and effect and transferable to a
successor to Sun or a Sun Subsidiary would not reasonably be expected to have a
Material Adverse Effect. Neither Sun nor any Sun Subsidiary has received notice
of any Proceeding for the suspension or revocation of any such license,
franchise, permit, or authorization and no such Proceeding is pending or, to
Sun's knowledge, has been threatened by any Governmental Authority.
3.6 Charter Documents. Sun has provided to Omega true, correct and
complete copies of the Charter Documents of Sun and each Sun Subsidiary.
3.7 Sun Financial Statements. Except as disclosed on Section 3.7 of the
Sun Schedule, the consolidated statements of financial condition contained in
the Sun Financial Statements fairly present the consolidated financial condition
of Sun and the Sun Subsidiaries as of the respective dates set forth therein,
and the related consolidated statements of operations, changes in shareholders'
equity and cash flows in the Sun Financial Statements fairly present the results
of the consolidated operations, changes in shareholders' equity and cash flows
of Sun and the Sun Subsidiaries for the respective periods or as of the
respective dates set forth therein, in each case in conformity with GAAP
consistently applied, it being understood that Sun's interim financial
statements are not audited, not prepared with related notes and are subject to
normal year-end adjustments.
3.8 Absence of Certain Changes. Except as disclosed on Section 3.8 of
the Sun Schedule and provided for or contemplated in this Agreement, since the
Balance Sheet Date there has not been:
(a) any material transaction by Sun or any Sun Subsidiary other than
in the ordinary course of business and in conformity with past practice;
(b) a change in the business, property, assets (including loan
portfolios), liabilities (whether absolute, accrued, contingent or otherwise),
operations, liquidity, income, condition or net worth of Sun or any Sun
Subsidiary that has had, or would reasonably be expected to have, a Material
Adverse Effect;
(c) any damage, destruction or loss, whether or not covered by
insurance, which has had or may have a Material Adverse Effect;
(d) any acquisition or disposition by Sun or any Sun Subsidiary of
any property or asset, whether real or personal, having a fair market value,
singularly or in the aggregate, in an amount greater than $100,000, other than
acquisitions or dispositions made in the ordinary course of business;
(e) any mortgage, pledge or subjection to lien, charge or
encumbrance of any kind on any of the respective properties or assets of Sun or
any Sun Subsidiary, except to secure extensions of credit in the ordinary course
of business and in conformity with past practice (pledges of and liens on assets
to secure Federal Home Loan Bank or Federal Reserve Bank advances being deemed
both in the ordinary course of business and consistent with past practice);
(f) any amendment, modification or termination of any contract or
agreement (other than contracts or agreements related to loans made by SunBank)
in excess of $75,000, relating to Sun or any Sun Subsidiary, or to which any Sun
or any Sun Subsidiary is a party, which would reasonably be expected to have a
Material Adverse Effect;
(g) any increase in, or commitment to increase, the compensation
payable or to become payable to any officer, director, employee or agent of Sun
or any Sun Subsidiary, or any bonus payment, stock option award, restricted
stock award or similar arrangement made to or with any of such officers,
directors, employees or agents, other than routine increases made in the
ordinary course of business and consistent with past practice and not exceeding
the lesser of five percent (5%) per annum or $15,000 for any of them
individually;
(h) any incurring of, assumption of, or taking of, by Sun or any Sun
Subsidiary, any property subject to, any liability in excess of $75,000, except
for liabilities incurred or assumed or property taken subsequent to the Balance
Sheet Date in the ordinary course of business and in conformity with past
practice; or
(i) any material alteration in the manner of keeping the books,
accounts or records of Sun or any Sun Subsidiary, or in the accounting policies
or practices therein reflected.
3.9 Deposits. None of the SunBank deposits (consisting of certificates
of deposit, savings accounts, NOW accounts, money market accounts and checking
accounts), is a brokered deposit.
3.10 Properties. Section 3.10 of the Sun Schedule contains a true and
complete list of all material Sun Real Property. Except as adequately reserved
against in the Sun Financial Statements or disposed of since the Balance Sheet
Date in the ordinary course of business, Sun and each Sun Subsidiary has good
and marketable title, free and clear of all material liens, encumbrances,
charges, defaults, or equities of whatever character to all of the material
properties and assets, real or personal, reflected in the Sun Financial
Statements as being owned by Sun or any Sun Subsidiary as of the dates thereof.
All buildings, and all fixtures, equipment, and other property and assets that
are material to the business of Sun and the Sun Subsidiaries on a consolidated
basis, held under leases or subleases by Sun or any Sun Subsidiary, are held
under
valid instruments enforceable in accordance with their respective terms (except
as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or other laws affecting the enforcement of
creditors' rights generally, or by equitable principles), and neither Sun nor
any Sun Subsidiary nor, to Sun's knowledge, any other party thereto is in
material breach or material default thereunder.
3.11 Intellectual Property. Section 3.11 of the Sun Schedule contains a
true and complete list of all material Sun Intellectual Property. Either Sun or
one of the Sun Subsidiaries own or have a valid license to use all Sun
Intellectual Property, free and clear of all liens, encumbrances, royalty or
other payment obligations (except for royalties or payments with respect to
off-the-shelf Software at standard commercial rates). Sun Intellectual Property
constitutes all of the Intellectual Property necessary to carry on the business
of Sun and the Sun Subsidiaries as currently conducted, except where the failure
to have such property would not reasonably be expected to have a Material
Adverse Effect. The Sun Intellectual Property is valid and has not been
cancelled, forfeited, expired or abandoned, and neither Sun nor any Sun
Subsidiary has received any notice challenging the validity or enforceability of
Sun Intellectual Property, other than as would not reasonably be expected to
have a Material Adverse Effect. To Sun's knowledge, the conduct of the business
of Sun and the Sun Subsidiaries does not violate, misappropriate or infringe
upon the Intellectual Property rights of any third Person. The consummation of
the transactions contemplated by this Agreement will not result in the material
loss or material impairment of the right of Sun or any Sun Subsidiary to own or
use any of the Sun Intellectual Property, and the Surviving Company and its
Subsidiaries will have substantially the same rights to own or use the Sun
Intellectual Property following the consummation of such transactions as Sun and
the Sun Subsidiaries had prior to the consummation of such transactions, except
such rights as would not reasonably be expected to have a Material Adverse
Effect.
3.12 Condition of Fixed Assets and Equipment. Section 3.12 of the Sun
Schedule contains a list of all material fixed assets and equipment used in the
conduct of the business of Sun and the Sun Subsidiaries as of the Balance Sheet
Date. Each such item of fixed assets and equipment having a net book value in
excess of $75,000 is, to Sun's knowledge, in good operating condition and
repair, normal wear and tear excepted.
3.13 Tax Matters.
(a) All federal, state and local Tax Returns required to be filed by
or on behalf of Sun or any Sun Subsidiary have been timely filed, or Sun or any
applicable Sun Subsidiary has received an appropriate extension therefor. All
Tax Returns filed are, and the information contained therein is, complete and
accurate in all material respects. All Tax obligations reflected in such returns
have been timely paid. Except as described in Section 3.13(a) of the Sun
Schedule, neither Sun nor any Sun Subsidiary is currently the beneficiary of any
extension of time within which to file any Tax Return. As of the date of this
Agreement, there is no audit examination, deficiency, or refund litigation or
matter in controversy with respect to any Taxes that might reasonably be
expected to result in a determination materially adverse to Sun or any Sun
Subsidiary except as fully reserved for in the Sun Financial Statements. All
Taxes, interest, additions, and penalties due with respect to completed and
settled examinations or concluded litigation have been paid;
(b) Neither Sun nor any Sun Subsidiary has executed an extension or
waiver of any statute of limitations on the assessment or collection of any Tax
due that is currently in effect;
(c) Adequate provision for any federal, state or local Taxes due or
to become due by Sun or any Sun Subsidiary for all periods through and including
December 31, 2003, has been made and is reflected on the December 31, 2003
financial statements included in Sun's Report on Form 10-K for the period then
ending, and has been and will continue to be made with respect to periods ending
after December 31, 2003 on a basis consistent with its historic Tax accounting
practices and GAAP;
(d) Deferred taxes of Sun and each Sun Subsidiary have been and will
be provided for in accordance with GAAP;
(e) Neither the U.S. Internal Revenue Service nor any state, local
or other taxing authority is now asserting or threatening to assert against Sun
or any Sun Subsidiary any deficiency or claim for additional Taxes, or interest
thereon or penalties in connection therewith. All income, payroll, withholding,
property, excise, sales, use, franchise and transfer taxes, and all other Taxes,
charges, fees, levies or other assessments, imposed upon Sun or any Sun
Subsidiary by the United States or by any state, municipality, subdivision or
instrumentality of the United States or by any other taxing authority, including
all interest, penalties or additions attributable thereto, which are due and
payable by Sun or any Sun Subsidiary, either have been paid in full or have been
properly accrued and reflected in the Sun Financial Statements;
(f) Except as set forth in Section 3.13(f) of the Sun Schedule,
neither Sun nor any Sun Subsidiary has made any material payments, is obligated
to make any material payments, or is a party to any agreement that under certain
circumstances could obligate it to make any material payments that will not be
deductible under Section 280G of the Code; and
(g) Neither Sun nor any Sun Subsidiary (i) is a party to any Tax
allocation or sharing agreement, (ii) has been a member of an affiliated group
filing a consolidated federal income Tax Return (other than a group the common
parent of which was Sun), or (iii) has any Tax liability for any Person (other
than Sun or any Sun Subsidiary) under Treasury Regulations Section 1.1502-6 (or
any similar provision of state, local or foreign law), as a transferee or
successor, by contract, or otherwise.
3.14 Litigation. There is no Proceeding pending against Sun or any Sun
Subsidiary, or to Sun's knowledge, threatened against or affecting Sun or any
Sun Subsidiary or any of their assets, that may, if decided against Sun or any
Sun Subsidiary, have a Material Adverse Effect.
3.15 Environmental Matters. To Sun's knowledge, the Sun Real Property
is and has been in compliance with all Environmental Laws, and there are no
conditions existing currently which would subject Sun or any Sun Subsidiary to
damages, penalties, injunctive relief or cleanup costs under any Environmental
Laws or assertions thereof, or which require cleanup, removal, remedial action
or other response pursuant to Environmental Laws by Sun or any Sun Subsidiary.
Neither Sun nor any Sun Subsidiary is a party to any Proceeding relating to
Environmental Laws, nor are any of them (either in their own capacity or as
trustee or fiduciary) required to clean up, remove or take remedial or other
responsive action due to the disposal,
depositing, discharge, leaking or other release of any hazardous substances or
materials. None of the Sun Real Property is, nor is Sun or any Sun Subsidiary,
subject to any judgment, decree, order or citation related to or arising out of
any Environmental Laws. No Consents, permits or licenses are required under
Environmental Laws relative to the Sun Real Property. Neither Sun nor any Sun
Subsidiary has stored, deposited, treated, recycled, used or disposed of any
materials (including, without limitation, asbestos) on, under or at the Sun Real
Property (or tanks or other facilities thereon containing such materials), which
materials, if known to be present on the Sun Real Property or present in soils
or ground water, would require cleanup, removal or some other remedial action
under the Environmental Laws.
3.16 Insurance. Section 3.16 of the Sun Schedule includes a complete
list of all insurance policies (other than title insurance policies or insurance
policies of which any Sun Subsidiary is a beneficiary incident to the making of
individual loans) held by Sun or any Sun Subsidiary. There are no outstanding
unresolved claims for losses under any such insurance policies. Sun and the Sun
Subsidiaries have paid all amounts due and payable under any insurance policies
and guaranties applicable to them and their assets and operations; all such
insurance policies and guaranties are in full force and effect; and Sun, the Sun
Subsidiaries and all of the Sun Real Estate and other material properties of Sun
and the Sun Subsidiaries are insured against fire, casualty, theft, loss, and
such other events against which it is customary to insure, all such insurance
policies being in amounts that are adequate and are consistent with past
practices and experience.
3.17 Books and Records. The minute books of Sun and each Sun Subsidiary
contain, in all material respects, accurate records of and fairly reflect all
actions taken at all meetings and accurately reflect all other corporate action
of the shareholders, owners, the boards of directors or other similar governing
body, and each committee thereof. The books and records of Sun and each Sun
Subsidiary fairly and accurately reflect the transactions to which they are or
have been parties or by which their respective properties are subject or bound,
and such books and records have been properly kept and maintained.
3.18 Capitalization of Sun and the Sun Subsidiaries.
(a) The authorized capital stock of Sun consists of 50,000,000
shares of common stock, no par value, 10,000,000 shares of preferred stock, no
par value, and no other class of equity security. As of the date of this
Agreement, 7,678,867 shares of Sun Common Stock were issued, of which 7,678,867
were outstanding and 0 were held in treasury. As of the date of this Agreement,
Sun has not issued any shares of its preferred stock. Section 3.18 of the Sun
Schedule sets forth the number of shares of Sun Common Stock authorized for
issuance under Sun's 1998 Stock Incentive Plan, 1998 Independent Directors Stock
Option Plan and 1998 Employee Stock Purchase Plan and the Sentry Plans, the
number of unawarded shares under each such plan, the number of awarded but
unvested shares issued under each such plan and the number of awarded shares
that are currently vested under each such plan. All of the outstanding Sun
Common Stock is validly issued, fully-paid and nonassessable and has not been
issued in violation of any preemptive rights of any Sun Shareholder. There are
468,251 validly issued, outstanding Sun Stock Options, 468,251 shares of which
are either currently exercisable or will become exercisable upon or prior to the
Merger, and there are no other options, rights, warrants, scrip or similar
rights to purchase shares of Sun Common Stock outstanding. Section 3.18 of the
Sun Schedule contains a true and complete list of all outstanding stock options
and awards under
Sun's 1998 Stock Incentive Plan, 1998 Independent Directors Stock Option Plan
and 1998 Employee Stock Purchase Plan and the Sentry Plans, including the name
of the optionee, the date of each grant, the expiration date of each grant, the
price at which each option or award may be exercised and the number of shares
for which the award or option is currently exercisable. There are no other
outstanding securities or other obligations which are convertible into Sun
Common Stock or into any other equity or debt security of Sun, and other than
the Sun Stock Options, no outstanding options, warrants, rights, scrip, rights
to subscribe to, calls or other commitments of any nature which would entitle
the holder, upon exercise thereof, to be issued Sun Common Stock or any other
equity or debt security of Sun. Accordingly, immediately prior to the Effective
Time, there will be not more than 8,147,118 shares of Sun Common Stock issued
and outstanding on a fully diluted basis (consisting of 7,678,867 shares
currently outstanding plus 468,251 unexercised options which may be exercised).
