FORM S-4/A
As filed with the Securities and Exchange Commission on
February 17, 2009
File No. 333-156923
UNITED STATES SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C.
20549
Amendment No. 1
to
Form S-4
REGISTRATION
STATEMENT
UNDER
THE SECURITIES ACT OF
1933
M&T Bank
Corporation
(Exact Name of Registrant as
Specified in Its Charter)
|
|
|
|
|
New York
|
|
6022
|
|
16-0968385
|
(State or Other Jurisdiction
of
Incorporation or Organization)
|
|
(Primary Standard Industrial
Classification Code Number)
|
|
(IRS Employer
Identification Number)
|
One M&T Plaza
Buffalo, New York 14203
(716) 842-5445
(Address, Including Zip Code,
and Telephone Number, Including Area Code, of Registrants
Principal Executive Offices)
Mark W. Yonkman
Senior Vice President and General Counsel
M&T Bank Corporation
One M&T Plaza
Buffalo, New York 14203
(716) 842-5445
(Name, Address, Including Zip
Code, and Telephone Number, Including Area Code, of Agent for
Service)
Copies to:
|
|
|
|
|
Edward D. Herlihy, Esq.
Nicholas G. Demmo, Esq.
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
(212) 403-1000
|
|
Robert L. Davis
General Counsel
Provident Bankshares Corporation
114 East Lexington Street
Baltimore, Maryland 21202
(410) 277-7000
|
|
H. Rodgin Cohen, Esq.
Mark J. Menting, Esq.
Sullivan & Cromwell LLP
125 Broad Street
New York, New York 10004
(212) 558-4000
|
Approximate Date of Commencement of Proposed Sale to the
Public: As soon as practicable after this
Registration Statement becomes effective and upon completion of
the merger described in the enclosed document.
If the securities being registered on this form are being
offered in connection with the formation of a holding company
and there is compliance with General Instruction G, check the
following
box: o
If this form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act
of 1933, as amended (the Securities Act), check the
following box and list the Securities Act registration statement
number of the earlier effective registration statement for the
same
offering: o
If this form is a post-effective amendment filed pursuant to
Rule 462(d) under the Securities Act, check the following
box and list the Securities Act registration statement number of
the earlier effective registration statement for the same
offering: o
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company. See the definitions of
large accelerated filer, accelerated
filer and smaller reporting company in Rule
12b-2 of the
Exchange Act. (Check one):
|
|
|
|
|
|
|
Large accelerated
filer þ
|
|
Accelerated
filer o
|
|
Non-accelerated
filer o
(Do not check if a smaller reporting company)
|
|
Smaller reporting
company o
|
If applicable, place an X in the box to designate the
appropriate rule provision relied upon in conducting this
transaction: o
Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender
Offer) o
Exchange Act Rule 14d-1(d) (Cross Border Third-Party Tender
Offer) o
The Registrant hereby amends this Registration Statement on
such date or dates as may be necessary to delay its effective
date until the Registrant shall file a further amendment that
specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(a)
of the Securities Act or until this Registration Statement shall
become effective on such date as the Securities and Exchange
Commission, acting pursuant to said Section 8(a), may
determine.
Information contained herein is subject to completion or
amendment. A registration statement relating to these securities
has been filed with the Securities and Exchange Commission.
These securities may not be sold nor may offers to buy be
accepted prior to the time the registration statement becomes
effective. This proxy statement/prospectus shall not constitute
an offer to sell or the solicitation of any offer to buy nor
shall there be any sale of these securities in any jurisdiction
in which such offer, solicitation or sale would be unlawful
prior to registration or qualification under the securities laws
of any such jurisdiction.
|
PRELIMINARY
SUBJECT TO COMPLETION DATED FEBRUARY 17,
2009
MERGER
PROPOSED YOUR VOTE IS VERY IMPORTANT
Dear Provident common stockholders:
On December 18, 2008, Provident Bankshares Corporation
(Provident) and M&T Bank Corporation
(M&T) agreed to a strategic business
combination in which Provident will merge with a subsidiary of
M&T. If the merger is completed, Provident common
stockholders will have a right to receive 0.171625 of a share of
M&T common stock for each share of Provident common stock
held immediately prior to the merger. We are sending you this
proxy statement/prospectus to notify you of and invite you to
the special meeting of Provident common stockholders being held
to consider the agreement and plan of merger and related matters
and to ask you to vote at the special meeting in favor of the
agreement and plan of merger and the transactions contemplated
thereby, including the merger.
The special meeting of the common stockholders of Provident will
be held at 250 North Calvert Street, Baltimore, Maryland on
April 8, 2009 at 10:00 a.m. local time.
At the special meeting, you will be asked to approve the
Agreement and Plan of Merger (merger agreement)
dated as of December 18, 2008 that Provident has entered
into with M&T and First Empire State Holding Company, a
wholly owned direct subsidiary of M&T (Merger
Sub), and the transactions contemplated thereby, including
the merger. In the merger, Provident will merge with and into
Merger Sub, with Merger Sub surviving the merger as a wholly
owned subsidiary of M&T. You will also be asked to approve
the adjournment or postponement of the special meeting, if
necessary, to solicit additional proxies in favor of the merger
agreement and the transactions contemplated thereby, including
the merger.
The merger is intended to be treated as a reorganization within
the meaning of Section 368(a) of the Internal Revenue Code
of 1986, as amended, and holders of Provident common stock are
not expected to recognize any gain or loss for United States
federal income tax purposes on the exchange of shares of
Provident common stock for shares of M&T common stock in
the merger, except with respect to any cash received instead of
fractional shares of M&T common stock.
The market value of the merger consideration will fluctuate with
the market price of M&T common stock. The following table
shows the closing sale prices of M&T common stock and
Provident common stock as reported on the New York Stock
Exchange (the NYSE) and the NASDAQ Global Select
Market (NASDAQ), respectively, on December 16,
2008, the trading day on which the exchange ratio was
calculated, and on February 12, 2009, the last practicable
trading day before the distribution of this proxy
statement/prospectus. This table also shows the implied value of
the merger consideration proposed for each share of Provident
common stock, which we calculated by multiplying the closing
price of M&T common stock on those dates by the exchange
ratio of 0.171625.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
M&T
|
|
|
Provident
|
|
|
Implied Value of One
|
|
|
|
Common Stock
|
|
|
Common Stock
|
|
|
Share of Provident
|
|
|
|
(NYSE: MTB)
|
|
|
(NASDAQ: PBKS)
|
|
|
Common Stock
|
|
|
At December 16, 2008
|
|
$
|
61.18
|
|
|
$
|
6.63
|
|
|
$
|
10.50
|
|
At February 12, 2009
|
|
$
|
38.57
|
|
|
$
|
6.37
|
|
|
$
|
6.62
|
|
Providents Board of Directors has unanimously declared
advisable the merger agreement and the transactions contemplated
thereby, including the merger, and recommends that Provident
common stockholders vote FOR approval of the merger
agreement and the transactions contemplated thereby, including
the merger, and FOR the approval of the adjournment
or postponement of the special meeting, if necessary, to solicit
additional proxies in favor of the merger agreement and the
transactions contemplated thereby, including the merger.
To complete the merger, the merger agreement and the
transactions contemplated thereby must be approved by the
holders of two-thirds of all the votes entitled to be cast on
the matter by Provident stockholders. Holders of Provident
preferred stock may attend the meeting, but are not entitled to
and are not being requested to vote at the Provident special
meeting. Your vote is very important. Whether or not you
expect to attend the special meeting,
please vote as soon as possible to ensure that your shares are
represented at the special meeting. Registered and many
broker-managed stockholders can vote their shares by using a
toll-free number or the Internet. Instructions for using these
convenient services are provided on the enclosed proxy card. You
may also vote your shares by marking your votes on the enclosed
proxy card, signing and dating it and mailing it in the envelope
provided. If you sign and return your proxy card without
specifying your vote, your shares will be voted in favor of the
merger agreement and the transactions contemplated thereby.
This proxy statement/prospectus provides you with detailed
information about the merger. In addition to being a proxy
statement of Provident, this proxy statement/prospectus is also
the prospectus of M&T for M&T common stock that will
be issued in connection with the merger. We encourage you to
read the entire document carefully. Please pay particular
attention to Risk Factors beginning on Page 12
for a discussion of the risks related to the merger and owning
M&T common stock after the merger.
I look forward to seeing you on April 8, 2009 in Baltimore,
Maryland.
Sincerely,
Gary N. Geisel
Chairman and Chief Executive Officer
Please read this proxy statement/prospectus carefully because
it contains important information about the merger. Read
carefully the risk factors relating to the merger beginning on
Page 12. You can also obtain information about M&T and
Provident from documents that each of us has filed with the
Securities and Exchange Commission.
Neither the Securities and Exchange Commission nor any state
securities commission or bank regulatory agency has approved or
disapproved the securities to be issued in the merger or
determined if this proxy statement/prospectus is accurate or
adequate. Any representation to the contrary is a criminal
offense.
The securities to be issued in the merger are not savings or
deposit accounts or other obligations of any bank or non-bank
subsidiary of either M&T or Provident, and they are not
insured by the Federal Deposit Insurance Corporation or any
other governmental agency.
This proxy statement/prospectus is dated February 17, 2009
and will be first mailed or otherwise delivered to Provident
stockholders on or about February 17, 2009.
PROVIDENT
BANKSHARES CORPORATION
NOTICE OF SPECIAL MEETING OF COMMON STOCKHOLDERS
TO BE HELD ON APRIL 8, 2009
Dear Provident common stockholder:
You are cordially invited to attend a special meeting of the
common stockholders of Provident Bankshares Corporation, a
Maryland corporation (Provident), on April 8,
2009 at 10:00 a.m. local time, at 250 North Calvert Street,
Baltimore, Maryland, for the purpose of considering and voting
upon the following matters:
|
|
|
|
|
To approve the Agreement and Plan of Merger (the merger
agreement), dated as of December 18, 2008, among
M&T Bank Corporation, a New York corporation
(M&T), Provident and First Empire State Holding
Company, a Maryland corporation and wholly owned direct
subsidiary of M&T (Merger Sub), pursuant to
which Provident will merge with and into Merger Sub as more
fully described in the attached proxy statement/prospectus, and
the transactions contemplated in the merger agreement, including
the merger.
|
|
|
|
To adjourn or postpone the special meeting, if necessary, to
solicit additional proxies in favor of the merger agreement and
the transactions contemplated thereby, including the merger.
|
We have fixed the close of business on February 12, 2009 as
the record date for determining those common stockholders
entitled to notice of and to vote at the special meeting and any
adjournments or postponements of the special meeting. Only
Provident common stockholders of record at the close of business
on that date are entitled to and being requested to vote at the
special meeting and any adjournments or postponements of the
special meeting.
Please vote as soon as possible. To complete the merger,
the merger agreement and the transactions contemplated thereby
must be approved by the holders of two-thirds of all the votes
entitled to be cast on the matter by Provident stockholders.
Abstentions and shares that you have not authorized your broker
to vote will have the same effect as votes against approval of
the merger agreement and the transactions contemplated thereby.
Whether or not you intend to attend the special meeting,
please vote as promptly as possible by (1) accessing the
Internet website specified on your proxy card, (2) calling
the toll-free number specified on your proxy card, or
(3) signing and returning the enclosed proxy card in the
postage-paid envelope provided. If your shares are held in the
name of a broker, bank or other fiduciary, please follow the
instructions on the voting instruction card provided by such
person. If you attend the special meeting, you may vote in
person if you wish, even if you have previously returned your
proxy card. If you wish to attend the special meeting and vote
in person and your shares are held in the name of a broker,
trust, bank or other nominee, you must bring with you a proxy or
letter from the broker, trustee, bank or nominee to confirm your
beneficial ownership of the shares.
We encourage you to read the attached proxy statement/prospectus
carefully. If you have any questions or need assistance voting
your shares, please call our proxy solicitor, Innisfree M&A
Incorporated, toll-free at
888-750-5834.
Providents Board of Directors has unanimously declared
advisable the merger agreement and the transactions contemplated
thereby, including the merger, and recommends that Provident
common stockholders vote FOR approval of the merger
agreement and the transactions contemplated thereby, including
the merger, and FOR the approval of the adjournment
or postponement of the special meeting, if necessary, to solicit
additional proxies in favor of the merger agreement and the
transactions contemplated thereby, including the merger.
By Order of the Board of Directors
Gary N. Geisel
Chairman and Chief Executive Officer
Baltimore, Maryland
February 17, 2009
ADDITIONAL
INFORMATION
This proxy statement/prospectus incorporates by reference
important business and financial information about M&T and
Provident from other documents that are not included in or
delivered with this proxy statement/prospectus. This information
is available to you without charge upon your written or oral
request. You can obtain those documents incorporated by
reference into this proxy statement/prospectus by accessing the
Securities and Exchange Commissions website maintained at
http://www.sec.gov
or by requesting copies in writing or by telephone from the
appropriate company:
|
|
|
M&T Bank Corporation
Attention: Shareholder Relations
One M&T Plaza
Buffalo, New York 14203
(716) 842-5138
|
|
Provident Bankshares Corporation
Attention: Stockholder Relations
114 East Lexington Street
Baltimore, Maryland 21202
(410) 277-2080
|
You will not be charged for any of these documents that you
request. If you would like to request documents from either
company, please do so by April 1, 2009 in order to receive
them before Providents special meeting. M&Ts
Internet address is
http://www.mtb.com
and Providents Internet address is
http://www.provbank.com.
The information on our Internet sites is not a part of this
proxy statement/prospectus.
See Where You Can Find More Information on
Page 68 and Recent Developments on Page 8.
ABOUT
THIS DOCUMENT
This document, which forms part of a registration statement on
Form S-4
filed with the Securities and Exchange Commission (the
SEC) by M&T (File
No. 333-156923),
constitutes a prospectus of M&T under Section 5 of the
Securities Act of 1933, as amended, which we refer to as the
Securities Act, with respect to the M&T common shares to be
issued to Provident common stockholders as required by the
merger agreement. This document also constitutes a joint proxy
statement under Section 14(a) of the Securities Exchange
Act of 1934, as amended, which we refer to as the Exchange Act.
It also constitutes a notice of meeting with respect to the
special meeting of Provident common stockholders, at which
Provident common stockholders will be asked to vote upon a
proposal to approve the merger agreement and the transactions
contemplated thereby.
You should rely only on the information contained or
incorporated by reference into this document. No one has been
authorized to provide you with information that is different
from that contained in, or incorporated by reference into, this
document. This document is dated February 17, 2009. You should
not assume that the information contained in, or incorporated by
reference into, this document is accurate as of any date other
than that date. Neither the mailing of this document to
Provident stockholders nor the issuance by M&T of stock in
connection with the merger will create any implication to the
contrary.
This document does not constitute an offer to sell, or a
solicitation of an offer to buy, any securities, or the
solicitation of a proxy, in any jurisdiction to or from any
person to whom it is unlawful to make any such offer or
solicitation in such jurisdiction. Except where the context
otherwise indicates, information contained in this document
regarding Provident has been provided by Provident and
information contained in this document regarding M&T has
been provided by M&T.
TABLE OF
CONTENTS
|
|
|
|
|
|
|
Page
|
|
|
|
|
iii
|
|
|
|
|
1
|
|
|
|
|
8
|
|
|
|
|
8
|
|
|
|
|
8
|
|
|
|
|
8
|
|
|
|
|
9
|
|
|
|
|
10
|
|
|
|
|
11
|
|
|
|
|
12
|
|
|
|
|
15
|
|
|
|
|
17
|
|
|
|
|
19
|
|
|
|
|
19
|
|
|
|
|
19
|
|
|
|
|
23
|
|
|
|
|
26
|
|
|
|
|
36
|
|
|
|
|
36
|
|
|
|
|
36
|
|
|
|
|
36
|
|
|
|
|
38
|
|
|
|
|
39
|
|
|
|
|
41
|
|
|
|
|
41
|
|
|
|
|
41
|
|
|
|
|
42
|
|
|
|
|
42
|
|
|
|
|
42
|
|
|
|
|
43
|
|
|
|
|
43
|
|
|
|
|
44
|
|
|
|
|
44
|
|
|
|
|
46
|
|
|
|
|
47
|
|
|
|
|
47
|
|
|
|
|
48
|
|
|
|
|
49
|
|
|
|
|
49
|
|
|
|
|
50
|
|
|
|
|
50
|
|
|
|
|
51
|
|
|
|
|
51
|
|
|
|
|
|
|
|
|
Page
|
|
|
|
|
52
|
|
|
|
|
52
|
|
|
|
|
52
|
|
|
|
|
53
|
|
|
|
|
54
|
|
|
|
|
54
|
|
|
|
|
55
|
|
|
|
|
55
|
|
|
|
|
55
|
|
|
|
|
56
|
|
|
|
|
56
|
|
|
|
|
57
|
|
|
|
|
58
|
|
|
|
|
58
|
|
|
|
|
58
|
|
|
|
|
60
|
|
|
|
|
61
|
|
|
|
|
61
|
|
|
|
|
61
|
|
|
|
|
61
|
|
|
|
|
62
|
|
|
|
|
62
|
|
|
|
|
62
|
|
|
|
|
62
|
|
|
|
|
63
|
|
|
|
|
63
|
|
|
|
|
63
|
|
|
|
|
65
|
|
|
|
|
65
|
|
|
|
|
66
|
|
|
|
|
66
|
|
|
|
|
67
|
|
|
|
|
67
|
|
|
|
|
67
|
|
|
|
|
67
|
|
|
|
|
67
|
|
|
|
|
68
|
|
|
|
|
A-1
|
|
|
|
|
B-1
|
|
|
|
|
II-1
|
|
EX-5 |
EX-8a |
EX-8b |
EX-23a |
EX-23d |
EX-99b |
ii
QUESTIONS
AND ANSWERS ABOUT THE MERGER AND SPECIAL MEETING
The questions and answers below highlight only selected
procedural information from this proxy statement/prospectus.
They do not contain all of the information that may be important
to you. You should read carefully the entire document and the
additional documents incorporated by reference into this proxy
statement/prospectus to fully understand the merger agreement
and the transactions contemplated thereby, including the merger,
and the voting procedures for the special meeting. We generally
refer to M&T Bank Corporation as M&T,
Provident Bankshares Corporation as Provident, and
First Empire State Holding Company, a wholly owned subsidiary of
M&T, as Merger Sub throughout this proxy
statement/prospectus.
|
|
|
Q: |
|
What is the proposed transaction for which I am being asked
to vote? |
|
A: |
|
Providents common stockholders are being asked to approve
the Agreement and Plan of Merger, dated as of December 18,
2008 among M&T, Provident and Merger Sub, and the
transactions contemplated thereby, including the merger of
Provident with and into Merger Sub, with Merger Sub surviving,
which we refer to as the merger within this proxy
statement/prospectus. |
|
Q: |
|
What do I need to do now? |
|
A: |
|
After you have carefully read this proxy statement/prospectus
and have decided how you wish to vote your shares, please vote
your shares promptly. If you hold common stock in your name as a
stockholder of record, you must complete, sign, date and mail
your proxy card in the enclosed postage paid return envelope as
soon as possible. You may also authorize a proxy to vote your
shares by telephone or through the Internet as instructed on the
enclosed proxy card. If you hold your stock in street
name through a bank or broker, you must direct your bank
or broker to vote in accordance with the instructions you have
received from your bank or broker. Submitting your proxy card,
authorizing a proxy by telephone or through the Internet, or
directing your bank or broker to vote your shares will ensure
that your shares are represented and voted at the special
meeting. |
|
Q: |
|
If I am a Provident common stockholder, should I send my
Provident stock certificates with my proxy card? |
|
A: |
|
No. Please DO NOT send your Provident stock certificates
with your proxy card. After the merger, M&T will send you
instructions for exchanging Provident stock certificates for the
merger consideration. Unless Provident common stockholders
specifically ask to receive M&T stock certificates, the
shares of M&T stock they receive in the merger will be
issued in book-entry form. |
|
Q: |
|
Why is my vote important? |
|
A: |
|
If you do not vote by proxy or vote in person at the special
meeting, it will be more difficult for us to obtain the
necessary quorum to hold our special meeting. In addition, your
failure to vote, by proxy or in person, will have the same
effect as a vote against the merger agreement and the
transactions contemplated thereby. The merger agreement and the
transactions contemplated thereby must be approved by the
holders of two-thirds of all the votes entitled to be cast on
the matter by Provident stockholders. Holders of Provident
preferred stock are not entitled to and are not being requested
to vote at the Provident special meeting. Providents
Board of Directors unanimously recommends that you vote FOR
approval of the merger agreement and the transactions
contemplated thereby, including the merger. |
|
Q: |
|
If my shares of common stock are held in street name by my
broker, will my broker automatically vote my shares for me? |
|
A: |
|
No. Your broker cannot vote your shares without
instructions from you. You should instruct your broker as to how
to vote your shares, following the directions your broker
provides to you. Please check the voting form used by your
broker. |
|
Q: |
|
What if I fail to instruct my broker? |
|
A: |
|
If you do not provide your broker with instructions and your
broker submits an unvoted proxy, referred to as a broker
non-vote, the broker non-vote will be counted toward a quorum at
the special meeting, but it will have |
iii
|
|
|
|
|
the same effect as a vote against the merger agreement and the
transactions contemplated thereby. With respect to the proposal
to adjourn the special meeting if necessary or appropriate to
solicit additional proxies, an abstention will have the same
effect as a vote against the proposal. If you fail to instruct
your broker to vote your shares, your broker may vote your
shares in its discretion on this proposal. |
|
Q: |
|
Can I attend the special meeting and vote my shares in
person? |
|
A: |
|
Yes. All common stockholders, including common stockholders of
record and common stockholders who hold their shares through
banks, brokers, nominees or any other holder of record, may
attend the special meeting. Holders of record of Provident
common stock can vote in person at the special meeting. Holders
of Provident preferred stock may attend the special meeting, but
are not entitled to and are not being requested to vote at the
special meeting. If you are not a common stockholder of record,
you must obtain a proxy, executed in your favor, from the record
holder of your shares of common stock, such as a broker, bank or
other nominee, to be able to vote in person at the special
meeting. If you plan to attend the special meeting, you must
hold your shares of common stock in your own name or have a
letter from the record holder of your shares of common stock
confirming your ownership and you must bring a form of personal
photo identification with you in order to be admitted. |
|
Q: |
|
Can I change my vote? |
|
A: |
|
Yes. A Provident common stockholder who has given a proxy may
revoke it at any time before its exercise at the special meeting
by (i) giving written notice of revocation to
Providents Corporate Secretary, (ii) properly
submitting to Provident a duly executed proxy bearing a later
date or (iii) attending the special meeting and voting in
person. Any common stockholder entitled to vote in person at the
special meeting may vote in person regardless of whether a proxy
has been previously given, and such vote will revoke any
previous proxy, but the mere presence (without notifying the
Corporate Secretary) of a common stockholder at the special
meeting will not constitute revocation of a previously given
proxy. |
|
|
|
All written notices of revocation and other communications with
respect to revocation of proxies should be addressed to
Provident as follows: Corporate Secretary, 114 East Lexington
Street, Baltimore, Maryland 21202. |
|
|
|
Proxies may also be revoked via the Internet or telephone
following the instructions on your proxy card. |
|
Q: |
|
Will Provident be required to submit the merger agreement to
its stockholders? |
|
A: |
|
Yes. Under the terms of the merger agreement, unless the merger
agreement is terminated before the Provident special meeting,
Provident is required to submit the merger agreement to its
common stockholders even if Providents Board of Directors
has withdrawn, modified or qualified its recommendation. |
|
Q: |
|
When do you expect to complete the merger? |
|
A: |
|
We expect to complete the merger in the second quarter of 2009.
However, we cannot assure you when or if the merger will occur.
Among other things, we cannot complete the merger until we
obtain the approval of Provident common stockholders at the
special meeting. |
|
Q: |
|
Whom should I call with questions about the special meeting
or the merger? |
|
A: |
|
Provident common stockholders should call Innisfree M&A
Incorporated, Providents proxy solicitor, toll-free at
888-750-5834,
with any questions about the special meeting or the merger and
related transactions. |
iv
SUMMARY
This summary highlights selected information from this proxy
statement/prospectus. It may not contain all the information
that is important to you. We urge you to read carefully this
entire document and the other documents we refer you to for a
more complete understanding of the merger between M&T and
Provident. In addition, we incorporate by reference into this
proxy statement/prospectus important business and financial
information about M&T and Provident. You may obtain the
information incorporated by reference into this proxy
statement/prospectus without charge by following the
instructions in the section entitled Where You Can Find
More Information on Page 68. Each item in this
summary includes a page reference directing you to a more
complete description of that item. Unless otherwise indicated in
this proxy statement/prospectus or the context otherwise
requires, all references in the proxy statement/prospectus to
M&T, we, our or
us refer to M&T Bank Corporation. All
references to the Company or to
Provident refer to Provident Bankshares
Corporation.
The
Parties to the Merger (Page 56)
M&T Bank Corporation
One M&T Plaza
Buffalo, New York 14203
(716) 842-5445
M&T is a New York business corporation which is registered
as a bank holding company under the Bank Holding Company Act of
1956, as amended, and under
Article III-A
of the New York Banking Law. M&T was incorporated in
November 1969. As of September 30, 2008, M&T and its
subsidiaries had consolidated total assets of
$65.2 billion, deposits of $42.5 billion and
stockholders equity of $6.4 billion. M&T had
12,124 full-time and 1,405 part-time employees as of
September 30, 2008.
First Empire State Holding Company
One M&T Plaza
Buffalo, New York 14203
(716) 842-5445
First Empire State Holding Company, which we refer to herein as
Merger Sub, is a Maryland corporation and a newly formed wholly
owned subsidiary of M&T. Merger Sub was formed in
connection with and for the purposes of the merger by M&T.
Provident Bankshares Corporation
114 East Lexington Street
Baltimore, Maryland 21202
Provident is a Maryland corporation which is registered as a
bank holding company under the Bank Holding Company Act, as
amended, and parent of Provident Bank of Maryland, a Maryland
chartered stock commercial bank. As of September 30, 2008,
Provident and its subsidiaries had consolidated total assets of
$6.4 billion, deposits of $4.6 billion and
stockholders equity of $0.54 billion. Provident had
1,592 full-time and 177 part-time employees as of
September 30, 2008.
We
Propose a Merger of Provident and Merger Sub
(Page 19)
We propose that Provident merge with and into Merger Sub, a
wholly owned direct subsidiary of M&T, with Merger Sub as
the surviving corporation. Upon completion of the merger, the
separate existence of Provident will terminate and Provident
common stock will no longer be publicly traded. Immediately
following the merger, Providents wholly owned direct bank
subsidiary, Provident Bank of Maryland, will merge with and into
one of M&Ts wholly owned bank subsidiaries. We
currently expect to complete these mergers in the second quarter
of 2009.
1
In the
Merger, Provident Common Stockholders Will Have a Right to
Receive 0.171625 of a Share of M&T Common Stock per Share
of Provident Common Stock (Page 19)
Under the terms of the merger agreement, Provident common
stockholders will have the right to receive 0.171625 of a share
of M&T common stock for each share of Provident common
stock held immediately prior to the merger. M&T will not
issue any fractional shares of M&T common stock in the
merger. Provident common stockholders who would otherwise be
entitled to a fractional share of M&T common stock will
instead receive an amount in cash, rounded to the nearest cent
and without interest, equal to the product of (i) the
fraction of a share to which such holder would otherwise have
been entitled and (ii) the average of the daily high and
low per share sales prices of M&T common stock on the NYSE
for the last trading day immediately prior to the closing date
of the merger.
What
Holders of Provident Stock Options and Restricted Stock Will
Receive (Page 42)
Under the terms of the merger agreement, upon completion of the
merger, the outstanding and unexercised stock options to acquire
Provident common stock will fully vest and be converted into
stock options to acquire M&T common stock adjusted to
reflect the exchange ratio applicable to Provident common stock
generally as follows:
|
|
|
|
|
the number of shares of M&T common stock subject to the
adjusted M&T stock option will equal: (1) the number
of shares of Provident common stock subject to the Provident
stock option as of immediately prior to the completion of the
merger multiplied by (2) the exchange ratio of 0.171625,
rounded down to the nearest whole share; and
|
|
|
|
the exercise price per share of the adjusted M&T stock
option will equal: (1) the exercise price per share of the
Provident stock option as of immediately prior to the completion
of the merger divided by (2) the exchange ratio of 0.171625
(rounded up to the nearest whole cent).
|
With respect to Provident restricted shares, under the terms of
the merger agreement, immediately prior to the completion of the
merger, the outstanding Provident restricted shares will fully
vest, and, upon completion of the merger, the outstanding
Provident restricted shares will be converted into unrestricted
shares of M&T common stock adjusted to reflect the exchange
ratio applicable to Provident common stock generally as follows:
|
|
|
|
|
the number of unrestricted shares of M&T common stock will
equal: (1) the number of shares of restricted Provident
common stock as of immediately prior to the completion of the
merger, less any shares of Provident common stock withheld to
satisfy tax withholding obligations, multiplied by (2) the
exchange ratio of 0.171625, with fractional shares to be
satisfied through a cash payment in accordance with the terms of
the merger agreement.
|
The
Merger Is Intended to Be Tax-Free to Provident Common
Stockholders as to the Shares of M&T Common Stock They
Receive (Page 52)
The merger is intended to be treated as a reorganization within
the meaning of Section 368(a) of the Internal Revenue Code
of 1986, as amended, and it is a condition to the respective
obligations of M&T and Provident to complete the merger
that each of M&T and Provident receives a legal opinion to
that effect. Accordingly, the merger generally will be tax-free
to a Provident common stockholder for United States federal
income tax purposes as to the shares of M&T common stock he
or she receives in the merger, except for any gain or loss that
may result from the receipt of cash instead of fractional shares
of M&T common stock that the Provident common stockholder
would otherwise be entitled to receive.
2
The
United States federal income tax consequences described above
may not apply to all holders of Provident common stock. Your tax
consequences will depend on your individual situation.
Accordingly, we strongly urge you to consult your tax advisor
for a full understanding of the particular tax consequences of
the merger to you.
Comparative
Market Prices of Securities (Page 55)
M&T common stock and Provident common stock are listed on
the New York Stock Exchange (the NYSE) and the
NASDAQ Global Select Market (NASDAQ), respectively,
under the symbols MTB and PBKS,
respectively. The following table presents the closing prices of
M&T common stock and Provident common stock on
December 16, 2008, the trading day on which the exchange
ratio of 0.171625 was calculated, and on February 12, 2009,
the last practicable date before our printing of this proxy
statement/prospectus. The table also presents the implied value
of the merger consideration proposed for each share of Provident
common stock on those dates, as determined by multiplying the
closing price of M&T common stock on those dates by the
exchange ratio of 0.171625 provided for in the merger agreement,
and assuming no adjustment.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Implied
|
|
|
|
M&T
|
|
|
Provident
|
|
|
Value of One
|
|
|
|
Common Stock
|
|
|
Common Stock
|
|
|
Share of Provident
|
|
|
|
(NYSE: MTB)
|
|
|
(NASDAQ: PBKS)
|
|
|
Common Stock
|
|
|
December 16, 2008
|
|
$
|
61.18
|
|
|
$
|
6.63
|
|
|
$
|
10.50
|
|
February 12, 2009
|
|
$
|
38.57
|
|
|
$
|
6.37
|
|
|
$
|
6.62
|
|
For each share of your Provident common stock, you will receive
0.171625 of a share of M&T common stock. The market prices
of both M&T common stock and Provident common stock will
fluctuate prior to the merger. You should obtain current stock
price quotations for M&T common stock and Provident common
stock. You can get these quotations from a newspaper, on the
Internet or by calling your broker.