(b) Sun owns, directly or indirectly, all of the issued and
outstanding shares of capital stock of each Sun Subsidiary, which shares are
owned by Sun free and clear of all liens, charges, encumbrances or security
interests of any kind whatsoever. All of the issued and outstanding shares of
capital stock of the Sun Subsidiaries are duly authorized and validly issued and
are fully paid, nonassessable and free of preemptive rights, with no personal
liability attaching to the ownership thereof. Except as set forth in Section
3.18(b) of the Sun Schedule, neither Sun nor any Sun Subsidiary has (i) any
equity investments other than investments in wholly-owned Subsidiaries or (ii)
any investments in real estate or real estate development projects, other than
assets classified as "other real estate owned." No Sun Subsidiary has or is
bound by any outstanding subscriptions, options, warrants, calls, commitments or
agreements of any character calling for the purchase or issuance of any shares
of capital stock or any other equity security of such Sun Subsidiary or any
securities representing the right to purchase or otherwise receive any shares of
capital stock or any other equity security of such Sun Subsidiary.
3.19 Sole Agreement. With the exception of this Agreement, neither Sun,
nor any Sun Subsidiary, is a party to any letter of intent or agreement to
merge, to consolidate, to sell or purchase assets (other than in the normal
course of its business) or, except as disclosed on Section 3.19 of the Sun
Schedule, any other agreement which contemplates the involvement of Sun or any
Sun Subsidiary (or any of their assets) in any business combination of any kind;
or any agreement, contract, commitment, understanding or arrangement obligating
Sun or any Sun Subsidiary to issue or sell or authorize the sale or transfer of
any shares of capital stock of Sun or any Sun Subsidiary, except Sun Stock
Options. There are no contracts, agreements, understandings or commitments
relating to the right of Sun to vote or to dispose of any shares of capital
stock of any Sun Subsidiary.
3.20 Disclosure.
(a) The information concerning, and representations and warranties
made by, Sun set forth in this Agreement, or in the Sun Schedule, or in any
document, statement, certificate or other writing furnished or to be furnished
by or on behalf of Sun or any Sun Subsidiary to Omega pursuant hereto, do not
and will not contain any untrue statement of a material fact or omit and will
not omit to state a material fact required to be stated herein or therein which
is necessary to make the statements and facts contained herein or therein, in
light of the circumstances in which they were or are made, not false or
misleading.
(b) None of the information prepared by or on behalf of Sun or any
Sun Subsidiary regarding any of them included or to be included in the
Prospectus/Proxy and any other documents to be filed with the SEC or any other
Governmental Authority in connection with the transactions contemplated herein,
will, at the respective times such documents are filed, be false or misleading
with respect to any material fact, or omit to state any material fact necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading. All documents which Sun or any Sun Subsidiary is
responsible for filing with the SEC or any other Governmental Authority in
connection with the transactions contemplated hereby will comply as to form in
all material respects with the provisions of Applicable Law, including
applicable provisions of the Securities Laws. Without limiting the foregoing, at
the time the Prospectus/Proxy is mailed to Sun Shareholders and Omega
Shareholders, and at all times subsequent to such mailing up to and including
the date of the shareholders meetings at which the Merger and this Agreement
will be presented for approval, the Registration Statement, with respect to all
information relating to Sun or any Sun Subsidiary, (i) will comply in all
material respects with the applicable provisions of the Securities Laws and (ii)
will not contain any statement which, at the time and in light of the
circumstances under which it is made, is false or misleading with respect to any
material fact or omit to state any material fact necessary in order to make the
statements made therein not false or misleading, or required to be stated
therein or necessary to correct any statement made in an earlier communication
with respect to such matters which have become false or misleading.
(c) Copies of all documents heretofore or hereafter delivered or
made available to Omega by or on behalf of Sun or any Sun Subsidiary pursuant
hereto were or will be complete and accurate copies of such documents.
3.21 Absence of Undisclosed Liabilities. To Sun's knowledge, neither
Sun nor any Sun Subsidiary has any obligation or liability that is material to
the financial condition or operations of any of them, or that, when combined
with all similar obligations or liabilities, would be material to their
financial condition or operations (i) except as disclosed in the Sun Financial
Statements delivered to Omega prior to the date of this Agreement, or (ii)
except as contemplated under this Agreement. Except as disclosed on Section 3.21
of the Sun Schedule, since the Balance Sheet Date, neither Sun nor any Sun
Subsidiary has incurred or paid any obligation or liability which would be
material to the financial condition or operations of any of them, except for
obligations paid in connection with transactions made by them in the ordinary
course of their business consistent with past practices and Applicable Law.
3.22 Allowance for Loan Losses.
(a) The allowance for loan losses shown on the Sun Financial
Statements is adequate in all material respects to provide for anticipated
losses inherent in loans outstanding. Except as set forth on Section 3.22 of the
Sun Schedule, as of the Balance Sheet Date, neither Sun nor any Sun Subsidiary
has any loan which has been criticized, designated or classified by Sun's
management, or by regulatory examiners representing any Governmental Authority
or by Sun's independent auditors as "Special Mention," "Substandard,"
"Doubtful", "Loss" or as a "Potential Problem Loan."
(b) The allowance for losses in real estate owned, if any, shown on
the Sun Financial Statements is or will be adequate in all material respects to
provide for anticipated
losses inherent in real estate owned by Sun or any Sun Subsidiary and the net
book value of real estate owned as shown on the most recent balance sheet
included in the Sun Financial Statements is the fair value of the real estate
owned in accordance with Statement of Position 92-3.
(c) True, complete and materially correct copies of reports
containing the following information with respect to any loan or account of Sun
or any Sun Subsidiary, as of March 31, 2004, are attached to Section 3.22 of the
Sun Schedule: (i) Delinquency, (ii) Non-Accrual, (iii) OREO (Other real estate
owned), (iv) Repossessed Assets, (v) Watch List/Adversely Classified Accounts
(i.e. loans or accounts classified by regulatory examiners representing any
Governmental Authority or by Sun's independent auditors as "Special Mention,"
"Substandard," "Doubtful", "Loss" or "Potential Problem Loan") and (vi) adequacy
test for loan and lease losses.
3.23 Loan Portfolio. With respect to each loan reflected as an asset on
the most recent balance sheet included in the Sun Financial Statements with an
aggregate principal balance equal to $750,000 or more (each, a "Loan"), to Sun's
knowledge:
(a) Enforceability. The note and any related mortgage, security
agreement, pledge, assignment or other grant of collateral, and all guaranties
thereof, are each legal, valid and binding obligations of the maker or obligor
thereof, enforceable against such maker or obligor in accordance with their
material terms.
(b) No Modification. Neither SunBank nor any prior holders of a Loan
has modified any documents related to the Loan in any material respect or
satisfied, canceled or subordinated any collateral for such Loan except as
otherwise disclosed by documents in the applicable Loan file.
(c) Owner. SunBank is the sole holder of legal and beneficial title
to each Loan (or, if the Loan is a participation loan as shown in the loan file,
SunBank's applicable participation interest), as applicable, and there has not
been any assignment or pledge of any Loan (other than as security for Federal
Home Loan Bank or Federal Reserve Bank advances).
(d) Documents. The note, mortgage, security agreement, guaranty and
any other collateral documents, copies of which are included in the Loan files,
are, in all material respects, true and correct copies of the documents they
purport to be and have not been superseded, amended, modified, canceled or
otherwise changed except as otherwise disclosed by documents in the applicable
Loan file.
(e) Litigation. There is no Proceeding pending or, to Sun's
knowledge, threatened, relating to the Loan or any collateral for the Loan.
(f) Participation. With respect to each Loan held in the form of a
participation, the participation documentation is legal, valid, binding and
enforceable, and the interest in such Loan of SunBank created by such
participation would not be a part of the insolvency estate of the Loan
originator or other third party upon the insolvency thereof.
3.24 Compliance with Laws.
(a) Sun and each Sun Subsidiary is in compliance with all Applicable
Laws, reporting and licensing requirements, and orders applicable to its
business or employees (including, but not limited to, the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of
2002, the Equal Credit Opportunity Act, the Fair Housing Act, the Community
Reinvestment Act, the Home Mortgage Disclosure Act, the Uniting and
Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism (USA PATRIOT ACT) Act of 2001, the Bank Secrecy Act, fair
lending laws or other laws relating to discrimination, consumer disclosure and
currency transaction reporting) the noncompliance, breach or violation of which
would reasonably be expected to have a Material Adverse Effect, or which would
reasonably be expected to subject Sun, SunBank or any other Sun Subsidiary or
any of their directors or officers to civil money penalties; and
(b) Neither Sun nor any Sun Subsidiary has received notification or
communication from any Governmental Authorities, or the staff thereof (i)
asserting that Sun or any Sun Subsidiary is not in compliance with any
Applicable Law, which, as a result of such noncompliance, would reasonably be
expected to have a Material Adverse Effect, (ii) threatening to revoke any
Consent, license, franchise, permit, or governmental authorization which is
material to the financial condition or operations of Sun or any Sun Subsidiary,
or (iii) requiring Sun or any Sun Subsidiary to enter into a cease and desist
order, consent, agreement, memorandum of understanding or similar arrangement.
3.25 Employee and Director Benefit Plans.
(a) Section 3.25 of the Sun Schedule lists (i) each pension, profit
sharing, stock bonus, thrift, savings, employee stock ownership or other plan,
program or arrangement, which constitutes an "employee pension benefit plan"
within the meaning of Section 3(2) of ERISA, which is maintained by Sun or any
Sun Subsidiary or to which Sun or any Sun Subsidiary contribute, or are
obligated to contribute, for the benefit of any current or former employee,
officer, director, consultant or agent; (ii) each plan, program, agreement or
arrangement for the provision of medical, surgical, or hospital care or
benefits, benefits in the event of sickness, accident, disability, death,
unemployment, severance, vacation, apprenticeship, day care, scholarship,
prepaid legal services or other benefits which constitute an "employee welfare
benefit plan" within the meaning of Section 3(1) of ERISA, which is maintained
by Sun or any Sun Subsidiary or to which Sun or any Sun Subsidiary contribute,
or are obligated to contribute, for the benefit of any current or former
employee, officer, director, consultant or agent; and (iii) every other
retirement or deferred compensation plan, bonus or incentive compensation plan
or arrangement, stock option plan, stock purchase plan, severance or vacation
pay arrangement, or other fringe benefit plan, program, agreement or arrangement
through which Sun or any Sun Subsidiary provide benefits for or on behalf of any
current or former employee, officer, director, consultant or agent, and, with
respect to each such plan, the amounts contributed but not yet paid to
participants or beneficiaries thereunder, and the amount of any contribution
deficiencies with respect thereto.
(b) To Sun's knowledge, all of the plans, programs and arrangements
described in Section 3.25 of the Sun Schedule (hereinafter referred to as the
"Sun Benefit Plans") are in material compliance with their provisions and with
all applicable requirements of ERISA and all other Applicable Law, including the
reporting and disclosure requirements of Part I of Title I of ERISA. Each of the
Sun Benefit Plans that is intended to be a pension, profit sharing,
stock bonus, thrift, savings or employee stock ownership plan that is qualified
under Section 401(a) of the Code satisfies the applicable requirements of such
provision in all material respects and there exist no circumstances that would
adversely affect the qualified status of any such plan under that section,
except with respect to any required retroactive amendment for which the remedial
amendment period has not yet expired. Sun (or any applicable Sun Subsidiary) has
submitted each such plan to the IRS for approval within the time prescribed
therefor under applicable regulations and favorable letters of determination of
such tax-qualified status from the IRS have been received and provided to Omega.
To Sun's knowledge, threatened Proceeding or audit against or relating to any
Sun Benefit Plan and there is no reasonable basis for any material Proceedings
or audits against any Sun Benefit Plan or its fiduciaries related to such plans.
No Sun Benefit Plan (or Sun Benefit Plan fiduciary, in his capacity as such) has
engaged in a non-exempt prohibited transaction (as defined in Section 406 of
ERISA or Section 4975(c) of the Code) since the date on which said sections
became applicable to such Plan. To Sun's knowledge, there have been no acts or
omissions by Sun or any Sun Subsidiary that have given rise to any material
fines, penalties, taxes or related charges under ERISA or the Code, or that may
give rise to any material fines, penalties, taxes or related damages under such
laws for which Sun or any Sun Subsidiary may be liable. To Sun's knowledge, all
group health plans of Sun and any Sun Subsidiary, including any plans of current
and former Affiliates of Sun or any Sun Subsidiary that must be taken into
account under Section 4980B of the Code or Section 601 of ERISA or the
requirements of any similar state law regarding insurance continuation, have
been operated in material compliance with the group health plan continuation
coverage requirements of Section 4980B of the Code, Sections 601 through 609 of
ERISA and any similar state law to the extent such requirements are applicable.
To Sun's knowledge, all payments due from any Sun Benefit Plan (or from Sun with
respect to any Sun Benefit Plan) have been made, and all amounts properly
accrued to date as liabilities of Sun or any Sun Subsidiary that have not yet
been paid have been properly recorded on the books of Sun and any applicable Sun
Subsidiary.
(c) Section 3.25 of the Sun Schedule contains a list of all plans
which provide for compensation or benefits to directors of Sun or any Sun
Subsidiary (other than Sun's 1998 Stock Incentive Plan, 1998 Independent
Directors Stock Option Plan and 1998 Employee Stock Purchase Plan, for which
information is provided in Section 3.18 of the Sun Schedule) and a list of the
liabilities owed to directors under the directors' deferred compensation plans
as of the Balance Sheet Date. All deferred amounts listed on such schedule have
been fully accrued on the Sun Financial Statements.
(d) True and correct copies and descriptions of all Sun Benefit
Plans, all employees affected or covered by Sun Benefit Plans and all
liabilities and obligations thereunder have been provided to Omega, which
information shall be updated immediately prior to and as of the Closing Date.
Sun has furnished Omega with a true and correct copy of the most current Form
5500, if required, and any other form or filing required to be submitted to any
Governmental Authority with regard to any of the Sun Benefit Plans and the most
current actuarial report with regard to any of the Sun Benefit Plans. To Sun's
knowledge, with respect to the Sun Benefit Plans, Sun will have made, on or
prior to the Closing Date, all material payments required to be made (including
those payments contemplated herein) on or prior to the Closing Date and will
have accrued (in accordance with GAAP consistently applied) as of the Closing
Date, all payments due but not yet payable as of the Closing Date. To Sun's
knowledge, there would be no material liability of Sun or any Sun Subsidiary
under Title IV of ERISA if any
of the Sun Benefit Plans were terminated as of the Closing Date. Neither the
execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will (i) result in any material payment
(including, without limitation, any severance, unemployment compensation,
"golden parachute" or similar payment) becoming due from Sun or any Sun
Subsidiary, (ii) materially increase any benefits payable under any of the Sun
Benefit Plans, or (iii) result in the material acceleration of the time of
payment or vesting of any such benefits to any extent. No event has occurred or
will occur which will result in liability to Sun or any Sun Subsidiary or by any
other entity which, together with Sun or any Sun Subsidiary constitute elements
of either (i) a controlled group of corporations (within the meaning of Section
414(b) of the Code), (ii) a group of trades or businesses under common control
(within the meaning of Section 414(c) of the Code or 4001 of ERISA), (iii) an
affiliated service group (within the meaning of Sections 414(m) of the Code), or
(iv) another arrangement covered by Section 414(o) of the Code.
3.26 Labor Relations.
(a) (i) There is no labor strike, slowdown, stoppage or lockout
actually pending or, to Sun's knowledge, threatened against or affecting Sun or
any Sun Subsidiary and during the past three years there has not been any such
action; (ii) no union claims to represent the employees of Sun or any of Sun
Subsidiaries; (iii) neither Sun nor any of Sun Subsidiaries is a party to or
bound by any collective bargaining or similar agreement with any labor
organization, or work rules or practices agreed to with any labor organization
or employee association; (iv) none of the employees of Sun or any Sun Subsidiary
is represented by any labor organization and Sun is not aware of any current
union organizing activities among the employees of Sun or any Sun Subsidiary,
nor does any question concerning representation exist concerning such employees;
(v) there are no written personnel policies, rules or procedures applicable to
employees of Sun or any Sun Subsidiary, other than those identified in Section
3.26(a) of Sun Schedule, true and correct copies of which have heretofore been
delivered to Omega; (vi) there is no unfair labor practice charge or complaint
against Sun or any Sun Subsidiary pending or, to Sun's knowledge, threatened
before the National Labor Relations Board or any similar state agency; and (vii)
there is no grievance arising out of any collective bargaining agreement or
other grievance procedure.
(b) Within the last five years, neither Sun nor or any Sun
Subsidiary has effectuated (i) a "plant closing" (as defined in the Worker
Adjustment and Retraining Notification Act (the "WARN Act")) affecting any site
of employment or one or more facilities or operating units within any site of
employment or facility of Sun or any Sun Subsidiary; or (ii) a "mass layoff" (as
defined in the WARN Act) affecting any site of employment or facility of Sun or
any Sun Subsidiary. No employee of Sun or any Sun Subsidiary has suffered an
"employment loss" (as defined in the WARN Act) within the period 90 days prior
to date of this Agreement.
3.27 Material Contracts.
(a) Section 3.27(a) of the Sun Schedule contains a true and complete
list of all employment, severance or other written or oral contracts between Sun
or any Sun Subsidiary and any individual employees or officers.
(b) Neither Sun nor any Sun Subsidiary, nor any of their respective
assets, businesses, or operations, is as of the date of this Agreement a party
to, or bound or affected by, or receives benefits under, any contract or
agreement or amendment thereto that requires annual payments to or from Sun or
any Sun Subsidiary of more than $100,000 per year, other than as set forth in
Section 3.27(a) or 3.27(b) of the Sun Schedule, and other than loans or
commitments to lend in the ordinary course of business pursuant to which SunBank
is a lender.
3.28 Material Contract Defaults. Neither Sun nor any Sun Subsidiary is
in default under any contract, agreement, commitment, arrangement, lease,
insurance policy, or other instrument to which it is a party or by which its
respective assets, business, or operations may be bound or affected or under
which it or its respective assets, business, or operations receives benefits,
and which default would reasonably be expected to have either individually or in
the aggregate a Material Adverse Effect, 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.
3.29 Exchange Act and NASDAQ Listing.
(a) The Sun Common Stock is registered with the SEC pursuant to the
Exchange Act and Sun has timely filed with the SEC all material forms, reports,
registrations, statements and certifications required by Applicable Law to be
filed by Sun with the SEC, together with all required amendments thereto, which,
taken as a whole, are true and correct in all material respects, and do not
misstate a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements contained therein, in light of the
circumstances under which they were made, not misleading.
(b) The outstanding shares of Sun Common Stock are quoted for
trading on the NASDAQ National Market (under the symbol "SUBI") and Sun has
timely filed with the NASDAQ National Market all material forms, reports,
registrations, statements and certifications required to be filed by Sun.
3.30 Certain Regulatory Matters.
(a) SunBank is a member of the Federal Home Loan Bank of Pittsburgh.
(b) SunBank has not paid any dividends to Sun or any Affiliate
thereof that (i) caused the regulatory capital of SunBank to be less than the
amount then required by Applicable Law or (ii) exceeded any other limitation on
the payment of dividends imposed by Applicable Law, agreement or regulatory
policy.
(c) SunBank has adopted policies and procedures designed to promote
overall compliance with the Bank Secrecy Act (31 U.S.C. Section 5301), the
Truth-in-Lending Act (15 U.S.C. Section 1601 et seq.), the Expedited Funds
Availability Act (12 U.S.C. Section 4001) and the regulations adopted under each
such act and have materially complied with the reporting requirements under the
Bank Secrecy Act and the regulations thereunder.
3.31 Disclosure Controls and Procedures. Since December 31, 2003, Sun
and each Sun Subsidiary has had in place "disclosure controls and procedures"
(as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Exchange Act)
designed and maintained to ensure that (i) transactions are recorded as
necessary to permit preparation of financial statements in conformity
with GAAP and to maintain accountability for assets, (ii) all information (both
financial and non-financial) required to be disclosed by Sun or any Sun
Subsidiary in the reports that it files or submits to the FDIC or the SEC is
recorded, processed, summarized and reported within the time periods specified
in the rules and forms of the FDIC or the SEC and (iii) all such information is
accumulated and communicated to management as appropriate to allow the Chief
Executive Officer and Chief Financial Officer of Sun to make the certifications
required under the Exchange Act with respect to such reports. None of Sun's or
any Sun Subsidiary's records, systems, controls, data or information are
recorded, stored, maintained, operated or otherwise wholly or partly dependent
on or held by any means (including any electronic, mechanical or photographic
process, whether computerized or not) which (including all means of access
thereto and therefrom) are not under the exclusive ownership and direct control
of Sun or the applicable Sun Subsidiary or their accountants.
3.32 Corporate Approval. The affirmative vote of 75% of the holders of
outstanding Sun Common Stock entitled to vote is required to adopt this
Agreement and approve the Merger and the other transactions contemplated hereby.
No other vote of the shareholders of Sun is required by Applicable Law, the
Charter Documents of Sun or otherwise to adopt this Agreement and approve the
Merger and the other transactions contemplated hereby. Sun's Board of Directors
is (a) is aware of the Voting Agreement and (b) has approved the transactions
contemplated by this Agreement such that the anti-takeover provisions of the
PBCL will not apply to this Agreement or any of the transactions contemplated
hereby. No "moratorium," "control share," "fair price" or other anti-takeover
laws are applicable to the Merger or any of the other transactions contemplated
by this Agreement.
3.33 Broker's and Finder's Fees. Except for payments to ▇▇▇▇▇, ▇▇▇▇▇▇▇▇
& ▇▇▇▇▇ as described in Section 3.33 of the Sun Schedule, neither Sun nor any
Sun Subsidiary has any liability to any broker, finder, or similar agent, nor
have any of them agreed to pay any broker's fee, finder's fee or commission,
with respect hereto or to the transactions contemplated hereby.
3.34 Delays. Sun is not aware of any matter that could prevent or delay
the receipt of any Banking Approval or any other Consent required for the
consummation of the transactions contemplated by this Agreement.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF OMEGA
Except as otherwise disclosed in one or more schedules numbered to
correspond to the following Sections of this Article 4, and delivered
concurrently with this Agreement, both as of the date hereof and as of the
Effective Time, Omega represents and warrants to Sun as follows:
4.1 Organization and Qualification of Omega and Subsidiaries.
(a) Omega is corporation duly organized, validly existing and in
good standing under the laws of the Commonwealth of Pennsylvania and (i) has all
requisite corporate power and authority to own, operate and lease its properties
and assets and to carry on its business as it is currently being conducted; (ii)
is in good standing and is duly qualified and licensed to conduct business in
each jurisdiction where the character of its properties owned or
held under lease or the nature of its business is such that a failure to be so
qualified or licensed would have, individually or in the aggregate, a Material
Adverse Effect; and (iii) is a registered bank holding company under the
regulations of the FRB.
(b) Omega Bank is a national bank, duly organized, validly existing
and in good standing under the laws of the United States and engages only in
activities (and holds properties and assets only of the types) permitted by the
law of the United States and the regulations of the OCC. Omega Bank's deposit
accounts are insured by the Bank Insurance Fund as administered by the FDIC to
the fullest extent permitted under Applicable Law, and all premiums and
assessments required to be paid in connection therewith have been paid when due.
(c) Omega's annual report on Form 10K filed with the SEC for the
fiscal year ending December 31, 2003 specifically identifies all material
Subsidiaries of Omega. Each Omega Subsidiary (other than Omega Bank) is duly
organized, validly existing and in good standing under the laws of the
appropriate jurisdiction in which it is incorporated or organized and (i) has
all requisite corporate power and authority to own, operate and lease its
properties and assets and to carry on its business as it is currently being
conducted; and (ii) is in good standing and is duly qualified and licensed to
conduct business in each jurisdiction where the character of its properties
owned or held under lease or the nature of its business is such that a failure
to be so qualified or licensed would have, individually or in the aggregate, a
Material Adverse Effect.
4.2 Authorization, Execution and Delivery; Agreement Not in Breach.
(a) Omega has all requisite corporate power and authority to execute
and deliver this Agreement and, subject to the approval of shareholders of Omega
and the Banking Approvals, to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation of the
proposed transactions have been duly authorized by the requisite vote of Omega's
Board of Directors and no other corporate proceedings on the part of Omega or
any Omega Subsidiary are necessary to authorize the execution and delivery of
this Agreement or the consummation of the transactions contemplated hereby,
except for the approval of the holders of Omega Common Stock entitled to vote
thereon. This Agreement and all other agreements and instruments herein
contemplated to be executed by Omega have been (or upon execution will have
been) duly executed and delivered by Omega and constitute (or upon execution
will constitute) legal, valid and enforceable obligations of Omega, subject, as
to enforceability, to applicable bankruptcy, insolvency, receivership,
conservatorship, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and to the application of equitable
principles.
(b) The execution and delivery of this Agreement, the consummation
of the transactions contemplated hereby, and the fulfillment of the terms hereof
will not result in a material violation or material breach of any of the terms
or provisions of, or constitute a material default under (or an event which,
with the passage of time or the giving of notice, or both, would constitute such
a default under), or conflict with, or permit the acceleration of, any material
obligation under, any mortgage, lease, covenant agreement, indenture or other
instrument to which Omega or any Omega Subsidiary is a party or by which Omega
or any Omega Subsidiary, or their respective properties or assets, is bound, the
Charter Documents of Omega or any Omega Subsidiary; or any judgment, decree,
order, regulatory letter of understanding or award of any
Governmental Authority by which Omega or any Omega Subsidiary, or their
respective properties or assets, is bound, or any material Consent, permit,
concession, grant, franchise, license, law, statute, ordinance, rule or
regulation applicable to Omega or any Omega Subsidiary or the properties or
assets of any of them; or result in the creation of any material lien, claim,
security interest, encumbrance, charge, restriction or right of any third arty
of any kind whatsoever upon the properties or assets of Omega or any Omega
Subsidiary, except that the approval of the shareholders of Omega and the
Banking Approvals must be obtained for Omega to consummate the Merger.
4.3 No Legal Bar. Neither Omega nor any Omega Subsidiary is a party to,
or subject to or bound by, any agreement, judgment, order, letter of
understanding, writ, prohibition, injunction or decree of any court or other
Governmental Authority, or any Applicable Law which would prevent the execution
of this Agreement by Omega, the delivery hereof to Sun or the consummation of
the transactions contemplated hereby (except for such laws as require that the
approval of the shareholders of Omega and the Banking Approvals be obtained),
and no Proceeding is pending against Omega or any Omega Subsidiary in which the
validity of this Agreement, any of the transactions contemplated hereby or any
action which has been taken by either of the Parties in connection herewith, or,
in connection with any of the transactions contemplated hereby, is at issue.
4.4 Consents and Approvals. Except for (a) the Banking Approvals, (b)
the filing with the SEC and declaration of effectiveness by the SEC of the
Registration Statement, (c) the approval of this Agreement by the requisite vote
of the shareholders of Omega and Sun, (d) the approval of the listing of Omega
Common Stock to be issued in the Merger on the NASDAQ National Market, and (e)
such filings and approvals as are required to be made or obtained under the
securities or "Blue Sky" laws of various states in connection with the issuance
of the shares of Omega Common Stock pursuant to this Agreement, no Consents of
any Governmental Authority or any other third Person are necessary in connection
with the execution and delivery by Omega of this Agreement or the consummation
by Omega of the Merger and the other transactions contemplated hereby, except
where the failure to obtain such Consents would not reasonably be expected to
have a Material Adverse Effect.