Dividends;
Coordination of Dividends (Page 38)
Before the merger, Provident will coordinate with M&T
regarding dividend declarations and the related record dates and
payment dates so that Provident common stockholders will not
receive two or more dividends, or fail to receive at least one
dividend, for any single quarter.
The payment, timing and amount of dividends by M&T or
Provident on their common stock in the future, either before or
after the merger is completed, are subject to the determination
of the respective M&T and Provident Boards of Directors and
depend on cash requirements, the financial condition and
earnings of M&T and Provident, legal and regulatory
considerations and other factors.
The
Merger Will Be Accounted for as a Business
Combination (Page 52)
The merger will be treated as a business combination
using the acquisition method of accounting with M&T treated
as the acquirer under generally accepted accounting principles,
or GAAP.
Special
Meeting of Provident Common Stockholders
(Page 17)
Provident plans to hold its special meeting of common
stockholders on April 8, 2009, at 10:00 a.m., local
time, at 250 Calvert Street, Baltimore, Maryland. At the special
meeting you will be asked to approve the merger agreement and
the transactions contemplated thereby, to adjourn or postpone
the special meeting, if necessary, to solicit additional proxies
in favor of the merger agreement, and to transact such other
business as may properly come before the special meeting and any
adjournments or postponements thereof.
You can vote at the Provident special meeting of common
stockholders if you owned Provident common stock at the close of
business on February 12, 2009. As of that date, there were
approximately 33,511,560 shares of Provident common stock
outstanding and entitled to vote, approximately 722,039 of
which, or 2.15%, were owned beneficially or of record by
directors and officers of Provident. You can cast one vote for
each share of Provident common stock that you owned on that date.
3
Sandler
ONeill & Partners, L.P. Has Provided an Opinion
to Providents Board of Directors Regarding the Merger
Consideration (Page 26)
Sandler ONeill & Partners, L.P. delivered its
opinion to Providents Board of Directors that, as of
December 18, 2008 and based upon and subject to the factors
and assumptions set forth therein, the exchange ratio of
0.171625 of a share of M&T common stock for each share of
Provident common stock held immediately prior to the merger is
fair to the holders of Providents common stock from a
financial point of view.
The full text of the written opinion of Sandler ONeill,
dated December 18, 2008, which sets forth assumptions made,
procedures followed, matters considered and limitations on the
review undertaken in connection with the opinion, is attached as
Annex B. Sandler ONeill provided its opinion for the
information and assistance of Providents Board of
Directors in connection with its consideration of the merger.
The Sandler ONeill opinion is not a recommendation as to
how any holder of Providents common stock should vote with
respect to the merger or any other matter. Pursuant to an
engagement letter between Provident and Sandler ONeill,
Provident has agreed to pay Sandler ONeill a transaction
fee. For further information, please see the discussion under
the caption The Merger Opinion of
Providents Financial Advisor, commencing on
Page 26.
Providents
Board of Directors Unanimously Recommends That Provident
Stockholders Vote FOR Approval of the Merger
Agreement and the Transactions Contemplated Thereby, Including
the Merger (Page 23)
Providents Board of Directors has unanimously declared
advisable the merger agreement and the transactions contemplated
thereby, including the merger, and recommends that Provident
common stockholders vote FOR approval of the merger
agreement and the transactions contemplated thereby, including
the merger, and FOR the approval of the adjournment
or postponement of the special meeting, if necessary, to solicit
additional proxies in favor of the merger agreement and the
transactions contemplated thereby, including the merger.
For more information concerning the background of the merger,
the recommendation of Providents Board of Directors and
the reasons for the merger and the recommendation, please see
the discussions under The Merger Background of
the Merger and The Merger Reasons for
the Merger; Recommendation of Providents Board of
Directors, commencing on Page 19 and Page 23,
respectively.
Providents
Directors and Executive Officers May Have Interests in the
Merger that Differ from Your Interests (Page 39)
In considering the information contained in this proxy
statement/prospectus, you should be aware that Providents
executive officers and directors have financial interests in the
merger that may be different from, or in addition to, the
interests of Provident stockholders. These additional interests
of Providents executive officers and directors may create
potential conflicts of interest and cause these persons to view
the proposed transaction differently than you may view it as a
stockholder.
Providents Board of Directors was aware of these interests
and took them into account in its decision to declare advisable
the merger agreement and the transactions contemplated thereby,
including the merger. For information concerning these
interests, please see the discussion under the caption The
Merger Interests of Providents Directors and
Executive Officers in the Merger, commencing on
Page 39.
Provident
Stockholders Do Not Have Dissenters Rights in the Merger
(Page 36)
Under Maryland law, stockholders of a Maryland corporation are
not entitled to exercise dissenters rights with respect to
a merger if shares of the corporation are listed on a national
securities exchange on the record date for determining
stockholders entitled to vote on the merger or if the
stockholders are not entitled to vote on the merger. Because
Provident common stock is quoted on NASDAQ (and is expected to
continue to be so quoted through the record date for the special
meeting and completion of the merger), Provident common
stockholders do not have the right to exercise dissenters
rights with respect to the merger. Because holders of Provident
preferred stock are not entitled to vote on the merger, holders
of Provident preferred stock do not have the right to exercise
dissenters rights. If the merger agreement and the
transactions contemplated thereby are approved and the merger is
4
completed, common stockholders who voted against the approval of
the merger agreement and the transactions contemplated thereby
will be treated the same as common stockholders who voted for
the approval of the merger agreement and the transactions
contemplated thereby and their shares will automatically be
converted into the right to receive the merger consideration.
For further information as to the special meeting and the proxy
solicited by Providents Board of Directors for purposes of
the special meeting, please see the discussion under the caption
Questions and Answers about the Merger and Special
Meeting and The Merger Interests of
Providents Directors and Executive Officers in the
Merger, commencing on Pages iii and 39, respectively.
M&T
and Provident Have Agreed When and How Provident Can Consider
Third-Party Acquisition Proposals (Page 48)
M&T and Provident have agreed that Provident will not
solicit or encourage proposals from third parties regarding
certain acquisitions of Provident, its shares, or its
businesses, or engage in related discussions, negotiations or
agreements. However, prior to approval of the merger agreement
by Providents common stockholders, Provident may
(1) provide information in response to a request from a
person who makes an unsolicited acquisition proposal, subject to
such person entering into a confidentiality agreement that is no
less favorable to Provident than its confidentiality agreement
with M&T; (2) engage or participate in discussions or
negotiations with a person who makes such an unsolicited
acquisition proposal; or (3) change its recommendation in
favor of the merger (but not terminate the merger agreement), if
(A) prior to taking any such action, Providents Board
of Directors determines, in good faith, after consultation with
its outside legal advisors, that such action is required in
order for Providents Board of Directors to comply with its
fiduciary duties, (B) prior to providing information or
engaging or participating in discussions or negotiations,
Providents Board of Directors determines, in good faith,
after consultation with its financial advisors, that the
acquisition proposal either constitutes a superior proposal
compared to the transactions contemplated in the merger
agreement or is reasonably likely to result in a superior
proposal, and (C) prior to changing its recommendation,
Providents Board of Directors determines, in good faith,
after consultation with its financial advisors and outside legal
advisors, that the acquisition proposal is a superior proposal,
and Provident provides M&T notice that Providents
Board of Directors intends to or may change its recommendation
and provides an opportunity for M&T to make an improved
proposal. Unless the merger agreement is terminated before the
Provident special meeting, Provident is required to submit the
merger agreement to its stockholders even if Providents
Board of Directors has withdrawn, modified or qualified its
recommendation, consistent with the terms of the merger
agreement.
Merger
Requires the Approval of Holders of Two-Thirds of Votes Entitled
to Be Cast (Page 18)
The merger agreement and the transactions contemplated thereby
must be approved by the holders of two-thirds of all the votes
entitled to be cast on the matter by Provident stockholders.
Holders of Provident preferred stock are not entitled to and are
not being requested to vote at the Provident special meeting.
Providents Board of Directors has fixed the close of
business on February 12, 2009 as the record date for
determining the Provident common stockholders entitled to
receive notice of and to vote at the special meeting. As of that
date, Provident directors and executive officers and their
affiliates beneficially owned approximately 722,039, or 2.15%,
of the shares entitled to vote at the Provident special meeting.
Provident is calling a special meeting of the common
stockholders to consider and vote on the proposal to approve the
merger agreement and the transactions contemplated thereby,
including the merger.
Conditions
That Must Be Satisfied or Waived for the Merger to Occur
(Page 50)
Currently, we expect to complete the merger in the second
quarter of 2009. As more fully described in this proxy
statement/prospectus and in the merger agreement, the completion
of the merger depends on a number of conditions being satisfied
or, where legally permissible, waived. These conditions include,
among others:
|
|
|
|
|
approval by Provident common stockholders;
|
5
|
|
|
|
|
the receipt of all regulatory consents and approvals required in
connection with the merger of Provident into M&T and the
merger of certain banking subsidiaries of M&T and
Provident, which we refer to herein as the bank merger (in each
case unless the failure to obtain such consents and approvals
would not reasonably be expected to have a material adverse
effect on Provident or M&T measured on a scale relative to
Provident);
|
|
|
|
the receipt by each of M&T and Provident of a legal opinion
with respect to certain United States federal income tax
consequences of the merger;
|
|
|
|
the absence of any law, statute, rule, regulation, judgment,
decree, injunction or other order by any court or other
governmental entity, which is in effect and prohibits completion
of the merger;
|
|
|
|
the effectiveness of the registration statement of which this
proxy statement/prospectus is a part with respect to the
M&T common stock to be issued in the merger under the
Securities Act and the absence of any stop order or proceedings
initiated or threatened by the SEC for that purpose;
|
|
|
|
the truth and correctness of the representations and warranties
of each other party in the merger agreement, subject to the
materiality standards provided in the merger agreement; and
|
|
|
|
the performance by each other party in all material respects of
their obligations under the merger agreement and the receipt by
each party of certificates from the other party to that effect.
|
We cannot be certain when, or if, the conditions to the merger
will be satisfied or waived, or that the merger will be
completed.
Termination
of the Merger Agreement (Page 51)
The merger agreement can be terminated at any time prior to
completion by mutual consent, if authorized by each of the
M&T and Provident Boards of Directors, or by either party
in the following circumstances:
|
|
|
|
|
if the other party breaches the merger agreement in a way that
would entitle the party seeking to terminate the agreement not
to consummate the merger, unless the breach is capable of being
cured by December 18, 2009, and is cured within
30 days of notice of the breach;
|
|
|
|
if the merger has not been completed by December 18, 2009,
unless the failure to complete the merger by that date is due to
the breach of the merger agreement by the party seeking to
terminate the merger agreement;
|
|
|
|
if the Provident common stockholders fail to approve the merger
agreement and the transactions contemplated thereby at the
special meeting; or
|
|
|
|
if there is any final, non-appealable order permanently
enjoining or prohibiting the completion of the merger or any
consent, registration, approval, permit or authorization is
denied such that the regulatory approval condition to the merger
cannot be satisfied as of the closing date.
|
In addition, M&T may terminate the merger agreement if
Providents Board of Directors (1) submits the merger
agreement to stockholders without a recommendation for approval,
otherwise withdraws or modifies (or publicly discloses its
intention to withdraw or modify) its recommendation in any
manner adverse to M&T or (2) approves, recommends, or
otherwise declares advisable or proposes to or publicly
discloses its intention to approve, recommend or declare
advisable an acquisition proposal other than the merger.
M&T may also terminate the merger agreement if Provident
fails to substantially comply with its obligations with respect
to acquisition proposals or obtaining the approval of Provident
common stockholders.
Effect of Termination. If the merger
agreement is terminated, it will become void, and there will be
no liability on the part of M&T or Provident, except that
(1) both M&T and Provident will remain liable for any
willful breach of the merger agreement and (2) designated
provisions of the merger agreement, including the payment of
fees and expenses and the confidential treatment of information,
will survive the termination.
6
Termination
Fee (Page 51)
Provident will pay M&T a $15.8 million termination fee
if:
|
|
|
|
|
an acquisition proposal has been made or proposed to Provident
or its stockholders or publicly disclosed and M&T
terminates the merger agreement either because Providents
Board of Directors withdraws or changes its recommendation in
favor of the merger or recommends another acquisition proposal
or Provident fails to substantially comply with its obligations
concerning holding the special meeting or soliciting acquisition
proposals; or the merger agreement is terminated by Provident
due to failure to obtain stockholder approval in such
circumstances;
|
|
|
|
prior to the special meeting, an acquisition proposal is made
known to Provident, made directly to Provident common
stockholders generally, otherwise becomes publicly known or any
person has publicly announced an intention (whether or not
conditional) to make an acquisition proposal; the merger
agreement is terminated as a result of (i) an incurable,
willful breach by Provident; (ii) a failure to obtain
stockholder approval; or (iii) by Provident upon a failure
to consummate the merger by December 18, 2009; and, in any
such case, Provident enters into a definitive agreement to
consummate an acquisition proposal within 12 months of such
termination and consummates such within 18 months following
such termination or, within 12 months following such
termination, consummates any acquisition proposal.
|
Regulatory
Approvals Required for the Merger (Page 36)
Each of M&T and Provident has agreed to use its reasonable
best efforts to obtain all regulatory approvals required to
complete the transactions contemplated by the merger agreement,
including the merger and the bank merger. These approvals
include approval from the Board of Governors of the Federal
Reserve System, the New York State Banking Department and the
Commissioner of Financial Regulation in the Department of Labor,
Licensing, and Regulation of the State of Maryland. M&T and
Provident have completed the filing of applications and
notifications to obtain the required regulatory approvals.
Although we do not know of any reason why we cannot obtain these
regulatory approvals in a timely manner, we cannot be certain
when or if we will obtain them.
The
Rights of Provident Common Stockholders Following the Merger
Will Be Different (Page 61)
The rights of M&T common stockholders are governed by New
York law and by M&Ts restated certificate of
incorporation, as amended, and amended and restated by-laws. The
rights of Provident common stockholders are governed by Maryland
law, and by Providents articles of incorporation, as
amended, and amended and restated by-laws. Upon the completion
of the merger, the rights of Provident common stockholders will
be governed by New York law, M&Ts restated
certificate of incorporation, as amended, and amended and
restated by-laws.
7
RECENT
DEVELOPMENTS
M&T. On
January 22, 2009, M&T announced its results of
operations for the fiscal quarter and full-year ended
December 31, 2008. Diluted earnings per common share were
$.92 in the fourth quarter of 2008, up from $.60 in the
year-earlier period and $.82 in the third quarter of 2008. Net
income for the fourth quarter of 2008 totaled $102 million,
up from $65 million and $91 million in the fourth
quarter of 2007 and the third quarter of 2008, respectively.
Diluted earnings per common share for the years ended
December 31, 2008 and 2007 were $5.01 and $5.95,
respectively. Net income was $556 million in 2008 and
$654 million in 2007. Fourth quarter net income and
earnings per common share were negatively impacted by
other-than-temporary impairment charges of $24 million
(pre-tax) on certain investment securities and a
$19 million (pre-tax) addition to the valuation allowance
for capitalized residential mortgage servicing rights.
Provident. On
January 27, 2009, Provident announced its results of
operations for the fiscal quarter and full-year ended
December 31, 2008. Provident recorded a net loss of
$26.7 million, or ($0.88) per diluted share, for the fourth
quarter of 2008, compared with a net loss of $15.5 million,
or ($0.49) per diluted share, for the same period of the prior
year. The net loss recorded in the fourth quarter of 2008 was
primarily due to a $32.7 million pre-tax non-cash
accounting charge for other-than-temporary impairment of certain
investment securities and a $21.5 million provision for
loan losses as a result of internal risk rating downgrades in
the loan portfolio. For the full-year 2008, the Company recorded
a net loss of $39.5 million, or ($1.38) per diluted share,
compared to net income of $32.1 million, or $1.00 per
diluted share, for 2007.
Market Developments and Economic
Conditions. In recent periods, United States
and global markets have experienced severe disruption and
volatility, and general economic conditions have declined
significantly. Adverse developments in credit quality, asset
values and revenue opportunities throughout the financial
services industry, as well as general uncertainty regarding the
economy, industry and regulatory environment, have had a marked
negative impact on the industry. These developments and
conditions have also negatively impacted the financial position
and results of operations of both M&T and Provident, even
though M&Ts most recent quarterly period reflected an
improvement over recent prior results.
The United States and the governments of other countries have
taken steps to try to stabilize the financial system, including
investing in financial institutions, and have also been working
to design and implement programs to improve general economic
conditions. Notwithstanding the actions of the United States and
other governments, there can be no assurances that these efforts
will be successful in restoring industry, economic or market
conditions and that they will not result in adverse unintended
consequences. Factors that could continue to pressure financial
services companies, including M&T and Provident, are
numerous and include (1) continued or worsening credit
quality, leading among other things to increases in loan losses
and reserves, (2) continued or worsening disruption and
volatility in financial markets, leading among other things to
continuing reductions in assets values, (3) capital and
liquidity concerns regarding financial institutions generally
and our counterparties specifically, (4) limitations
resulting from or imposed in connection with governmental
actions intended to stabilize or provide additional regulation
of the financial system, or (5) recessionary conditions
that are deeper or last longer than currently anticipated. See
Risk Factors beginning on Page 12 for more
information.
8
UNAUDITED
COMPARATIVE PER COMMON SHARE DATA
Unaudited
Comparative Per Common Share Data
The following table sets forth certain historical, pro forma
and pro forma per equivalent share financial
information for M&T and Provident. The historical
information is based on historical financial information and
related notes that M&T and Provident have presented in
their prior filings with the SEC. You should read the financial
information provided in the following table together with this
historical financial information and related notes. The
historical financial information is also incorporated into this
proxy statement/prospectus by reference. See Where You Can
Find More Information on Page 68 for a description of
where you can find this historical information. See also
Recent Developments on Page 8. The pro forma
and pro forma per equivalent share information give
effect to the merger as if the merger had been effective on the
date presented in the case of the book value data, and as if the
merger had been effective as of January 1, 2007 of the
indicated period in the case of the earnings per share and the
cash dividends data. The pro forma data in the table
assumes that the merger is accounted for using the
business combination acquisition method of
accounting treating M&T as the acquirer and is derived
from, and should be read in conjunction with, the historical
consolidated financial statements and related notes of M&T
and Provident, which are incorporated in this document by
reference. The pro forma financial adjustments record the
assets and liabilities of Provident at their estimated fair
values and are subject to adjustment as additional information
becomes available and as additional analyses are performed. The
pro forma information, while helpful in illustrating the
financial characteristics of the combined company under one set
of assumptions, does not reflect the impact of factors that may
result as a consequence of the merger or consider any potential
impacts of current market conditions or the merger on revenues,
expense efficiencies, asset dispositions, and share repurchases,
among other factors, nor the impact of possible business model
changes. As a result, the pro forma results are not
necessarily indicative of what would have occurred had the
acquisition taken place on the assumed dates, nor do they
represent an attempt to predict or suggest future results.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro Forma
|
|
|
|
Historical
|
|
|
Pro Forma
|
|
|
Equivalent
|
|
|
|
M&T
|
|
|
Provident
|
|
|
Combined
|
|
|
Provident Share
|
|
|
Basic Earnings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the nine months ended September 30, 2008
|
|
$
|
4.12
|
|
|
|
(0.49
|
)
|
|
|
3.73
|
|
|
$
|
0.64
|
|
For the year ended December 31, 2007
|
|
|
6.05
|
|
|
|
1.00
|
|
|
|
5.96
|
|
|
|
1.02
|
|
Diluted Earnings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the nine months ended September 30, 2008
|
|
$
|
4.09
|
|
|
|
(0.49
|
)
|
|
|
3.70
|
|
|
$
|
0.64
|
|
For the year ended December 31, 2007
|
|
|
5.95
|
|
|
|
1.00
|
|
|
|
5.86
|
|
|
|
1.01
|
|
Cash Dividends
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the nine months ended September 30, 2008
|
|
$
|
2.10
|
|
|
|
0.55
|
|
|
|
2.10
|
|
|
$
|
0.36
|
|
For the year ended December 31, 2007
|
|
|
2.60
|
|
|
|
1.25
|
|
|
|
2.60
|
|
|
|
0.45
|
|
Book Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of September 30, 2008
|
|
$
|
58.17
|
|
|
|
14.73
|
|
|
|
59.52
|
|
|
$
|
10.21
|
|
As of December 31, 2007
|
|
|
58.99
|
|
|
|
17.56
|
|
|
|
60.86
|
|
|
|
10.45
|
|
9
SELECTED
CONSOLIDATED HISTORICAL FINANCIAL DATA OF M&T
Selected
Consolidated Historical Financial Data of M&T
The following table summarizes financial results achieved by
M&T for the periods and at the dates indicated and should
be read in conjunction with M&Ts consolidated
financial statements and the notes to the consolidated financial
statements contained in reports that M&T has previously
filed with the SEC. Historical financial information for
M&T can be found in its Quarterly Report on
Form 10-Q
for the quarter ended September 30, 2008 and its Annual
Report on
Form 10-K
for the year ended December 31, 2007. See Where You
Can Find More Information on Page 68 for instructions
on how to obtain the information that has been incorporated by
reference. See also Recent Developments on
Page 8. Financial amounts as of and for the nine months
ended September 30, 2008 and 2007 are unaudited (and are
not necessarily indicative of the results of operations for the
full year or any other interim period), but management of
M&T believes that such amounts reflect all adjustments
(consisting only of normal recurring adjustments) necessary for
a fair presentation of its results of operations and financial
position as of the dates and for the periods indicated. You
should not assume the results of operations for past periods and
for the nine months ended September 30, 2008 and 2007
indicate results for any future period.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of or for the Nine Months
|
|
|
|
|
|
|
Ended September 30,
|
|
|
As of or for the Year Ended December 31,
|
|
|
|
2008
|
|
|
2007
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
|
2003
|
|
|
|
(In thousands, except per share data)
|
|
|
Summarized Income Statement Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income
|
|
$
|
1,453,721
|
|
|
$
|
1,380,027
|
|
|
$
|
1,850,237
|
|
|
$
|
1,817,541
|
|
|
$
|
1,794,343
|
|
|
$
|
1,734,572
|
|
|
$
|
1,598,755
|
|
Provision for credit losses
|
|
|
261,000
|
|
|
|
91,000
|
|
|
|
192,000
|
|
|
|
80,000
|
|
|
|
88,000
|
|
|
|
95,000
|
|
|
|
131,000
|
|
Other income
|
|
|
697,562
|
|
|
|
772,499
|
|
|
|
932,989
|
|
|
|
1,045,852
|
|
|
|
949,718
|
|
|
|
942,969
|
|
|
|
831,095
|
|
Other expense
|
|
|
1,280,177
|
|
|
|
1,182,216
|
|
|
|
1,627,689
|
|
|
|
1,551,751
|
|
|
|
1,485,142
|
|
|
|
1,516,018
|
|
|
|
1,448,180
|
|
Income taxes
|
|
|
156,460
|
|
|
|
289,981
|
|
|
|
309,278
|
|
|
|
392,453
|
|
|
|
388,736
|
|
|
|
344,002
|
|
|
|
276,728
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
453,646
|
|
|
|
589,329
|
|
|
|
654,259
|
|
|
|
839,189
|
|
|
|
782,183
|
|
|
|
722,521
|
|
|
|
573,942
|
|
Per Common Share Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net income
|
|
$
|
4.12
|
|
|
$
|
5.45
|
|
|
$
|
6.05
|
|
|
$
|
7.55
|
|
|
$
|
6.88
|
|
|
$
|
6.14
|
|
|
$
|
5.08
|
|
Diluted net income
|
|
|
4.09
|
|
|
|
5.34
|
|
|
|
5.95
|
|
|
|
7.37
|
|
|
|
6.73
|
|
|
|
6.00
|
|
|
|
4.95
|
|
Book value at end of period
|
|
|
58.17
|
|
|
|
58.40
|
|
|
|
58.99
|
|
|
|
56.94
|
|
|
|
52.39
|
|
|
|
49.68
|
|
|
|
47.55
|
|
Cash dividends
|
|
|
2.10
|
|
|
|
1.90
|
|
|
|
2.60
|
|
|
|
2.25
|
|
|
|
1.75
|
|
|
|
1.60
|
|
|
|
1.20
|
|
Weighted Average Number of Shares:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
110,158
|
|
|
|
108,220
|
|
|
|
108,129
|
|
|
|
111,173
|
|
|
|
113,689
|
|
|
|
117,696
|
|
|
|
113,010
|
|
Diluted
|
|
|
111,000
|
|
|
|
110,342
|
|
|
|
110,012
|
|
|
|
113,918
|
|
|
|
116,232
|
|
|
|
120,406
|
|
|
|
115,932
|
|
Average Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
65,198,034
|
|
|
$
|
57,533,005
|
|
|
$
|
58,545,310
|
|
|
$
|
55,839,101
|
|
|
$
|
54,134,983
|
|
|
$
|
51,516,603
|
|
|
$
|
45,349,219
|
|
Total borrowings
|
|
|
17,919,610
|
|
|
|
13,176,002
|
|
|
|
13,814,354
|
|
|
|
10,542,908
|
|
|
|
11,301,850
|
|
|
|
10,974,144
|
|
|
|
10,349,048
|
|
Stockholders equity
|
|
|
6,465,420
|
|
|
|
6,209,120
|
|
|
|
6,247,274
|
|
|
|
6,041,469
|
|
|
|
5,797,823
|
|
|
|
5,700,781
|
|
|
|
4,940,554
|
|
10
SELECTED
CONSOLIDATED HISTORICAL FINANCIAL DATA OF PROVIDENT
Selected
Consolidated Historical Financial Data of Provident
The following table summarizes financial results achieved by
Provident for the periods and at the dates indicated and should
be read in conjunction with Providents consolidated
financial statements and the notes to the consolidated financial
statements contained in reports that Provident has previously
filed with the SEC. Historical financial information for
Provident can be found in its Quarterly Report on
Form 10-Q
for the quarter ended September 30, 2008 and its Annual
Report on
Form 10-K
for the year ended December 31, 2007. See Where You
Can Find More Information on Page 68 for instructions
on how to obtain the information that has been incorporated by
reference. Financial amounts as of and for the nine months ended
September 30, 2008 and 2007 are unaudited (and are not
necessarily indicative of the results of operations for the full
year or any other interim period), but management of Provident
believes that such amounts reflect all adjustments (consisting
only of normal recurring adjustments) necessary for a fair
presentation of its results of operations and financial position
as of the dates and for the periods indicated. You should not
assume the results of operations for past periods and for the
nine months ended September 30, 2008 and 2007 indicate
results for any future period.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of or for the Nine Months
|
|
|
|
|
|
|
Ended September 30,
|
|
|
As of or for the Year Ended December 31,
|
|
|
|
2008
|
|
|
2007
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
|
2003
|
|
|
|
(In thousands, except per share data)
|
|
|
Summarized Income Statement Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income
|
|
$
|
134,824
|
|
|
$
|
145,320
|
|
|
$
|
191,232
|
|
|
$
|
204,411
|
|
|
$
|
198,930
|
|
|
$
|
182,213
|
|
|
$
|
148,880
|
|
Provision for loan losses
|
|
|
16,085
|
|
|
|
13,338
|
|
|
|
23,365
|
|
|
|
3,973
|
|
|
|
5,023
|
|
|
|
7,534
|
|
|
|
11,122
|
|
Other
income(1)
|
|
|
5,746
|
|
|
|
96,257
|
|
|
|
79,919
|
|
|
|
113,262
|
|
|
|
112,289
|
|
|
|
100,968
|
|
|
|
88,373
|
|
Other expense
|
|
|
154,997
|
|
|
|
160,081
|
|
|
|
211,089
|
|
|
|
214,579
|
|
|
|
200,737
|
|
|
|
183,728
|
|
|
|
157,261
|
|
Income taxes
|
|
|
(17,722
|
)
|
|
|
20,554
|
|
|
|
4,567
|
|
|
|
29,118
|
|
|
|
32,509
|
|
|
|
29,939
|
|
|
|
17,415
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
|
(12,790
|
)
|
|
|
47,604
|
|
|
|
32,130
|
|
|
|
70,003
|
|
|
|
72,950
|
|
|
|
61,980
|
|
|
|
51,455
|
|
Per Common Share Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net income
|
|
$
|
(0.49
|
)
|
|
$
|
1.48
|
|
|
$
|
1.00
|
|
|
$
|
2.14
|
|
|
$
|
2.21
|
|
|
$
|
2.05
|
|
|
$
|
2.10
|
|
Diluted net income
|
|
|
(0.49
|
)
|
|
|
1.48
|
|
|
|
1.00
|
|
|
|
2.12
|
|
|
|
2.17
|
|
|
|
2.00
|
|
|
|
2.05
|
|
Book value at end of
period(2)
|
|
|
14.73
|
|
|
|
19.10
|
|
|
|
17.56
|
|
|
|
19.54
|
|
|
|
19.14
|
|
|
|
18.68
|
|
|
|
13.22
|
|
Cash dividends
|
|
|
0.55
|
|
|
|
0.93
|
|
|
|
1.25
|
|
|
|
1.17
|
|
|
|
1.09
|
|
|
|
1.01
|
|
|
|
0.93
|
|
Weighted Average Number of Shares:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
32,443
|
|
|
|
32,063
|
|
|
|
31,972
|
|
|
|
32,727
|
|
|
|
32,956
|
|
|
|
30,299
|
|
|
|
24,495
|
|
Diluted
|
|
|
32,443
|
|
|
|
32,259
|
|
|
|
32,195
|
|
|
|
33,082
|
|
|
|
33,656
|
|
|
|
30,971
|
|
|
|
25,142
|
|
Average Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
6,463,759
|
|
|
$
|
6,243,179
|
|
|
$
|
6,284,152
|
|
|
$
|
6,375,182
|
|
|
$
|
6,381,398
|
|
|
$
|
6,061,611
|
|
|
$
|
4,991,775
|
|
Total borrowings
|
|
|
1,423,363
|
|
|
|
1,441,781
|
|
|
|
1,474,369
|
|
|
|
1,634,824
|
|
|
|
1,814,506
|
|
|
|
1,863,266
|
|
|
|
1,515,661
|
|
Stockholders equity
|
|
|
645,117
|
|
|
|
643,008
|
|
|
|
643,998
|
|
|
|
653,824
|
|
|
|
629,354
|
|
|
|
512,853
|
|
|
|
312,371
|
|
|
|
|
(1) |
|
Includes impairment on investment securities of $87,973 and
$47,488 for the nine months ended September 30, 2008 and
the full year ended 2007, respectively. |
|
|
|
(2) |
|
Book value as of the nine months ended September 30, 2008
excludes preferred stock outstanding of $49,400. |
11
RISK
FACTORS
In addition to general investment risks and the other
information contained in or incorporated by reference into this
proxy statement/prospectus, including the matters addressed
under the heading Cautionary Statement Regarding
Forward-Looking Statements commencing on Page 15 and
the matters discussed under the caption Risk Factors
in the Annual Reports on
Forms 10-K
filed by M&T and Provident, respectively, for the year
ended December 31, 2007, as updated by subsequently filed
Forms 10-Q,
you should carefully consider the following risk factors in
deciding how to vote on the merger agreement and the
transactions contemplated thereby, including the merger.