4.5 Licenses, Franchises and Permits. Omega and each Omega Subsidiary
holds all licenses, franchises, permits and authorizations necessary for the
lawful conduct of its respective businesses, except where the failure to hold
such licenses, franchises, permits and authorizations would not reasonably be
expected to have a Material Adverse Effect. All of such licenses, franchises,
permits and authorizations are in full force and effect and shall continue in
effect subsequent to the Closing of the transactions contemplated herein without
any Consent, other than the Banking Approvals, subject to the legal right and
authority of such successor to engage in the activities licensed, franchised,
permitted or authorized thereby and except where the failure of such licenses,
franchises, permits and authorizations to be in full force and effect would not
reasonably be expected to have a Material Adverse Effect. Neither Omega nor any
Omega Subsidiary has received notice of any Proceeding for the suspension or
revocation of any such license, franchise, permit, or authorization and no such
Proceeding is pending or, to Sun's knowledge, threatened.
4.6 Omega Financial Statements. The consolidated statements of
financial condition contained in the Omega Financial Statements fairly present
the consolidated financial condition
of Omega and the Omega Subsidiaries as of the respective dates set forth
therein, and the related consolidated statements of operations, changes in
shareholders' equity and cash flows in the Omega Financial Statements, fairly
present the results of the consolidated operations, changes in shareholders'
equity and cash flows of Omega and the Omega Subsidiaries for the respective
periods or as of the respective dates set forth therein, in each case in
conformity with GAAP consistently applied, it being understood that Omega's
interim financial statements are not audited, not prepared with related notes
and are subject to normal year-end adjustments.
4.7 Charter Documents. Omega has made available to Sun true, correct
and complete copies of the Charter Documents of Omega and each Omega Subsidiary.
4.8 Tax Matters.
(a) All federal, state and local Tax Returns required to be
filed by or on behalf of Omega or any Omega Subsidiary have been timely filed,
or Omega or any applicable Omega Subsidiary has received an appropriate
extension therefor. All Tax Returns filed are, and the information contained
therein is, complete and accurate in all material respects. All Tax obligations
reflected in such returns have been timely paid. Neither Omega nor any Omega
Subsidiary is currently the beneficiary of any extension of time within which to
file any Tax Return. As of the date of this Agreement, there is no audit
examination, deficiency, or refund litigation or matter in controversy with
respect to any Taxes that might reasonably be expected to result in a
determination materially adverse to Omega or any Omega Subsidiary except as
fully reserved for in the Omega Financial Statements. All Taxes, interest,
additions, and penalties due with respect to completed and settled examinations
or concluded litigation have been paid;
(b) Neither Omega nor any Omega Subsidiary has executed an extension
or waiver of any statute of limitations on the assessment or collection of any
Tax due that is currently in effect;
(c) Adequate provision for any federal, state or local Taxes due or
to become due for Omega or any Omega Subsidiary for all periods through and
including December 31, 2003, has been made and is reflected on the December 31,
2003 financial statements included in Omega's Report on Form 10-K for the period
then ending, and has been and will continue to be made with respect to periods
ending after December 31, 2003 on a basis consistent with its historic Tax
accounting practices and GAAP;
(d) Deferred taxes of Omega and the Omega Subsidiaries have been and
will be provided for in accordance with GAAP;
(e) Neither the U.S. Internal Revenue Service nor any state, local
or other taxing authority is now asserting or threatening to assert against
Omega or any Omega Subsidiary any deficiency or claim for additional Taxes, or
interest thereon or penalties in connection therewith. All income, payroll,
withholding property, excise, sales, use, franchise and transfer taxes, and all
other Taxes, charges, fees, levies or other assessments, imposed upon Omega or
any Omega Subsidiary by the United States or by any state, municipality,
subdivision or instrumentality of the United States or by any other authority,
including all interest, penalties or additions attributable thereto, which are
due and table by Omega or any Omega Subsidiary,
either have been paid in full or have been properly accrued and reflected in the
Omega Financial Statements;
(f) Neither Omega nor any Omega Subsidiary has made any material
payments, is obligated to make any material payments, or is a party to any
agreement that under certain circumstances could obligate it to make any
material payments that will not be deductible under Section 280G of the Code;
and
(g) Neither Omega nor any Omega Subsidiary (i) is a party to any Tax
allocation or sharing agreement, (ii) has been a member of an affiliated group
filing a consolidated federal income Tax Return (other than a group the common
parent of which was Omega), or (iii) has any Tax liability for any Person (other
than Omega or any Omega Subsidiary) under Treasury Regulations Section 1.1502-6
(or any similar provision of state, local or foreign law), as a transferee or
successor, by contract, or otherwise.
4.9 Litigation. There is no Proceeding pending against Omega or any
Omega Subsidiary, or Omega's knowledge, threatened against or affecting Omega or
any Omega Subsidiary or any of their assets, that may, if decided against Omega
or any Omega Subsidiary, have a Material Adverse Effect.
4.10 Insurance. Section 4.10 of the Omega Schedule includes a complete
list of all insurance policies (other than title insurance policies or insurance
policies of which any Omega Subsidiary is a beneficiary incident to the making
of individual loans) held by Omega or any Omega Subsidiary. There are no
outstanding unresolved claims for losses under any such insurance policies.
Omega and the Omega Subsidiaries have paid all amounts due and payable under any
insurance policies and guaranties applicable to them and their assets and
operations; all such insurance policies and guaranties are in full force and
effect; and Omega, the Omega Subsidiaries and all properties of Omega and the
Omega Subsidiaries are insured against fire, casualty, theft, loss, and such
other events against which it is customary to insure, all such insurance
policies being in amounts that are adequate and are consistent with past
practices and experience. Neither Omega nor any Omega Subsidiary is aware of any
basis for any claim under any existing directors and officers liability
insurance policy.
4.11 Books and Records. The minute books of Omega and each Omega
Subsidiary contain, in all material respects, accurate records of and fairly
reflect all actions taken at all meetings and accurately reflect all other
corporate action of the shareholders, owners, the boards of directors or other
similar governing body, and each committee thereof. The books and records of
Omega and each Omega Subsidiary fairly and accurately reflect the transactions
to which they are or have been parties or by which their respective properties
are subject or bound, and such books and records have been properly kept and
maintained.
4.12 Capitalization of Omega and the Omega Subsidiaries.
(a) The authorized capital stock of Omega consists of 25,000,000
shares of Common Stock having a par value of $5.00 per share, 5,000,000 shares
of Preferred Stock having a par value of $5.00 per share, and no other class of
equity security. As of the date of this Agreement, 10,082,931 shares of Omega
Common Stock were issued, of which 8,493,386 were outstanding and 1,589,545 were
held in treasury, and there were no shares of Omega Preferred
Stock issued and outstanding. All of the outstanding Omega Common Stock is
validly issued, fully-paid and nonassessable and has not been issued in
violation of any preemptive rights of any Omega Shareholder. Section 4.12 of the
Omega Schedule sets forth the number of shares of Omega Common Stock authorized
for issuance under Omega's 1996 Employee Stock Option Plan, Employee Stock
Purchase Plan and Non-Employee Director Stock Option Plan, the number of
unawarded shares under each such plan, the number of awarded but unvested shares
issued under each such plan and the number of awarded shares that are currently
vested under each such plan. In addition, there are outstanding options to
purchase 39,261 shares of Omega Common Stock under Omega's 1986 Employee Stock
Option Plan, all of which are vested, and no other options are issuable Omega's
1986 Employee Stock Option Plan. As of the date hereof, there are no other
outstanding securities or other obligations which are convertible into Omega
Common Stock or into any other equity or debt security of Omega, and there are
no outstanding options, warrants, rights, scrip, rights to subscribe to, calls
or other commitments of any nature which would entitle the holder, upon exercise
thereof, to be issued Omega Common Stock or any other equity or debt security of
Omega.
(b) Omega owns, directly or indirectly, all of the issued and
outstanding shares of capital stock of each Omega Subsidiary, which shares are
free and clear of all liens, charges, encumbrances, and security interests of
any kind whatsoever. All of the issued and outstanding shares of capital stock
of the Omega Subsidiaries are duly authorized and validly issued and are fully
paid, nonassessable and free of preemptive rights, with no personal liability
attaching to the ownership thereof. Except as set forth in Section 4.12(b) of
the Omega Schedule, neither Omega nor any Omega Subsidiary has (i) any equity
investments other than investments in wholly-owned Subsidiaries or (ii) any
investments in real estate or real estate development projects, other than
assets classified as "other real estate owned." No Omega Subsidiary has or is
bound by any outstanding subscriptions, options, warrants, calls, commitments or
agreements of any character calling for the purchase or issuance of any shares
of capital stock or any other equity security of such Omega Subsidiary or any
securities representing the right to purchase or otherwise receive any shares of
capital stock or any other equity security of such Omega Subsidiary.
4.13 Disclosure.
(a) The information concerning, and representations and warranties
made by, Omega set forth in this Agreement, or in the Omega Schedule, or in any
document, statement, certificate or other writing furnished or to be furnished
by or any behalf of Omega or any Omega Subsidiary to Sun pursuant hereto, do not
and will not contain any untrue statement of a material fact or omit and will
not omit to state a material fact required to be stated herein or therein which
is necessary to make the statements and facts contained herein or therein, in
light of the circumstances in which they were or are made, not false or
misleading.
(b) None of the information prepared by or on behalf of Omega or any
Omega Subsidiary regarding any of them included or to be included in the
Prospectus/Proxy and any other documents to be filed with the SEC or any other
Governmental Authority in connection with the transactions contemplated herein,
will, at the respective times such documents are filed, be false or misleading
with respect to any material fact, or omit to state any material fact necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading. All documents which Omega or any Omega Subsidiary is
responsible for
filing with the SEC or any other Governmental Authority in connection with the
transactions contemplated hereby will comply as to form in all material respects
with the provisions of Applicable Law, including applicable provisions of the
Securities Laws. Without limiting the foregoing, at the time the
Prospectus/Proxy is mailed to Omega Shareholders and Sun Shareholders, and at
all times subsequent to such mailing up to and including the date of the
shareholders meetings at which the Merger and this Agreement will be presented
for approval, the Registration Statement, with respect to all information
relating to Omega or any Omega Subsidiary, (i) will comply in all material
respects with the applicable provisions of the Securities Laws and (ii) will not
contain any statement which, at the time and in light of the circumstances under
which it is made, is false or misleading with respect to any material fact or
omit to state any material fact necessary in order to make the statements made
therein not false or misleading, or required to be stated therein or necessary
to correct any statement made in an earlier communication with respect to such
matters which have become false or misleading.
(c) Copies of all documents heretofore or hereafter delivered or
made available to Sun by or on behalf of Omega or any Omega Subsidiary pursuant
hereto were or will be complete and accurate copies of such documents.
4.14 Absence of Undisclosed Liabilities. To Omega's knowledge, neither
Omega or any Omega Subsidiary has any obligation or liability that is material
to the financial condition or operations of any of them, or that, when combined
with all similar obligations or liabilities, would be material to their
financial condition or operations (i) except as disclosed in the Omega Financial
Statements prior to the date this Agreement, or (ii) except as contemplated
under this Agreement. Since the Balance Sheet Date, neither Omega nor any Omega
Subsidiary has incurred or paid any obligation or liability which would be
material to the financial condition or operations of any of them, except for
obligations paid in connection with transactions made by them in the ordinary
course of their business consistent with past practices and Applicable Law.
4.15 Allowance for Loan Losses.
(a) The allowance for loan losses shown on the Omega Financial
Statements is adequate in all material respects to provide for anticipated
losses inherent in loans outstanding.
(b) The allowance for losses in real estate owned, if any, shown on
the Omega Financial Statements is or will be adequate in all material respects
to provide for anticipated losses inherent in real estate owned by Omega or any
Omega Subsidiary and the net book value of real estate owned as shown on the
most recent balance sheet included in the Omega Financial Statements is the fair
value of the real estate owned in accordance with Statement of Position 92-3.
4.16 Compliance with Laws.
(a) Omega and each Omega Subsidiary is in compliance with all
Applicable Laws, reporting and licensing requirements, and orders applicable to
its business or employees (including, but not limited to, the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act
of 2002, the Equal Credit Opportunity Act, the Fair Housing Act, the Community
Reinvestment Act, the Home Mortgage Disclosure Act, the Uniting and
Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism (USA PATRIOT ACT) Act of 2001, the Bank Secrecy Act, fair
lending laws or other laws relating to discrimination, consumer disclosure and
currency transaction reporting) the noncompliance, breach or violation of which
would reasonably be expected to have a Material Adverse Effect, or which would
reasonably be expected to subject Omega or any Omega Subsidiary or any of their
directors or officers to civil money penalties; and
(b) Neither Omega nor any Omega Subsidiary has received notification
or communication from any Governmental Authority, or the staff thereof (i)
asserting that Omega or any Omega Subsidiary is not in compliance with any
Applicable Law, which, as a result of such noncompliance, would reasonably be
expected to have a Material Adverse Effect, (ii) threatening to revoke any
Consent, license, franchise, permit, or governmental authorization which is
material to the financial condition or operations of Omega or any Omega
Subsidiary, or (iii) requiring Omega or any Omega Subsidiary to enter into a
cease and desist order, consent, agreement, memorandum of understanding or
similar arrangement.
4.17 Employee Benefit Plans. To Omega's knowledge, all of the Omega
Benefit Plans are in material compliance with their provisions and with all
applicable requirements of ERISA and all other Applicable Law, including the
reporting and disclosure requirements of Part I of Title I of ERISA. To Omega's
knowledge, with respect to the Omega Benefit Plans, Omega will have made, on or
prior to the Closing Date, all payments required to be made (including those
payments contemplated herein) on or prior to the Closing Date and will have
accrued (in accordance with GAAP consistently applied) as of the Closing Date,
all payments due but not yet payable as of the Closing Date.
4.18 Material Contracts. Omega has filed with the SEC as exhibits to
its Annual Reports on Form 10-K, all material contracts of Omega that are
required by Applicable Law to be so filed.
4.19 Material Contract Defaults. Neither Omega nor any Omega Subsidiary
is in default under any contract, agreement, commitment, arrangement, lease,
insurance policy, or other instrument to which it is a party or by which its
respective assets, business, or operations may be bound or affected or under
which it or its respective assets, business, or operations receives benefits,
and which default would reasonably be expected to have either individually or in
the aggregate a Material Adverse Effect, 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.
4.20 Exchange Act and NASDAQ Listing.
(a) The Omega Common Stock is registered with the SEC pursuant to
the Exchange Act and Omega has timely filed with the SEC all material forms,
reports, registrations, statements and certifications required by Applicable Law
to be filed by Omega with the SEC, together with all required amendments
thereto, which, taken as a whole, are true and correct in all material respects,
and do not misstate a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements contained therein, in
light of the circumstances under which they were made, not misleading.
(b) The outstanding shares of Omega Common Stock are quoted for
trading on the NASDAQ National Market (under the symbol "OMEF") and Omega has
timely filed with
the NASDAQ National Market all material forms, reports, registrations,
statements and certifications required to be filed by Omega.
4.21 Certain Regulatory Matters.
(a) Omega Bank is a member of the Federal Home Loan Bank of
Pittsburgh.
(b) Omega Bank has not paid any dividends to Omega or any Affiliate
thereof that (i) caused the regulatory capital of Omega Bank to be less than the
amount then required by Applicable Law or (ii) exceeded any other limitation on
the payment of dividends imposed by Applicable Law, agreement or regulatory
policy.
(c) Omega Bank has adopted policies and procedures designed to
promote overall compliance with the Bank Secrecy Act (31 U.S.C. Section 5301),
the Truth-in-Lending Act (15 U.S.C. Section 1601 et seq.), the Expedited Funds
Availability Act (12 U.S.C. Section 4001) and the regulations adopted under each
such act and have materially complied with the reporting requirements under the
Bank Secrecy Act and the regulations thereunder.
4.22 Disclosure Controls and Procedures. Omega and each Omega
Subsidiary has had in place "disclosure controls and procedures" (as defined in
Rules 13a-15(e) and 15d-15(e) promulgated under the Exchange Act) designed and
maintained to ensure that (i) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP and to maintain
accountability for assets, (ii) all information (both financial and
non-financial) required to be disclosed by Omega or any Omega Subsidiary in the
reports that it files or submits to the FDIC or the SEC is recorded, processed,
summarized and reported within the time periods specified in the rules and forms
of the FDIC or the SEC and (iii) all such information is accumulated and
communicated to management as appropriate to allow the Chief Executive Officer
and Chief Financial Officer of Omega to make the certifications required under
the Exchange Act with respect to such reports. None of Omega's or any Omega
Subsidiary's records, systems, controls, data or information are recorded,
stored, maintained, operated or otherwise wholly or partly dependent on or held
by any means (including any electronic, mechanical or photographic process,
whether computerized or not) which (including all means of access thereto and
therefrom) are not under the exclusive ownership and direct control of Omega or
the applicable Omega Subsidiary or their accountants.
4.23 Corporate Approval. The affirmative vote of a majority of the
holders of the outstanding Omega Common Stock cast by all such holders entitled
to vote thereon is required to adopt this Agreement and approve the Merger and
the other transactions contemplated hereby. No other vote of the shareholders of
Omega is required by Applicable Law, the Charter Documents of Omega or otherwise
to adopt this Agreement and approve the Merger and the other transactions
contemplated hereby.
4.24 Broker's and Finder's Fees. Except for payments to Sandler ▇'▇▇▇▇▇
& Partners, L.P., neither Omega nor any Omega Subsidiary has any liability to
any broker, finder, or similar agent, nor have any of them agreed to pay any
broker's fee, finder's fee or commission, with respect hereto or to the
transactions contemplated hereby.
4.25 Delays. Omega is not aware of any matter that could prevent or delay
the receipt of any Banking Approval or any other Consent required for the
consummation of the transactions contemplated by this Agreement.
ARTICLE 5
COVENANTS OF SUN
5.1 Preparation of Registration Statement and Applications for Required
Consents.
(a) Sun will cooperate with Omega in the preparation of the
Registration Statement and the Prospectus/Proxy. Sun will cooperate with Omega
and provide such information as may be necessary or advisable in preparing and
filing the Prospectus/Proxy, obtaining an order of effectiveness for the
Registration Statement, appropriate permits or approvals under state securities
and "blue sky" law, the Banking Approvals, the listing of the Shares on the
NASDAQ National Market (subject to official notice of issuance, if necessary)
and any other Governmental Approvals or the taking of any other action by any
Governmental Authority necessary to consummate the Merger without a material
adverse effect on the business, results of operations, assets or condition
(financial or otherwise) of the Surviving Corporation or its Subsidiaries. Sun
covenants and agrees that all information furnished by or on behalf of Sun or
any Sun Subsidiary for inclusion in the Registration Statement, the
Prospectus/Proxy, all applications to appropriate regulatory agencies for
approval of the Merger, and all information furnished by or on behalf of Sun or
any Sun Subsidiary to Omega or any of its employees, representatives or agents
pursuant to this Agreement or in connection with obtaining Banking Approvals,
will comply in all material respects with the provisions of Applicable Law,
including the Securities Act, and will not contain any untrue statement of a
material fact and will not omit to state any material fact required to be stated
therein or necessary to make the statements contained therein, in light of the
circumstances under which they were made, not misleading.
(b) As promptly as practicable after the Registration Statement
becomes effective under the Securities Act, Sun and Omega will hold meetings of
their respective shareholders for the purpose of approving this Agreement and
authorizing the Merger. Sun and Omega will, in accordance with and in compliance
with the Exchange Act, and to the extent permitted by their respective Board's
fiduciary duties, solicit proxies from their shareholders in favor of such
approval and authorization; provided, however, that Sun's Board of Directors may
withdraw or modify its recommendation that the Sun Shareholders approve this
Agreement if such Board of Directors has complied with Section 5.4 hereof and
has determined, in good faith, that an Acquisition Proposal constitutes a
Superior Proposal. Without the prior written consent of Omega, Sun will not
distribute to the Sun Shareholders any materials in connection with the
solicitation of proxies for approving this Agreement and authorizing the Merger
other than materials contained in the Registration Statement as effective or as
otherwise required by Applicable Law (upon prior notice to Omega).
5.2 Conduct of Business - Affirmative Covenants. Unless the
prior written consent of Omega shall have been obtained:
(a) Sun and each Sun Subsidiary shall:
(i) Operate its business only in the usual, regular, and
ordinary course;
(ii) Preserve intact its business organizations and assets and
maintain its rights and franchises;
(iii) Take no action, unless otherwise required by Applicable
Law, that would reasonably be considered to (A) adversely affect the ability of
any of them or Omega to obtain any necessary approvals of Governmental
Authorities required to consummate the transactions contemplated by this
Agreement, or (B) adversely affect the ability of such Party to perform its
covenants and agreements under this Agreement;
(iv) Except as they may terminate in accordance with their
terms or as may be terminated by Sun or the applicable Sun Subsidiary as a
result of a material default by a party other than Sun or the applicable Sun
Subsidiary, keep in full force and effect, and not default in any of their
obligations under, all material contracts;
(v) Keep in full force and effect insurance coverage with
responsible insurance carriers which is reasonably adequate in coverage and
amount for companies the size of Sun or such Sun Subsidiary and for the
businesses and properties owned by each and in which each is engaged, to the
extent that such insurance is reasonably available;
(vi) Use its best efforts to retain the present customer base
of each Sun Subsidiary and to facilitate the retention of such customers by each
Sun Subsidiary and its respective locations and branches after the Effective
Time; and
(vii) Maintain, renew, keep in full force and effect, and
preserve its business organization and material rights and franchises, permits
and licenses, and use its best efforts to maintain positive relations with its
present employees so that such employees will continue to perform effectively
and will be available to Sun, the Sun Subsidiaries or Omega and Omega's
Subsidiaries at and after the Effective Time, and use its best efforts to
maintain its existing, or substantially equivalent, credit arrangements with
banks and other financial institutions and to assure the continuance of each Sun
Subsidiary's customer relationships.
(b) Sun agrees to use its best efforts to assist Omega in obtaining
the Banking Approvals and any Governmental Approvals necessary to complete the
transactions contemplated hereby and does not know of any reason that such
approvals can not be obtained, and Sun and the Sun Subsidiaries shall provide to
Omega or to the appropriate Governmental Authorities all information reasonably
required to be submitted in connection with obtaining such approvals.
(c) Sun and the Sun Subsidiaries, at their own cost and expense,
shall use their best efforts to secure all necessary Consents and releases, if
any, required of Sun, any Sun Subsidiary or any third parties, and shall comply
with all Applicable Laws and rulings, in connection with this Agreement and the
consummation of the transactions contemplated hereby.
(d) Subject to the terms and conditions of this Agreement, Sun shall
use its best efforts to do, or to cause to be done, all things necessary,
proper, or advisable under Applicable Laws to consummate the transactions
contemplated by this Agreement, including, without limitation, using reasonable
best efforts to lift or rescind any injunction or restraining or
other order adversely affecting the ability of the Parties to consummate the
transaction contemplated by this Agreement. Sun shall use, and shall cause each
of its Subsidiaries to use, its best efforts to obtain the Banking Approvals and
all other Consents of all third parties and Governmental Authorities necessary
or desirable for the consummation of each of the transactions contemplated by
this Agreement.
(e) On the business day immediately prior to the Effective Time,
assuming that all conditions precedent to the Merger as Omega may require have
been satisfied, Sun shall, at the request of Omega, take all permissible legal,
accounting and regulatory action necessary to convert to the accounting policies
and practices of Omega, such actions to include, without limitation, at Omega's
option, adjustments to loan loss reserves, reserves for federal income taxes,
accounting for post-retirement medical benefits, and accruals for severance and
related costs and accrued vacation and disability leave. Sun's representations,
warranties and covenants contained in this Agreement shall not be deemed to be
untrue or breached in any respect for any purpose as a consequence of any
modifications or changes undertaken at the request of Omega under this Section
5.2(e) or otherwise.
5.3 Conduct of Business - Negative Covenants. From the date of this
Agreement until the earlier of the Effective Time or the termination of this
Agreement, except as may be separately agreed by Sun and Omega, Sun covenants
and agrees that it will neither do, nor agree or commit to do, nor permit any
Sun Subsidiary to do or commit or agree to do, any of the following without
requesting Omega's approval and receiving the prior written consent of the
President of Omega, which consent shall be deemed given unless Omega disapproves
the same within five (5) business days of having received Sun's written request
for such approval:
(a) Except as expressly contemplated by this Agreement, amend its
any of its Charter Documents; or
(b) Impose on any share of capital stock held by it any lien,
charge, or encumbrance, or permit any such lien, charge, or encumbrance to
exist; or
(c) (i) Repurchase, redeem, or otherwise acquire or exchange,
directly or indirectly, any shares of its capital stock or other equity
securities or any securities or instruments convertible into any shares of its
capital stock, or any rights or options to acquire any shares of its capital
stock or other equity securities except as expressly permitted by this
Agreement; or (ii) split or otherwise subdivide its capital stock; or (iii)
recapitalize in any way; or (iv) declare stock dividend on its capital stock; or
(v) pay or declare a cash dividend or make or declare any other type of
distribution on its capital stock except for any cash dividend already declared
prior to this Agreement and regular quarterly cash dividends payable in the same
amount and on the same schedule as past quarterly cash dividends; provided,
however, that with respect to any cash dividend payable in the quarter in which
the Effective Time occurs, only the pro rata portion of such cash dividend for
such quarter shall be payable; or
(d) Except as expressly permitted by this Agreement, acquire direct
or indirect control over any corporation, association, firm, organization or
other entity, other than in connection with (i) mergers, acquisitions, or other
transactions approved in writing by Omega, (ii) internal organization or
consolidations involving existing Sun Subsidiaries, (iii) acquisitions
of control in its fiduciary capacity, or (iv) the creation of new subsidiaries
organized to conduct or continue activities otherwise permitted by this
Agreement; or
(e) Except as expressly permitted by this Agreement, to (i) issue,
sell, agree to sell, or otherwise dispose of or otherwise permit to become
outstanding any additional shares of any capital stock, including, without
limitation, Sun Common Stock (other than shares issuable upon the exercise of
Sun Stock Options outstanding as of the date of this Agreement), or any stock
appreciation rights, or any option, warrant, conversion, call, scrip, or other
right to acquire any such stock, or any security convertible into any such
stock, unless any such shares of such stock are directly sold or otherwise
directly transferred to Sun or any Sun Subsidiary; (ii) except as may otherwise
be necessary for Sun's Board of Directors to fulfill its fiduciary duties, sell,
agree to sell, or otherwise dispose of any substantial part of the assets or
earning power of Sun or of any Sun Subsidiary; (iii) except as may otherwise be
necessary for Sun's Board of Directors to fulfill its fiduciary duties, sell,
agree to sell, or otherwise dispose of any asset of Sun or any Sun Subsidiary
other than in the ordinary course of business for reasonable and adequate
consideration; or (iv) buy, agree to buy or otherwise acquire a substantial part
of the assets or earning power of any other Person except in the ordinary course
of business to realize upon a debt owed to it; or
(f) Incur any additional debt obligation or other obligation for
borrowed money other than (i) in replacement of existing short-term debt with
other short-term debt of an equal or lesser amount; (ii) financing of banking
related activities; or (iii) indebtedness of Sun or any Sun Subsidiary to
SunBank or another Sun Subsidiary not in excess of an aggregate of $300,000 (for
Sun and Sun Subsidiaries on a consolidated basis), except in the ordinary course
of the business (and such ordinary course of business shall include, but shall
not be limited to, creation of deposit liabilities, entry into repurchase
agreements or reverse repurchase agreements, purchases or sales of federal
funds, Federal Home Loan Bank advances, and sales of certificates of deposit);
or
(g) Grant any increase in compensation or benefits (including,
without limitation, any grants or awards under Sun's 1998 Stock Incentive Plan,
1998 Independent Directors Stock Option Plan and 1998 Employee Stock Purchase
Plan) to any of is employees or officers, except as required by Applicable Law,
and except for the scheduled increases in salary or payments made pursuant to
incentive compensation plans specifically identified on Schedule 5.3(g) to this
Agreement, which are to be granted in the ordinary course of business consistent
with past practices; except as required by Applicable Law, enter into any
severance agreements with any of its officers or employees; grant any material
increase in fees or other increases in new compensation or other benefits to any
director; effect any change in retirement for any class of its employees or
officers, unless such change is required by Applicable Law; or pay any bonuses,
including retention bonuses, but excluding payments made pursuant to incentive
compensation plans, to any persons in excess of $150,000 for all bonuses paid in
the aggregate;
(h) Amend any existing employment or other contract between it and
any director, officer or employee to increase the compensation or benefits
payable thereunder; or enter into any employment or other contract with any
director, officer or employee that Sun or the Sun Subsidiary, as applicable,
does not have the unconditional right to terminate without liability (other than
liability for services already rendered), at any time on or after the Effective
Time;
(i) Adopt any new employee benefit plan or terminate or make any
material change in or to any existing employee benefit plan other than any
change that is required by Applicable Law or that, in the opinion of counsel, is
necessary or advisable to maintain the tax-qualified status of any such plan;
(j) Enter into any new service contracts, purchase or sale
agreements or lease agreements providing for annual payments in excess of
$100,000 that are material to Sun or any Sun Subsidiary except for the sale of
collateral for customer loans in default;
(k) Make any capital expenditure exceeding $200,000 except for
budgeted expenses in connection with the previously announced or budgeted
openings of a new branch location;
(l) Knowingly take any action that is intended or may reasonably be
expected to result in any of its representations and warranties set forth in
this Agreement being or becoming untrue in any material respect, or in any of
the conditions to the Merger set forth in Article 7 not being satisfied, or in
violation of any provision of this Agreement;
(m) Change its methods of accounting in effect at December 31, 2003,
except as required by changes in generally accepted accounting principles as
concurred in, in writing, by Sun's independent auditors (a copy of which shall
be provided to Omega) or regulatory accounting principles or the SEC;
(n) Except as required by Applicable Law, knowingly take or cause to
be taken any action that could reasonably be expected to jeopardize or delay the
receipt of any of the Banking Approvals or required Governmental Approvals or
which would reasonably be expected to result in any such Banking Approval or
required Governmental Approval containing a condition that is determined by
Omega to be unduly burdensome;
(o) Fail to use its best efforts to keep in full force and effect
its insurance and bonds in such amounts as are reasonable to cover such risks
customary in relation to the character and location of its properties and the
nature of its business and in any event at least equal in scope and amount of
coverage of insurance and bonds now carried;
(p) Fail to notify Omega promptly of its receipt of any letter,
notice or other communication, whether written or oral, from any Governmental
Authority advising it of any investigation (other than normal bank regulatory
examinations) or that such Governmental Authority is contemplating issuing,
requiring, or requesting any agreement, memorandum of understanding, or similar
undertaking, order or directive;
(q) Fail promptly to notify Omega of (i) the commencement or threat
of any Proceeding involving any material amount of taxes against Sun or any Sun
Subsidiary or (ii) the receipt by Sun or any Sun Subsidiary of any deficiency or
audit notices oro reports in respect of any material deficiencies asserted by
any federal, state, local or other tax authority;
(r) Fail to maintain and keep its properties in good repair
and condition, except for depreciation due to ordinary wear and tear;
(s) Engage in any off-balance sheet hedge transaction.