Because
the market price of M&T common stock will fluctuate,
Provident common stockholders cannot be sure of the market value
of the merger consideration they will receive.
Upon completion of the merger, each share of Provident common
stock will be converted into the right to receive merger
consideration consisting of 0.171625 of a share of M&T
common stock pursuant to the terms of the merger agreement. The
market value of the merger consideration may vary from the
closing price of M&T common stock on the date we announced
the merger, on the date that this proxy statement/prospectus was
mailed to Provident stockholders, on the date of the special
meeting of the Provident common stockholders and on the date we
complete the merger and thereafter. Any change in the market
price of M&T common stock prior to completion of the merger
will affect the market value of the merger consideration that
Provident common stockholders will receive upon completion of
the merger. Accordingly, at the time of the special meeting,
Provident common stockholders will not know or be able to
calculate the market value of the merger consideration they
would receive upon completion of the merger. Neither M&T
nor Provident is permitted to terminate the merger agreement or
re-solicit the vote of Provident common stockholders solely
because of changes in the market prices of either companys
stock. There will be no adjustment to the merger consideration
for changes in the market price of either shares of M&T
common stock or shares of Provident common stock. Stock price
changes may result from a variety of factors, including general
market and economic conditions, changes in our respective
businesses, operations and prospects, and regulatory
considerations. Many of these factors are beyond our control.
You should obtain current market quotations for shares of
M&T common stock and for shares of Provident common stock.
Provident
will be subject to business uncertainties and contractual
restrictions while the merger is pending.
Uncertainty about the effect of the merger on employees and
customers may have an adverse effect on Provident and
consequently on M&T. These uncertainties may impair
Providents ability to attract, retain and motivate key
personnel until the merger is consummated, and could cause
customers and others that deal with Provident to seek to change
existing business relationships with Provident. Retention of
certain employees may be challenging during the pendency of the
merger, as certain employees may experience uncertainty about
their future roles with M&T. If key employees depart
because of issues relating to the uncertainty and difficulty of
integration or a desire not to remain with M&T,
M&Ts business following the merger could be harmed.
In addition, the merger agreement restricts Provident from
making certain acquisitions and taking other specified actions
until the merger occurs without the consent of M&T. These
restrictions may prevent Provident from pursuing attractive
business opportunities that may arise prior to the completion of
the merger. Please see the section entitled The Agreement
and Plan of Merger Covenants and Agreements
commencing on Page 46 of this proxy statement/prospectus
for a description of the restrictive covenants to which
Provident is subject.
The
opinion obtained by Provident from its financial advisor will
not reflect changes in circumstances between signing the merger
agreement and completion of the merger.
Provident has not obtained an updated opinion as of the date of
this proxy statement/prospectus from its financial advisor.
Changes in the operations and prospects of Provident or
M&T, general market and economic conditions and other
factors that may be beyond the control of Provident or M&T,
and on which Providents financial advisors opinion
was based, may significantly alter the value of Provident or the
prices of shares of M&T common stock or Provident common
stock by the time the merger is completed. The opinion does not
speak as of the time the merger will be completed or as of any
date other than the date of such opinion. Because Provident does
12
not currently anticipate asking its financial advisor to update
its opinion, the opinion will not address the fairness of the
exchange ratio from a financial point of view at the time the
merger is completed. Providents Board of Directors
recommendation that Provident common stockholders vote
FOR approval of the merger agreement and the
transactions contemplated thereby, including the merger,
however, is as of the date of this proxy statement/prospectus.
For a description of the opinion that Provident received from
its financial advisor, please refer to The
Merger Opinion of Providents Financial
Advisor, commencing on Page 26. For a description of
the other factors considered by Providents Board of
Directors in determining to declare the merger and the other
transactions contemplated in the merger agreement to be
advisable, please refer to The Merger
Background of the Merger, and The Merger
Reasons for the Merger; Recommendation of Providents Board
of Directors, commencing on Page 19 and Page 23,
respectively.
Combining
the two companies may be more difficult, costly or
time-consuming than we expect.
M&T and Provident have operated and, until the completion
of the merger, will continue to operate, independently. It is
possible that the integration process could result in the loss
of key employees or disruption of each companys ongoing
business or inconsistencies in standards, controls, procedures
and policies that adversely affect our ability to maintain
relationships with customers and employees or to achieve the
anticipated benefits of the merger. As with any merger of
banking institutions, there also may be business disruptions
that cause us to lose customers or cause customers to take their
deposits out of our banks. The success of the combined company
following the merger may depend in large part on the ability to
integrate the two businesses, business models and cultures. If
we are not able to integrate our operations successfully and in
a timely manner, the expected benefits of the merger may not be
realized.
Regulatory
approvals may not be received, may take longer than expected or
impose conditions that are not presently
anticipated.
Before the transactions contemplated in the merger agreement,
including the merger and the bank merger, may be completed,
various approvals or consents must be obtained from the Federal
Reserve Board and various bank regulatory and other authorities.
These governmental entities, including the Federal Reserve
Board, may impose conditions on the completion of the merger or
the bank merger or require changes to the terms of the merger
agreement. Although M&T and Provident do not currently
expect that any such conditions or changes would be imposed,
there can be no assurance that they will not be, and such
conditions or changes could have the effect of delaying
completion of the transactions contemplated in the merger
agreement or imposing additional costs on or limiting the
revenues of M&T, any of which might have a material adverse
effect on M&T following the merger.
There can be no assurance as to whether the regulatory approvals
will be received, the timing of those approvals, or whether any
conditions will be imposed.
The
merger agreement limits Providents ability to pursue
alternatives to the merger.
The merger agreement contains provisions that limit
Providents ability to discuss competing third-party
proposals to acquire all or a significant part of Provident.
These provisions, which include a $15.8 million termination
fee payable under certain circumstances, might discourage a
potential competing acquiror that might have an interest in
acquiring all or a significant part of Provident from
considering or proposing that acquisition even if it were
prepared to pay consideration with a higher per share market
price than that proposed in the merger, or might result in a
potential competing acquiror proposing to pay a lower per share
price to acquire Provident than it might otherwise have proposed
to pay.
If the
merger is not consummated by December 18, 2009, either
M&T or Provident may choose not to proceed with the
merger.
Either M&T or Provident may terminate the merger agreement
if the merger has not been completed by December 18, 2009,
unless the failure of the merger to be completed has resulted
from the material failure of the party seeking to terminate the
merger agreement to perform its obligations.
13
Termination
of the merger agreement could negatively impact
Provident.
If the merger agreement is terminated, there may be various
consequences. For example, Providents businesses may have
been adversely impacted by the failure to pursue other
beneficial opportunities due to the focus of management on the
merger, without realizing any of the anticipated benefits of
completing the merger, or the market price of Provident common
stock could decline to the extent that the current market price
reflects a market assumption that the merger will be completed.
If the merger agreement is terminated and Providents Board
of Directors seeks another merger or business combination,
Provident stockholders cannot be certain that Provident will be
able to find a party willing to pay an equivalent or more
attractive price than the price M&T has agreed to pay in
the merger.
Some
of the directors and executive officers of Provident may have
interests and arrangements that may have influenced their
decisions to support or recommend that you approve the
merger.
The interests of some of the directors and executive officers of
Provident may be different from those of Provident common
stockholders, and directors and officers of Provident may be
participants in arrangements that are different from, or in
addition to, those of Provident common stockholders. These
interests are described in more detail in the section of this
proxy statement/prospectus entitled The Merger
Interests of Providents Directors and Executive Officers
in the Merger beginning on Page 39.
The
shares of M&T common stock to be received by Provident
common stockholders as a result of the merger will have
different rights from the shares of Provident common stock
currently held by them.
The rights associated with Provident common stock are different
from the rights associated with M&T common stock. See the
section of this proxy statement/prospectus entitled
Comparison of Common Stockholder Rights commencing
on Page 61.
The
market price of M&T common stock after the merger may be
affected by factors different from those affecting Provident
common stock or M&T common stock currently.
The businesses of M&T and Provident differ in some respects
and, accordingly, the results of operations of the combined
company and the market price of M&Ts shares of common
stock after the merger may be affected by factors different from
those currently affecting the independent results of operations
of each of M&T or Provident. For a discussion of the
businesses of M&T and Provident and of certain factors to
consider in connection with those businesses, see the documents
incorporated by reference into this proxy statement/prospectus
and referred to under Where You Can Find More
Information on Page 68.
We may
fail to realize the cost savings estimated for the
merger.
M&T estimates to achieve cost savings from the merger when
the two companies have been fully integrated. While M&T
continues to be comfortable with these expectations as of the
date of this proxy statement/prospectus, it is possible that the
estimates of the potential cost savings could turn out to be
incorrect. The cost savings estimates also assume our ability to
combine the businesses of M&T and Provident in a manner
that permits those cost savings to be realized. If the estimates
turn out to be incorrect or M&T is not able to combine
successfully the two companies, the anticipated cost savings may
not be fully realized or realized at all, or may take longer to
realize than expected.
Provident
common stockholders will have a reduced ownership and voting
interest after the merger and will exercise less influence over
management.
Providents common stockholders currently have the right to
vote in the election of the Board of Directors of Provident and
on other matters affecting Provident. Upon the completion of the
merger, each Provident common stockholder that receives shares
of M&T common stock will become a stockholder of M&T
with a percentage ownership of the combined organization that is
much smaller than the stockholders percentage ownership of
Provident. It is expected that the former common stockholders of
Provident as a group will receive shares in the merger
constituting less than 5% of the outstanding shares of M&T
common stock immediately after the merger. Because of this,
Providents common stockholders may have less influence on
the management and policies of M&T than they now have on
the management and policies of Provident.
14
A
continuation of recent turmoil in the financial markets could
have an adverse effect on the financial position or results of
operations of M&T, Provident and/or the combined
company.
In recent periods, United States and global markets, as well as
general economic conditions, have been disrupted and volatile.
Concerns regarding the financial strength of financial
institutions have led to distress in credit markets and issues
relating to liquidity among financial institutions. Some
financial institutions around the world have failed; others have
been forced to seek acquisition partners. The United States and
other governments have taken steps to try to stabilize the
financial system, including investing in financial institutions.
M&T and Providents businesses and financial condition
and results of operations could be adversely affected by
(1) continued disruption and volatility in financial
markets, (2) continued capital and liquidity concerns
regarding financial institutions generally and our
counterparties specifically, (3) limitations resulting from
governmental action in an effort to stabilize or provide
additional regulation of the financial system, or
(4) recessionary conditions that are deeper or last longer
than currently anticipated. Further, there can be no assurance
that action by Congress, governmental agencies and regulators,
including the enacted legislation authorizing the
U.S. government to invest in financial institutions, or
changes in tax policy, will help stabilize the
U.S. financial system and any such action, including
changes to existing legislation or policy, could have an adverse
effect on the financial position or results of operation of
M&T, Provident and/or the combined company.
Impairments
in the value of M&T and Providents respective
securities portfolios or other assets could further affect each
of their results of operations or the results of operations of
the combined company.
Under accounting principles generally accepted in the United
States, each of M&T and Provident is required to review its
investment portfolio (as well as its other investments and
goodwill) periodically for the presence of
other-than-temporary-impairment of its securities, taking into
consideration current market conditions, the extent and nature
of change in fair value, issuer rating changes and trends,
volatility of earnings, current analysts evaluations, our
ability and intent to hold investments until a recovery of fair
value, as well as other factors. Adverse developments with
respect to one or more of the foregoing factors have required
M&T and Provident to deem particular securities to be
other-than-temporarily impaired, with the reduction in the value
recognized as a charge to M&T and Providents
respective earnings. Recent market volatility has made it
extremely difficult to value certain securities held by each of
M&T and Provident. Subsequent valuations, in light of
factors prevailing at that time, may result in significant
changes in the values of these securities in future periods. Any
of these factors could require either M&T or Provident to
recognize further impairments in the value of its securities
portfolio, which may have an adverse effect on its results of
operations in future periods. Similarly, either M&T or
Provident may be required to recognize impairments in the value
of other investments or goodwill, any of which may have an
adverse effect on its results of operations in future periods.
CAUTIONARY
STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Certain statements contained in this filing that are not
statements of historical fact constitute forward-looking
statements within the meaning of the Private Securities
Litigation Reform Act of 1995 (the Act),
notwithstanding that such statements are not specifically
identified. In addition, certain statements may be contained in
the future filings of M&T and Provident with the SEC, in
press releases and in oral and written statements made by or
with the approval of M&T or Provident that are not
statements of historical fact and constitute forward-looking
statements within the meaning of the Act. Examples of
forward-looking statements include, but are not limited to:
|
|
|
|
|
statements about the benefits of the merger between M&T and
Provident, including future financial and operating results,
cost savings, enhanced revenues and accretion to reported
earnings that may be realized from the merger;
|
|
|
|
|
|
statements of plans, objectives and expectations of M&T or
Provident or their managements or boards of directors;
|
|
|
|
statements of future economic performance; and
|
|
|
|
statements of assumptions underlying such statements.
|
Words such as believes, anticipates,
expects, intends, targeted,
continue, remain, will,
should, may, possible, and
other similar expressions are intended to identify
forward-looking statements but are not the exclusive means of
identifying such statements.
15
Forward-looking statements are not guarantees of future
performance and involve certain risks, uncertainties and
assumptions which are difficult to predict. Therefore, actual
outcomes and results may differ materially from what is
expressed or forecasted in such forward-looking statements.
Factors that could cause actual results to differ from those
discussed in the forward-looking statements include, but are not
limited to:
|
|
|
|
|
the businesses of M&T and Provident will not be integrated
successfully or such integration may be more difficult,
time-consuming or costly than expected;
|
|
|
|
material differences in the actual financial results of merger
and acquisition activities compared with expectations, such as
with respect to the full realization of anticipated cost savings
and revenue enhancements within the expected time frame,
including as to the merger;
|
|
|
|
revenues following the merger may be lower than expected;
|
|
|
|
deposit attrition, operating costs, customer loss and business
disruption following the merger, including, without limitation,
difficulties in maintaining relationships with employees, may be
greater than expected;
|
|
|
|
the ability to obtain governmental approvals required for the
transactions contemplated in the merger agreement, including the
merger and the bank merger, on the proposed terms and schedule;
|
|
|
|
the failure of Providents common stockholders to approve
the merger agreement and the transactions contemplated thereby;
|
|
|
|
local, regional, national and international economic conditions
and the impact they may have on M&T and Provident and their
customers and M&Ts and Providents assessment of
that impact;
|
|
|
|
the significant downturn in the residential real estate market
that began in 2007 has continued in 2008 and may continue in
2009, resulting in declining home prices, higher foreclosures
and loan charge-offs, and lower market prices on investment
securities backed by residential real estate, all of which could
negatively impact M&Ts and Providents results
of operations;
|
|
|
|
lower demand for M&Ts and Providents products
and services and lower revenues and earnings could result from
an economic recession;
|
|
|
|
lower fee income from M&Ts
and/or
Providents brokerage and trust businesses could result
from significant declines in stock market prices;
|
|
|
|
lower earnings could result from other-than-temporary-impairment
charges related to M&Ts and Providents
investment securities portfolios or other assets;
|
|
|
|
higher FDIC insurance costs due to bank failures that have
caused the FDIC Deposit Insurance Fund to fall below minimum;
|
|
|
|
absence of any assurance that the Emergency Economic
Stabilization Act of 2008 will improve the condition of the
financial markets;
|
|
|
|
changes in the level of non-performing assets and charge-offs;
|
|
|
|
changes in estimates of future reserve requirements based upon
the periodic review thereof under relevant regulatory and
accounting requirements;
|
|
|
|
other changes in accounting requirements;
|
|
|
|
inflation, securities market and monetary fluctuations;
|
|
|
|
changes in interest rates, spreads on earning assets and
interest-bearing liabilities, and interest rate sensitivity;
|
|
|
|
prepayment speeds, loan originations and credit losses;
|
|
|
|
sources of liquidity and financial resources in the amounts, at
the times and on the terms required to support M&Ts
and Providents or the combined companys future
businesses;
|
16
|
|
|
|
|
legislation or other governmental action affecting the financial
services industry as a whole, participants in the TARP Capital
Purchase Program or other programs, M&T, Provident and/or
M&T or Providents subsidiaries individually or
collectively, including changes in laws and regulations
(including laws and regulations concerning taxes, banking,
securities and insurance) with which M&T and Provident must
comply;
|
|
|
|
M&Ts and Providents common shares outstanding
and common stock price volatility;
|
|
|
|
fair value of and number of stock-based compensation awards to
be issued in future periods;
|
|
|
|
rapid technological developments and changes;
|
|
|
|
M&Ts and Providents ability to continue to
introduce competitive new products and services on a timely,
cost-effective basis and the mix of those products and services;
|
|
|
|
containing costs and expenses;
|
|
|
|
protection and validity of intellectual property rights;
|
|
|
|
reliance on large customers;
|
|
|
|
technological, implementation and cost/financial risks in
contracts; and
|
|
|
|
the outcome of pending and future litigation and governmental
proceedings.
|
Additional factors that could cause M&Ts or
Providents results to differ materially from those
described in the forward-looking statements can be found in
M&Ts and Providents Annual Reports on
Form 10-K,
Quarterly Reports on
Form 10-Q
and Current Reports on
Form 8-K
filed with the SEC. See Where You Can Find More
Information on Page 68 for a description of where you
can find this information. All subsequent written and oral
forward-looking statements concerning the proposed transaction
or other matters and attributable to M&T or Provident or
any person acting on their behalf are expressly qualified in
their entirety by the cautionary statements contained or
referred to within this proxy statement/prospectus.
Forward-looking statements speak only as of the date on which
such statements are made. M&T and Provident undertake no
obligation to update any forward-looking statement to reflect
events or circumstances after the date on which such statement
is made, or to reflect the occurrence of unanticipated events.
PROVIDENT
SPECIAL MEETING
This section contains information from Provident for Provident
common stockholders about the special meeting Provident has
called for common stockholders to consider and approve the
merger agreement and the transactions contemplated thereby. We
are mailing this proxy statement/prospectus to you, as a
Provident common stockholder, on or about February 17,
2009. Together with this proxy statement/prospectus, we are also
sending to you a notice of the special meeting of Provident
common stockholders and a form of proxy card that
Providents Board of Directors is soliciting for use at the
special meeting and at any adjournments or postponements of the
special meeting. The special meeting will be held on
April 8, 2009, at 10:00 a.m. local time, at 250
Calvert Street, Baltimore, Maryland.
This proxy statement/prospectus is also being furnished by
M&T to Provident common stockholders as a prospectus in
connection with the issuance of shares of M&T common stock
upon completion of the merger.
Matters
to Be Considered
The only matter to be considered at the Provident special
meeting is the approval of the merger agreement and the
transactions contemplated thereby. You may also be asked to vote
upon a proposal to adjourn or postpone the special meeting.
Provident could use any adjournment or postponement of the
special meeting for the purpose, among others, of allowing more
time to solicit votes in favor of the merger agreement.
Recommendation
of Providents Board of Directors
Providents Board of Directors has unanimously declared
advisable the merger agreement and the transactions contemplated
thereby, including the merger, and recommends that Provident
common stockholders vote FOR
17
approval of the merger agreement and the transactions
contemplated thereby, including the merger, and FOR
the approval of the adjournment or postponement of the special
meeting, if necessary, to solicit additional proxies in favor of
the merger agreement and the transactions contemplated thereby,
including the merger.
Record
Date
Providents Board of Directors has fixed the close of
business on February 12, 2009 as the record date for
determining the Provident common stockholders entitled to
receive notice of and to vote at the special meeting. Only
Provident common stockholders of record as of the record date
are entitled to and are being requested to vote at the special
meeting. As of the record date, 33,511,560 shares of
Provident common stock were issued and outstanding and held by
approximately 3,796 record holders. Provident common
stockholders are entitled to one vote on each matter considered
and voted on at the special meeting for each share of Provident
common stock held of record at the close of business on the
record date. The presence, in person or by properly executed
proxy, of the holders of a majority of the shares of Provident
common stock entitled to vote at the special meeting is
necessary to constitute a quorum at the special meeting. For
purposes of determining the presence of a quorum, abstentions
and broker non-votes will be counted as shares present.
Abstentions and broker non-votes will have the same effect as
votes against approval of the merger agreement and the
transactions contemplated thereby, including the merger.
Action
Required
The merger agreement and the transactions contemplated thereby
must be approved by the holders of two-thirds of all the votes
entitled to be cast on the matter by Provident stockholders.
Holders of Provident preferred stock are not entitled to and are
not being requested to vote at the Provident special meeting.
The merger agreement and the consummation of the transactions
contemplated therein will not require the approval of the
holders of M&T common stock under the New York Business
Corporation Law or the rules of the NYSE.
As of the record date, Provident directors and executive
officers and their affiliates held approximately
722,039 shares (or 2.15% of the outstanding shares) of
Provident common stock entitled to vote at the special meeting.
As of the record date, M&T and its subsidiaries held no
shares of Provident common stock (other than shares held as
fiduciary, custodian or agent as described below) and its
directors and executive officers or their affiliates held
approximately 23,600 shares (or less than 0.01% of the
outstanding shares) of Provident common stock. See The
Merger Interests of Providents Directors and
Executive Officers in the Merger. As of the record date,
subsidiaries of M&T, as fiduciaries, custodians or agents,
held a total of approximately 102,583 shares of Provident
common stock, representing approximately less than 0.01% of the
shares entitled to vote at the Provident special meeting, and
maintained sole or shared voting power over approximately 13,175
of these shares.
Solicitation
of Proxies
Proxies are being solicited by Providents Board of
Directors from Provident common stockholders. Shares of
Provident common stock represented by properly executed proxies
will be voted in accordance with the instructions indicated on
the enclosed proxy cards. If no instructions are indicated, such
proxies will be voted FOR approval of the merger
agreement and the transactions contemplated thereby, including
the merger, and FOR any motion to adjourn or
postpone the special meeting to another time
and/or place
for the purpose of soliciting additional proxies or otherwise.
Revocation
of Proxies
A Provident common stockholder who has given a proxy may revoke
it at any time before its exercise at the special meeting by
(i) giving written notice of revocation to Providents
Corporate Secretary, (ii) properly submitting to Provident
a duly executed proxy bearing a later date or
(iii) attending the special meeting and voting in person.
All written notices of revocation and other communications with
respect to revocation of proxies should be addressed to
Provident as follows: Corporate Secretary, 114 East Lexington
Street, Baltimore, Maryland 21202. Proxies may also be revoked
via the Internet or telephone following the instructions on your
proxy card.
18
THE
MERGER
Terms of
the Merger
Each of the M&T Board of Directors and Providents
Board of Directors has approved and adopted or declared
advisable the merger agreement, which provides for the merger of
Provident with and into Merger Sub, with Merger Sub being the
surviving corporation in the merger and remaining a subsidiary
of M&T. Each share of Provident common stock, par value
$1.00 per share, issued and outstanding immediately prior to the
completion of the merger, except for specified shares of
Provident common stock held by Provident or M&T, will be
converted into the right to receive 0.171625 of a share of
M&T common stock.
Provident common stockholders are being asked to approve the
merger agreement and the transactions contemplated thereby.
Background
of the Merger
Historically, Provident has periodically reviewed ways to
enhance its performance and prospects in light of market,
economic, regulatory, competitive and other factors and has
considered its strategic alternatives. In addition, with the
approval of Providents Board of Directors, the Chairman of
the Board of Directors and Chief Executive Officer of Provident,
Gary Geisel, has maintained relationships with senior officers
of possible strategic partners, including senior officers of
M&T. Until recently, Providents Board of Directors
and management considered independence to be the appropriate
strategic policy for Provident because they believed that
independence was in the long-term best interests of, and would
deliver greater long-term value to, Providents
stockholders as compared to other strategic options such as a
sale of Provident, a joint venture or any other significant
business combination transaction.
In the second quarter of 2007, softening residential housing
markets, rising delinquency and default rates on mortgage loans
and increasingly volatile and constrained secondary credit
markets began affecting the banking and financial services
industry generally. Although these issues first appeared in the
subprime mortgage market, they grew in significance and expanded
into the prime mortgage market and broader consumer and
commercial credit markets. These factors, along with adverse
developments in credit quality, asset values and revenue
opportunities throughout the financial services industry, had
negative impacts on Providents results of operations,
credit costs and investment values. Provident reported
write-downs to a significant portion of Providents REIT
trust preferred and non-agency mortgage-backed securities
portfolios and increased provisions for loan losses for the
fourth quarter of 2007 and the first quarter of 2008. As a
consequence of these developments, Providents Board of
Directors and management began to consider ways to address these
issues and improve Providents capital and liquidity
positions.
In April 2008, Providents Board of Directors and
management announced a multi-tiered capital plan intended to
raise additional capital and provide Provident with additional
liquidity, which included the successful completion of a private
placement of $64.8 million of its capital stock to certain
institutional and individual accredited investors, resulting in
$62.4 million in cash proceeds to Provident. In connection
with the private placement, Provident and its advisors,
including Sandler ONeill & Partners, L.P., which
we refer to as Sandler ONeill, approached a number of
financial institutions and other investors, including M&T,
as well as officers and directors of Provident. The private
placement ultimately included sales of 16,000 shares of
Series A Mandatory Convertible Non-Cumulative preferred
stock to M&T for $16.0 million and 72,110 shares
of common stock to officers and directors of Provident for
$0.8 million. The capital plan also included the successful
completion of a private placement of $50.0 million of
subordinated unsecured debt to qualified institutional buyers
and accredited investors. Provident also reported a cash
dividend of $0.11 per share of common stock for the first
quarter of 2008, a 66% reduction from the prior quarterly
dividend.
For the second and third quarters of 2008, Provident announced
net income of $10.2 million, or $0.27 per diluted share,
and a net loss of $5.4 million, or ($0.21) per diluted
share, respectively, which included non-cash, pre-tax accounting
charges for other-than-temporary-impairment of
$20.7 million and $24.6 million, respectively for
certain investment securities. Providents Board of
Directors and management continued to monitor the various
19
implications of the worsening economic and market conditions,
their impact on Provident, and the possible need for and
prospects of success of further capital-raising transactions
and/or
possible strategic transactions with other financial
institutions. Among other things, Providents Board of
Directors considered the high cost of raising capital in the
current credit environment, the possible need for additional
capital in the future and the possible difficulties of obtaining
such capital in an expedited manner should the need arise due to
downgrades in Providents investment securities portfolio
or otherwise. Providents Board of Directors also
considered the factors relating to the state of the economy
described under Recent Developments, beginning at
Page 8 of this proxy statement/prospectus.
In October 2008, the U.S. Treasury announced that it had
established the Troubled Asset Relief Program (TARP)
Capital Purchase Program. Eligible institutions were granted
until November 14, 2008 to apply to participate in the
TARP. After considering the implications and impacts of a TARP
investment, including the potential improvement to
Providents capital position and liquidity in the amount of
any cash proceeds from the TARP investment, Providents
Board of Directors approved Providents application to
participate in the TARP. Provident reported on November 14,
2008 that, pursuant to the TARP, it had sold shares of a newly
created class of Fixed Rate Cumulative Perpetual Preferred
Stock, Series B and a warrant to purchase shares of
Providents common stock to the U.S. Treasury for an
aggregate purchase price of $151.5 million in cash,
increasing its capital by a like amount. As a result of the TARP
investment, Providents regulatory capital ratios improved.
In particular, Providents tangible capital ratio, which
was 4.63% prior to the investment, improved to 7.09% on a pro
forma basis, its Tier One risk-based capital ratio, which
was 10.31% prior to the investment, improved to 13.25% on a pro
forma basis, and its total risk-based capital ratio, which as
12.46% prior to the investment, improved to 15.41% on a pro
forma basis.
In mid-November 2008, a leading ratings agency reviewed and
downgraded a broad range of collateralized debt obligations, or
CDOs, including bank pooled trust preferred securities held by
Provident in its investment portfolio. The securities had a face
value of approximately $138 million in a total portfolio of
$408 million. Provident understood that the ratings agency
was also in the process of reviewing a range of other CDOs,
which range was likely to include the remaining securities in
Providents investment portfolio. On November 19,
2008, Providents management briefed Providents Board
of Directors as to the possible impact of these downgrades,
including other-than-temporary-impairment implications. Among
other things, Providents management briefed
Providents Board of Directors as to the potentially
adverse impact of the downgrades on Providents compliance
with regulatory capital ratio requirements. In addition,
Providents Board of Directors and management discussed the
potential risk and earnings impacts of downgrades, including
other-than-temporary-impairments, of Providents remaining
trust preferred and certain other securities, and the likelihood
of any change in fair value accounting requirements
under SFAS No. 157. Providents Board of
Directors discussed the challenges of remaining independent
following its write-down and given the adverse developments in
the financial industry and uncertainty as to the economy
generally. In particular, Providents Board of Directors
considered the possible need for additional capital in the
future and the potential risk and earnings impact of the
downgrades, including the potential impact on the market prices
for Providents common stock in the future. After
considering these matters and the prevailing economic and market
conditions and outlook, Providents Board of Directors,
with advice from Providents financial advisor with respect
to the merger, Sandler ONeill, authorized and directed
management to work with Sandler ONeill to begin to explore
Providents strategic alternatives, including by
considering the potential for further public or private capital
raising activities or financial or balance sheet restructurings
and by soliciting initial indications of interest from financial
institutions with respect to a business combination with
Provident.
During late November 2008, Sandler ONeill worked with
Providents senior management to identify potential
transaction partners, including by reviewing Providents
past relationships with potential transaction partners,
analyzing publicly available information about other financial
institutions and applying their knowledge and expertise
concerning Providents peers and the current market for
transactions involving financial institutions. Sandler
ONeill contacted a number of potential transaction
partners on Providents behalf and engaged in preliminary
discussions with those parties regarding the possibility of a
business combination. Some of the institutions contacted
executed confidentiality agreements and thereafter Sandler
ONeill commenced further discussions regarding a potential
transaction and Provident provided the institutions with certain
non-public information regarding Providents business and
recent operating performance. Provident also continued to work
20
with Sandler ONeill during this period to consider other
alternatives, including further public or private capital
raising activities or financial or balance sheet restructuring
alternatives.
In early December, certain of the potential transaction
partners, including M&T, expressed an interest in a
potential acquisition. Each of the proposals received
contemplated a stock-for-stock merger. Each proposal was subject
to further due diligence and other customary conditions.
Provident also received an indication of interest from one of
the potential transaction partners regarding a possible capital
raising transaction. Thereafter, management worked with Sandler
ONeill and Providents legal advisor,
Sullivan & Cromwell LLP, which we refer to as
Sullivan & Cromwell, to assess the proposals and to
review and consider the status of managements review of
Providents investment securities portfolio and
Providents financial outlook.
Providents Board of Directors met on December 5,
2008. The Chairman of the Board and Chief Executive Officer,
Mr. Geisel, updated Providents Board as to the work
recently performed by management and Sandler ONeill
regarding the exploration of strategic alternatives and
described the initial results of those efforts. A representative
of Sullivan & Cromwell discussed Providents
Boards legal duties in connection with its consideration
of strategic alternatives.