5.4 Conduct of Business - Certain Actions. During the period from the date
of this Agreement until the earlier of the Effective Time or the termination of
this Agreement in accordance with its terms, Sun shall not, and shall not
authorize or permit its Affiliates and the Sun Subsidiaries, and the directors,
officers, employees, agents, representatives (including investment bankers,
attorneys and accountants) of Sun and the Sun Subsidiaries to, directly or
indirectly, (i) initiate, solicit, encourage or otherwise facilitate any
Acquisition Transaction or any inquiries that may reasonably be expected to lead
to an Acquisition Transaction, or (ii) engage in any discussions with or provide
any confidential information or data to any Person that may reasonably be
expected to lead to an Acquisition Transaction, or (iii) engage in any
negotiations concerning, or otherwise facilitate any effort or attempt to make
or implement, an Acquisition Transaction. Notwithstanding the foregoing, the
Board of Directors of Sun shall be permitted (A) to respond to inquiries from
analysts, Governmental Authorities and holders of Sun Common Stock in the
ordinary course of business and as otherwise provided in this Agreement, (B) to
comply with Rule l4e-2(a) promulgated under the Exchange Act, to the extent
applicable, with regard to an Acquisition Proposal, (C) in response to an
unsolicited bona fide written Acquisition Proposal from any Person, to recommend
such Acquisition Transaction to its shareholders and/or withdraw or modify in
any adverse manner its approval or recommendation of this Agreement, (D) to
engage in any discussions or negotiations with, and/or provide any information
to, any Person in response to an unsolicited bona fide written Acquisition
Proposal by any such Person, and (E) to accept a Superior Proposal from any
Person, if and only to the extent that, in any such case described in the
preceding clause (C), (D) or (E), (i) the Sun Shareholders shall not have
approved this Agreement and the Merger, (ii) the Board of Directors of Sun shall
have concluded in good faith that such Acquisition Proposal (x) in the case
described in clause (C) above would, if consummated, constitute a Superior
Proposal, or (y), in the case described in clause (D) above, could reasonably be
expected to constitute a Superior Proposal, (iii) the Board of Directors of Sun
shall have determined in good faith, on the basis of written advice of outside
legal counsel, that such action is necessary for such Board of Directors to be
deemed to have acted in a manner consistent with its fiduciary duties under the
PBCL or other Applicable Law, (iv) prior to providing any information or data to
any Person in connection with an Acquisition Transaction by any such Person, the
Board of Directors shall have received from such Person an executed
confidentiality agreement containing terms and provisions no less favorable to
Sun than those contained in the Confidentiality Agreement between Sun and Omega,
and (v) in the case described in clause (E) above, Sun complies with and
terminates this Agreement pursuant to Section 8.1(g). Sun shall, within one (1)
business day, notify Omega in writing of any and all such inquiries, proposals
or offers received by, or any such discussions or negotiations sought to be
initiated or continued with, any of its representatives, which notice shall set
forth the identity of such Person and the material terms and conditions of any
Acquisition Proposal. Sun shall immediately cease and cause to be terminated any
pending or current activities, discussions or negotiations with any Persons with
respect to any Acquisition Transaction.
5.5 Delivery of Information. Sun will provide to Omega a copy of the
materials including monthly financial statements, distributed to directors of
Sun, SunBank or any other Sun Subsidiary in connection with board meetings.
5.6 Notification. Sun shall notify Omega promptly after becoming aware of
the occurrence of, or the impending or threatened occurrence of, any event that
would constitute a material breach on Sun's part of any obligation under this
Agreement or the occurrence of any
event that would cause any representation or warranty made by it herein to be
false or misleading in any material respect, or if it becomes a party or is
threatened with becoming a party to any Proceeding or upon the occurrence of any
event that would result in a material change in the circumstances described in
the representations and warranties contained herein; provided, however, that
such notification does not obviate any of Sun's responsibilities or obligations
under this Agreement. At all times up to and including, and as of, the Closing,
Sun shall inform Omega in writing of any and all facts necessary to amend or
supplement the representations and warranties made herein and in the Sun
Schedule as necessary so that the information contained herein and therein will
accurately reflect the current status of Sun and the Sun Subsidiaries; provided,
however, that any such updates to the Sun Schedule shall be required prior to
the Closing only with respect to matters which represent material changes to the
Sun Schedule and the information contained therein.
5.7 Inspections Permitted. Sun and the Sun Subsidiaries shall afford Omega
and its authorized agents and representatives reasonable access during normal
business hours to the properties, operations, books, records, contracts,
documents, loan files and other information of or relating to Sun or any Sun
Subsidiary. Omega will provide Sun at least 48 hours notice of any inspection
and conduct any inspection in a reasonable manner that will not interfere with
business operations. Sun shall cause all personnel of Sun and the Sun
Subsidiaries to provide reasonable assistance to Omega in its investigation of
matters relating to Sun or any Sun Subsidiaries.
ARTICLE 6
COVENANTS OF OMEGA
6.1 Banking Approvals and Other Consents. As promptly as practicable after
execution of this Agreement, Omega shall file any and all applications with the
appropriate Governmental Authorities in order to obtain the Banking Approvals
and shall take such other actions as may reasonably be required to consummate
the transactions contemplated in this Agreement with reasonable promptness.
Omega shall pay all fees and expenses arising in connection with such
applications for Banking Approvals. Omega agrees to use its best efforts to
provide the appropriate Governmental Authorities with the information required
by such authorities in connection with Omega's applications for Banking
Approvals and to use its best efforts to obtain such Banking Approvals, and any
other Consents and Governmental Approvals as may be required for the Closing, as
promptly as practicable; provided, however, that nothing in this Section shall
be construed to obligate Omega to take any action to meet any condition required
to obtain prior Banking Approvals if such condition is not routinely included
for the same approvals relating to transactions substantially similar to those
contemplated by this Agreement and would have a material adverse effect on the
ability of Omega or any Omega Subsidiary to carry on its business, as presently
conducted. Omega shall provide Sun the opportunity to and comment on all
required applications within a reasonable period prior to the filing thereof
provide Sun with copies of all written communications with Governmental
Authorities regarding any transactions provided for herein and related
applications and Proceedings. Subject to the term and conditions of this
Agreement, Omega shall use its best efforts to do, to cause to be done, all
things necessary, proper, or advisable under Applicable Laws to consummate the
transactions contemplated by this Agreement, including, without limitation,
using reasonable efforts to lift or rescind any injunction or restraining or
other order
adversely affecting the ability of the Parties to consummate the transaction
contemplated by this Agreement. Subject to the provisions of this Section, Omega
shall use, and shall cause each Omega Subsidiary to use, its best efforts to
obtain Consents of all third parties and Governmental Authorities necessary for
the consummation of the transactions contemplated by this Agreement.
6.2 Approvals and Registrations. Omega will use its best efforts to
prepare and file (a) the Registration Statement with the SEC, (b) with the
Governmental Authorities, applications for approval of the Merger, if required,
and (c) with the NASDAQ National Market, if necessary, an application for the
listing of the Shares, subject to official notice of issuance, except that Omega
shall have no obligation to file a new registration statement or a
post-effective amendment to the Registration Statement covering any reoffering
of Omega Common Stock by Affiliates of Sun. Omega, reasonably in advance of
making such filings, will provide Sun a reasonable opportunity to comment on
such filings and regulatory applications and will give due consideration to any
comments of Sun before making any such filing or application; and Omega will
provide Sun with copies of all such filings and applications at the time filed
if such filings and applications are made at any time before the Effective Time.
Omega covenants and agrees that all information furnished by Omega for inclusion
in the Registration Statement, the Prospectus/Proxy, and all applications and
submissions for the Banking Approvals and Governmental Approvals will comply in
all material respects with the provisions of Applicable Law, including the
Securities Act and the Exchange Act and the rules and regulations of the SEC,
the FDIC, the OCC, and FRB, and will not contain any untrue statement of a
material fact and will not omit to state any material fact required to be stated
therein or necessary to make the statements contained therein, in light of the
circumstances under which they were made, not misleading.
6.3 Employee Benefits; Directors Deferred Compensation Plan; Severance
Agreements.
(a) As soon as practical after the consummation of the transactions
contemplated herein, Omega shall have the right to terminate Sun's defined
benefit pension plan.
(b) All employees of Sun immediately prior to the Effective Time who
continue as employees of Omega will be afforded the opportunity to participate
in any employee benefit plans maintained by Omega, including but not limited to
any "employee benefit plan," as that term is defined in ERISA, on an equal basis
with similarly situated employees of Omega with comparable positions,
compensation, and tenure, subject to the provisions of this Section 6.3. Service
with Sun prior to the Effective Time by such former Sun employees will be deemed
service with Omega for all purposes.
(c) Upon the Closing, Omega shall retain all of employees of Sun
immediately prior to the Effective Time, subject to the needs of Omega's
business. Any Sun employee at the Effective Time whose employment with Omega is
terminated by Omega within six months after the Effective Time, other than for
cause, and who is not otherwise entitled to a severance payment or contract
assurance period pursuant to any written agreement with Sun, shall be entitled
to receive a severance payment equal to one week's salary at then current rates
for each full year of employment with Sun up to a maximum of 26 weeks. For the
purposes of this Agreement, termination by Omega shall include actual
termination, material reduction in salary, or relocation of the principal
workplace of the employee beyond 50 miles from the
employee's current workplace; and "cause" shall include the following: (i)
personal dishonesty, (ii) incompetence or intentional failure to perform regular
duties, (iii) willful misconduct or willful violation of any law, rule or
regulation (other than traffic violations or similar offenses) or final cease
and desist order, or (iv) breach of fiduciary duty. Following the transfer of
the former Sun employees to Omega's health plan(s), there shall be no exclusion
from coverage for any pre-existing medical condition of any such employee to the
extent such condition was covered under a health plan of Sun.
(i) Simultaneous with this Agreement, Omega shall enter into
the severance agreement with ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ attached hereto as Exhibit C
(the "▇▇▇▇▇▇▇▇▇ Severance Agreement), the severance agreement with ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇ attached hereto as Exhibit D (the "▇▇▇▇▇▇ Severance Agreement") and the
severance agreement with ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ attached hereto as Exhibit E (the
"▇▇▇▇▇▇ Severance Agreement"), and, after the Merger, Omega shall honor the
employment contracts of Sun specifically identified in Section 3.25 of the Sun
Schedule (other than the employment contracts that are superceded by the
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Agreement, the ▇▇▇▇▇▇ Severance Agreement and the ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ Agreement), in accordance with the terms of such contracts.
(d) From and after the Closing Date, Omega shall, without any
further action being required, assume all obligations under, and pay as and when
due, all amounts owed to directors of Sun pursuant to, existing plans for the
deferred payment of directors fees.