Representatives of management then reported on managements
review of Providents investment securities portfolio and
discussed the prospect of further downgrades of Providents
pooled bank issued trust preferred securities, the possible
impact of such downgrades upon Providents regulatory
capital ratios and impairment charges and the possibility of
write-downs of Providents non-agency mortgage-backed
securities and REIT trust preferred securities. Representatives
of management also described Providents operating outlook
for the 2009 fiscal year and discussed the factors affecting
this outlook, including increases in FDIC insurance premiums,
the costs of raising additional capital, the difficult operating
environment including limited revenue opportunities, projected
expenses under Providents capital expenditure programs,
the significant product investments necessary to remain
competitive in the future and the likelihood of any change in
fair value accounting requirements under
SFAS No. 157.
Sandler ONeill then reviewed the process undertaken to
that point with respect to Providents strategic
alternatives, including the possibility of raising equity
capital, and discussed the proposals received by Provident.
Sandler ONeill informed Providents Board of
Directors that Provident had received three proposals for a
business combination transaction. Sandler ONeill reviewed
the key characteristics of the proposals, including the amount
and type of consideration offered. Sandler ONeill further
reviewed the anticipated next steps in and the timing of a
strategic transaction process, including with respect to due
diligence, management presentations and merger agreement
negotiations. Specifically, Sandler ONeill reviewed the
process for providing selected bidders with access to
Providents management for interviews and access to review
Providents non-public loan file information. Following
discussions and questions among the participants at the meeting,
including discussion by Providents Board of Directors
concerning the impact of conditions in the credit markets on
financial institutions generally and Provident specifically,
Providents Board of Directors authorized and directed
management and Sandler ONeill to invite the two financial
institutions that had submitted the most compelling initial
indications of interest with respect to an acquisition
transaction (one of which was M&T) to conduct due diligence
and submit final indications of interest with a view to a
transaction being presented to Providents Board for review
and consideration at the Boards regularly scheduled
meeting on December 17, 2008. Providents Board also
made clear that it would continue to consider other
alternatives, including the possibility of Provident remaining
as an independent institution.
In the period from December 5 to December 16, 2008,
representatives of management, Providents legal advisors
and Sandler ONeill worked with the two remaining bidders
(one of which was M&T) to facilitate their respective due
diligence investigations of Provident. The due diligence
investigations included, among other things, discussions with
Providents senior management regarding Providents
senior managements view of Providents business
prospects, and review of Providents securities portfolio
and other assets, capital structure, and legal documents and
obligations. Providents legal counsel provided to each
bidder a form of merger agreement, and worked with
M&Ts counsel at Wachtell, Lipton, Rosen &
Katz, to negotiate definitive transaction documentation. As a
result of this process, on December 16, 2008, M&T
proposed a stock-for-stock merger with Provident in which the
holders of Provident common stock would receive
0.171625 shares of M&T stock in exchange for each
share of
21
Provident common stock held by them. The other remaining bidder
determined not to submit a revised indication of interest or
negotiate potential transaction documentation.
On December 17, 2008, a regularly scheduled meeting of
Providents Board of Directors was held. Management and
Sandler ONeill made presentations to Providents
Board regarding Providents strategic alternatives,
including the possibilities of Provident (i) remaining as
an independent institution, (ii) seeking to raise capital
via a public or private offering or strategic investment, or
(iii) engaging in a strategic business combination.
Mr. Geisel and Sandler ONeill provided an overview of
events since the Boards December 5 meeting, including the
background of discussions with M&T and other bidders, the
terms of the M&T proposal received on December 16,
2008, and Providents due diligence review of M&T,
including discussions between Providents and
M&Ts respective senior management with respect to
M&Ts financial condition and business prospects.
Sandler ONeill also reviewed M&Ts historical
and current financial results and estimates of future
performance as published by
I/B/E/S.
Providents Board again discussed prevailing market
conditions, the possibility of further downgrades of
Providents securities portfolio, and Providents
strategic alternatives.
Representatives of Sullivan & Cromwell again discussed
with Providents Board of Directors their legal duties in
connection with any consideration of a possible strategic
transaction. Sullivan & Cromwell also presented a
summary of the legal terms of the merger agreement submitted by
M&T with its proposal and the stockholder and regulatory
approvals that would be required to complete the transaction,
including the possible timeframe for obtaining such approvals.
Providents Board also considered the M&T proposal in
the light of the constituency provisions of Providents
articles of incorporation, including the impact a merger would
have on Providents employees and the communities in which
Provident or its subsidiaries operate or are located, and
M&Ts request to have a member of Providents
Board of Directors become a director of M&T.
Sandler ONeill then presented an analysis of the financial
terms of the M&T proposal, including the transaction value,
form of consideration, and dividend impact for Providents
stockholders as well as the historical performance of
M&Ts stock, potential effects of the proposed merger
on M&T, M&Ts business and financial information,
M&Ts asset and deposit mixes and retail profile,
M&Ts branch footprint and potential overlap with
Providents branches, and the performance of
M&Ts stock after announcing previous mergers, as well
as M&Ts request to have an as of yet unspecified
current member of Providents Board of Directors become a
director of M&T upon completion of the transaction. Sandler
ONeills presentation included discussion of the
matters described under Opinion of Providents
Financial Advisor, beginning on Page 26 of this proxy
statement/prospectus. Sandler ONeill noted that
M&Ts proposal had a value of $10.50 per share of
Provident common stock, based on the closing price of
M&Ts stock on December 16, 2008, representing a
significant premium over Providents stock price as of
December 16, 2008. Sandler ONeill further noted its
estimate that M&Ts proposal would be accretive to
Providents dividends per share. Sandler ONeill
discussed its analysis of Providents other strategic
alternatives, including a capital raising transaction, and
review of Provident on a stand-alone basis.
Sandler ONeill then delivered to Providents Board of
Directors its oral opinion, subsequently confirmed in writing,
that based upon and subject to the factors and assumptions
stated in that opinion, as of such date, the exchange ratio of
0.171625 shares of M&T stock to be received in respect
of each share of Provident common stock in the transaction was
fair to Providents common stockholders from a financial
point of view. Subsequently, the merger documents were finalized
and Sandler ONeill conducted on behalf of Provident
various types of due diligence on M&T, including due
diligence with respect to M&Ts financial condition
and business prospects.
Following these discussions, and extensive review and discussion
among Providents Directors, including consideration of the
factors described under Reasons for the
Merger; Recommendation of Providents Board of
Directors, beginning on Page 23 of this proxy
statement/prospectus and consideration of Sandler
ONeills presentation, including Sandler
ONeills analyses of transaction ratios, the trading
history of Provident common stock and M&T common stock,
financial results of comparable companies, selected merger
transactions, discounted cash flow valuation on both a combined
company and stand-alone basis, and the pro forma impact of the
proposed merger, Providents Board of Directors unanimously
approved the M&T merger agreement and the transactions
contemplated thereby and declared the merger and other
transactions contemplated in the merger agreement to be
advisable. See Opinion of Providents Financial
Advisor, beginning on Page 26 of this proxy
statement/prospectus. Providents Board of Directors
resolved that a meeting of the Provident common
22
stockholders be convened to consider and approve the merger
agreement and the transactions contemplated in the merger
agreement. Providents Board then directed that management
and Providents advisors continue to negotiate terms with
M&T with a view toward signing a definitive merger
agreement as soon as reasonably practicable.
During the remainder of December 17 and on December 18,
2008, representatives of Provident and M&T management and
outside legal advisors and Sandler ONeill worked to
finalize the merger agreement and related documents. Among other
things, the parties continued to work to finalize provisions of
the merger agreement regarding certain employee retention
arrangements and mechanics of the merger procedures and the
contents of Providents disclosure schedules. M&T
informed Provident that it had selected Mr. Geisel as the
director to join M&Ts board if the transaction is
completed. M&T advised Provident that its selection was
based on, among other things, Mr. Geisels extensive
knowledge of Providents operations and financial
institutions generally, as well as his valuable relationships
with Providents various constituencies. Late in the
evening on December 18, 2008, the parties executed the
merger agreement. The transaction was announced prior to the
opening of the financial markets in New York City on
December 19, 2008.
Reasons
for the Merger; Recommendation of Providents Board of
Directors
After careful consideration, Providents Board of Directors
determined that the merger is advisable and in the best
interests of Provident and its stockholders. Providents
Board of Directors therefore declared the merger and the merger
agreement to be advisable and unanimously recommends that the
Provident stockholders vote FOR the approval of the
merger.
In reaching the determination that the merger is advisable,
Providents Board of Directors consulted with
Providents senior management, financial advisor and legal
advisors, and drew on its knowledge of the business, operations,
properties, assets, financial condition, operating results,
historical market prices and prospects of Provident and
M&T, as well as current economic and market conditions. In
connection with its review and approval of the merger, and in
the course of its deliberations, Providents Board of
Directors considered numerous factors that weighed in favor of
the merger, including the following:
|
|
|
|
|
Economic turmoil and challenging environment for financial
institutions. Providents Board of Directors
reviewed the difficulty of remaining independent and enhancing
stockholder value in the face of national and global economic
turmoil. Providents Board of Directors considered the
current and prospective environment in the financial services
industry, including national and regional economic conditions,
continued consolidation and intensified competition in the
industry, the consequences of fair value accounting
treatment under SFAS No. 157, the likelihood that there
would not be any significant change in fair value
accounting requirements, the volatility in capital markets, and
the lack of availability of capital at acceptable costs, and the
likely effect of these factors on Provident in the absence of
the merger. Among other things, Providents Board of
Directors considered the impact of these factors on
Providents securities portfolio and regulatory capital,
including the impact of the rating agency downgrade (and
potential future downgrades) of certain types of financial
instruments owned by Provident.
|
|
|
|
Strategic Alternatives. Providents Board
of Directors carefully considered the strategic alternatives
available to Provident, including pursuing a business
combination with a third party, maintaining the status quo, and
attempting to raise capital through a private placement,
strategic investment or a public offering of debt or equity
securities. Providents Board of Directors discussed these
alternatives in its deliberations and received advice from
senior management, Sandler ONeill as its financial advisor
and Sullivan & Cromwell as its special legal counsel.
In comparing a business combination to the alternative of
capital raising, Providents Board of Directors considered
the fact that Provident had raised a significant amount of
capital through private placements of preferred stock and debt,
and through participation in the TARP in the past eight months,
the volatile current conditions of the securities market, the
general unavailability of capital for financial institutions and
the likely high cost if any capital were available.
Specifically, Providents Board of Directors considered
that issuing common stock to raise equity capital was likely to
cause significant dilution of existing Provident
stockholders interests, and that issuing preferred stock
would be very costly. Provident would also continue to face the
various significant financial issues described in detail above
under
|
23
|
|
|
|
|
Background of the Merger.
Providents Board of Directors therefore concluded that a
merger with a third party is the best strategic alternative.
|
|
|
|
|
|
The Potential Sale Process. Providents
Board of Directors considered the extent and breadth of the
potential sale process conducted by Provident, with the
assistance of Sandler ONeill and its legal advisors, in
soliciting, evaluating and responding to potential bidders
likely to be interested in acquiring Provident.
|
|
|
|
Future Prospects. Providents Board of
Directors evaluated the business, operations, financial
conditions, earnings, management and future prospects of
M&T and Provident and believed that a business combination
with M&T would enable Providents stockholders to
participate in a combined company that would have enhanced
future prospects compared to those that Provident is likely to
achieve on a stand-alone basis. In reaching its conclusion,
Providents Board of Directors took into consideration,
among other things, the following benefits of a merger with
M&T: enhanced revenue and geographic diversification,
increased market capitalization, a lower cost of capital,
stronger capital position, funding capabilities and liquidity
position, cost savings through integration and synergies and, as
a result, improved capabilities to cope with potential
challenges and risks. Providents Board of Directors also
took into account the potential impact of Providents
likely earnings in the fourth quarter of 2008 and in 2009 in
light of Providents earnings in the first nine months of
2008.
|
|
|
|
Merger Consideration. Providents Board
of Directors considered the value of the consideration offered
by M&T. The consideration, at the time of their decision,
represented an approximate 58% premium over the market price of
Providents common stock on December 16, 2008.
Providents Board of Directors also considered the adequacy
of the merger consideration, not only in relation to the market
price of Providents common stock, but also in relation to
the historical, present and anticipated future operating results
and financial position of Provident as an independent entity.
|
Providents Board of Directors considered the low price
level of M&Ts common stock in relation to the price
level in recent years and the possibility that Provident
stockholders would have the opportunity to participate in future
stock price growth of M&T.
Providents Board of Directors also considered the risks
and uncertainties in evaluating the merger consideration in view
of the potential fluctuation of M&Ts common stock
price given the fixed exchange ratio, and the period of time
between the execution of the merger agreement and the closing.
|
|
|
|
|
Likelihood of Prompt Regulatory
Approval. Providents Board of Directors
considered the likelihood that M&T and Provident would
receive the necessary regulatory approvals to complete the
transactions contemplated in the merger agreement, including the
merger and the bank merger, in a timely fashion.
|
|
|
|
Terms and Conditions of the Merger Agreement Relating to
Closing. Providents Board of Directors
believed the terms and conditions of the merger agreement,
including the parties respective representations and
warranties, the conditions to closing and termination
provisions, provided adequate assurances as to M&Ts
obligation and ability to consummate the merger in a timely
manner, without any extraordinary conditions, and the
protections against the impact on certainty of completion of the
merger of further write-downs in Providents securities
portfolio.
|
|
|
|
Providents Ability to Appoint a Director to
M&Ts Board of
Directors. Providents Board of Directors
considered the ability of Provident stockholders to retain a
voice in management oversight by appointing one of
Providents directors to M&Ts Board of Directors.
|
|
|
|
Tax. Providents Board of Directors
expected that the merger will constitute a reorganization under
Section 368(a) of the Code and Provident stockholders
generally will not recognize any gain or loss for federal income
tax purposes on the exchange of shares of Provident common stock
for shares of M&T common stock in the merger, except with
respect to any cash received instead of fractional shares of
M&T common stock. Those stockholders who wish to enjoy the
tax benefits of recognizing and deducting capital losses may be
able to sell their shares in the market before the closing.
|
|
|
|
Impact on Constituencies. As required by
Providents articles of incorporation, Providents
Board of Directors considered the social and economic effect on
the employees, depositors and customers of, and
|
24
|
|
|
|
|
others dealing with, Provident and its subsidiaries and on the
communities in which Provident and its subsidiaries operate or
are located. Providents Board of Directors believed that
M&T and Provident share a commitment to the customers,
employees, stockholders, and the communities both companies
serve. Providents Board of Directors viewed
M&Ts record in this area favorably and considered
M&Ts commitment to match or expand Providents
charitable donations in the Baltimore area for at least three
years after the consummation of the merger.
|
|
|
|
|
|
Sandler ONeills Fairness Opinion and
Analysis. Providents Board of Directors
considered the opinion, analyses and presentations of Sandler
ONeill described under the heading
Opinion of Providents Financial
Advisor. Sandler ONeills opinion concluded
that the merger consideration offered to Providents common
stockholders in the merger was fair from a financial point of
view to the holders of such stock.
|
In the course of its deliberation regarding the merger,
Providents Board of Directors also considered the
following factors, which it determined did not outweigh the
expected benefits to Provident and its stockholders:
|
|
|
|
|
Provisions and Covenants Contained in the Merger
Agreement. Providents Board of Directors
considered the restrictions on the operation of Providents
business during the period between signing of the merger
agreement and completion of the merger, as well as other
covenants and agreements of Provident contained in the merger
agreement. Providents Board of Directors also considered
the provisions of the merger agreement relating to payment of
the termination fee upon certain events, and the limitations on
Providents ability to discuss alternative transactions
during the pendency of the merger. Providents Board of
Directors further considered the requirement that Provident must
convene a special meeting of common stockholders to vote on the
transaction with M&T regardless of whether it changes its
recommendation unless the merger agreement is terminated.
|
|
|
|
|
|
Completion Risks. Providents Board of
Directors considered the risks and costs associated with the
merger not being completed in a timely manner or at all,
including as a result of any failure to obtain requisite
regulatory approvals. Providents Board of Directors
considered that these risks and costs included the diversion of
management and employee attention, potential employee attrition,
the potential effect on business and customer relationships and
potential litigation brought by stockholders of Provident
arising from the merger agreement or the transactions
contemplated thereby.
|
|
|
|
|
|
Integration Risks. Providents Board of
Directors considered the challenges of combining the businesses,
assets and workforces of Provident and M&T, which could
affect the post-merger success and the ability to achieve
anticipated cost savings and other potential synergies.
Providents Board of Directors considered M&Ts
acquisition history, and the timing between signing and closing
of recent transactions.
|
|
|
|
|
|
Insider Interests. Providents Board of
Directors considered the fact that the interests of Provident
directors and executive officers with respect to the merger may
be different from those of other Provident stockholders in
certain limited circumstances. See The Merger
Interests of Providents Directors and Executive Officers
in the Merger on Page 39.
|
The reasons set forth above are not intended to be exhaustive,
but include the material considerations of Providents
Board of Directors in approving the merger agreement. In
reaching its determination to approve and recommend the
transaction, Providents Board of Directors looked at the
totality of the information presented to it and did not assign
any relative or specific weights to the factors considered, and
individual directors may have given different weights to
different factors. After considering, among other things, the
matters discussed above and the opinion of Sandler ONeill
referred to above, Providents Board of Directors believed
that the merger was advisable and in the best interests of
Provident and its stockholders, and therefore, unanimously
approved and recommended the merger.
It should be noted that this explanation of the reasoning of
Providents Board of Directors (and some other information
presented in this section) is forward-looking in nature and,
therefore, should be read in light of the factors discussed
under the section of this proxy statement/prospectus entitled
Cautionary Statement Regarding Forward-Looking
Statements commencing on Page 15.
25
Opinion
of Providents Financial Advisor
Provident retained Sandler ONeill to act as its financial
advisor in connection with a possible business combination with
another financial institution. Provident selected Sandler
ONeill as its financial advisor because Sandler
ONeill is a nationally recognized investment banking firm
whose principal business specialty is financial institutions. In
the ordinary course of its investment banking business, Sandler
ONeill is regularly engaged in the valuation of financial
institutions and their securities in connection with mergers and
acquisitions and other corporate transactions.
Sandler ONeill acted as financial advisor to Provident in
connection with the proposed merger and participated in certain
of the negotiations leading to the execution of the merger
agreement. At the December 17, 2008 meeting at which
Providents Board of Directors considered and declared
advisable the merger agreement and the transactions contemplated
thereby, including the merger, Sandler ONeill delivered to
Providents Board its oral opinion, subsequently confirmed
in writing that, as of such date, the exchange ratio to be
received in the transaction was fair to the holders of Provident
common stock from a financial point of view. The full text of
Sandler ONeills opinion is attached as
Appendix B to this proxy statement/prospectus. The opinion
outlines the procedures followed, assumptions made, matters
considered and qualifications and limitations on the review
undertaken by Sandler ONeill in rendering its opinion. The
description of the opinion set forth below is qualified in its
entirety by reference to the opinion. We urge Provident common
stockholders to read the entire opinion carefully in connection
with their consideration of the proposed merger.
Sandler ONeills opinion speaks only as of the
date of the opinion. The opinion was directed to
Providents Board of Directors and is directed only to the
fairness of the exchange ratio to holders of Provident common
stock from a financial point of view. It does not address the
underlying business decision of Provident to engage in the
merger or any other aspect of the merger and is not a
recommendation to any Provident common stockholder as to how
such stockholder should vote at the special meeting with respect
to the merger or any other matter.
In connection with rendering its December 17, 2008 opinion,
Sandler ONeill reviewed and considered, among other things:
(1) the merger agreement;
(2) certain publicly available financial statements and
other historical financial information of Provident that Sandler
ONeill deemed relevant;
(3) certain publicly available financial statements and
other historical financial information of M&T that Sandler
ONeill deemed relevant;
(4) internal financial projections for Provident for the
years ending December 31, 2008 through 2012 as prepared by
and discussed with senior management of Provident;
(5) consensus earnings per share estimates for M&T for
the years ending December 31, 2008 and 2009 as revised to
include M&Ts receipt of funds pursuant to TARP and an
estimated long-term growth rate as published by I/B/E/S;
(6) the pro forma financial impact of the merger on
M&T, based on assumptions relating to transaction expenses,
purchase accounting adjustments, cost savings and other
synergies as discussed with the senior management of Provident;
(7) publicly reported historical price and trading activity
for the common stock of Provident and M&T, including a
comparison of certain financial and stock market information for
Provident and M&T with similar publicly available
information for certain other companies the securities of which
are publicly traded;
(8) to the extent publicly available, the financial terms
of certain recent business combinations in the commercial
banking industry;
(9) the current market environment generally and the
commercial banking environment in particular; and
26
(10) such other information, financial studies, analyses
and investigations and financial, economic and market criteria
as Sandler ONeill considered relevant.
Sandler ONeill also discussed with certain members of
senior management of Provident the business, financial
condition, results of operations and prospects of Provident,
including certain matters facing Provident including further
potential write-downs to Providents investment portfolio
and recent downgrades made to bank pooled trust preferred
securities by Moodys which were expected to result in
other-than-temporary-impairment charges to Provident. We also
held discussions with certain members of senior management of
M&T regarding the business, financial condition and results
of operations of M&T.
In performing its reviews and analyses and in rendering its
opinion, Sandler ONeill assumed and relied upon the
accuracy and completeness of all the financial information,
analyses and other information that was publicly available or
otherwise provided to Sandler ONeill by Provident or
M&T and further relied on the assurances of management of
Provident and M&T that they were not aware of any facts or
circumstances that would make such information inaccurate or
misleading. Sandler ONeill was not asked to and did not
independently verify the accuracy or completeness of any of such
information and they did not assume any responsibility or
liability for the accuracy or completeness of any of such
information. Sandler ONeill did not make an independent
evaluation or appraisal of the assets, the collateral securing
assets or the liabilities, contingent or otherwise, of Provident
or M&T or any of their respective subsidiaries, or the
collectibility of any such assets, nor was it furnished with any
such evaluations or appraisals. Sandler ONeill is not an
expert in the evaluation of allowances for loan losses and it
did not make an independent evaluation of the adequacy of the
allowance for loan losses of Provident or M&T, nor did it
review any individual credit files relating to Provident or
M&T and Sandler ONeill assumed that the respective
allowances for loan losses for both Provident and M&T were
adequate to cover such losses.
Sandler ONeills opinion was necessarily based upon
market, economic and other conditions as they existed on, and
could be evaluated as of, the date of its opinion. Sandler
ONeill assumed, in all respects material to its analysis,
that all of the representations and warranties contained in the
merger agreement and all related agreements were true and
correct, that each party to such agreements will perform all of
the covenants required to be performed by such party under such
agreements and that the conditions precedent in the merger
agreement will not be waived. Sandler ONeill also assumed,
with Providents consent, that there has been no material
change in Providents and M&Ts assets, financial
condition, results of operations, business or prospects or other
financial information since the date of the last financial
information made available to it, that Provident and M&T
will remain as going concerns for all periods relevant to its
analyses, and that the merger will qualify as a tax-free
reorganization for federal income tax purposes. Finally, with
Providents consent, Sandler ONeill relied upon the
advice that Provident received from its legal, accounting and
tax advisors as to all legal, accounting and tax matters
relating to the merger and the other transactions contemplated
by the merger agreement.
In rendering its December 17, 2008 opinion, Sandler
ONeill performed a variety of financial analyses. The
following is a summary of the material analyses performed by
Sandler ONeill, but is not a complete description of all
the analyses underlying Sandler ONeills opinion. The
summary includes information presented in tabular format. In
order to fully understand the financial analyses, these tables
must be read together with the accompanying text. The tables
alone do not constitute a complete description of the financial
analyses. The preparation of a fairness opinion is a complex
process involving subjective judgments as to the most
appropriate and relevant methods of financial analysis and the
application of those methods to the particular circumstances.
The process, therefore, is not necessarily susceptible to a
partial analysis or summary description. Sandler ONeill
believes that its analyses must be considered as a whole and
that selecting portions of the factors and analyses considered
without considering all factors and analyses, or attempting to
ascribe relative weights to some or all such factors and
analyses, could create an incomplete view of the evaluation
process underlying its opinion. Also, no company included in
Sandler ONeills comparative analyses described below
is identical to Provident or M&T and no transaction is
identical to the merger. Accordingly, an analysis of comparable
companies or transactions involves complex considerations and
judgments concerning differences in financial and operating
characteristics of the companies and other factors that could
affect the public trading values or merger transaction values,
as the case may be, of Provident or M&T and the companies
to which they are being compared.
27
The internal financial projections prepared by the senior
management of Provident and the anticipated transaction costs,
purchase accounting adjustments, expected cost savings and other
synergies relating to the merger were discussed with the senior
management of Provident. Sandler ONeill expressed no
opinion as to such financial projections or the assumptions on
which they were based. These projections, as well as the other
estimates used by Sandler ONeill in its analyses, were
based on numerous variables and assumptions which are inherently
uncertain and, accordingly, actual results could vary materially
from those set forth in such projections.
In performing its analyses, Sandler ONeill also made
numerous assumptions with respect to industry performance,
business and economic conditions and various other matters, many
of which cannot be predicted and are beyond the control of
Provident, M&T and Sandler ONeill. The analyses
performed by Sandler ONeill are not necessarily indicative
of actual values or future results, which may be significantly
more or less favorable than suggested by such analyses. Sandler
ONeill prepared its analyses solely for purposes of
rendering its opinion and provided such analyses to
Providents Board of Directors at its December 17,
2008 meeting. Estimates on the values of companies do not
purport to be appraisals or necessarily reflect the prices at
which companies or their securities may actually be sold. Such
estimates are inherently subject to uncertainty and actual
values may be materially different. Accordingly, Sandler
ONeills analyses do not necessarily reflect the
value of Providents common stock or M&Ts common
stock or the prices at which Providents or M&Ts
common stock may be sold at any time. Sandler
ONeills fairness opinion was approved by Sandler
ONeills fairness opinion committee. Sandler
ONeill expresses no opinion as to the fairness of the
amount or nature of the compensation to be received in the
merger by Providents officers, directors or employees, or
any class of such persons, relative to the compensation to be
received in the merger by any other stockholders of Provident.
Sandler ONeill also expresses no opinion as to the
fairness of the exchange ratio to or the effects of the merger
on holders of Provident preferred shares.
Summary of Proposal. Sandler ONeill
reviewed the financial terms of the proposed transaction. Based
upon the closing price of M&Ts common stock on
December 16, 2008 of $61.18 per share, a fixed exchange
ratio of 0.171625, representing $10.50 per share, and the
exchange of all of Providents shares into shares of
M&T, and based upon per share financial information for
Provident for the twelve months ended September 30, 2008,
Sandler ONeill calculated the following ratios:
Transaction
Ratios
|
|
|
|
|
Transaction Value/Tangible Book Value per Share
|
|
|
150
|
%
|
Transaction Value/Adjusted Tangible Book Value per Share(1)
|
|
|
195
|
%
|
Transaction Value/Management Est. 2009 Earnings per Share
|
|
|
12.1
|
x
|
Transaction Value/Adjusted Est. 2009 Earnings per Share(1)
|
|
|
NM
|
|
Tangible Book Premium/Core Deposits(2)
|
|
|
3.5
|
%
|
Adjusted Tangible Book Premium/Core Deposits(1)(2)
|
|
|
6.6
|
%
|
Market Premium (Price as of December 16, 2008)
|
|
|
58.4
|
%
|
|
|
|
(1) |
|
Adjusted tangible book value as of December 31, 2009 and
2009 estimated earnings per share adjusted for further potential
write-downs to Providents investment portfolio and recent
downgrades made to bank pooled trust preferred securities by
Moodys which are expected to result in
other-than-temporary-impairment charges to Provident, through
December 31, 2009, as per Provident management estimates. |
|
(2) |
|
Assumes Providents total core deposits are
$3.46 billion; excludes certificates of deposits greater
than $100,000. |
The aggregate offer value was approximately $407.1 million,
based upon the purchase of 33,511,560 shares of Provident
common stock (aggregate price of $351.9 million) and
preferred shares outstanding (common stock equivalents of
4.7 million shares or $49.4 million in deal value),
roll-over of Provident options into M&T options (rollover
price of $3.6 million) and cash out of certain TARP-related
warrants (cost of $2.1 million).
Stock Trading History of Provident. Sandler
ONeill reviewed the history of the distribution of the
reported trading prices of Providents common stock as a
percentage of the total number of shares of Provident common
stock traded for the six-month period ended December 16,
2008 and the reported trading volume of Providents
28
common stock for the six-month period ended December 16,
2008. During the six-month period, the average daily trading
volume of Provident common stock was 667,236 shares and the
number of shares traded represented 256.29% of the number of
shares of Provident common stock outstanding.
Providents
Six-Month Trading Distribution Beginning June 16,
2008
|
|
|
|
|
Price per Share
|
|
|
|
|
$0.00 - $2.75
|
|
|
0.0
|
%
|
$2.75 - $4.26
|
|
|
0.0
|
|
$4.26 - $5.77
|
|
|
1.7
|
|
$5.77 - 7.49
|
|
|
25.3
|
|
$7.49 - $9.00
|
|
|
32.1
|
|
$9.00 - $10.51
|
|
|
29.1
|
|
Greater than $10.51
|
|
|
10.8
|
|
As shown in the table below, Sandler ONeill then compared
the relationship between the movements in the prices of
Providents common stock to movements in the prices of the
NASDAQ Bank Index, the S&P 500 Index, and the S&P Bank
Index over the one-year period ended December 16, 2008.
During that time period, Provident common stock underperformed
each of the indices to which it was compared.
Providents
Stock Performance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage Decrease in
|
|
|
|
Beginning Index Value
|
|
|
Ending Index Value
|
|
|
|
December 14,
|
|
|
December 16,
|
|
|
|
2007
|
|
|
2008
|
|
|
Provident
|
|
|
100.0
|
%
|
|
|
(69.3
|
)%
|
NASDAQ Bank Index
|
|
|
100.0
|
|
|
|
(24.7
|
)
|
S&P 500 Index
|
|
|
100.0
|
|
|
|
(37.8
|
)
|
S&P Bank Index
|
|
|
100.0
|
|
|
|
(39.1
|
)
|
Stock Trading History of M&T. As shown in
the table below, Sandler ONeill compared the relative
price appreciation in the price of M&Ts common stock
and compared it to the appreciation of the NASDAQ Bank Index
over the one year and three year periods ended December 16,
2008. During that time period, M&T common stock
underperformed the NASDAQ Bank Index.
M&Ts
Stock Performance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage Decrease in
|
|
|
|
Beginning Index Value
|
|
|
Ending Index Value
|
|
|
|
December 14,
|
|
|
December 16,
|
|
|
|
2007
|
|
|
2008
|
|
|
M&T
|
|
|
100.0
|
%
|
|
|
(26.6
|
)%
|
NASDAQ Bank Index
|
|
|
100.0
|
|
|
|
(24.7
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage Decrease in
|
|
|
|
Beginning Index Value
|
|
|
Ending Index Value
|
|
|
|
December 16,
|
|
|
December 16,
|
|
|
|
2005
|
|
|
2008
|
|
|
M&T
|
|
|
100.0
|
%
|
|
|
(44.9
|
)%
|
NASDAQ Bank Index
|
|
|
100.0
|
|
|
|
(36.4
|
)
|
Comparable Company Analysis. Sandler
ONeill used publicly available information to compare
selected financial and market trading information for Provident
and M&T with groups of financial institutions selected by
29
Sandler ONeill for Provident and M&T, respectively.
For Provident, the peer groups consisted of the following
financial institutions:
Regional Comparable Group:
|
|
|
Fulton Financial Corporation
|
|
Sun Bancorp, Inc.
|
Susquehanna Bancshares, Inc.
|
|
Sandy Spring Bancorp, Inc.
|
National Penn Bancshares, Inc.
|
|
Virginia Commerce Bancorp, Inc.
|
United Bankshares, Inc.
|
|
|
Mid-Cap Comparable Group:
|
|
|
Huntington Bancshares Incorporated
|
|
TCF Financial Corporation
|
First Horizon National Corporation
|
|
City National Corporation
|
Colonial BancGroup, Inc.
|
|
Valley National Corporation
|
Associated Banc-Corp
|
|
Cullen/Frost Bankers, Inc.
|
BOK Financial Corporation
|
|
Bank of Hawaii Corporation
|
Commerce Bancshares, Inc.
|
|
|
The analysis compared publicly available financial information
for Provident as of and for the twelve months ended
September 30, 2008 with that of each of the companies in
Providents peer groups as of and for the twelve-month
period ended September 30, 2008. The tables below set forth
certain of the data for Provident and the mean and median data
for the Provident peer groups, with pricing data as of
December 16, 2008.
Comparable
Group Analysis Operating Performance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Regional
|
|
|
Regional
|
|
|
Mid-Cap
|
|
|
Mid-Cap
|
|
|
|
|
|
|
Peer Group
|
|
|
Peer Group
|
|
|
Peer Group
|
|
|
Peer Group
|
|
|
|
Provident
|
|
|
Mean
|
|
|
Median
|
|
|
Mean
|
|
|
Median
|
|
|
Total Assets ($mm)
|
|
$
|
6,410
|
|
|
$
|
8,067
|
|
|
$
|
8,096
|
|
|
$
|
22,461
|
|
|
$
|
16,953
|
|
Tier 1 Capital Ratio
|
|
|
9.88
|
%
|
|
|
9.64
|
%
|
|
|
9.73
|
%
|
|
|
9.78
|
%
|
|
|
9.25
|
%
|
Total Risk-Based Capital Ratio
|
|
|
12.0
|
%
|
|
|
11.2
|
%
|
|
|
11.0
|
%
|
|
|
12.4
|
%
|
|
|
12.0
|
%
|
Loans / Deposits
|
|
|
93
|
%
|
|
|
106
|
%
|
|
|
105
|
%
|
|
|
107
|
%
|
|
|
101
|
%
|
Net Interest Margin
|
|
|
3.16
|
%
|
|
|
3.49
|
%
|
|
|
3.49
|
%
|
|
|
3.64
|
%
|
|
|
3.44
|
%
|
Fee Income Ratio
|
|
|
38.5
|
%
|
|
|
23.4
|
%
|
|
|
22.8
|
%
|
|
|
36.4
|
%
|
|
|
36.4
|
%
|
Efficiency Ratio
|
|
|
68.8
|
%
|
|
|
56.8
|
%
|
|
|
57.9
|
%
|
|
|
59.8
|
%
|
|
|
58.7
|
%
|
Nonperforming Assets / Assets
|
|
|
1.05
|
%
|
|
|
1.31
|
%
|
|
|
1.02
|
%
|
|
|
1.16
|
%
|
|
|
1.01
|
%
|
Reserves / Nonperforming Loans
|
|
|
147.5
|
%
|
|
|
123.0
|
%
|
|
|
95.6
|
%
|
|
|
146.2
|
%
|
|
|
98.0
|
%
|
Loan Loss Reserve / Gross Loans
|
|
|
1.40
|
%
|
|
|
1.26
|
%
|
|
|
1.28
|
%
|
|
|
1.63
|
%
|
|
|
1.51
|
%
|
Net Charge-offs / Average Loans
|
|
|
0.48
|
%
|
|
|
0.32
|
%
|
|
|
0.31
|
%
|
|
|
0.97
|
%
|
|
|
0.66
|
%
|
Comparable
Group Analysis Market Valuation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Regional
|
|
|
Regional
|
|
|
Mid-Cap
|
|
|
Mid-Cap
|
|
|
|
|
|
|
Peer Group
|
|
|
Peer Group
|
|
|
Peer Group
|
|
|
Peer Group
|
|
|
|
Provident
|
|
|
Mean
|
|
|
Median
|
|
|
Mean
|
|
|
Median
|
|
|
Total Assets ($mm)
|
|
$
|
6,410
|
|
|
$
|
8,067
|
|
|
$
|
8,096
|
|
|
$
|
22,461
|
|
|
$
|
16,953
|
|
Price/Tangible Book Value
|
|
|
78
|
%
|
|
|
185
|
%
|
|
|
199
|
%
|
|
|
185
|
%
|
|
|
183
|
%
|
2009 Est. Earnings Per Share
|
|
$
|
0.87
|
|
|
$
|
1.08
|
|
|
$
|
1.20
|
|
|
$
|
2.35
|
|
|
$
|
2.67
|
|
Price / 2009 Est. Earnings Per Share
|
|
|
8.29
|
x
|
|
|
14.47
|
x
|
|
|
14.25
|
x
|
|
|
12.92
|
x
|
|
|
13.49
|
x
|
Last Quarter Annualized Dividend Yield
|
|
|
6.64
|
%
|
|
|
3.63
|
%
|
|
|
4.55
|
%
|
|
|
3.77
|
%
|
|
|
4.23
|
%
|
Est. 2009 Dividend Payout
|
|
|
59.5
|
%
|
|
|
51.1
|
%
|
|
|
59.5
|
%
|
|
|
85.0
|
%
|
|
|
47.6
|
%
|
Market Capitalization
|
|
$
|
222.7
|
|
|
$
|
923.9
|
|
|
$
|
1,213.1
|
|
|
$
|
2,305.4
|
|
|
$
|
2,423.7
|
|
30
M&T Comparable Group Analysis. Sandler
ONeill also used publicly available information to compare
selected financial and market trading information for M&T
with the following group of publicly traded commercial banking
institutions as defined by M&Ts management.
Nationwide Comparable Group
|
|
|
U.S. Bancorp
|
|
Fifth Third Bancorp
|
SunTrust Banks, Inc.
|
|
KeyCorp
|
Capital One Financial Corp.
|
|
Comerica Inc.
|
PNC Financial Services Group, Inc.
|
|
Marshall & Ilsley Corp.
|
Regions Financial Corp.
|
|
Huntington Bancshares Inc.
|
BB&T Corp.
|
|
Zions Bancorp.
|
The analysis compared publicly available financial information
for M&T with that of each of the companies in the M&T
peer groups as of and for the twelve months ended
September 30, 2008. The tables below set forth the data for
M&T and the median data for the M&T peer groups, with
pricing data as of December 16, 2008.
Comparable
Group Analysis Operating Performance
|
|
|
|
|
|
|
|
|
|
|
M&T Nationwide
|
|
|
|
|
Peer Group
|
|
|
M&T
|
|
Median
|
|
Total Assets ($mm)
|
|
$
|
65,247
|
|
$
|
164,790
|
Return on Average Assets
|
|
|
0.81%
|
|
|
0.99%
|
Net Interest Margin
|
|
|
3.40%
|
|
|
3.43%
|
Efficiency Ratio
|
|
|
56.0%
|
|
|
57.3%
|
Tangible Equity / Tangible Assets
|
|
|
4.89%
|
|
|
5.78%
|
Total Risk-Based Capital Ratio
|
|
|
12.0%
|
|
|
12.1%
|
Loan Loss Reserve / Loans
|
|
|
1.60%
|
|
|
1.54%
|
Loan Loss Reserve / Nonperforming Assets
|
|
|
1.02%
|
|
|
1.50%
|
Nonperforming Assets / Assets
|
|
|
1.17%
|
|
|
0.62%
|
Net Charge-offs / Average Loans
|
|
|
0.61%
|
|
|
0.91%
|
|
Comparable Group Analysis Market Valuation
|
|
|
|
|
M&T
|
|
|
|
|
Nationwide
|
|
|
|
|
Peer Group
|
|
|
M&T
|
|
Median
|
|
Last twelve months Price Change
|
|
|
(31.1)%
|
|
|
(53.3)%
|
Price / Tangible Book Value
|
|
|
223%
|
|
|
94%
|
2009 Est. Earnings Per Share
|
|
$
|
5.25
|
|
$
|
1.80
|
Price / 2009 Est. Earnings Per Share
|
|
|
11.7x
|
|
|
12.0x
|
Last Quarter Annualized Dividend Yield
|
|
|
4.58%
|
|
|
6.43%
|
Est. 2009 Dividend Payout
|
|
|
59.8%
|
|
|
72.1%
|
Market Capitalization ($mm)
|
|
$
|
6,747
|
|
$
|
5,317
|
Historical Market Valuation. Sandler
ONeill compared the historical prices of M&T common
stock to the shares of common stock of M&Ts peer
group from a share price to last twelve months earnings
perspective and determined that M&T shares were trading at
a lower price to earnings per share multiple than that of
M&Ts peer group, which was not the case in
2000-2007.
Analyst Recommendation and Estimates
Analysis. Sandler ONeill used publicly
available I/B/E/S research analyst estimates and recommendations
to outline the current analyst views for M&T. Sandler
ONeill only used
31
research analyst estimates and recommendations that were
published or reviewed after the public announcement of
preliminary approval for TARP funding on November 20, 2008.
For M&T, the analysts consisted of the following:
Firms with Published M&T Research
|
|
|
Fox-Pitt Kelton Inc.
|
|
UBS Securities LLC
|
J.P. Morgan
|
|
|
Morgan Stanley
|
|
|
Sandler ONeill & Partners L.P.
|
|
|
The analysis compared published recommendations, long-term
growth rates, 2009 earnings per share estimates and 2010
earnings per share estimates. As of December 16, 2008,
thirteen research analysts had published recommendations for
M&T, comprised of ten Hold recommendations, two
Sell recommendations and one Buy
recommendation. As of December 16, 2008, seven research
analysts had published or reviewed 2009 estimates outstanding
after M&Ts public announcement of preliminary
approval for TARP funding on November 20, 2008. Four of
these seven analysts also had published 2010 earnings estimates
outstanding. Sandler ONeill had no published 2010 earnings
estimates outstanding for M&T. The table below sets forth
the median values of these estimates:
|
|
|
|
|
|
|
M&T
|
|
|
I/B/E/S Long-Term Growth Rate
|
|
|
2.90%
|
|
I/B/E/S 2009 Estimated Earnings per Share
|
|
$
|
5.00
|
|
I/B/E/S 2010 Estimated Earnings per Share
|
|
$
|
6.49
|
|
Analysis of Selected Merger
Transactions. Sandler ONeill reviewed seven
selected merger transactions announced nationwide from
January 1, 2008 through December 16, 2008 involving
the acquisition of commercial banking institutions in New
England and the Mid-Atlantic regions with announced transaction
values between $100 million and $600 million. Sandler
ONeill reviewed the multiples of transaction price at
announcement to tangible book value, tangible book premium to
core deposits, and premium to market value. The median multiples
from this selected group were compared to the proposed
transaction ratios.
Comparable
Transaction Metrics
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Median
|
|
|
|
M&T/ Provident
|
|
|
M&T/ Provident
|
|
|
Nationwide
|
|
|
|
Metric
|
|
|
Adjusted Metric(1)
|
|
|
Metric
|
|
|
Transaction price/Tangible book value
|
|
|
150
|
%
|
|
|
195
|
%
|
|
|
157
|
%
|
Tangible book premium/Core deposits(2)
|
|
|
3.5
|
%
|
|
|
6.6
|
%
|
|
|
10.5
|
%
|
Market Premium(3)
|
|
|
58.4
|
%
|
|
|
58.4
|
%
|
|
|
19.6
|
%
|
|
|
|
(1) |
|
Adjusted tangible book value as of December 31, 2009 and
2009 estimated earnings per share adjusted for further potential
write-downs to Providents investment portfolio and recent
downgrades made to bank pooled trust preferred securities by
Moodys which are expected to result in
other-than-temporary-impairment charges to Provident, through
December 31, 2009, as per Provident management estimates. |
|
(2) |
|
Assumes Providents core deposits total $3.46 billion. |
|
(3) |
|
Based on Providents closing price of $6.63 per share as of
December 16, 2008. |
Discounted Cash Flow Analysis. Sandler
ONeill performed an analysis that estimated the future
stream of after-tax cash flows of Provident through
December 31, 2013 under various circumstances, assuming
Provident continued a quarterly cash dividend per share of $0.11
and that Provident performed in accordance with the earnings and
growth projections reviewed with management of Provident. To
approximate the terminal value of Provident common stock at
December 31, 2013, Sandler ONeill applied price to
earnings multiples ranging from 10.0x to 16.0x. The dividend
income streams and terminal values were then discounted to
present values using different discount rates ranging from 11.0%
to 15.0%, chosen to reflect different assumptions regarding
required rates of return of holders or prospective buyers of
Provident common stock. In addition, the terminal value of
Providents
32
common stock at December 31, 2013 was calculated using a
range of price to earnings multiples ranging from 10.0x to 16.0x
and applied to a range of discounts and premiums to the
projected net income of Provident. The range applied to the
projected net income was 25% under the projected amount to 25%
over the projected amount, using a discount rate of 12.85%. In
addition, the terminal value of Providents common stock at
December 31, 2013 was calculated by applying price to
tangible book value multiples ranging from 75% to 225%. As
illustrated in the following tables, this analysis indicated an
imputed range of values per share for Providents common
stock of $4.93 to $8.41 when applying the price to earnings
multiples to the matched projections, $4.39 to $9.35 when
applying earnings multiples to the -25% / +25%
projection and $3.78 to $10.32 when applying tangible book value
multiples.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per Share Multiples
|
|
|
|
10.0x
|
|
|
12.0x
|
|
|
14.0x
|
|
|
16.0x
|
|
|
11.0%
|
|
$
|
5.81
|
|
|
$
|
6.67
|
|
|
$
|
7.54
|
|
|
$
|
8.41
|
|
12.0%
|
|
$
|
5.57
|
|
|
$
|
6.40
|
|
|
$
|
7.22
|
|
|
$
|
8.05
|
|
13.0%
|
|
$
|
5.35
|
|
|
$
|
6.14
|
|
|
$
|
6.92
|
|
|
$
|
7.71
|
|
14.0%
|
|
$
|
5.13
|
|
|
$
|
5.89
|
|
|
$
|
6.64
|
|
|
$
|
7.39
|
|
15.0%
|
|
$
|
4.93
|
|
|
$
|
5.65
|
|
|
$
|
6.37
|
|
|
$
|
7.09
|
|
With
Projected Net Income Variance:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per Share Multiples
|
|
|
|
10.0x
|
|
|
12.0x
|
|
|
14.0x
|
|
|
16.0x
|
|
|
(25.0)%
|
|
$
|
4.39
|
|
|
$
|
4.98
|
|
|
$
|
5.58
|
|
|
$
|
6.17
|
|
(20.0)%
|
|
$
|
4.59
|
|
|
$
|
5.22
|
|
|
$
|
5.86
|
|
|
$
|
6.49
|
|
(15.0%
|
|
$
|
4.78
|
|
|
$
|
5.46
|
|
|
$
|
6.13
|
|
|
$
|
6.81
|
|
(10.0)%
|
|
$
|
4.98
|
|
|
$
|
5.70
|
|
|
$
|
6.41
|
|
|
$
|
7.13
|
|
(5.0)%
|
|
$
|
5.18
|
|
|
$
|
5.94
|
|
|
$
|
6.69
|
|
|
$
|
7.44
|
|
0.0%
|
|
$
|
5.38
|
|
|
$
|
6.17
|
|
|
$
|
6.97
|
|
|
$
|
7.76
|
|
5.0%
|
|
$
|
5.58
|
|
|
$
|
6.41
|
|
|
$
|
7.25
|
|
|
$
|
8.08
|
|
10.0%
|
|
$
|
5.78
|
|
|
$
|
6.65
|
|
|
$
|
7.52
|
|
|
$
|
8.40
|
|
15.0%
|
|
$
|
5.97
|
|
|
$
|
6.89
|
|
|
$
|
7.80
|
|
|
$
|
8.72
|
|
20.0%
|
|
$
|
6.17
|
|
|
$
|
7.13
|
|
|
$
|
8.08
|
|
|
$
|
9.03
|
|
25.0%
|
|
$
|
6.37
|
|
|
$
|
7.36
|
|
|
$
|
8.36
|
|
|
$
|
9.35
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tangible Book Value Multiples
|
|
|
|
75%
|
|
|
125%
|
|
|
175%
|
|
|
225%
|
|
|
11.0%
|
|
$
|
4.43
|
|
|
$
|
6.39
|
|
|
$
|
8.36
|
|
|
$
|
10.32
|
|
12.0%
|
|
$
|
4.25
|
|
|
$
|
6.13
|
|
|
$
|
8.00
|
|
|
$
|
9.88
|
|
13.0%
|
|
$
|
4.09
|
|
|
$
|
5.88
|
|
|
$
|
7.67
|
|
|
$
|
9.46
|
|
14.0%
|
|
$
|
3.93
|
|
|
$
|
5.64
|
|
|
$
|
7.35
|
|
|
$
|
9.06
|
|
15.0%
|
|
$
|
3.78
|
|
|
$
|
5.42
|
|
|
$
|
7.05
|
|
|
$
|
8.68
|
|
Sandler ONeill performed an analysis that estimated the
future stream of after-tax cash flows of M&T through
December 31, 2013 under various circumstances, assuming
M&Ts cash dividend was flat at $0.70 quarterly
through 2009 and was increased by $0.10 per quarter thereafter.
It was also assumed that M&T performed in accordance with
the research analyst and I/B/E/S earnings and growth
projections. To approximate the terminal value of M&T
common stock at December 31, 2013, Sandler ONeill
applied price to earnings multiples ranging from 10.0x to 16.0x.
The dividend income streams and terminal values were then
discounted to present values using different discount rates
ranging from 8.0% to 12.0% chosen to reflect different
assumptions regarding required rates of return of holders or
prospective buyers of M&T common stock. In addition, the
terminal value of M&Ts common stock at
December 31, 2013 was calculated using a range of price to
earnings multiples ranging from 10.0x to 16.0x and applied to a
range of discounts and premiums to the projected net income of
M&T. The range applied to the projected
33
net income was 25% under the projected amount to 25% over the
projected amount, using a discount rate of 10.12%. In addition,
the terminal value of M&Ts common stock at
December 31, 2013 was calculated by applying price to
tangible book values multiples ranging from 175% to 250%. As
illustrated in the following tables, this analysis indicated an
imputed range of values per share for M&Ts common
stock of $58.52 to $102.80 when applying the price to earnings
multiples to the matched projections, $50.99 to $113.32 when
applying the earnings multiples to the -25% / +25%
projection and $57.36 to $91.34 when applying tangible book
value multiples.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per Share Multiples
|
|
|
|
10.0x
|
|
|
12.0x
|
|
|
14.0x
|
|
|
16.0x
|
|
|
8.0%
|
|
$
|
69.67
|
|
|
$
|
80.72
|
|
|
$
|
91.76
|
|
|
$
|
102.80
|
|
9.0%
|
|
$
|
66.65
|
|
|
$
|
77.17
|
|
|
$
|
87.69
|
|
|
$
|
98.21
|
|
10.0%
|
|
$
|
63.79
|
|
|
$
|
73.82
|
|
|
$
|
83.85
|
|
|
$
|
93.88
|
|
11.0%
|
|
$
|
61.08
|
|
|
$
|
70.65
|
|
|
$
|
80.21
|
|
|
$
|
89.77
|
|
12.0%
|
|
$
|
58.52
|
|
|
$
|
67.64
|
|
|
$
|
76.77
|
|
|
$
|
85.89
|
|
With
Projected Net Income Variance:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per Share Multiples
|
|
|
|
10.0x
|
|
|
12.0x
|
|
|
14.0x
|
|
|
16.0x
|
|
|
(25.0)%
|
|
$
|
50.99
|
|
|
$
|
58.47
|
|
|
$
|
65.95
|
|
|
$
|
73.43
|
|
(20.0)%
|
|
$
|
53.48
|
|
|
$
|
61.46
|
|
|
$
|
69.44
|
|
|
$
|
77.42
|
|
(15.0%
|
|
$
|
55.98
|
|
|
$
|
64.45
|
|
|
$
|
72.93
|
|
|
$
|
81.41
|
|
(10.0)%
|
|
$
|
58.47
|
|
|
$
|
67.44
|
|
|
$
|
76.42
|
|
|
$
|
85.39
|
|
(5.0)%
|
|
$
|
60.96
|
|
|
$
|
70.44
|
|
|
$
|
79.91
|
|
|
$
|
89.38
|
|
0.0%
|
|
$
|
63.46
|
|
|
$
|
73.43
|
|
|
$
|
83.40
|
|
|
$
|
93.37
|
|
5.0%
|
|
$
|
65.95
|
|
|
$
|
76.42
|
|
|
$
|
86.89
|
|
|
$
|
97.36
|
|
10.0%
|
|
$
|
68.44
|
|
|
$
|
79.41
|
|
|
$
|
90.38
|
|
|
$
|
101.35
|
|
15.0%
|
|
$
|
70.93
|
|
|
$
|
82.40
|
|
|
$
|
93.87
|
|
|
$
|
105.34
|
|
20.0%
|
|
$
|
73.43
|
|
|
$
|
85.39
|
|
|
$
|
97.36
|
|
|
$
|
109.33
|
|
25.0%
|
|
$
|
75.92
|
|
|
$
|
88.39
|
|
|
$
|
100.85
|
|
|
$
|
113.32
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tangible Book Value Multiples
|
|
|
|
175%
|
|
|
200%
|
|
|
225%
|
|
|
250%
|
|
|
8.0%
|
|
$
|
68.27
|
|
|
$
|
75.96
|
|
|
$
|
83.65
|
|
|
$
|
91.34
|
|
9.0%
|
|
$
|
65.32
|
|
|
$
|
72.64
|
|
|
$
|
79.97
|
|
|
$
|
87.29
|
|
10.0%
|
|
$
|
62.52
|
|
|
$
|
69.50
|
|
|
$
|
76.48
|
|
|
$
|
83.46
|
|
11.0%
|
|
$
|
59.87
|
|
|
$
|
66.53
|
|
|
$
|
73.19
|
|
|
$
|
79.84
|
|
12.0%
|
|
$
|
57.36
|
|
|
$
|
63.71
|
|
|
$
|
70.07
|
|
|
$
|
76.42
|
|
In connection with its analyses, Sandler ONeill considered
and discussed with Providents Board of Directors how the
present value analyses would be affected by changes in the
underlying assumptions, including variations with respect to net
income. Sandler ONeill noted that the discounted cash flow
and terminal value analysis is a widely used valuation
methodology, but the results of such methodology are highly
dependent upon the numerous assumptions that must be made, and
the results thereof are not necessarily indicative of actual
values or future results.
Stand-Alone Analysis. Sandler ONeill
performed an analysis of Providents valuation on a
stand-alone basis based on Providents internal financial
projections for the years ended December 31, 2008 through
2012. In connection with its analysis, Sandler ONeill
considered and discussed with Providents senior management
what underlying assumptions to reflect, including assumptions
with regard to regulatory capital charges, pre-tax
34
impairment charges, dividend payments, share repurchases and
deposits. The table below sets forth certain of the data with
respect to Providents estimated earnings per share and
growth rates on a stand-alone basis:
Estimated
Earnings Per Share and Growth Rates Analysis
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/31/08
|
|
|
12/31/09
|
|
|
12/31/10
|
|
|
12/31/11
|
|
|
12/31/12
|
|
|
Basic EPS
|
|
$
|
(1.16
|
)
|
|
$
|
(1.91
|
)
|
|
$
|
0.37
|
|
|
$
|
0.52
|
|
|
$
|
0.64
|
|
EPS Growth
|
|
|
NA
|
|
|
|
NM
|
|
|
|
NM
|
|
|
|
39.5%
|
|
|
|
22.6%
|
|
The results of Sandler ONeills analysis are highly
dependent upon Providents internal financial projections
and the underlying assumptions derived from Sandler
ONeills discussions with senior management, and the
results thereof are not necessarily indicative of actual values
or future results.
Pro Forma Merger Analysis. Sandler
ONeill analyzed certain potential pro forma effects
of the merger, assuming the following: (1) the merger
closes on March 31, 2009; (2) 100% of the Provident
shares are exchanged for shares of M&T common stock;
(3) estimated $100 million pre-tax additional mark to
investment securities and loan portfolio taken, assumed as a
100% credit or impairment mark with no earnings generated from
these assets going forward; (4) all FAS 141R
accounting rules have been incorporated; (5) 35% cost
savings on Providents non-interest expense base,
$53.3 million pre-tax in the remaining 9 months of
2009 and $70.8 million pre-tax in 2010; (6) 5.00%
pre-tax cost of cash used to pay transaction expenses and
after-tax restructuring charges of $20.5 million;
(7) 3.0% core deposit intangible amortized over eight years
using sum of years digits methodology;
(8) $103.7 million in aggregate core deposit
intangible; (9) no deposit divestitures; and
(10) Provident options roll over into M&T options and
TARP warrants are exchanged for cash utilizing the Treasury
Method.
Based upon those assumptions, Sandler ONeills
analysis indicated that during the years ended December 31,
2010, 2011 and 2012 the merger would be accretive to
M&Ts earnings per share in 2010, 2011 and 2012.
From the perspective of a Provident common stockholder, the
analysis indicated that at the years ended December 31,
2010 and December 31, 2011, the merger would be accretive
to Providents earnings per share and accretive to
Providents dividends per share. The actual results
achieved by the combined company may vary from projected results
and the variations may be material.
Pro Forma Capital Impact on M&T. Sandler
ONeill also performed an analysis of the impact of the
transaction, on a pro forma basis, as compared to those
of M&T on a stand-alone basis for the quarterly periods
ending December 31, 2008 and March 31, 2009 as follows:
Pro Forma
Capital Analysis
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro Forma
|
|
|
|
12/31/08
|
|
|
03/31/09
|
|
|
(03/31/09)
|
|
|
Tier 1 Leverage Ratio
|
|
|
8.33
|
%
|
|
|
8.26
|
%
|
|
|
8.16
|
%
|
Tier 1 Risk Based Capital
|
|
|
8.90
|
%
|
|
|
8.87
|
%
|
|
|
8.85
|
%
|
Total Risk Based Capital
|
|
|
12.94
|
%
|
|
|
12.86
|
%
|
|
|
12.60
|
%
|
Tangible Equity/Tangible Assets
|
|
|
5.83
|
%
|
|
|
5.84
|
%
|
|
|
5.73
|
%
|
Sandler ONeill also noted M&Ts stand-alone
tangible book value per share upon the completion of the merger
would be approximately $29.04 per share and on a pro forma
basis would be approximately $28.70 as of the completion of
the merger, representing dilution of tangible book value per
share of 1.15% ($0.33 per share).
Sandler ONeill Relationship. Provident
has agreed to pay Sandler ONeill a transaction fee in
connection with the merger of $100,000 as a result of the
signing of the definitive agreement, $350,000 related to Sandler
ONeills fairness opinion due when the proxy
materials are sent to stockholders and a 1.0% fee based on the
aggregate deal value which is contingent, and payable, upon
completion of the merger. Provident has also agreed to reimburse
certain of Sandler ONeills reasonable out-of-pocket
expenses incurred in connection with its engagement and to
indemnify Sandler ONeill and its affiliates and their
respective partners, directors, officers, employees, agents, and
controlling persons against certain expenses and liabilities,
including liabilities under securities laws.
35
Sandler ONeill has, in the past, provided certain
investment banking services to both Provident and M&T and
has received compensation for such services. Recently, Sandler
ONeill acted as financial advisor to Provident in
connection with its placement of shares of Series A
Mandatory Convertible Non-Cumulative Preferred Stock to various
purchasers, including M&T. In the ordinary course of its
business as a broker-dealer, Sandler ONeill may purchase
securities from and sell securities to Provident and M&T
and their affiliates. Sandler ONeill may also actively
trade the debt or equity securities of Provident
and/or
M&T or their affiliates for its own account and for the
accounts of its customers and, accordingly, may at any time hold
a long or short position in such securities.
Board of
Directors and Management of M&T Following Completion of the
Merger
Upon completion of the merger, the current directors and
officers of M&T are expected to continue in their current
positions. M&T has agreed to cause one current member of
Providents Board of Directors designated by Provident and
reasonably acceptable to M&T to be appointed to
M&Ts Board immediately after the completion of the
merger. Provident has designated Gary Geisel, Providents
Chairman of the Board of Directors and Chief Executive Officer,
to join M&Ts Board of Directors. Information about
the current M&T directors and executive officers can be
found in M&Ts proxy statement dated March 6,
2008, which is incorporated by reference into this proxy
statement/prospectus and information about Mr. Geisel can
be found in Providents proxy statement dated
March 12, 2008, which is also incorporated by reference
into this proxy statement/prospectus. See Where You Can
Find More Information on Page 68.
Public
Trading Markets
M&T common stock is listed on the NYSE under the symbol
MTB. Provident common stock is quoted on NASDAQ
under the symbol PBKS. Upon completion of the
merger, Provident common stock will be delisted from NASDAQ and
thereafter will be deregistered under the Exchange Act. The
M&T common stock issuable in the merger will be listed on
the NYSE.
Provident
Stockholders Do Not Have Dissenters Rights in the
Merger
Under Maryland law, stockholders of a Maryland corporation are
not entitled to exercise dissenters rights with respect to
a merger if shares of the corporation are listed on a national
securities exchange on the record date for determining
stockholders entitled to vote on the merger or if the
stockholders are not entitled to vote on the merger. Because
Provident common stock is quoted on NASDAQ (and is expected to
continue to be so quoted through the record date for the special
meeting and completion of the merger), Provident common
stockholders do not have the right to exercise dissenters
rights with respect to the merger. Because holders of Provident
preferred stock are not entitled to vote on the merger, holders
of Provident preferred stock do not have the right to exercise
dissenters rights. If the merger agreement and the
transactions contemplated thereby are approved and the merger is
completed, common stockholders who voted against the approval of
the merger agreement and the transactions contemplated thereby
will be treated the same as common stockholders who voted for
the approval of the merger agreement and the transactions
contemplated thereby and their shares will automatically be
converted into the right to receive the merger consideration.
For further information as to the special meeting and the proxy
solicited by Providents Board of Directors for purposes of
the special meeting, please see the discussion under the caption
Questions and Answers about the Merger and Special
Meeting and The Merger Interests of
Providents Directors and Executive Officers in the
Merger, commencing on Pages iii and 39, respectively.
Regulatory
Approvals Required for the Merger
We have agreed to use our reasonable best efforts to obtain all
regulatory approvals required to complete the merger and the
other transactions contemplated by the merger agreement. These
approvals include approval from the Board of Governors of the
Federal Reserve System, the New York State Banking Department
and the Commissioner of Financial Regulation in the Department
of Labor, Licensing, and Regulation of the State of Maryland.