6.4 Notification. Omega shall notify Sun promptly after becoming aware of
the occurrence of, or the impending or threatened occurrence of, any event that
would constitute a material breach on its part of any obligation under this
Agreement or the occurrence of any event that could cause any representation or
warranty made by it herein to be false or misleading in any in respect, or if it
becomes a party or is threatened with becoming a party to any Proceeding or upon
the occurrence of any event that would result in a material change in the
circumstances described in the representations and warranties made herein;
provided, however, that such notification does not obviate any of Omega's
responsibilities or obligations under this Agreement. At all times up to and
including, and as of, the Closing, Omega shall inform Sun in writing of any and
all facts necessary to amend or supplement the representations and warranties
made herein and in the Omega Schedule as necessary so that the information
contained herein and therein will accurately reflect the current status of Omega
and the Omega Subsidiaries; provided, however, that any such updates to the
Omega Schedule shall be required prior to the Closing only with respect to
matters which represent material changes to the Omega Schedule and the
information contained therein.
6.5 Directors and Officers Indemnification and Insurance Coverage. On and
after the Effective Time, Omega shall indemnify, defend and hold harmless all
former and then-existing directors, officers and employees of Sun against all
losses, claims, damages, reasonable costs, reasonable expenses, liabilities or
judgments or amounts that are paid in settlement (with the approval of Omega,
which approval shall not be unreasonably withheld) or in connection with any
claim, action, suit, proceeding or investigation based in whole or in part on or
arising in whole or in part out of the fact that the person is or was a
director, officer or employee of Sun, whether pertaining to any matter existing
or occurring at or prior to the Effective Time and whether asserted or claimed
prior to, or at or after, the Effective Time to the same extent as the officer,
director or employee would be entitled to indemnification by Sun, as of the
Effective
Time, including the right to advancement of reasonable expenses. In addition,
Omega shall obtain and maintain a directors' and officers' liability insurance
tail coverage policy with respect to the directors and officers of Sun, relating
to periods prior to the Effective Time and for a period ending 6 years
thereafter, with coverages substantially the same as the coverages they have
under Sun's director and officer liability policy on the date hereof; provided,
however, that in no event shall Omega be required to spend in excess of 150% of
the premiums currently paid by Sun for their existing directors and officers
liability insurance policy, to satisfy its obligations under this Section 6.5.
6.6 Conduct of Omega Prior to the Effective Time. Except as expressly
provided in this Agreement, as agreed to by Sun or as required by Applicable
Law, during the period from the date of this Agreement to the Effective Time,
Omega shall, and shall cause the Omega Subsidiaries to (i) take no action which
would adversely affect or delay the ability of the Parties to obtain any
necessary Banking Approvals or Governmental Approvals or waivers of any
Governmental Authority required for the transactions contemplated hereby or to
perform their covenants and agreements in this Agreement on a timely basis, (ii)
take no action that would reasonably be expected to have a Material Adverse
Effect, (iii) continue to conduct their businesses in the ordinary course and
consistent with past practices; and (iv) pay no dividend other than normal
periodic dividends in accordance with existing practice. Notwithstanding
anything contained herein to the contrary, nothing in this Agreement shall be
deemed to prohibit Omega or any Omega Subsidiary from acquiring, or agreeing to
acquire, directly or indirectly, a controlling interest in any Person (by
merger, business combination or otherwise), or all or a portion of a Person's
business or assets.
6.7 Inspections Permitted. Omega and the Omega Subsidiaries shall afford
Sun and its authorized agents and representatives reasonable access during
normal business hours to the properties, operations, books, records, contracts,
documents, loan files and other information of or relating to Omega or any Omega
Subsidiary. Sun will provide Omega at least 48 hours notice of any inspection
and conduct any inspection in a reasonable manner that will not interfere with
business operations. Omega shall cause all personnel of Omega and the Omega
Subsidiaries to provide reasonable assistance to Sun in its investigation of
matters relating to Omega or the Omega Subsidiaries.
ARTICLE 7
CONDITIONS TO CLOSING
7.1 Conditions to the Obligations of Omega. Unless waived in writing by
Omega, the obligation of Omega to consummate the transactions contemplated by
this Agreement is subject to the satisfaction at or prior to the Closing Date of
all of the following conditions:
(a) Performance. Each of the material acts and undertakings of Sun
to be performed at or before the Closing Date pursuant to this Agreement shall
have been duly performed.
(b) No Material Adverse Effect. No change in the business, property,
assets (including loan portfolios), liabilities (whether absolute, contingent or
otherwise), operations, liquidity, income, or financial condition of Sun or any
of the Sun Subsidiaries shall have
occurred since the date of this Agreement which has had, or would reasonably be
likely to have, a Material Adverse Effect.
(c) Representations and Warranties. The representations and
warranties contained in Article 3 of this Agreement shall be (i) true and
correct in all respects to the extent that such representations and warranties
include any Material Adverse Effect or other materiality qualifier, and (ii)
true and correct in all material respects to the extent that such
representations and warranties are not so qualified or limited, in all cases,
when made and on and as of the Closing Date with the same effect as though made
on and as of the Closing Date
(d) Documents. In addition to the documents described elsewhere in
this Agreement, Omega shall have received the following documents and
instruments:
(i) the Voting Agreement of each director and executive
officer of Sun, duly executed by such director or officer;
(ii) a certificate signed by the Secretary or an assistant
secretary of Sun dated as of the Closing Date certifying that:
(A) Sun's Board of Directors and shareholders have duly
adopted resolutions (copies of which shall be attached to such certificate)
approving the substantive terms of this Agreement and authorizing the
consummation of transactions contemplated by this Agreement and certifying that
such resolutions have not been amended or modified and remain in full force and
effect;
(B) each person executing this Agreement on behalf of
Sun is an officer of Sun holding the office or offices specified therein, with
full power and authority to execute this Agreement and any and all other
documents in connection with the Merger, and that the signature of each person
set forth on such certificate is his or her genuine signature,
(C) Sun's Charter Documents, and the Charter Documents
of each Sun Subsidiary, all as attached to such certificate, remain in full
force and effect, and
(iii) a certificate signed by the Chairman of the Board,
President and Chief Financial Officer of Sun stating that to the best of their
knowledge and belief the conditions set forth in Sections 7.1(a), 7.1(b) and
7.1(c) of this Agreement have been satisfied; and
(iv) Certificates of Good Standing dated no later than 5 days
prior to the Effective Time that each of Sun and its Subsidiaries are each in
good standing in their jurisdictions of formation and any other jurisdiction
where they are qualified to do business.
(e) Opinion of Sun's Counsel. Omega shall have been furnished with
an opinion of Sun's legal counsel, dated the Closing Date, addressed to Omega,
substantially to the effect set forth in Exhibit B-1. Such opinion may (i)
expressly rely as to matters of fact upon certificates furnished by appropriate
officers of Sun or any Sun Subsidiary or appropriate Governmental Authorities;
and (ii) in the case of matters of law governed by the laws of the states in
which they are not licensed, reasonably rely upon the opinions of legal counsel
duly
licensed in such states and may be limited, in any event, to United States
federal law, and the laws of the Commonwealth of Pennsylvania.
(f) Other Business Combinations. Etc. Neither Sun nor any Sun
Subsidiary shall have entered into any agreement, letter of intent,
understanding or other arrangement pursuant to which Sun or any Sun Subsidiary
would merge, consolidate with, effect a business combination with, sell any
substantial part of Sun's or any Sun Subsidiary's assets to, or acquire a
significant part of the shares or assets of, any other Person (financial or
otherwise); or adopt any "poison pill" or other type of anti-takeover
arrangement, any shareholder rights provision, any "golden parachute" or similar
program which would have the effect of materially decreasing the value of Sun or
any Sun Subsidiaries or the benefits of the Merger to Omega.
(g) Fairness Opinion. Omega shall have received a fairness opinion
letter from independent financial adviser, Sandler ▇'▇▇▇▇▇ & Partners, L.P.,
dated the date hereof and to the effect that, the opinion of such adviser, the
consideration to be received by the Sun Shareholders is fair to the shareholders
of Omega from a financial point of view.
(h) Tax Opinion. Omega shall have received an opinion of Omega's
counsel, in form and substance reasonably satisfactory to Omega, to the effect
that the Merger will constitute a tax-free reorganization within the meaning of
Section 368(a) of the Code. In rendering such opinion, Omega's counsel may
require and rely upon representations and covenants, including those contained
in certificates of officers of Omega and others, reasonably satisfactory in form
and substance to such counsel.
7.2 Conditions to the Obligations of Sun. Unless waived in writing by Sun,
the obligation of Sun to consummate the transactions contemplated by this
Agreement is subject to the satisfaction at or prior to the Closing Date of all
of the following conditions:
(a) Performance. Each of the material acts and undertakings of Omega
to be performed at or prior to the Closing Date pursuant to this Agreement shall
have been duly performed in all material respects.
(b) No Material Adverse Effect. No change in the business, property,
assets (including loan portfolios), liabilities (whether absolute, contingent or
otherwise), operations, liquidity, income, or financial condition of Omega or
any of the Omega Subsidiaries shall have occurred since the date of this
Agreement which has had, or would reasonably be likely to have, a Material
Adverse Effect.
(c) Representations and Warranties. The representations and
warranties contained in Article 4 of this Agreement shall be (i) true and
correct in all respects to the extent that such representations and warranties
include any Material Adverse Effect or other materiality qualifier, and (ii)
true and correct in all material respects to the extent that such
representations and warranties are not so qualified or limited, in all cases,
when made and on and as of the Closing Date with the same effect as though made
on and as of the Closing Date.
(d) Documents. In addition to the other deliveries of Omega
described elsewhere in this Agreement, Sun shall have received the following
documents and instruments
(i) a certificate signed by the Secretary or an
assistant secretary of Omega dated as of the Closing Date certifying that
(A) Omega's Board of Directors and shareholders have
duly adopted resolutions (copies of which shall be attached to such certificate)
approving the substantive terms of this Agreement and authorizing the
consummation of the transactions contemplated by this Agreement and certifying
that such resolutions have not been amended or modified and remain in full force
and effect, and
(B) each person executing this Agreement on behalf of
Omega is an officer of Omega holding the office or offices specified therein,
with full power and authority to execute this Agreement and any and all
documents in connection with the Merger and that the signature of such person
set forth on such certificate is his or her genuine signature,
(C) Omega's Charter Documents, and the Charter Documents
of each Omega Subsidiary, all as attached to such certificate, remain in full
force and effect, and
(ii) a certificate signed by the Chairman of the Board,
President and Chief Officer of each of Omega stating that to the best of its
knowledge and belief the conditions set forth in Sections 7.2(a), 7.2(b) and
7.2(c) of this Agreement have been satisfied; and
(iii) Certificates of Good Standing dated no later than 5 days
prior to the Effective Time that each of Omega and its material Subsidiaries are
each in good standing in their jurisdictions of formation and any other
jurisdiction where they are qualified to do business.
(e) Consideration. Sun shall have received a certificate executed by
an authorized officer of the Exchange Agent to the effect that the Exchange
Agent has received and holds in its possession proper authorization to issue
certificates evidencing shares of Omega Common Stock and cash or other good
funds sufficient to meet the obligations of Omega to the Sun Shareholders to
deliver the Consideration under this Agreement.
(f) Opinion of Omega's Counsel. Sun shall have been furnished with
an opinion of counsel to Omega, dated as of the Closing Date, addressed to Sun,
substantially to the effect set forth on Exhibit B-2. Such opinion may (i)
expressly rely as to matters of fact upon certificates furnished by appropriate
officers of Omega or appropriate Government Authorities; and (ii) in the case of
matters of law governed by the laws of the states in which they are not
licensed, reasonably rely upon the opinions of legal counsel duly licensed in
such states and may be limited, in any event, to United States federal law and
the laws of the Commonwealth of Pennsylvania.
(g) Fairness Opinion. Sun shall have received a "fairness opinion"
letter from its independent financial adviser, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, or such
other qualified third party, dated the date hereof and to the effect that, in
the opinion of such adviser the Consideration to be received by the Sun
Shareholders is fair to the Sun Shareholders from a financial point of view.
(h) Tax Opinion. Sun shall have received an opinion of Sun's
counsel, in form and substance reasonably satisfactory to Sun, to the effect
that the Merger will constitute a tax-free reorganization within the meaning of
Section 368(a) of the Code. In rendering such opinion, Sun's counsel may require
and rely upon representations and covenants, including those
contained in certificates of officers of Sun and others, reasonably satisfactory
in form and substance to such counsel.
7.3 Conditions to Obligations of Each Party. The obligations of each Party
to effect the transactions contemplated hereby shall be subject to the
fulfillment, at or prior to the Closing, of the following conditions:
(a) No Pending or Threatened Claims. No Proceeding shall be pending
or threatened which presents a substantial risk of the restraint or prohibition
of the transactions contemplated by this Agreement or the obtaining of material
damages or other relief in connection therewith;
(b) Approvals and Consents Obtained. The Banking Approvals shall
have been received and all other Consents required to consummate the
transactions contemplated by this Agreement shall be been obtained, in each case
without the imposition of any conditions that are not routinely included for the
same approvals relating to transactions substantially similar to those
contemplated by this Agreement which would materially affect the benefits
normally expected to result from the transactions contemplated by this
Agreement, and all waiting periods incidental to such approvals or notices given
shall have expired; and
(c) Approval of Shareholders. Approval of this Agreement and the
transactions contemplated hereby by the Sun Shareholders and the Omega
Shareholders, as required by Applicable Law, the rules of the NASDAQ National
Market and the applicable provisions of Sun's or Omega's Charter Documents.
(d) Effectiveness of Registration Statement. The Registration
Statement has become effective under the Securities Act, and no stop order
suspending the effectiveness of the Registration Statement or preventing the use
of the Prospectus/Proxy has been issued and no Proceedings for that purpose have
been instituted or are pending or contemplated by the SEC or any state
securities or other regulatory authority.
(e) NASDAQ Listing. A sufficient number of shares of Omega Common
Stock for the purpose of issuing shares of Omega Common Stock to the Sun
Shareholders in accordance with this Agreement are listed for trading on the
NASDAQ National Market.