M&T and Provident have completed the filing of applications
and notifications to obtain the required regulatory approvals.
36
Federal Reserve Board. The transactions
contemplated by the merger agreement are subject to approval by
the Federal Reserve Board pursuant to Section 3 of the Bank
Holding Company Act of 1956 and the Bank Merger Act. On January
16, 2009, M&T filed the required application with the
Federal Reserve Board.
The Federal Reserve Board is prohibited from approving any
transaction under the applicable statutes that (1) would
result in a monopoly, (2) would be in furtherance of any
combination or conspiracy to monopolize or to attempt to
monopolize the business of banking in any part of the United
States, or (3) may have the effect in any section of the
United States of substantially lessening competition, tending to
create a monopoly or resulting in a restraint of trade, unless
the Federal Reserve Board finds that the anti-competitive
effects of the transaction are clearly outweighed in the public
interest by the probable effect of the transaction in meeting
the convenience and needs of the communities to be served. The
Federal Reserve Board may not approve an interstate acquisition
without regard to state law if the applicant controls, or after
completion of the acquisition the combined entity would control,
more than 10 percent of the total deposits of insured
depository institutions in the United States.
In addition, in reviewing a transaction under the applicable
statutes, the Federal Reserve Board will consider the financial
and managerial resources of the companies and their subsidiary
banks and the convenience and needs of the community to be
served as well as the companies effectiveness in combating
money-laundering activities. In connection with its review, the
Federal Reserve Board will provide an opportunity for public
comment on the application and is authorized to hold a public
meeting or other proceeding if it determines that would be
appropriate.
Under the Community Reinvestment Act of 1977, which we refer to
as the CRA, the Federal Reserve Board must take into account the
record of performance of each of M&T and Provident in
meeting the credit needs of the entire communities, including
low- and moderate-income neighborhoods, served by the company
and its subsidiaries. Each of M&Ts and
Providents depository institutions has a
satisfactory or better CRA rating.
Banking Superintendent. The bank merger
is subject to the prior approval of the Banking Superintendent
under certain provisions of the New York Banking Law. In
determining whether to approve the bank merger the Banking
Superintendent will consider, among other factors:
|
|
|
|
|
whether the merger would be consistent with adequate or sound
banking practice and would not result in concentration of assets
beyond limits consistent with effective competition; and
|
|
|
|
whether the merger would result in such a lessening of
competition as to be injurious to the interest of the public or
tend toward monopoly.
|
The Banking Superintendent will also consider the public
interest and the needs and convenience thereof. Further, it is
the policy of the State of New York to:
|
|
|
|
|
ensure the safe and sound conduct of banking organizations;
|
|
|
|
conserve assets of banking organizations;
|
|
|
|
prevent hoarding of money;
|
|
|
|
eliminate unsound and destructive competition among banking
organizations; and
|
|
|
|
maintain public confidence in the business of banking and
protect the public interest and the interests of depositors,
creditors, and stockholders.
|
Under the provisions of the New York Banking Law comparable to
the Community Reinvestment Act, the Banking Superintendent must
also take into account the record of performance of each of
Provident and M&T in meeting the credit needs of the entire
community, including low and moderate income neighborhoods
served by each institution. As part of the review process, the
banking agencies frequently receive comments and protests from
community groups and others.
M&T filed the required applications with the New York
Banking Superintendent on or about January 16, 2009.
Other Requisite Approvals, Notices and
Consents. The transactions contemplated by
the merger agreement are also subject to the prior approval of
the Commissioner of Financial Regulation in the Department of
Labor,
37
Licensing, and Regulation of the State of Maryland. M&T
filed the required application with the Commissioner of
Financial Regulation in the Department of Labor, Licensing, and
Regulation on or about January 16, 2009. M&T also
filed the necessary notifications with the relevant banking
regulators of Pennsylvania, Virginia and Washington, D.C.
on or about January 16, 2009.
Antitrust Considerations. At any time
before or after the merger is completed, the Antitrust Division
of the United States Department of Justice or the United States
Federal Trade Commission, which we refer to as the Antitrust
Division and the FTC, respectively, could take action under the
antitrust laws as it deems necessary or desirable in the public
interest, including seeking to enjoin the merger or seeking
divestiture of substantial assets of M&T or Provident or
their subsidiaries. Private parties also may seek to take legal
action under the antitrust laws under some circumstances.
M&T and Provident can give no assurance that a challenge to
the merger on antitrust grounds will not be made, or, if such a
challenge is made, that M&T and Provident will prevail.
In addition, the merger may be reviewed by the state attorneys
general in the various states in which M&T and Provident
operate. Although M&T and Provident believe there are
substantial arguments to the contrary, these agencies may claim
the authority, under the applicable state and federal antitrust
laws and regulations, to investigate
and/or
disapprove the transactions contemplated by the merger
agreement. There can be no assurance that one or more state
attorneys general will not attempt to file an antitrust action
to challenge the transactions.
Timing. We cannot assure you that all
of the regulatory approvals described above will be obtained,
and, if obtained, we cannot assure you as to the date of any
approvals or the absence of any litigation challenging such
approvals. Likewise, we cannot assure you that the Antitrust
Division, the FTC or any state attorney general will not attempt
to challenge the transactions contemplated by the merger
agreement on antitrust grounds, and, if such a challenge is
made, we cannot assure you as to its result.
Pursuant to the Bank Holding Company Act, a transaction approved
by the Federal Reserve Board may not be completed until
30 days after approval is received, during which time the
Antitrust Division may challenge the transactions on antitrust
grounds. The commencement of an antitrust action would
stay that is, suspend the
effectiveness of an approval unless a court were to order
specifically otherwise. With the approval of the Federal Reserve
Board and the concurrence of the Antitrust Division, the waiting
period may be reduced to no less than 15 days.
M&T and Provident believe that the transactions
contemplated by the merger agreement do not raise substantial
antitrust or other significant regulatory concerns and that they
will be able to obtain all requisite regulatory approvals on a
timely basis without the imposition of any condition that would
have a material adverse effect on M&T or Provident. The
parties obligations to complete the transactions
contemplated by the merger agreement are subject to a number of
conditions, including the receipt of all required regulatory
consents and approvals, unless the failure to obtain such
consents and approvals would not reasonably be expected to have
a material adverse effect on Provident or M&T measured on a
scale relative to Provident. We are not aware of any material
governmental approvals or actions that are required for
completion of the transactions other than those described above.
It is presently contemplated that if any such additional
governmental approvals or actions are required, those approvals
or actions will be sought. There can be no assurance, however,
that any additional approvals or actions will be obtained.
Dividends
The payment, timing and amount of dividends with respect to
M&T after the merger is subject to the determination of
M&Ts Board of Directors and may change at any time.
In the fourth quarter of 2008, M&T declared a dividend of
$0.70 per share of M&T common stock, and Provident declared
a dividend of $0.11 per share of Provident common
stock. For comparison, if the merger had occurred prior to the
dividend paid in the fourth quarter of 2008, Provident common
stockholders in receipt of the merger consideration (based on
the exchange ratio) would hypothetically have received a
dividend in the fourth quarter of 2008 equivalent to $0.12 per
share of Provident common stock.
The merger agreement permits each of M&T and Provident to
continue to pay regular quarterly cash dividends to its
stockholders prior to merger completion. Provident has agreed in
the merger agreement to coordinate with
38
M&T regarding dividend declarations and the related record
dates and payment dates so that Provident common stockholders
will not receive two or more dividends, or fail to receive one
dividend, for any single quarter. Accordingly, prior to the
merger, Provident will coordinate and alter its dividend record
dates in order to effect this policy. The agreements separately
entered into by Provident and M&T with the
U.S. Department of Treasury with respect to their
individual participation in the TARP Capital Purchase Program
contain limitations on certain actions of M&T and
Provident, including but not limited to the payment of cash
dividends in excess of their current quarterly cash dividends.
The payment, timing and amount of dividends by M&T or
Provident on their common stock in the future, either before or
after the merger is completed, are subject to the determination
of each companys respective Board of Directors and depend
on cash requirements, contractual restrictions, its financial
condition and earnings, legal and regulatory considerations and
other factors.
For further information, please see Comparative Market
Prices and Dividends on Page 55 and Recent
Developments on Page 8.
Interests
of Providents Directors and Executive Officers in the
Merger
In considering the recommendation of Providents Board of
Directors that you vote to approve the merger agreement and the
transactions contemplated thereby, you should be aware that some
of Providents directors and executive officers have
financial interests in the merger that are different from, or in
addition to, those of Providents stockholders generally.
The independent members of Providents Board of Directors
were aware of and considered these interests, among other
matters, in evaluating and negotiating the merger agreement and
the merger, and in recommending that the Providents
stockholders approve the merger agreement and the transactions
contemplated thereby. For purposes of all of the Provident
agreements and plans described below, the consummation of the
transactions contemplated by the merger agreement will
constitute a change in control.
Equity Compensation Awards. Upon consummation
of the merger, all outstanding options to acquire shares of
Provident common stock will fully vest and be converted into an
option to purchase a number of shares of M&T common stock
equal to the product (rounded down to the nearest whole share)
of (x) the number of shares of Provident common stock
subject to the Provident option immediately prior to the merger
and (y) 0.171625, at an exercise price per share of
M&T common stock (rounded up to the nearest whole cent)
equal to (x) the exercise price per share of Provident
common stock subject to the Provident option immediately prior
to the merger divided by (y) 0.171625.
Immediately prior to the consummation of the merger, any vesting
conditions applicable to any shares of restricted stock of
Provident granted pursuant to Provident stock plans or other
Provident benefit plans will be waived, and such shares of
restricted stock (less shares of Provident common stock withheld
to satisfy the holders tax withholding obligations upon
vesting) will be treated the same as all other shares of
Provident common stock in accordance with terms of the merger
agreement.
Based on Provident equity compensation holdings as of
January 15, 2009, and assuming that the merger is
consummated on April 1, 2009, upon consummation of the
merger, (1) the number of unvested Provident stock options
(at exercise prices ranging from $7.04 to $36.00) held by each
of Messrs. Geisel, Starliper, Byrnes, and Newton and
Ms. Uphouse, the six other Provident executive officers (as
a group), and the seventeen non-employee directors (as a group)
that would vest are 23,319; 55,308; 13,551; 33,655; 44,850;
165,155; and 0, respectively (with such unvested options having
a total in the money value of approximately $0 based
upon the assumed closing price on April 1, 2009 that is
equal to M&Ts closing price on February 4, 2009
multiplied by 0.171625); (2) the number of unvested shares
of restricted Provident common stock held by each of
Messrs. Geisel, Starliper, Byrnes, and Newton and
Ms. Uphouse, the six other Provident executive officers (as
a group), and the seventeen non-employee directors (as a group)
that would vest and become free of restrictions are 73,047;
8,886; 45,218; 6,538; 8,675; 30,874; and 0, respectively.
Change in Control Agreements. Provident has
entered into substantially similar Change in Control Agreements
with each of Messrs. Geisel, Starliper, Byrnes, Newton,
Davis, Heine, Patrick and Waldych and Mmes. Kilroy and Uphouse.
For each executive, the Change in Control Agreements provide for
the payment of certain severance payments if the executive is
involuntarily terminated without cause or terminates
employment for
39
good reason (each defined in the Change in Control
Agreement), in either case within three years following a change
in control (a Qualifying Termination).
In the event of a Qualifying Termination, each executive is
entitled to receive (1) a cash severance payment equal to
300% of the executives average annual taxable compensation
(excluding any taxable compensation realized by virtue of the
executives exercise of stock options or the vesting of
restricted stock awards) over the last five completed calendar
years preceding the change in control, or, if less, the number
of completed calendar years of employment; and
(2) continuation of the standard employee benefits package
for thirty-six months or a lesser period if the executive
obtains other comparable employment. Assuming that the merger is
consummated on April 1, 2009, and the executive experiences
a Qualifying Termination immediately thereafter, the amount of
cash severance that will be payable to each of
Messrs. Geisel, Starliper, Byrnes, Newton, Davis, Heine,
Patrick and Waldych and Mmes. Kilroy and Uphouse is, subject to
limitations that may be imposed under applicable law (including
as described in the following paragraph), approximately
$2,062,948, $970,493, $1,482,434, $863,480, $670,814, $706,196,
$798,547, $706,596, $622,193, and $835,045, respectively.
Subject to the completion of the merger, Mr. Geisel intends
to pay $1 million of the cash severance he actually
receives in excess of $1 million under his Change in
Control Agreement to The Skip Johnson Charitable Foundation. The
Change in Control Agreements also provide each executive with
the opportunity to terminate employment on a voluntary basis for
any reason following the first anniversary of the merger and
receive a reduced severance payment equal to one-half of the
executives then-current annual base salary and
continuation of benefit coverage for the lesser of six months or
the date the executive obtains other comparable employment.
Regulations promulgated by the Department of Treasury pursuant
to the Emergency Economic Stabilization Act (the
EESA) impose certain limitations on payments and
benefits that are paid upon certain terminations of an
executives employment, including a Qualifying Termination.
Pursuant to the terms of the TARP Purchase Agreement entered
into by Provident on November 14, 2008, the named executive
officers, Messrs. Geisel, Starliper, Byrnes, and Newton and Ms.
Uphouse, entered into waivers and letter agreements under which
the aggregate value of the severance payments and benefits of
each executive in the event of an involuntary termination may
not exceed 2.99 times such executives five year average
annual taxable compensation (including any taxable compensation
realized by virtue of the executives exercise of stock
options or the vesting of restricted stock awards). Assuming
that the severance limitations applicable on November 14,
2008 continue to apply and the merger is consummated on
April 1, 2009, and the executive experiences a Qualifying
Termination immediately thereafter the maximum severance
payments and benefits that may be paid to each of Messrs.
Geisel, Starliper, Byrnes, and Newton and Ms. Uphouse is
approximately $2,523,339, $1,578,491, $1,542,857, $1,113,932,
and $1,071,969, respectively. In the event further limitations
on termination payments and benefits to executives are imposed
on companies that issued preferred shares to the government
under a TARP purchase agreement, including pursuant to the
American Recovery and Reinvestment Tax Act of 2009, the
termination payments and benefits to be paid or provided to the
named executive officers and other executive officers may be
limited further or prohibited.
The executives are not entitled to any Section 4999 or 280G
excise tax gross-ups and would be subject to a Section 280G
cutback if such a cutback would result in a greater after-tax
benefit to the executive.
In addition, each executive is subject to an ongoing
confidentiality obligation and to non-solicitation of customer
and employee covenants while employed by Provident or such
successor corporation and for three years thereafter.
Non-Employee Directors Severance
Plan. Provident maintains a Non-Employee
Directors Severance Plan which provides that if a
non-employee directors service is terminated within the
twelve months following a change in control, the director will
be eligible to receive a lump sum cash severance payment equal
to five times the directors annual retainer amount minus
any retainer fee paid to such director following the change in
control. Assuming that the merger is consummated on
April 1, 2009 and each non-employee director is terminated
immediately thereafter, the amount that will be payable to each
non-employee director is approximately $162,500.
Membership on M&Ts Board. Upon the
successful consummation of the merger, Mr. Gary N. Geisel,
Chairman of the Board of Directors and Chief Executive Officer
of Provident, will become a member of the M&T Board of
Directors. For more information concerning the M&T Board of
Directors following completion of the
40
merger, see The Merger Board of Directors and
Management of M&T Following Completion of the Merger
on Page 36.
Indemnification
and Insurance
The merger agreement requires M&T to indemnify and advance
expenses to present and former directors and officers of
Provident and its subsidiaries against all costs or expense,
judgments, fines, losses, claims, damages, penalties, amounts
paid in settlement or other liabilities incurred in connection
with any claim, action, suit, proceeding or investigation
arising out of actions or omissions prior to the completion of
the merger, to the extent provided under Providents
restated articles of incorporation or amended and restated
by-laws or indemnification agreements in effect on the date of
the merger agreement and, in addition, to the fullest extent
permitted by law. The merger agreement also provides that, for a
period of six years after completion of the merger, M&T
will use its reasonable best efforts to provide directors
and officers liability insurance to reimburse current and
former directors and officers with respect to claims arising at
or prior to the completion of the merger. The insurance will
contain at least the same coverage and amounts and contain terms
and conditions that are not less advantageous than the current
coverage provided by Provident, except that M&T is not
required to incur annual premium expense greater than 250% of
Providents current annual directors and
officers liability insurance premium. In lieu of the
insurance described in the preceding sentences, M&T may, at
its option, purchase prepaid or tail directors
and officers liability insurance coverage no less
favorable than the coverage described in the preceding sentences.
Litigation
Relating to the Merger
On December 30, 2008, an action captioned Gilbert
Feldman v. Provident Bankshares Corporation, et
al. was filed in the Circuit Court for Baltimore City,
Maryland on behalf of a putative class of Provident stockholders
against Provident, certain of its current and former directors,
and M&T. The complaint alleges that the Provident director
defendants breached their fiduciary duties of loyalty, good
faith, due care and disclosure by approving the merger, and that
M&T aided and abetted in such breaches of duty. The
complaint seeks, among other things, an order enjoining the
defendants from proceeding with or consummating the merger, and
other equitable relief. On January 29, 2009, the plaintiff
filed an amended complaint that added allegations contending
that certain Provident public disclosures regarding the
transaction were misleading. On the same day, plaintiff filed a
motion seeking expedited discovery in the proceeding.
On February 17, 2009, the putative class representative and
defendants entered into a memorandum of understanding with
regard to the settlement of this action. The stipulation of
settlement will be subject to customary conditions, including
court approval. In the event that the parties enter into a
stipulation of settlement, a hearing will be scheduled at which
the court will consider the fairness, reasonableness, and
adequacy of the settlement. If the settlement is finally
approved by the court, it will resolve and release all claims in
the action that were or could have been brought challenging any
aspect of the proposed merger, the merger agreement, and any
disclosure made in connection therewith. In addition, it is
expected that plaintiffs counsel will seek an award of
attorneys fees and expenses to be paid by Provident
and/or its
successor(s) in interest. There can be no assurance that the
parties will ultimately enter into a stipulation of settlement
or that the court will approve the settlement even if the
parties were to enter into such stipulation. In such event, the
proposed settlement as contemplated by the memorandum of
understanding may be terminated.
THE
AGREEMENT AND PLAN OF MERGER
The following describes certain aspects of the merger,
including certain material provisions of the merger agreement.
The following description of the merger agreement is subject to,
and qualified in its entirety by reference to, the merger
agreement, which is attached to this proxy statement/prospectus
as Annex A and is incorporated by reference into this proxy
statement/prospectus. We urge you to read the merger agreement
carefully and in its entirety, as it is the legal document
governing this merger.
41
Terms of
the Merger
Each of M&Ts Board of Directors and Providents
Board of Directors has declared advisable the merger agreement,
which provides for the merger of Provident with and into Merger
Sub, with Merger Sub being the surviving corporation in the
merger and remaining a subsidiary of M&T. Each share of
Provident common stock, par value $1.00 per share, issued and
outstanding immediately prior to the completion of the merger,
except for specified shares of Provident common stock held by
Provident or M&T or their subsidiaries, will be converted
into the right to receive 0.171625 of a share of M&T common
stock, which we refer to herein as the exchange ratio. If the
number of shares of common stock of M&T changes before the
merger is completed because of a reorganization,
recapitalization, reclassification, stock dividend, stock split,
reverse stock split, or other similar change in capitalization,
then a proportionate adjustment will be made to the exchange
ratio.
M&T will not issue any fractional shares of M&T common
stock in the merger. Provident common stockholders who would
otherwise be entitled to a fractional share of M&T common
stock will instead receive an amount in cash, rounded to the
nearest cent and without interest, equal to the product of
(i) the fraction of a share to which such holder would
otherwise have been entitled and (ii) the average of the
daily high and low per share sales prices of M&T common
stock on the NYSE for the last trading day immediately prior to
the closing date of the merger.
The Provident articles of incorporation as in effect at the time
of the merger will be the articles of incorporation of the
surviving corporation (the name of the surviving corporation
will be Provident Bankshares Corporation), and the by-laws of
Merger Sub, as then in effect, will be the by-laws of the
surviving corporation.
Closing
and Effective Time of the Merger
The merger will be completed only if all conditions to the
merger discussed in this proxy statement/prospectus and set
forth in the merger agreement are either satisfied or waived.
See Conditions to Complete the Merger below.
The merger will become effective when articles of merger are
filed with the Maryland State Department of Assessments and
Taxation. However, we may agree to a later time for completion
of the merger and specify that time in accordance with Maryland
law. In the merger agreement, we have agreed to cause the
completion of the merger to occur no later than the fifth
business day following the satisfaction or waiver of the last of
the conditions specified in the merger agreement, or on another
mutually agreed date. It currently is anticipated that the
completion of the merger will occur in the second quarter of
2009, but we cannot guarantee when or if the merger will be
completed.
Treatment
of Provident Stock Options and Provident Restricted
Stock
Under the terms of the merger agreement, upon completion of the
merger, the outstanding and unexercised stock options to acquire
Provident common stock will fully vest and be converted into
stock options to acquire M&T common stock adjusted to
reflect the exchange ratio applicable to Provident common stock
generally as follows:
|
|
|
|
|
the number of shares of M&T common stock subject to the
adjusted M&T stock option will equal: (1) the number
of shares of Provident common stock subject to the Provident
stock option as of immediately prior to the completion of the
merger multiplied by (2) the exchange ratio of 0.171625,
rounded down to the nearest whole share; and
|
|
|
|
the exercise price per share of the adjusted M&T stock
option will equal: (1) the exercise price per share of the
Provident stock option as of immediately prior to the completion
of the merger divided by (2) the exchange ratio of 0.171625
(rounded up to the nearest whole cent).
|
With respect to Provident restricted shares, under the terms of
the merger agreement, immediately prior to the completion of the
merger, the outstanding Provident restricted shares will fully
vest, and, upon completion of the
42
merger, the outstanding Provident restricted shares will be
converted into unrestricted shares of M&T common stock
adjusted to reflect the exchange ratio applicable to Provident
common stock generally as follows:
|
|
|
|
|
the number of unrestricted shares of M&T common stock will
equal: (1) the number of shares of restricted Provident
common stock as of immediately prior to the completion of the
merger, less any shares of Provident common stock withheld to
satisfy tax withholding obligations, multiplied by (2) the
exchange ratio of 0.171625 with fractional shares to be
satisfied through a cash payment in accordance with the terms of
the merger agreement.
|
Treatment
of Provident Preferred Stock
Each share of Providents Series A Mandatory
Convertible Non-Cumulative Preferred Stock, which we refer to
herein as Provident Series A Preferred Stock, issued and
outstanding immediately prior to the merger will be converted
into the right to receive one share of a series of M&T
preferred stock to be designated prior to the completion of the
merger as Mandatory Convertible Non-Cumulative Preferred Stock
and having powers, preferences and rights such that the holders
of the Provident Series A Preferred Stock are not adversely
affected by such conversion.
Each share of Providents Fixed Rate Cumulative Perpetual
Preferred Stock, Series B, which we refer to herein as
Provident Series B Preferred Stock, issued and outstanding
immediately prior to the merger will be converted into the right
to receive one share of a series of M&T preferred stock to
be designated, prior to the completion of the merger, as Fixed
Rate Cumulative Perpetual Preferred Stock and having rights,
preferences, privileges and voting powers such that the rights,
preferences, privileges and voting powers of the Provident
Series B Preferred Stock are not adversely affected by such
conversion and having rights, preferences, privileges and voting
powers, and limitations and restrictions that, taken as a whole,
are not materially less favorable than the rights, preferences,
privileges and voting powers, and limitations and restrictions
of the Provident Series B Preferred Stock immediately prior
to such conversion, taken as a whole.
Conversion
of Shares; Exchange of Certificates
The conversion of Provident common stock into the right to
receive the merger consideration will occur automatically upon
completion of the merger. As promptly as reasonably practicable
after the completion of the merger, an exchange agent will
exchange certificates representing shares of Provident stock for
the merger consideration, without interest, to be received by
holders of Provident stock in the merger pursuant to the terms
of the merger agreement. M&T will appoint Registrar and
Transfer Company as exchange agent in the merger to exchange
certificates for the merger consideration and perform other
duties as explained in the merger agreement.
If any M&T shares are to be issued, or cash payment in lieu
of fractional shares made, in a name other than that in which
the Provident stock certificates surrendered in exchange for the
merger consideration are registered, the person requesting the
exchange must pay any transfer or other taxes required by reason
of the issuance of the new M&T shares or the payment of the
cash in lieu of fractional shares in a name other than that of
the registered holder of the Provident stock certificate
surrendered, or must establish to the satisfaction of M&T
or the exchange agent that any such taxes have been paid or are
not applicable.
Letter
of Transmittal
As soon as reasonably practicable after the completion of the
merger, the exchange agent will mail a letter of transmittal to
those persons who were Provident stockholders immediately prior
to the completion of the merger. This mailing will contain
instructions on how to surrender shares of Provident stock in
exchange for the merger consideration the holder is entitled to
receive under the merger agreement.
If a certificate for Provident stock has been lost, stolen or
destroyed, the exchange agent will issue the consideration
properly payable under the merger agreement upon receipt of
appropriate evidence as to that loss, theft or destruction,
appropriate evidence as to the ownership of that certificate by
the claimant, and appropriate and customary indemnification.
43
Withholding
Each of M&T, Merger Sub and the exchange agent will be
entitled to deduct and withhold from the consideration payable
to any Provident stockholder such amounts as it is required to
deduct and withhold under any federal, state, local or foreign
tax law. If either of them withholds any such amounts, these
amounts will be treated for all purposes of the merger as having
been paid to the stockholders from whom they were withheld.
Dividends
and Distributions
Until Provident shares of common stock are surrendered for
exchange, any dividends or other distributions declared after
the effective time with respect to M&T common stock into
which shares of Provident common stock may have been converted
will accrue but will not be paid. M&T will pay to former
Provident common stockholders any unpaid dividends or other
distributions, without interest, only after they have duly
surrendered their Provident stock certificates.
Prior to the completion of the merger, Provident and its
subsidiaries may not declare or pay any dividend or distribution
on its capital stock or repurchase any shares of its capital
stock, other than:
|
|
|
|
|
dividends on the Provident common stock consistent with past
practice;
|
|
|
|
dividends on the Provident Series A Preferred Stock and the
Provident Series B Preferred Stock in accordance with the
terms thereof;
|
|
|
|
dividends paid by any wholly owned Provident subsidiary to
another wholly owned Provident subsidiary or to Provident;
|
|
|
|
dividends on preferred stock of subsidiaries, the common stock
of which is wholly owned directly or indirectly by Provident, in
accordance with the terms thereof; and
|
|
|
|
the acceptance of shares of Provident common stock in payment of
the exercise of a stock option granted under a Provident stock
option plan, to the extent that such stock options may be
exercised.
|
Provident has agreed to coordinate with M&T regarding
dividend declarations and the related record dates and payment
dates so that Provident common stockholders will not receive two
or more dividends, or fail to receive one dividend, for any
single quarter on their shares of Provident common stock or
shares of M&T common stock received in exchange therefore
in the merger.
Representations
and Warranties
The merger agreement contains customary representations and
warranties of Provident and M&T relating to their
respective businesses. With the exception of certain
representations that must be true and correct in all material
respects and with the exception of the representation concerning
the absence of a material adverse effect which must be true and
correct in all respects, no representation or warranty will be
deemed untrue or incorrect as a consequence of the existence of
any fact, circumstance or event unless that fact, circumstance
or event, individually or when taken together with all other
facts, circumstances or events inconsistent with any
representation, has had or is reasonably likely to materially
impair the ability of the company making the representation to
consummate the merger, or is materially adverse to the business,
financial condition or results of operations of the company
making the representation and its subsidiaries, taken as a
whole. In determining whether any such materially adverse effect
has occurred or is reasonably likely to occur, the parties will
disregard effects resulting from (1) changes in laws,
regulations, or interpretations of laws or regulations generally
affecting the banking or bank holding company businesses,
(2) changes in generally accepted accounting principles or
regulatory accounting requirements generally affecting the
banking or bank holding company businesses, (3) events,
conditions or trends in economic, business or financial
conditions generally or affecting the banking or bank holding
company businesses generally (including changes in interest
rates or securities ratings and changes in the markets for
securities (including changes in interest rates or securities
ratings and changes in the markets for securities),
(4) changes in national or international political or
social conditions including the engagement by the United States
in hostilities, whether or not pursuant to the declaration of a
national emergency or war, or the occurrence of any military or
terrorist attack upon or within the United States, or any of its
territories, possessions or diplomatic or consular offices or
upon any
44
military installation, equipment or personnel of the United
States, (5) actions or omissions of a party taken with the
prior written consent of the other party or actions that are
taken by the parties, consistent with the terms of the merger
agreement, to consummate the transactions contemplated by the
merger agreement, or (6) announcement of the merger
agreement or the transactions contemplated thereby. However,
effects attributable to or resulting from any of the
developments referred to in items (1) to (4) of the
preceding sentence need not be excluded from the material
adverse effect determination if such effect is materially
disproportionately adverse to the business or financial
condition or results of operations of the company making the
representation as compared to other companies in the banking or
bank holding company businesses. The representations and
warranties in the merger agreement do not survive the effective
time of the merger.
Each of M&T and Provident has made representations and
warranties to the other regarding, among other things:
|
|
|
|
|
corporate matters, including due organization and qualification;
|
|
|
|
capitalization;
|
|
|
|
power and authority to execute, deliver and perform its
obligations under the merger agreement;
|
|
|
|
stockholder vote requirement;
|
|
|
|
required government filings and consents;
|
|
|
|
the absence of conflicts with, or violations of,
(1) organizational documents, (2) applicable law or
(3) material agreements, indentures or other instruments,
in each case as a result of the merger or entry into the merger
agreement;
|
|
|
|
financial reports and regulatory documents;
|
|
|
|
absence of material adverse changes;
|
|
|
|
legal proceedings;
|
|
|
|
regulatory investigations and orders;
|
|
|
|
compliance with applicable law;
|
|
|
|
brokers fees payable in connection with the merger;
|
|
|
|
environmental liabilities;
|
|
|
|
tax matters;
|
|
|
|
derivative instruments;
|
|
|
|
trust business;
|
|
|
|
insurance coverage; and
|
|
|
|
the inapplicability of state takeover laws.
|
In addition, Provident has made other representations and
warranties about itself to M&T as to:
|
|
|
|
|
its subsidiaries;
|
|
|
|
material contracts, exclusivity arrangements, and other certain
types of contracts;
|
|
|
|
employee matters, including employee benefit plans;
|
|
|
|
labor matters; and
|
|
|
|
absence of related party transactions.
|
M&T also has made representations and warranties to
Provident regarding the authorization and valid issuance of the
M&T stock to pay the merger consideration.
45
The representations and warranties described above and included
in the merger agreement were made by each of M&T and
Provident to the other. These representations and warranties
were made as of specific dates, may be subject to important
qualifications and limitations agreed to by M&T and
Provident in connection with negotiating the terms of the merger
agreement, and may have been included in the merger agreement
for the purpose of allocating risk between M&T and
Provident rather than to establish matters as facts. The merger
agreement is described in, and included as Annex B to, this
proxy statement/prospectus only to provide you with information
regarding its terms and conditions, and not to provide any other
factual information regarding Provident, M&T or their
respective businesses. Accordingly, the representations and
warranties and other provisions of the merger agreement should
not be read alone, but instead should be read only in
conjunction with the information provided elsewhere in this
proxy statement/prospectus and in the documents incorporated by
reference into this proxy statement/prospectus. See
Where You Can Find More Information on Page 68.
Covenants
and Agreements
Each of Provident and M&T has undertaken customary
covenants that place restrictions on it and its subsidiaries
until the completion of the merger.
In general, each of M&T and Provident agreed to use its
reasonable best efforts in good faith to take all actions and to
do all things to permit the completion of the merger as soon as
possible. M&T and Provident have also agreed not to take
any action or knowingly fail to take any reasonable action that
would, or is reasonably likely to, prevent, impede or delay the
merger from qualifying as a reorganization within the meaning of
Section 368(a) of the Internal Revenue Code or take any
action that is reasonably likely to result in any of the
conditions to the merger set forth in the merger agreement from
not being satisfied in a timely manner or in a material
violation of any provision of the merger agreement except, in
each case, as may be required by applicable law or regulation.
Provident has agreed that, with certain exceptions and except
with M&Ts prior written consent (which is not to be
unreasonably withheld, delayed or conditioned), Provident will
not, and will not permit any of its subsidiaries to, among other
things, undertake the following actions:
|
|
|
|
|
to operate its business other than in the ordinary course of
business or fail to use commercially reasonable efforts to
preserve intact its business organization and assets and
maintain its rights, franchises and existing relations with
customers, suppliers, employees and business associates;
|
|
|
|
issue, sell or otherwise permit to become outstanding, or
dispose of or encumber or pledge or propose the creation of, any
additional shares of Provident stock other than pursuant to
rights existing on the date of the merger agreement;
|
|
|
|
permit any shares of Provident stock to become subject to new
grants or other rights;
|
|
|
|
declare or pay any dividends or other distributions on any
shares of its stock, except as set forth above in
Conversion of Shares; Exchange of Certificates; Dividends
and Distributions;
|
|
|
|
undertake certain actions relating to director, officer or
employee agreements, compensation, benefits, hiring and
promotion;
|
|
|
|
undertake certain corporate transactions, such as mergers and
acquisitions, or other transactions, such as sales of assets or
incurrence or waivers of indebtedness outside the ordinary
course of business or to the extent such actions are material to
Provident and its subsidiaries as a whole;
|
|
|
|
amend its articles of incorporation or by-laws or similar
governing documents;
|
|
|
|
make any change to its financial accounting methods, except as
required by applicable law, generally accepted accounting
principles or applicable regulatory accounting requirements;
|
|
|
|
other than in the ordinary course consistent with past practice,
and subject to certain other limitations, enter into, renew,
amend in any respect or terminate any contract or agreement;
|
|
|
|
settle any claim, action or proceeding, other than payments in
cash in the ordinary course of business consistent with past
practice that do not exceed $100,000 individually or $250,000 in
the aggregate, and that
|
46
|
|
|
|
|
do not create negative precedent for claims that are likely to
be material to Provident or, after the completion of the merger,
M&T;
|
|
|
|
|
|
make any capital expenditures in excess of $50,000 per project
or related series of projects or $250,000 in the aggregate;
|
|
|
|
make, change, or revoke any material tax election, change any
material method of tax accounting, adopt or change any taxable
year or period, enter into any closing agreement with respect to
taxes, file any material tax return or material amended tax
return, settle or compromise any material claim for taxes, or
surrender any material claim for a refund of taxes; or
|
|
|
|
agree or commit to do any of the actions prohibited by the
preceding bullets.
|
M&T has agreed that, except with Providents prior
written consent (which is not to be unreasonably withheld,
delayed or conditioned), M&T will not, and will not permit
any of its subsidiaries to:
|
|
|
|
|
amend its organizational documents in a way that would affect
holders of Provident common stock or holders of Provident
preferred stock adversely relative to other holders of M&T
common stock or the M&T preferred stock to be issued as
consideration for the Provident preferred stock; or
|
|
|
|
declare or pay any extraordinary or special dividend or make any
other extraordinary or special distributions with respect to its
stock.
|
M&T has also agreed to take certain actions in order to
assume at the time of the completion of the merger
Providents obligations with respect to its outstanding
trust preferred securities and preferred stock and also with
respect to certain of Providents other debt obligations.
The merger agreement also contains mutual covenants relating to
the preparation of this proxy statement/prospectus and the
holding of the special meeting of Provident common stockholders,
access to information of the other company, notification to the
other party of certain matters and public announcements with
respect to the transactions contemplated by the merger
agreement. Provident and M&T have also agreed to use
reasonable best efforts to prepare as promptly as possible all
documentation, to effect all filings and to obtain all third
party and governmental permits, consents, approvals and
authorizations necessary to consummate the transactions
contemplated by the merger agreement. Provident has agreed to
consult with M&T regarding certain tax planning matters. To
the extent permitted by applicable law, M&T and Provident
will also cooperate and take all actions reasonably necessary to
facilitate the integration of their respective businesses and
operating systems, effective as of the completion of the
transactions contemplated by the merger agreement, including by
causing their respective employees and officers, and their
respective outside vendors and contractors, to provide
information, data and support and to assist in performing such
tasks, including equipment installation, reasonably required to
result in a successful integration and conversion of Provident
Bank of Maryland into a bank subsidiary of M&T as of the
date of completion (see the following section captioned
Bank Merger).
Bank
Merger
M&T and Provident have agreed to enter into a merger
agreement pursuant to which Provident Bank of Maryland will
merge with and into a bank subsidiary of M&T. The bank
merger is intended to become effective after the completion of
the merger of Provident with and into Merger Sub.
Reasonable
Best Efforts of Provident to Obtain the Required Common
Stockholder Vote
Provident has agreed to take all actions necessary to hold a
meeting of its common stockholders as promptly as practicable
for the purpose of obtaining common stockholder approval of the
merger agreement and the transactions contemplated thereby.
Providents Board of Directors may withdraw, modify, or
condition its recommendation that common stockholders approve
the merger agreement and the transactions contemplated thereby
only if Providents Board of Directors determines, in good
faith after consultation with its outside financial and legal
advisors, that the failure to take such action would breach its
fiduciary obligations under applicable law. As discussed below,
additional requirements apply to any change in recommendation
with respect to certain acquisition proposals. Notwithstanding
the foregoing, the merger agreement requires Provident to submit
the merger agreement and
47
transactions contemplated thereby to a stockholder vote even if
its board of directors no longer recommends approval of the
merger agreement and the transactions contemplated thereby, in
which event the board may communicate its basis for its lack of
a recommendation to stockholders.
Agreement
Not to Solicit Other Offers
Provident also has agreed that it, its subsidiaries and their
officers and directors, will not, and Provident will use all
reasonable best efforts to cause its employees and agents not
to, directly or indirectly, initiate, solicit or encourage any
inquiries or the making or implementation of any acquisition
proposal (as defined below) or engage in any discussions or
negotiations concerning, or provide confidential information
with respect to, an acquisition proposal.
The restrictions apply to any acquisition proposal or offer as
to any of the following (other than the merger) involving
Provident or any of its significant subsidiaries:
|
|
|
|
|
any merger, consolidation, share exchange, business combination,
or other similar transaction;
|
|
|
|
any sale, lease, exchange, pledge, transfer or other disposition
of 25% or more of the consolidated assets or liabilities of
Provident or any of its significant subsidiaries in a single
transaction or series of transactions;
|
|
|
|
any tender offer or exchange offer for, or other acquisition of,
25% or more of the outstanding shares of capital stock of
Provident or any of its significant subsidiaries; or
|
|
|
|
any public announcement of a proposal, plan or intention to do,
or any agreement to engage in, any of the actions listed in the
foregoing bullets.
|
However, prior to the required stockholder vote being obtained
and subject to Provident taking the steps and making the
required determinations described below:
|
|
|
|
|
Provident may provide information in response to a request
therefor by a person who has made an unsolicited bona fide
written acquisition proposal providing for the acquisition of
all or substantially all of the assets (on a consolidated basis)
or total voting power of the equity securities of Provident, if
(1) such person enters into a confidentiality agreement
with Provident at least as favorable as the confidentiality
agreement entered into with M&T; and (2) Provident
immediately discloses and, if applicable, provides copies of,
any such information to M&T to the extent not previously
provided;
|
|
|
|
Provident may engage or participate in any discussions or
negotiations with any person who has made such an unsolicited
bona fide written acquisition proposal; and
|
|
|
|
after having complied with the applicable provisions of the
merger agreement, Providents Board of Directors may
recommend or otherwise declare advisable or propose to recommend
or declare advisable (publicly or otherwise) such an acquisition
proposal or withdraw or modify in a manner adverse to M&T
or Merger Sub, or propose to withdraw or so modify (publicly or
otherwise), its recommendation in favor of the merger agreement
and the transactions contemplated thereby,
|
if and only to the extent that:
|
|
|
|
|
prior to taking any such action, Providents Board of
Directors determines, in good faith, after consultation with its
outside legal advisors, that providing such action is required
in order for Providents Board of Directors to comply with
its fiduciary duties;
|
|
|
|
prior to providing information or engaging or participating in
discussions or negotiations, Providents Board of Directors
determines, in good faith, after consultation with its financial
advisors, that such acquisition proposal is or is reasonably
likely to result in a superior proposal (as defined below);
|
|
|
|
prior to changing its recommendation in favor of the merger
agreement, Providents Board of Directors determines, in
good faith, after consultation with its financial advisors and
outside legal advisors, that such acquisition proposal
constitutes a superior proposal (as defined below), and M&T
has received written notice that Provident intends to recommend
or otherwise declare advisable such superior proposal or
otherwise effect a change in the recommendation of
Providents Board of Directors, which notice shall
|
48
|
|
|
|
|
(x) state expressly that Provident has received an
acquisition proposal which Providents Board of Directors
has determined is a superior proposal and that Provident intends
to effect a change of its recommendation and the manner in which
it intends or may intend to do so and (y) include the
identity of the person making such acquisition proposal and a
copy (if in writing) and summary of material terms of such
acquisition proposal; provided that any material amendment to
the terms of such acquisition proposal shall require a new such
notice; and M&T does not make, within five days of receipt
of the latest of Providents required written notices, an
offer that Providents Board of Directors determines, in
good faith, after consultation with its financial and legal
advisors, is at least as favorable, from a financial point of
view, to the stockholders of Provident as the competing
acquisition proposal. In this case, Provident must notify
M&T promptly if its board of directors determines not to
change its recommendation and, during such five day period, must
negotiate in good faith with M&T with respect to any
revisions to the terms of the transactions contemplated by the
merger agreement proposed by M&T in response to the
competing acquisition proposal.
|
Providents Board of Directors has agreed to promptly (but
in no event later than 24 hours) advise M&T, orally
and in writing, of (1) the receipt by it (or its officers
or directors, its subsidiaries, its subsidiaries officers
or directors, or any of its employees or agents), of any
acquisition proposal, any inquiry which could reasonably be
expected to lead to an acquisition proposal, any material
modification of or material amendment to any acquisition
proposal, any request for nonpublic information relating to
Provident or any of its subsidiaries or for access to the
properties, books or records of Provident or any subsidiary by
any person or entity that informs Providents Board of
Directors or any subsidiary that it is considering making, or
has made, an acquisition proposal; (2) the material terms
and conditions of such proposal or inquiry (whether written or
oral) or modification or amendment to an acquisition proposal;
and (3) the identity of the person making any such proposal
or inquiry. Provident has also agreed to keep M&T fully
informed of the status and details of any such proposal or
inquiry and any developments with respect thereto.
Provident has further agreed:
|
|
|
|
|
to cease any existing discussions or negotiations with any
persons with respect to any acquisition proposal, and to use
reasonable best efforts to cause all persons other than M&T
who have been furnished with confidential information in
connection with an acquisition proposal within the
12 months prior to the date of the merger agreement to
return or destroy such information;
|
|
|
|
to use reasonable best efforts to enforce any existing
confidentiality or standstill agreements; and
|
|
|
|
not to approve or take any action to render inapplicable to any
acquisition proposal any anti-takeover provision under the
Maryland General Corporation Law or any similar takeover laws.
|
A superior proposal is an unsolicited bona fide acquisition
proposal that would result or would be reasonably likely to
result in any person becoming the beneficial owner, directly or
indirectly, of all or substantially all of the assets (on a
consolidated basis) or total voting power of the equity
securities of Provident, that Providents Board of
Directors has determined in its good faith judgment is
reasonably likely to be consummated in accordance with its
terms, taking into account all legal, financial and regulatory
aspects of the proposal and the person making the proposal, and
if consummated, would result in a transaction more favorable to
Providents stockholders from a financial point of view
than the transactions contemplated by the merger agreement.
Expenses
and Fees
In general, each of M&T and Provident will be responsible
for all expenses incurred by it in connection with the
negotiation and completion of the transactions contemplated by
the merger agreement. However, the costs and expenses of
copying, printing and mailing this joint proxy
statement/prospectus will be borne equally by Provident and
M&T.
Employee
Matters
M&T has agreed to honor all Provident compensation and
benefit plans in accordance with their terms (subject to any
amendments or termination required by the merger agreement or
permitted by the terms of the applicable plans). M&T has
also agreed to provide Provident employees with compensation
opportunities and pension and
49
welfare benefits that are no less favorable in the aggregate
than those provided by Provident as of December 18, 2008.
M&T employee benefit plans applicable to similarly situated
M&T employees (other than plans frozen to new participants
and any grandfathered benefits provided under such plans) are
deemed under the merger agreement to meet that standard.
In addition, M&T has agreed, to the extent any Provident
employee participates in M&T compensation and benefit plans
following the merger, to recognize each such employees
service with Provident prior to the completion of the merger for
purposes of eligibility, vesting and benefit accruals (other
than benefit accruals under defined benefit pension plans or
that would result in a duplication of benefits). For one year
following the merger, Provident employees who continue to be
employed by M&T following the merger will receive severance
benefits equal to the severance benefits payable under
Providents applicable severance policy and pursuant to the
procedures and administrative terms and conditions of the
M&T Bank Corporation Employee Severance Pay Plan.
M&T has agreed to waive any coverage limitations for
pre-existing conditions under any M&T health plans, to the
extent such limitation would have been waived or satisfied under
a corresponding Provident plan and to give credit for any
co-payments and deductibles paid under a corresponding Provident
health plan for purposes of satisfying any applicable deductible
and
out-of-pocket
requirements under any health plan of M&T.
However, M&T has no obligation to continue the employment
of any Provident employee, except Provident employees who have
entered into separate employment agreements with M&T, for
any period following the merger and may review employee benefit
programs from time to time and make such changes as it deems
appropriate.
Indemnification
and Insurance
The merger agreement requires M&T to indemnify and advance
expenses to present and former directors and officers of
Provident and its subsidiaries against all costs or expense,
judgments, fines, losses, claims, damages, penalties, amounts
paid in settlement or other liabilities incurred in connection
with any claim, action, suit, proceeding or investigation
arising out of actions or omissions prior to the completion of
the merger, to the extent provided under Providents
articles of incorporation, as amended, or amended and restated
by-laws or indemnification agreements in effect on the date of
the merger agreement and, in addition, to the fullest extent
permitted by law.
The merger agreement provides that, for a period of six years
after the completion of the merger, M&T will use its
reasonable best efforts to provide directors and
officers liability insurance to reimburse current and
former directors and officers with respect to claims arising at
or prior to the completion of the merger. The insurance will
contain at least the same coverage and amounts and contain terms
and conditions that are not less advantageous than the current
coverage provided by Provident, except that M&T is not
required to incur annual premium expense greater than 250% of
Providents current annual directors and
officers liability insurance premium. In lieu of the
insurance described in the preceding sentences, M&T may, at
its option, purchase prepaid or tail directors
and officers liability insurance coverage no less
favorable than the coverage described in the preceding sentences.
Conditions
to Complete the Merger
Our respective obligations to complete the merger are subject to
the fulfillment or waiver of certain conditions, including:
|
|
|
|
|
the approval of the merger agreement and the transactions
contemplated thereby by Provident common stockholders;
|
|
|
|
the receipt of all regulatory consents and approvals required in
connection with the merger of Provident into Merger Sub and the
merger of Provident Bank of Maryland with and into an M&T
bank subsidiary (in each case unless the failure to obtain such
consents and approvals would not reasonably be expected to have
a material adverse effect on Provident or M&T measured on a
scale relative to Provident);
|
|
|
|
the absence of any law, statute, rule, regulation, judgment,
decree, injunction or other order by any court or other
governmental entity, which is in effect and prohibits completion
of the merger; and
|
50
|
|
|
|
|
the effectiveness of the registration statement of which this
proxy statement/prospectus is a part with respect to the
M&T common stock to be issued in the merger under the
Securities Act and the absence of any stop order or proceedings
initiated or threatened by the SEC for that purpose.
|
Each of M&Ts, Merger Subs, and Providents
obligations to complete the merger is also separately subject to
the satisfaction or waiver of a number of conditions including:
|
|
|
|
|
the receipt by each of M&T and Provident of a legal opinion
with respect to certain United States federal income tax
consequences of the merger; and
|
|
|
|
the truth and correctness of the representations and warranties
of each other party in the merger agreement, subject to the
materiality standards provided in the merger agreement, and the
performance by each other party in all material respects of
their obligations under the merger agreement (and the receipt by
each party of certificates from the other party to such effects).
|
We cannot provide assurance as to when or if all of the
conditions to the merger can or will be satisfied or waived by
the appropriate party. As of the date of this proxy
statement/prospectus, we have no reason to believe that any of
these conditions will not be satisfied.
Termination
of the Merger Agreement
The merger agreement can be terminated at any time prior to
completion by mutual consent, if authorized by each of our
boards of directors, or by either party in the following
circumstances:
|
|
|
|
|
if the other party breaches the merger agreement in a way that
would entitle the party seeking to terminate the agreement not
to consummate the merger, unless the breach is capable of being
cured by December 18, 2009, and is cured within
30 days of notice of the breach;
|
|
|
|
if the merger has not been completed by December 18, 2009,
unless the failure to complete the merger by that date is due to
the breach of the merger agreement by the party seeking to
terminate the merger agreement;
|
|
|
|
if the Provident common stockholders fail to approve the merger
agreement and the transactions contemplated thereby at the
special meeting; or
|
|
|
|
if there is any final, non-appealable order permanently
enjoining or prohibiting the completion of the merger or any
consent, registration, approval, permit or authorization is
denied such that the regulatory approval condition to the merger
cannot be satisfied as of the closing date.
|
In addition, M&T may terminate the merger agreement if
Providents Board of Directors (1) submits the merger
agreement to stockholders without a recommendation for approval,
otherwise withdraws or modifies (or publicly discloses its
intention to withdraw or modify) its recommendation in any
manner adverse to M&T or (2) approves, recommends, or
otherwise declares advisable or proposes to or publicly
discloses its intention to approve, recommend or declare
advisable an acquisition proposal other than the merger.
M&T may also terminate the merger agreement if Provident
fails to substantially comply with its obligations with respect
to acquisition proposals or obtaining the approval of Provident
common stockholders.
Effect of Termination. If the merger
agreement is terminated, it will become void, and there will be
no liability on the part of M&T or Provident, except that
(1) both M&T and Provident will remain liable for any
willful breach of the merger agreement and (2) designated
provisions of the merger agreement, including with respect to
the payment of fees and expenses and the confidential treatment
of information, will survive the termination.
Termination
Fee
Provident will pay M&T a $15.8 million termination fee
if:
|
|
|
|
|
an acquisition proposal has been made or proposed to Provident
or its stockholders or publicly disclosed and M&T
terminates the merger agreement either because Providents
Board of Directors withdraws or changes its recommendation in
favor of the merger or recommends another acquisition proposal
or Provident fails to
|
51
|
|
|
|
|
substantially comply with its obligations concerning holding the
special meeting or soliciting acquisition proposals; or the
merger agreement is terminated by Provident due to failure to
obtain the common stockholder approval in such circumstances; or
|
|
|
|
|
|
prior to the special meeting, an acquisition proposal is made
known to Provident, made directly to Provident common
stockholders generally, otherwise becomes publicly known or any
person has publicly announced an intention (whether or not
conditional) to make an acquisition proposal; the merger
agreement is terminated as a result of (i) an incurable,
willful breach by Provident; (ii) a failure to obtain
stockholder approval; or (iii) by Provident upon a failure
to consummate the merger by December 18, 2009; and, in any
such case, Provident enters into a definitive agreement to
consummate an acquisition proposal within 12 months
following such termination and consummates such within
18 months following such termination or, within
12 months following such termination, consummates any
acquisition proposal.
|
Amendment,
Waiver and Extension of the Merger Agreement
Subject to applicable law, the parties may amend the merger
agreement by written agreement. At any time prior to the
completion of the merger, each of M&T and Provident, to the
extent legally allowed, may waive in whole or in part any
conditions to that partys obligation to complete the
merger.
ACCOUNTING
TREATMENT
The merger will be accounted for as a business
combination, as that term is used under generally accepted
accounting principles, for accounting and financial reporting
purposes, with M&T treated as the acquiror. Under the
acquisition method of accounting, the assets (including
identifiable intangible assets) and liabilities (including
executory contracts and other commitments) of Provident as of
the effective time of the merger will be recorded at their
respective fair values and added to those of M&T. Any
excess of purchase price over the fair values is recorded as
goodwill. Consolidated financial statements of M&T issued
after the merger would reflect these fair values and would not
be restated retroactively to reflect the historical financial
position or results of operations of Provident.
UNITED
STATES FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
The following general discussion sets forth the anticipated
material United States federal income tax consequences of the
merger to U.S. holders (as defined below) of Provident
common stock that exchange their shares of Provident common
stock for shares of M&T common stock in the merger. This
discussion does not address any tax consequences arising under
the laws of any state, local or foreign jurisdiction, or under
any United States federal laws other than those pertaining to
income tax. This discussion is based upon the Internal Revenue
Code, the regulations promulgated under the Code and court and
administrative rulings and decisions, all as in effect on the
date of this proxy statement/prospectus. These laws may change,
possibly retroactively, and any change could affect the accuracy
of the statements and conclusions set forth in this discussion.
This discussion addresses only those Provident common
stockholders that hold their shares of Provident common stock as
a capital asset within the meaning of Section 1221 of the
Code. Further, this discussion does not address all aspects of
United States federal income taxation that may be relevant to
you in light of your particular circumstances or that may be
applicable to you if you are subject to special treatment under
the United States federal income tax laws, including if you are:
|
|
|
|
|
a financial institution;
|
|
|
|
a tax-exempt organization;
|
|
|
|
an S corporation or other pass-through entity (or an
investor in an S corporation or other pass-through entity);
|
|
|
|
an insurance company;
|
|
|
|
a mutual fund;
|
|
|
|
a dealer or broker in stocks and securities, or currencies;
|
52
|
|
|
|
|
a trader in securities that elects mark-to-market treatment;
|
|
|
|
a holder of Provident common stock subject to the alternative
minimum tax provisions of the Code;
|
|
|
|
a holder of Provident common stock that received Provident
common stock through the exercise of an employee stock option,
through a tax qualified retirement plan or otherwise as
compensation;
|
|
|
|
a person that is not a U.S. holder (as defined below);
|
|
|
|
a person that has a functional currency other than the
U.S. dollar;
|
|
|
|
a holder of Provident common stock that holds Provident common
stock as part of a hedge, straddle, constructive sale,
conversion or other integrated transaction; or
|
|
|
|
a United States expatriate.
|
Determining the actual tax consequences of the merger to you may
be complex. They will depend on your specific situation and on
factors that are not within our control. You should consult with
your own tax advisor as to the tax consequences of the merger in
your particular circumstances, including the applicability and
effect of the alternative minimum tax and any state, local,
foreign or other tax laws and of changes in those laws.
For purposes of this discussion, the term
U.S. holder means a beneficial owner of
Provident common stock that is for United States federal income
tax purposes (i) an individual citizen or resident of the
United States, (ii) a corporation, or entity treated as a
corporation, organized in or under the laws of the United States
or any state thereof or the District of Columbia, (iii) a
trust if (a) a court within the United States is able to
exercise primary supervision over the administration of the
trust and one or more U.S. persons have the authority to
control all substantial decisions of the trust or (b) such
trust has made a valid election to be treated as a
U.S. person for U.S. federal income tax purposes or
(iv) an estate, the income of which is includible in gross
income for U.S. federal income tax purposes regardless of
its source.
The United States federal income tax consequences to a partner
in an entity or arrangement treated as a partnership, for United
States federal income tax purposes, that holds Provident common
stock generally, will depend on the status of the partner and
the activities of the partnership. Partners in a partnership
holding Provident common stock should consult their own tax
advisors.
Tax
Consequences of the Merger Generally
The parties intend for the merger to be treated as a
reorganization for United States federal income tax purposes. It
is a condition to M&Ts obligation to complete the
merger that M&T receive an opinion from Wachtell, Lipton,
Rosen & Katz, dated the closing date of the merger,
substantially to the effect that the merger will be treated for
federal income tax purposes as a reorganization within the
meaning of Section 368(a) of the Code. It is a condition to
Providents obligation to complete the merger that
Provident receive an opinion from Sullivan & Cromwell,
dated the closing date of the merger, substantially to the
effect that the merger will be treated for federal income tax
purposes as a reorganization within the meaning of
Section 368(a) of the Code. These opinions will be based on
representation letters provided by M&T and Provident and on
customary factual assumptions. Neither of the opinions described
above will be binding on the Internal Revenue Service. M&T
and Provident have not sought and will not seek any ruling from
the Internal Revenue Service regarding any matters relating to
the merger, and as a result, there can be no assurance that the
Internal Revenue Service will not assert, or that a court would
not sustain, a position contrary to any of the conclusions set
forth below.
Provided the merger is treated for federal income tax purposes
as a reorganization within the meaning of Section 368(a) of
the Code, upon exchanging your Provident common stock for
M&T common stock, you generally will not recognize gain or
loss, except with respect to cash received instead of fractional
shares of M&T common stock (as discussed below). The
aggregate tax basis in the shares of M&T common stock that
you receive in the merger, including any fractional share
interests deemed received and sold as described below, will
equal your aggregate adjusted tax basis in the Provident common
stock you surrender. Your holding period for the shares of
M&T common stock that you receive in the merger (including
a fractional share interest deemed received and sold
53
as described below) will include your holding period for the
shares of Provident common stock that you surrender in the
exchange.
Cash
Instead of a Fractional Share
If you receive cash instead of a fractional share of M&T
common stock, you will be treated as having received the
fractional share of M&T common stock pursuant to the merger
and then as having sold that fractional share of M&T common
stock for cash. As a result, you generally will recognize gain
or loss equal to the difference between the amount of cash
received and the basis in your fractional share of M&T
common stock as set forth above. This gain or loss generally
will be capital gain or loss, and will be long-term capital gain
or loss if, as of the effective date of the merger, the holding
period for the shares (including the holding period of Provident
common stock surrendered therefor) is greater than one year. The
deductibility of capital losses is subject to limitations.
Backup
Withholding
If you are a non-corporate holder of Provident common stock you
may be subject to information reporting and backup withholding
(currently at a rate of 28%) on any cash payments you receive.
You generally will not be subject to backup withholding,
however, if you:
|
|
|
|
|
furnish a correct taxpayer identification number, certify that
you are not subject to backup withholding on the substitute
Form W-9
or successor form included in the election form/letter of
transmittal you will receive and otherwise comply with all the
applicable requirements of the backup withholding rules; or
|
|
|
|
provide proof that you are otherwise exempt from backup
withholding.
|
Any amounts withheld under the backup withholding rules will
generally be allowed as a refund or credit against your United
States federal income tax liability, provided you timely furnish
the required information to the Internal Revenue Service.
54
COMPARATIVE
MARKET PRICES AND DIVIDENDS
M&T
M&T common stock is traded on the NYSE under the symbol
MTB. The following table shows the high and low
reported
intra-day
sales prices per share of M&T common stock as reported by
the NYSE and the cash dividends declared per share.
Provident
Provident common stock is traded on NASDAQ under the symbol
PBKS. The following table sets forth the high and
low reported
intra-day
sales prices as reported by NASDAQ per share of Provident common
stock for the periods indicated and the cash dividends declared
per share.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
M & T (MTB)
|
|
|
Provident (PBKS)
|
|
|
|
High
|
|
|
Low
|
|
|
Dividends
|
|
|
High
|
|
|
Low
|
|
|
Dividends
|
|
|
2009 Quarters
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First (through February 12, 2009)
|
|
|
59.08
|
|
|
|
33.52
|
|
|
|
0.00
|
|
|
|
9.66
|
|
|
|
5.61
|
|
|
|
0.11
|
|
2008 Quarters
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fourth
|
|
$
|
99.50
|
|
|
$
|
52.20
|
|
|
$
|
0.70
|
|
|
$
|
12.88
|
|
|
$
|
5.43
|
|
|
$
|
0.11
|
|
Third
|
|
|
108.53
|
|
|
|
53.61
|
|
|
|
0.70
|
|
|
|
16.75
|
|
|
|
4.52
|
|
|
|
0.11
|
|
Second
|
|
|
98.38
|
|
|
|
69.90
|
|
|
|
0.70
|
|
|
|
14.04
|
|
|
|
5.76
|
|
|
|
0.11
|
|
First
|
|
|
94.03
|
|
|
|
70.49
|
|
|
|
0.70
|
|
|
|
21.65
|
|
|
|
9.78
|
|
|
|
0.33
|
|
2007 Quarters
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fourth
|
|
$
|
108.32
|
|
|
$
|
77.39
|
|
|
$
|
0.70
|
|
|
$
|
33.07
|
|
|
$
|
20.75
|
|
|
$
|
0.32
|
|
Third
|
|
|
115.81
|
|
|
|
97.26
|
|
|
|
0.70
|
|
|
|
33.62
|
|
|
|
27.09
|
|
|
|
0.32
|
|
Second
|
|
|
114.33
|
|
|
|
104.00
|
|
|
|
0.60
|
|
|
|
35.63
|
|
|
|
31.75
|
|
|
|
0.31
|
|
First
|
|
|
125.13
|
|
|
|
112.05
|
|
|
|
0.60
|
|
|
|
36.74
|
|
|
|
32.18
|
|
|
|
0.31
|
|
On December 16, 2008, the trading day on which the exchange
ratio was calculated, the high and low sales prices of shares of
M&T common stock as reported on the NYSE were $62.27 and
$58.25, respectively. On December 18, 2008, the last full
trading day before the public announcement of the merger
agreement, the high and low sales prices of shares of M&T
common stock as reported on the NYSE were $62.22 and $59.44,
respectively. On February 12, 2009, the last practicable
trading day before the date of this proxy statement/prospectus,
the high and low sale prices of shares of M&T common stock
as reported on the NYSE were $39.44 and $36.35, respectively.
On December 16, 2008, the trading day on which the exchange
ratio was calculated, the high and low sales prices of shares of
Provident common stock as reported on the NASDAQ were $6.99 and
$6.31, respectively. On December 18, 2008, the last full
trading day before the public announcement of the merger
agreement, the high and low sales prices of shares of Provident
common stock as reported on the NASDAQ were $6.33 and $5.43,
respectively. On February 12, 2009, the last practicable
trading day before the date of this proxy statement/prospectus,
the high and low sale prices of shares of Provident common stock
as reported on the NASDAQ were $6.41 and $5.95, respectively.