ARTICLE 8
TERMINATION
8.1 Termination. This Agreement may be terminated at any time
prior to the Closing, as follows:
(a) By mutual consent of the Board of Directors of Sun and the Board
of Directors of Omega;
(b) By Omega or Sun in the event the Closing shall not have occurred
by December 31, 2004, unless the failure of the Closing to occur shall be due to
the failure of the Party seeking to terminate this Agreement to perform its
obligations hereunder in accordance with this Agreement;
(c) By either Omega or Sun upon written notice to the other Party,
(i) upon denial of any Banking Approval or Governmental Approval necessary for
the consummation of the Merger (or should any such approval include any
condition or requirement that (A) is not routinely included for the same
approvals relating to transactions substantially similar to those contemplated
by this Agreement and (B) would materially adversely affect the benefits
normally expected from the transactions contemplated hereby); provided, however,
that either Omega or Sun may, upon written notice to the other, extend the term
of this Agreement for ninety (90) days to prosecute diligently and overturn such
denial (or imposition of such condition), provided that such denial (or
imposition) has been appealed within twenty (20) business days of the receipt
thereof or (ii) upon the failure to obtain the approval of the transactions
contemplated by this Agreement by the Sun Shareholders at the Sun shareholders
meeting to approve the same or (iii) upon the failure to obtain the approval of
the transactions contemplated by this Agreement by the Omega Shareholders at the
Omega shareholders meeting to approve the same;
(d) By Omega or Sun in the event that there shall have been a
material breach of any obligation, covenant, representation or warranty of the
other Party hereunder and such breach shall not have been remedied within five
days after receipt by the breaching Party of written notice from the other Party
specifying the nature of such breach and requesting that it be remedied, or such
longer period not to exceed 30 days as may be necessary to remedy such breach if
the same cannot reasonably be remedied within five days;
(e) By Omega should Sun or any Sun Subsidiary enter into any term
sheet, letter of intent, agreement or similar type agreement with a view to
being acquired by, or effecting a business combination with, any other Person;
or any agreement to merge, to consolidate, to combine or to sell a material
portion of its assets or to be acquired in any other manner by any other Person
or to acquire a material amount of assets or a material equity position in any
other Person, whether financial or otherwise;
(f) By Omega should either Sun or any Sun Subsidiary enter into any
formal agreement, letter of understanding, memorandum or other similar
arrangement with any bank regulatory authority establishing a formal capital
plan requiring Sun or any Sun Subsidiary to raise additional capital or to sell
a substantial portion of its assets;
(g) By Omega or Sun, if, at any time after the date of this
Agreement and prior to obtaining the Sun Shareholders' approval, Sun's Board of
Directors withdraws or modifies, in any manner adverse to Omega, its approval or
recommendation of this Agreement or the Merger; and
(h) By Sun, if (i) the average of the closing sales prices of Omega
Common Stock, as reported on the NASDAQ National Market, for the 10 consecutive
trading days ending 2 trading days prior to Closing (the "Omega Market Value")
is less than 80% of the closing sales price of Omega Common Stock ending on the
trading day immediately prior to the public announcement of the Merger, and (ii)
the quotient obtained by dividing the Omega Market Value by the closing sales
price of Omega Common Stock ending on the trading day immediately prior to
public announcement of the Merger is less than the number obtained when .20 is
subtracted from the quotient obtained by dividing the Closing Price of the
NASDAQ Bank Index on the trading day ending 2 days prior to Closing used in
determining the Omega Market Value by the
Closing Price of the NASDAQ Bank Index on the trading day immediately prior to
the public announcement of the Merger.
If a Party should elect to terminate this Agreement pursuant to
subsections (b), (c), (d), (e), (f), (g) or (h) of this Section, it shall give
notice to the other Party, in writing, of its election in the manner prescribed
in Section 9.1 of this Agreement.
8.2 Effect of Termination. If this Agreement is terminated pursuant to
Section 8.1, all further obligations of the Parties under this Agreement shall
terminate without further liability of any Party to another; provided, however,
that a termination under Section 8.1 shall not relieve any Party of any
liability under Section 8 of this Agreement, for breach of this Agreement or for
any misstatement or misrepresentation made hereunder prior to such termination,
or be deemed to constitute a waiver of any available remedy for any such breach,
misstatement or misrepresentation.
8.3 Fees.
(a) Notwithstanding anything to the contrary herein, Sun hereby
agrees to pay Omega, and Omega shall be entitled to receipt of, a fee of
$8,000,000 if this Agreement is terminated, unless such termination is pursuant
to Section 8.1(a), (b), (c), (d), (f) or (h). If such termination is pursuant to
Section 8.1(c)(ii) and within 120 days after the failure of the Sun Shareholders
to approve this Agreement, Sun or any Sun Subsidiary enters into an agreement,
letter of intent, memorandum of understanding or similar arrangement with anyone
other than Omega to engage in an Acquisition Transaction (except that, for
purposes of this Section 8.3(a), references to 10% and 25% in the definition of
the term "Acquisition Transaction" shall be deemed to be a reference to 50%), in
which case Sun shall pay, and Omega shall be entitled to receive, an additional
amount equal to $8,000,000.
(b) Sun hereby agrees that if this Agreement or the transactions
contemplated hereby are terminated pursuant to Section 8.1(c)(ii) or (d) (in the
event terminated by Omega due to a material breach by Sun), then Sun shall pay
all Expenses of Omega; provided, however, that Sun shall not be required to pay
any Expenses of Omega upon termination of this Agreement by Omega pursuant to
Section 8.1(c)(ii) if Omega's shareholders failed to approve the transactions
contemplated by this Agreement at the Omega shareholders meeting to approve the
same.
(c) Omega hereby agrees that if this Agreement or the transactions
contemplated hereby are terminated pursuant to Section 8.1(c)(iii) or (d) (in
the event terminated by Sun due to a material breach by Omega), then Omega shall
pay all Expenses of Sun; provided, however, that Omega shall not be required to
pay any Expenses of Sun upon termination of this Agreement by Sun pursuant to
Section 8.1(c)(iii) if Sun's shareholders failed to approve the transactions
contemplated by this Agreement at the Sun shareholders meeting to approve the
same.
(d) Sun shall pay to Omega the amounts to which Omega is entitled
under this Section 8.3 within five (5) business days after the occurrence of the
event that entitles Omega to receive such amount. Omega shall pay to Sun the
amounts to which Sun is entitled under Section 8.3(c) within five (5) business
days after effective date of the termination of this Agreement by Sun pursuant
to Section 8.1(d).
(e) Sun shall notify Omega promptly in writing of its knowledge of
the occurrence of any Acquisition Transaction; provided, however, that the
giving of such notice by Sun shall not be a condition to the right of Omega to
receive any payment under this Section 8.3.
ARTICLE 9
GENERAL PROVISIONS
9.1 Notices. Any notice, request, demand and other communication which
either Party hereto may desire or may be required hereunder to give shall be in
writing and shall be deemed to be duly given if delivered personally or mailed
by certified or registered mail (postage prepaid, return receipt requested), air
courier or facsimile transmission, addressed or transmitted to such other Party
as follows:
If to Omega: Omega Financial Corporation
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇, Chairman and Chief Executive Officer
Fax: ▇▇▇-▇▇▇-▇▇▇▇
With copies to: Blank Rome LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esquire
If to Sun: Sun Bancorp, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
President and Chief Executive Officer
With copies to: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, P.C.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇ ▇ ▇▇▇ ▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇., Esquire
or to such other address as any Party hereto may hereafter designate to
the other Parties in writing. Notice shall be deemed to have been given on the
date reflected in the proof or evidence of delivery, or if none, on the date
actually received.
9.2 Governing Law. This Agreement shall be governed by, and construed and
enforced a accordance with, the internal laws, and not the laws pertaining to
choice or conflicts of laws, of the Commonwealth of Pennsylvania, unless and to
the extent that federal law controls. Disputes arising between the Parties in
connection with this Agreement or the transactions that are the subject of this
Agreement shall be heard in a court of competent jurisdiction located in
Harrisburg, Pennsylvania or in the Middle District of Pennsylvania.
9.3 Counterparts. This Agreement may be executed simultaneously in one or
more counterparts, each of which shall be deemed an original, but all of which
shall constitute but one and the same instrument.
9.4 Publicity. The Parties hereto will consult with each other with regard
to the terms and substance of any press releases, announcements, communications
with customers, employees or shareholders, or other public statements with
respect to the transactions contemplated hereby. To the extent practicable, each
Party shall provide the proposed text of any such press release, announcement,
public statement or communication with customers, employees or shareholders to
the other Party prior to its publication, shall permit such other Party a
reasonable period to provide comments thereon, and shall not issue the same over
the other Party's reasonable objection.
9.5 Entire Agreement; No Third Party Beneficiaries; Assignment. This
Agreement, together with the recitals and definitions appearing at the beginning
hereof, and the Schedules, Annexes and Exhibits required to be delivered
hereunder and any amendments or addenda hereafter executed and delivered in
accordance with this Section constitute the entire agreement of the Parties
hereto pertaining to the transactions contemplated hereby and supersede all
prior written and oral (and all contemporaneous oral) agreements and
understandings of the Parties hereto concerning the subject matter hereof. The
Schedules, Annexes and Exhibits attached hereto or furnished pursuant to this
Agreement are hereby incorporated as integral parts of this Agreement. Except to
the extent otherwise provided herein, by specific language and not by
mere implication, this Agreement is not intended to confer upon any other Person
not a Party to this Agreement any rights or remedies hereunder. Neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by either of the Parties (whether by operation of law or otherwise)
without the prior written consent of the other Party. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of and be
enforceable by the parties and their respective successors and assigns.
9.6 Severability. If any portion or provision of this Agreement should be
determined by a court of competent jurisdiction to be invalid, illegal or
unenforceable in any jurisdiction, such portion or provision shall be
ineffective as to that jurisdiction to the extent of such invalidity, illegality
or unenforceability, without affecting in any way the validity or enforceability
of the remaining portions or provisions hereof in such jurisdiction or rendering
that or any other portions or provisions of this Agreement invalid, illegal or
unenforceable in any other jurisdiction.
9.7 Modifications, Amendments and Waivers. At any time prior to
the Closing or termination of this Agreement, the Parties may:
(a) extend the time for the performance of any of the obligations or
other acts of the other Party hereto;
(b) waive any inaccuracies in the representations and warranties
made by the other Party contained in this Agreement or in the Schedules or
Exhibits hereto or any other document delivered pursuant to this Agreement;
(c) waive compliance with any of the covenants or agreements of the
other Party contained in this Agreement to the extent permitted by Applicable
Law; and
(d) amend or add to any provision of this Agreement; provided,
however, that no provision of this Agreement may be amended or added to other
than by an agreement in writing duly executed by the Parties or their respective
successors in interest and expressly stating that it is an amendment to this
Agreement.
9.8 Interpretation. All headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. The terms "herein," "hereof," "hereby,"
"hereunder" and other similar terms refer to this Agreement as a whole and not
only to the particular Article, Section or other subdivision in which any such
terms may be employed. References to Articles, Sections, Schedules, Exhibits and
other subdivisions refer to the Articles, Sections, Schedules, Exhibits and
other subdivisions of this Agreement. A reference to any Person shall include
such Person's predecessors. All accounting terms not otherwise defined herein
have the meanings assigned to them in accordance with GAAP. The words "includes"
and "including" and their syntactical variants mean "includes, but is not
limited to" and "including, without limitation," and corresponding syntactical
variant expressions. Use of the plural form of a word shall be deemed to include
the singular and vice versa.
9.9 Payment of Expenses. Except as set forth herein, Omega and Sun shall
each pay its own fees and Expenses; provided however, that the costs and
expenses of printing and
mailing the Prospectus/Proxy, and all filing and other fees paid to the SEC in
connection with the Merger, shall be borne equally by the Parties.
9.10 Provisions Which Survive. Except for the agreements of the Parties in
Sections 1.2(c), 1.2(d), 1.2(e), 2.2, 2.4(e), 2.5, 6.3, 6.5, 8.2, 8.3, 9.9,
9.10, and 9.13, which shall survive the Closing, none of the representations,
warranties and conditions of the Parties contained in this Agreement or in any
instrument of transfer or other document delivered in connection with the
transactions contemplated by this Agreement shall survive the Closing or other
termination of this Agreement. The agreements of the Parties in Sections 1.2(c),
1.2(d), 1.2(e), 2.2, 2.5, 6.3 and 6.5 shall be enforceable directly by each
Person benefited or intended to be benefited by such sections.
9.11 No Waiver. No failure, delay or omission of or by either Party in
exercising any right, power or remedy upon any breach or default of the other
Party shall impair any such rights, powers or remedies of the Party not in
breach or default, nor shall it be construed to be a waiver of any such right
power or remedy, or an acquiescence in any similar breach or default nor shall
any waiver of any single breach or default be deemed a waiver of any other
breach or default theretofore or thereafter occurring. Any waiver, permit,
consent or approval of any kind or character on the part of either Party of any
provisions of this Agreement must be in writing and must be executed by each
Party and shall be effective only to the extent specifically set forth in such
writing.
9.12 Remedies Cumulative. All remedies provided in this Agreement, by law
or equity, shall be cumulative and not alternative.
9.13 Confidentiality. Any non-public or confidential information disclosed
by or on behalf of either Sun (or any Sun Subsidiary) or Omega (or any Omega
Subsidiary) to the other Party or any of its respective Subsidiaries or
Affiliates pursuant to this Agreement or as a result of the discussions and
negotiations leading to this Agreement, or otherwise disclosed, or to which any
other Party has acquired or may acquire access, shall be kept strictly
confidential and shall not be used in any manner by the recipient except in
connection with the transactions contemplated by this Agreement. To that end,
the Parties will each, to the maximum extent practicable restrict knowledge of
and access to non-public or confidential information of the other Party to its
officers, directors, employees and professional advisors who are directly
involved in the transactions contemplated hereby and reasonably need to know
such information. Further to that end, all non-public or confidential documents
(including all copies thereof) obtained hereunder by any Party shall be returned
as soon as practicable after any termination of this Agreement.
Signatures appear on following page
IN WITNESS WHEREOF, each of the Parties hereto has duly executed and
delivered this Agreement or has caused this Agreement to be executed and
delivered in its name and on its behalf by its representative thereunto duly
authorized, all as of the date first written above.
SUN BANCORP, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
President and Chief Executive Officer
OMEGA FINANCIAL CORPORATION
By: /s/ ▇▇▇▇▇ ▇▇▇
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▇▇▇▇▇ ▇▇▇
Chairman and Chief Executive Officer
[SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER]