As of the record date, the last date prior to printing this
proxy statement/prospectus for which it was practicable to
obtain this information, there were approximately
11,185 registered holders of M&T common stock and
approximately 3,796 registered holders of Provident common
stock.
Past price performance is not necessarily indicative of likely
future performance. Because market prices of M&T and
Provident common stock will fluctuate, you are urged to obtain
current market prices for shares of M&T and Provident
common stock. The market price of M&T common stock and
Provident common stock will fluctuate between the date of this
proxy statement/prospectus and the effective date of the merger.
No assurance can be given concerning the market price of
M&T common stock or Provident common stock before or after
the effective date of the merger. M&T may repurchase shares
of its common stock in accordance with applicable legal
guidelines. The actual amount of shares repurchased will depend
on various factors, including: market conditions; legal
limitations
55
and considerations affecting the amount and timing of repurchase
activity; the companys capital position; internal capital
generation; and alternative potential investment opportunities.
Federal law prohibits M&T from purchasing shares of its
common stock from the date this proxy statement/prospectus is
first disseminated to stockholders until completion of the
special meeting of common stockholders. Certain other
restrictions on M&Ts repurchase of shares of its
common stock apply as a result of M&Ts participation
in the TARP Capital Purchase Program.
M&Ts timing, payment and amount of dividends (when,
as and if declared by M&Ts Board of Directors out of
funds legally available) remains subject to determination by
M&Ts Board of Directors. M&T has previously paid
regular quarterly cash dividends of $0.70 per share. In the
ordinary course of business, M&T is dependent upon
dividends from its subsidiaries, M&T Bank, and M&T
Bank, National Association to provide funds for the payment of
dividends to stockholders and to provide for other cash
requirements. Banking regulations may limit the amount of
dividends that may be paid. Approval by regulatory authorities
is required if the effect of dividends declared would cause the
regulatory capital of M&T Bank or M&T Bank, National
Association to fall below specified minimum levels. Approval is
also required if dividends declared exceed the net profits for
that year combined with the retained net profits for the
preceding two years. Under Federal Reserve Board regulations,
the Federal Reserve Board has the authority to prohibit bank
holding companies from engaging in activities that the Federal
Reserve Board considers unsafe or unsound banking practices.
Under certain circumstances, the Federal Reserve Board may take
the position that payment of dividends by M&T would
constitute an unsafe or unsound banking practice in light of its
financial condition. Under Federal Reserve Board policies, a
bank holding company should pay cash dividends on its common
stock only out of income available over the past year and should
not pay cash dividends if such payment would undermine its
ability to serve as a source of strength to its banking
subsidiaries. M&Ts ability to pay cash dividends is
further limited by its obligation to maintain adequate levels of
capital in accordance with the Federal Reserve Boards
capital adequacy guidelines. In addition, M&Ts
agreements with the U.S. Department of the Treasury with
respect to M&Ts participation in the TARP Capital
Purchase Program contains limitations on certain actions of
M&T, including, but not limited to, the payment of cash
dividends on M&T common stock in excess of the current
quarterly cash dividend of $0.70 per share and the repurchase of
M&T common stock during the first three years, unless all
of the Fixed Rate Cumulative Perpetual Preferred Stock,
Series A, par value $1.00 per share and liquidation
preference of $1,000 per share (the M&T Preferred
Stock) has been redeemed or transferred to third parties
or the U.S. Department of Treasury otherwise consents.
In the period before completion of the merger, Provident is
permitted by the merger agreement to continue to pay regular
quarterly cash dividends on its common stock consistent with its
recent practices. Provident has agreed in the merger agreement
to coordinate with M&T regarding dividend declarations and
the related record dates and payment dates so that Provident
common stockholders will not receive two or more dividends, or
fail to receive one dividend, for any single quarter.
Accordingly, prior to the merger, Provident will coordinate and
alter its dividend record dates in order to effect this policy.
Dividends remain subject to determination by Providents
Board of Directors (including as to timing and amount),
applicable law, contractual restrictions including the terms of
its preferred stock and the availability of funds, and cash
dividends to holders of its Series A Mandatory Convertible
Non-Cumulative Preferred Stock and recently issued Fixed Rate
Cumulative Perpetual Preferred Stock, Series B in accordance
with the provisions of its articles of incorporation, as
amended, governing such stock.
The payment, timing and amount of dividends by M&T or
Provident on their common stock in the future, either before or
after the merger is completed, are subject to the determination
of each companys respective Board of Directors and depend
on cash requirements, contractual restrictions, its financial
condition and earnings, legal and regulatory considerations and
other factors. See Recent Developments on
Page 8 for more information concerning dividends.
INFORMATION
ABOUT M&T AND PROVIDENT
M&T
M&T is a New York business corporation which is registered
as a bank holding company under the Bank Holding Company Act and
under
Article III-A
of the New York Banking Law. M&T was incorporated in
November 1969. As of September 30, 2008, M&T and its
subsidiaries had consolidated total assets of
$65.2 billion, deposits of
56
$42.5 billion and stockholders equity of
$6.4 billion. M&T had 12,124 full-time and 1,405
part-time employees as of September 30, 2008.
At September 30, 2008, M&T had two wholly owned bank
subsidiaries: M&T Bank and M&T Bank, National
Association. The banks collectively offer a wide range of
commercial banking, trust and investment services to their
customers. At September 30, 2008, M&T Bank represented
98% of the consolidated assets of M&T. M&T Bank
operates branch offices in New York, Maryland, Pennsylvania,
Virginia, West Virginia, New Jersey, Delaware and the District
of Columbia.
M&T regularly evaluates merger and acquisition
opportunities and conducts due diligence activities related to
possible transactions with other financial institutions and
financial services companies. As a result, merger or acquisition
discussions and, in some cases, negotiations may take place and
future mergers or acquisitions involving cash, debt or equity
securities may occur. Acquisitions typically involve the payment
of a premium over book and market value, and, therefore, some
dilution of M&Ts tangible book value and net income
per common share may occur in connection with any future
transaction.
M&Ts principal executive offices are located at One
M&T Plaza, Buffalo, New York 14203.
Provident
Provident is a Maryland corporation which is registered as a
bank holding company under the Bank Holding Company Act, as
amended, and parent of Provident Bank of Maryland, a Maryland
chartered stock commercial bank. As of September 30, 2008,
Provident and its subsidiaries had consolidated total assets of
$6.4 billion, deposits of $4.6 billion and
stockholders equity of $0.54 billion. Provident had
1,592
full-time
and 177 part-time employees as of September 30, 2008.
Provident Bank of Maryland serves individuals and businesses
through a network of banking offices and ATMs in Maryland,
Virginia, and southern York County, Pennsylvania. Related
financial services are offered through its wholly owned
subsidiaries. Securities brokerage, investment management and
related insurance services are available through Provident
Investment Company and leases through Court Square Leasing.
Providents principal executive offices are located at 114
East Lexington Street, Baltimore, Maryland 21202.
57
DESCRIPTION
OF M&T CAPITAL STOCK
As a result of the merger, Provident common stockholders who
receive shares of M&T common stock in the merger will
become stockholders of M&T. Your rights as stockholders of
M&T will be governed by New York law and the restated
certificate of incorporation, as amended, and the amended and
restated by-laws of M&T. The following description of the
material terms of M&Ts capital stock, including the
common stock to be issued in the merger, reflects the
anticipated state of affairs upon completion of the merger. We
urge you to read the applicable provisions of New York law,
M&Ts restated certificate of incorporation, as
amended, and amended and restated by-laws and federal law
governing bank holding companies carefully and in their
entirety.
General
M&Ts authorized capital stock consists of
250,000,000 shares of common stock, par value $0.50 per
share and 1,000,000 shares of preferred stock, par value
$1.00 per share. As of the record date, there were
111,111,640 shares of M&T common stock outstanding. As
of the record date, there were 600,000 shares of
M&Ts Fixed Rate Cumulative Perpetual Preferred Stock,
Series A, par value $1.00 per share and liquidation
preference of $1,000 per share, (the M&T
Series A Preferred Stock) outstanding (held by the
U.S. Department of Treasury in connection with
M&Ts participation in the TARP Capital Purchase
Program). The U.S. Department of Treasury also holds a
ten-year warrant (the M&T Warrant) to purchase
up to 1,218,522 shares of M&T common stock, at an
initial exercise price of $73.86 per share, subject to certain
anti-dilution and other adjustments. In addition, as of the
record date, 13,324,733 shares of M&T common stock
were reserved for issuance upon conversion or exercise of
outstanding stock options and awards.
Because M&T is a holding company, the rights of M&T to
participate in any distribution of assets of any subsidiary upon
its liquidation or reorganization or otherwise (and thus the
ability of M&Ts stockholders to benefit indirectly
from such distribution) would be subject to the prior claims of
creditors of that subsidiary, except to the extent that M&T
itself may be a creditor of that subsidiary with recognized
claims. Claims on M&Ts subsidiaries by creditors
other than M&T will include substantial obligations with
respect to deposit liabilities and purchased funds.
Preferred
Stock
The M&T Board of Directors is authorized to divide the
preferred stock into series and to fix and determine the
relative rights and preferences of the shares of any series and
to provide for the issuance of the preferred stock. If and when
any further M&T preferred stock is issued, the holders of
M&T preferred stock may have a preference over holders of
M&T common stock in the payment of dividends, upon
liquidation of M&T, in respect of voting rights and in the
redemption of the capital stock of M&T.
Fixed Rate Cumulative Perpetual Preferred Stock,
Series A. On December 19, 2008,
M&T filed with the New York State Department of State a
Certificate of Amendment to Certificate of Incorporation for the
purpose of fixing the designations, preferences, limitations and
relative rights of the M&T Series A Preferred Stock in
connection with M&Ts participation in the TARP
Capital Purchase Program. On December 23, 2008, M&T
issued the M&T Series A Preferred Stock to the
U.S. Department of the Treasury; agreements entered into in
connection with the issuance grant the holders of the M&T
Series A Preferred Stock, the M&T Warrant and the
M&T common stock to be issued under the M&T Warrant
certain registration rights.
The terms of the M&T Series A Preferred Stock provide
that holders of the M&T Series A Preferred Stock are
entitled to, as and when declared by the board of directors,
cumulative cash dividends at a rate per annum equal to 5% per
annum until February 14, 2014 or 9% per annum after
February 14, 2014, payable quarterly in arrears. No
dividends may be paid on M&Ts common stock or other
junior stock unless all the accrued and unpaid dividends for all
past dividend periods, including the latest dividend period,
have been paid in full on the M&T Series A Preferred
Stock. The M&T Series A Preferred Stock is redeemable
on or after February 15, 2012 by M&T, subject to
approval of the appropriate federal banking agency, in whole or
in part, at a redemption price equal to the sum of the
liquidation amount per share and any accrued and unpaid
dividends to but excluding the redemption date. The M&T
Series A Preferred Stock is also redeemable prior to
February 15, 2012 on the same terms as described in the
preceding sentence, at M&Ts option but subject to the
approval of the appropriate federal bank agency, if M&T has
58
received aggregate gross proceeds of not less than 25% of the
aggregate liquidation amount of the M&T Series A
Preferred Stock and, after the Closing, the M&T
Series C Preferred Stock, measured on the respective
initial date of each series issuance, from one or more
Qualified Equity Offerings and the aggregate
redemption price does not exceed the aggregate net cash proceeds
received by M&T from such Qualified Equity Offerings.
Qualified Equity Offerings with respect to the M&T
Series A Preferred Stock means the sale and issuance for
cash after December 23, 2008 by M&T of perpetual
preferred stock or common stock qualifying as Tier 1
capital.
Holders of the M&T Series A Preferred Stock will have
no voting rights except in limited circumstances, including with
respect to the election of two directors, whose seats are
automatically added to the then current board, in certain
circumstances where dividends have not been paid for six
quarterly dividend periods or more, and with respect to creating
or authorizing shares of classes of stock senior to the M&T
Series A Preferred Stock, amending the Certificate of
Incorporation of M&T so as to adversely affect the rights,
preferences, privileges or voting powers of the M&T
Series A Preferred Stock, or consummating a binding share
exchange or reclassification involving the M&T
Series A Preferred Stock or a merger or consolidation of
M&T unless the M&T Series A Preferred Stock
remains outstanding or is exchanged for preferred stock with
rights, preferences, privileges, and voting powers, taken as a
whole, that are not materially less favorable to the holders as
compared to immediately prior to such transaction.
Holders of M&T Series A Preferred Stock shares have no
rights to exchange or convert such shares into any other
securities.
Mandatory Convertible Non-Cumulative Preferred Stock,
Series B. Prior to the completion of the
merger, M&T will file with the New York State Department of
State a Certificate of Amendment to Certificate of Incorporation
for the purpose of fixing the designations, preferences,
limitations and relative rights of a new series of Mandatory
Convertible Non-Cumulative Preferred Stock, Series B, par
value $1.00 per share and liquidation preference of $1,000 per
share (the M&T Series B Preferred Stock).
Upon the completion of the merger, under the terms of the merger
agreement, each share of the Provident Series A Preferred
Stock will be exchangeable for one share of M&T
Series B Preferred Stock.
The terms of the M&T Series B Preferred Stock provide
that on April 1, 2011 each share of M&T Series B
Preferred Stock will automatically convert (unless previously
converted at the option of the holders) into a number of shares
of M&T common stock equivalent to the conversion rate of
16.345222, subject to certain anti-dilution adjustments. Holders
may elect to convert at any time prior to that date by written
notice to M&T. The M&T Series B Preferred Stock
will pay non-cumulative dividends in cash, when declared by the
M&T Board of Directors, at a rate of 10.0% per annum on the
liquidation preference of $1,000 per share, payable quarterly in
arrears. In the event that M&T increases its quarterly
dividend on its common stock above $0.9614, the holders of the
M&T Series B Preferred Stock will be entitled to an
additional dividend at a rate per annum equal to the percentage
increase above $0.961 multiplied by 10.0%. No dividends may be
paid on M&Ts common stock or other junior stock
unless dividends have been paid in full on the M&T
Series B Preferred Stock. The M&T Series B
Preferred Stock ranks on a parity with the M&T
Series A Preferred Stock and the M&T Series C
Preferred Stock with respect to dividend and liquidation rights.
M&T Series B Preferred Stock is not redeemable. Holders of
the M&T Series B Preferred Stock will have no voting
rights, except in limited circumstances including with respect
to any amendment, whether by merger, consolidation, combination,
reclassification or otherwise, of any provisions of the
Certificate of Incorporation of M&T so as to adversely
affect the holders of the M&T Series B Preferred
Stock, including, without limitation, the creation, issuance or
increase in the authorized number of shares of any class or
series of senior stock.
Fixed Rate Cumulative Perpetual Preferred Stock,
Series C. Prior to the completion of the
merger, M&T will file with the New York State Department of
State a Certificate of Amendment to Certificate of Incorporation
for the purpose of fixing the designations, preferences,
limitations and relative rights of a new series of Fixed Rate
Cumulative Perpetual Preferred Stock, Series C, par value
$1.00 per share and liquidation preference of $1,000 per share
(the M&T Series C Preferred Stock). Upon
the completion of the merger, under the terms of the merger
agreement, each share of the Provident Series B Preferred
Stock will be exchangeable for one share of M&T
Series C Preferred Stock. The Provident Series B
Preferred Stock was issued to the U.S. Department of the
Treasury in connection with Providents participation in
the TARP Capital Purchase Program. M&T will also succeed to
the
59
rights and obligations of Provident in the agreement with the
U.S. Department of the Treasury, including a warrant issued by
Provident.
The terms of the M&T Series C Preferred Stock provide
that holders of the M&T Series C Preferred Stock are
entitled to, as and when declared by the board of directors,
cumulative cash dividends at a rate per annum equal to 5% per
annum until November 14, 2013 or 9% per annum after
November 14, 2013, payable quarterly in arrears. No
dividends may be paid on M&Ts common stock or other
junior stock unless all the accrued and unpaid dividends for all
the past dividend periods, including the latest dividend period,
have been paid in full on the M&T Series C Preferred
Stock. The M&T Series C Preferred Stock is redeemable
on or after November 15, 2011 by M&T, subject to
approval of the appropriate federal banking agency, in whole or
in part, at a redemption price equal to the sum of the
liquidation amount per share and any accrued and unpaid
dividends to but excluding the redemption date. The M&T
Series C Preferred Stock is also redeemable prior to
November 15, 2011 on the same terms as described in the
preceding sentence, at M&Ts option but subject to the
approval of the appropriate federal bank agency, if M&T has
received aggregate gross proceeds of not less than 25% of the
aggregate liquidation amount of the M&T Series C
Preferred Stock and the M&T Series A Preferred Stock,
measured on the respective initial date of each series
issuance, from one more Qualified Equity Offerings
and the aggregate redemption price does not exceed the aggregate
net cash proceeds received by M&T from such Qualified
Equity Offerings. Qualified Equity Offerings means with respect
to the M&T Series C Preferred Stock, the sale and
issuance for cash after November 14, 2008 by M&T of
perpetual preferred stock or common stock qualifying as
Tier 1 capital.
Holders of the M&T Series C Preferred Stock will have
no voting rights except in limited circumstances, including with
respect to the election of two directors, whose seats are
automatically added to the then current board, in certain
circumstances where dividends have not been paid for six
quarterly dividend periods or more and with respect to creating
or authorizing shares of classes of stock senior to the M&T
Series A Preferred Stock, amending the Certificate of
Incorporation of M&T so as to adversely affect the rights,
preferences, privileges or voting powers of the M&T
Series C Preferred Stock, or consummating a binding share
exchange or reclassification involving the M&T
Series C Preferred Stock or a merger or consolidation of
M&T unless the M&T Series C Preferred Stock
remains outstanding or is exchanged for preferred stock with
rights, preferences, privileges, and voting powers, taken as a
whole, that are not materially less favorable to the holders as
compared to immediately prior to such transaction.
Holders of M&T Series C Preferred Stock shares have no
rights to exchange or convert such shares into any other
securities.
Common
Stock
The common stock are entitled to share ratably in dividends when
and if declared by the M&T Board of Directors from funds
legally available for the dividends. In the event of
liquidation, dissolution or
winding-up
of M&T, whether voluntary or involuntary, the holders of
M&T common stock will be entitled to share ratably in any
of its assets or funds that are available for distribution to
its stockholders after the satisfaction of its liabilities (or
after adequate provision is made therefor) and after preferences
of any outstanding M&T preferred stock. M&T common
stock is neither redeemable nor convertible into another
security of M&T.
Each holder of M&T common stock has one vote for each share
held on matters presented for consideration by the stockholders.
Each director of M&T is elected at an annual meeting of
stockholders or at any meeting of stockholders held in lieu of
such annual meeting and holds office until the next annual
meeting and until his or her successor has been elected and
qualified.
The holders of M&T common stock have no preemptive rights
to acquire any additional shares of M&T common stock.
Unless approved by the executive committee of the M&T Board
of Directors (which shall include the affirmative vote of the
director designated by Allied Irish Banks, p.l.c.
(AIB)), for as long as AIB holds 15% or more of the
outstanding shares of common stock of M&T, M&T may not
issue shares of common stock of M&T for purposes of
acquiring any assets or businesses if the issued shares will
exceed 10% of the aggregate voting power of
60
the outstanding voting securities of M&T. In addition,
M&T common stock is listed on the NYSE, which requires
stockholder approval of the issuance of additional shares of
M&T common stock under certain circumstances.
For more information regarding the rights of holders of M&T
common stock, please see the description captioned
Comparison of Common Stockholder Rights, commencing
below.
COMPARISON
OF COMMON STOCKHOLDER RIGHTS
The rights of M&T stockholders are governed by the New
York Business Corporation Law, or NYBCL, and M&Ts
restated certificate of incorporation, as amended, and amended
and restated by-laws. The rights of Provident stockholders are
governed by the Maryland General Corporation Law, or MGCL, and
Providents articles of incorporation, as amended, and
amended and restated bylaws. After the merger, the rights of
Providents common stockholders that receive M&T
shares will be governed by the NYBCL and M&Ts
restated certificate of incorporation and amended and restated
by-laws. The following discussion summarizes the material
differences between the rights of Provident common stockholders
and the rights of M&Ts common stockholders. We urge
you to read M&Ts restated certificate of
incorporation, as amended, M&Ts amended and restated
by-laws, Providents articles of incorporation, as amended,
Providents amended and restated bylaws, and the NYBCL, the
MGCL, and federal law governing bank holding companies carefully
and in their entirety.
Authorized
Capital Stock
M&T. M&Ts restated certificate
of incorporation, as amended, authorizes it to issue up to
250,000,000 shares of common stock, par value $0.50 per
share, and 1,000,000 shares of preferred stock, par value
$1.00 per share. As of the record date, there were
111,111,640 shares of M&T common stock outstanding,
and 600,000 shares of the M&T Preferred Stock were
outstanding.
Provident. Providents articles of
incorporation, as amended, authorize Provident to issue up to
100,000,000 shares of common stock, par value $1.00 per
share, and 5,000,000 shares of preferred stock, par value
$1.00 per share. As of the record date, there were
33,511,560 shares of Provident common stock outstanding, of
which not more than 10,550,701 shares were held in the
treasury of Provident. As of the record date, there were
200,400 shares of Provident preferred stock outstanding, of
which 49,400 shares were designated as Series A
Mandatory Convertible Non-Cumulative Preferred Stock, and
151,000 shares were designated as Fixed Rate Cumulative
Perpetual Preferred Stock, Series B.
Size of
Board of Directors
M&T. M&Ts amended and restated
by-laws provide that its Board of Directors shall consist of at
least 3 directors, unless all of its shares are owned by
fewer than three stockholders in which case the Board must
consist of at least as many directors as number of stockholders.
The exact number of directors may be determined from time to
time by action of stockholders or by a majority of the entire
M&T Board of Directors. The number of directors may not
exceed 28 members without consent of AIB as long as AIB owns at
least 15% of the outstanding M&T common stock. As of
M&Ts most recent proxy statement filed March 6, 2008,
AIB owned approximately 24.25% of the outstanding shares of
M&T. The M&T Board of Directors currently has
20 directors. Following the merger, Providents
designee will be added to the M&Ts Board of Directors.
Provident. Providents amended and
restated bylaws provide that its Board shall consist of at least
3 directors. The directors may set the number of directors
by resolution of a majority of the entire board, provided that
such a resolution may not affect the tenure of office of any
director. Providents Board of Directors currently has
16 directors.
Classes
of Directors
M&T. M&Ts Board of Directors
is not classified. M&Ts amended and restated by-laws
provide that each director is elected annually.
61
Provident. Providents Board of Directors
is classified. Providents amended and restated by-laws
provide that the Board shall be divided into three classes, as
nearly equal in number as possible, with the divided classes to
hold office in staggered
three-year
terms. Providents Board of Directors currently has
16 directors.
Removal
of Directors
M&T. M&Ts amended and restated
by-laws provide that any M&T director may be removed for
cause either by a vote of stockholders at a meeting or by
three-fourths of the entire Board at a meeting. Any director may
be removed without cause by a vote of a majority of shares
entitled to vote.
Provident. Providents articles of
incorporation, as amended, provide that directors may only be
removed for cause and then only by the affirmative vote of the
holders of at least 80% of the shares of stock entitled to vote
in an election of directors.
Filling
Vacancies on the Board of Directors
M&T. Under M&Ts amended and
restated by-laws, vacancies created by any reason other than
removal of directors may be filled by a majority of the
directors then in office, whether or not a quorum exists.
Vacancies created by reason of removal of directors may be
filled by vote of stockholders at a meeting. Each director
filling a vacancy shall remain in office for the remainder of
the unexpired term. M&T stockholders are not entitled to
cumulative voting rights in the election of directors.
Provident. Under Providents amended and
restated bylaws, vacancies resulting from an increase in the
number of directors or other causes other than removal from
office may be filled by a majority vote of the remaining
directors, whether or not a quorum exists. Each director filling
a vacancy shall remain in office for a term expiring at the next
annual meeting of stockholders and until his or her successor is
duly elected and qualified. Provident stockholders are not
entitled to cumulative voting rights in the election of
directors. Under MGCL § 2-407, vacancies created by
reason of removal of directors may be filled by vote of
stockholders at a meeting.
Nomination
of Director Candidates by Stockholders
M&T. M&Ts amended and restated
by-laws provide AIB with the authority to designate a certain
number of nominees depending on its percent ownership of
M&Ts outstanding common stock. So long as AIB owns at
least 15% of the outstanding shares of M&T common stock,
M&Ts Board of Directors shall nominate and recommend
for election at least four director candidates designated
by AIB. If AIB owns at least 10% but less than 15% of the
outstanding shares of M&T common stock, AIB may designate
and M&Ts Board of Directors shall nominate and
recommend at least two candidates. If AIB owns at least 5% but
less than 10% of the outstanding shares of M&T common
stock, AIB may designate and M&Ts Board of Directors
shall nominate and recommend at least one candidate. All
designees must be reasonably acceptable to M&T.
Provident. Providents amended and
restated bylaws provide any stockholder entitled to vote in the
election of directors may nominate directors by delivering
notice to the principal executive office of Provident not less
than 90 days prior to the date of the meeting of
stockholders; provided that in the event that less than
100 days notice or prior disclosure of the date of
the meeting is given to stockholders, notice must be received no
later than ten days after such notice or disclosure is given.
The notice must set forth (i) the name of the nominee and,
all information required to be disclosed under the Exchange Act,
including such nominees consent to being named in the
attendant proxy statement and to serving as a director,
(ii) the identity of the name, shareholdings and address of
the stockholder providing notice, and (iii) a statement
disclosing whether such stockholder is acting with or on behalf
of any other person and, if applicable, the identity of such
person.
Calling
Special Meetings of Stockholders
M&T. Under M&Ts amended and
restated by-laws, a special meeting of stockholders may be
called by M&Ts Board of Directors or M&Ts
chief executive officer, or by written request of stockholders
representing at least 25% of the outstanding M&T shares
entitled to vote.
62
Provident. Under Providents amended and
restated bylaws, a special meeting of stockholders may be called
by the chairman of Providents Board of Directors, by the
President of Provident, or by a majority of the board, and a
special meeting of stockholders shall be called by the Corporate
Secretary of Provident upon the written request of stockholders
representing a majority of all shares outstanding and entitled
to vote on the business to be transacted at such special meeting.
Stockholder
Proposals
M&T. M&Ts amended and restated
by-laws provide for stockholder proposals to conduct business
that is proper for stockholder action at stockholder meetings.
Any M&T stockholder making such a proposal must give notice
to M&Ts corporate secretary at M&Ts
principal executive offices no later than (i) the
120th day prior to the date on which M&T mailed its
proxy materials for the preceding years annual meeting if
the date of the annual meeting is not changed by more than
30 days from that of the preceding year, and (ii) the
tenth day following the date of the public disclosure of the
date of any other annual or special meeting. The proposal must
also set forth (i) the name and address of the stockholder
making the proposal, (ii) the classes and number of
M&T shares owned by that stockholder, (iii) the
business proposed including a brief description, (iv) the
reasons for conducting the business at the meeting, (v) any
material interest of the stockholder making the proposal in the
business proposed and (vi) any other information
M&Ts Board of Directors reasonably determines is
necessary for the board and stockholders to consider the
proposal.
Provident. Providents amended and
restated bylaws provide that, at any annual meeting, a
stockholder proposal shall only be considered if it relates to a
proper subject for stockholder action and advance notice is
provided to Provident not fewer than 90 days prior to the
meeting; provided, however, that if fewer than
100 days notice (or public disclosure) is provided to
stockholders of the date of the meeting, then written notice
must be provided not later than the close of business on the
tenth day following notice or public disclosure of the time of
the meeting. Such notice shall include (i) a description of
the business desired to be brought at the annual meeting,
(ii) the reasons for conducting such business at the annual
meeting, (iii) the name, address and shareholdings of the
stockholder, (iv) a statement disclosing whether such
stockholder is acting with or on behalf of any other person, and
if applicable, the identity of such person, and (v) any
material interest of the stockholder in such business.
Notice of
Stockholder Meetings
M&T. M&Ts amended and restated
by-laws provide that M&T must give notice between 10 and
60 days before any stockholders meeting to each stockholder
entitled to vote at such a meeting. The notice shall state the
place, date and hour, the purposes of the meeting and indicate
the person who called the meeting if not an annual meeting. The
notice shall also indicate if any proposed action to be taken at
a meeting would trigger dissenters appraisal rights.
Provident. Providents amended and
restated bylaws provide that Provident must give notice between
10 and 90 days before any stockholders meeting to each
stockholder entitled to vote at such a meeting. The notice shall
state the place, date and time of the meeting and, in the case
of a special meeting, the purpose or purposes of the meeting.
Anti-Takeover
Provisions and Other Stockholder Protections
M&T. Under M&Ts amended and
restated by-laws, M&Ts Board of Directors shall not
adopt any stockholders rights plan or other measures having the
purpose or effect of preventing a transaction or materially
delaying any transaction involving a change in control without
consent of AIB as long as AIB remains the beneficial owner of at
least 15% of the outstanding shares of M&T common stock.
A New York Corporation may elect not to be governed by NYBCL
§ 912, which places restrictions on certain business
combinations with interested stockholders. M&T has made
such an election.
NYBCL § 910 provides that a stockholder of a New York
corporation has the right, following compliance with certain
procedures, to receive payment of the fair value of its shares
if the stockholder has the right to vote and does not assent to,
among other actions, a merger or consolidation to which the
corporation is a party. The right to receive
63
payment of the fair value of the shares is not available in
certain circumstances, including if the shares of the
corporation are listed on a national securities exchange (as is
the case in the present context) or to stockholders of a parent
corporation in the case of certain mergers between the parent
corporation and a 90%-owned subsidiary corporation. M&T
stockholders do not have the right to receive fair value
described in the immediately preceding sentences in connection
with the merger and consummation of the transactions
contemplated by the merger agreement.
Provident. Under Providents articles of
incorporation, as amended, and amended and restated bylaws,
Providents Board of Directors is not prohibited from
adopting any stockholders rights plan. Providents articles
of incorporation, as amended, provide that if the board
determines that any actual or proposed transaction which
involves a change in control should be rejected, the board may
take the following anti-takeover measures: advising stockholders
not to accept the proposal; instituting litigation against the
party making the proposal; filing complaints with governmental
and regulatory authorities; acquiring the stock or any of the
securities of Provident; selling or otherwise issuing authorized
but unissued stock, other securities or treasury stock or
granting options with respect thereto; selling any of the assets
of Provident; acquiring a company to create an antitrust or
other regulatory problem for the party making the proposal; and
obtaining a more favorable offer from another individual or
entity.
The board of a Maryland corporation may opt out of MGCL 3-602,
which places restrictions on certain business combination with
interested stockholders. Providents Board of Directors has
not made such an election as a general matter. Providents
articles of incorporation, as amended, provide that any business
combination with interested stockholders require the approval of
(a) two-thirds of the outstanding shares entitled to vote
generally in the election of directors, voting together as a
single voting group, and (b) two-thirds of the holders of
shares other than those owned by the interested stockholders and
their affiliates, unless the business combination is approved by
a majority of the disinterested directors, or certain fair price
requirements are met.
Providents articles of incorporation, as amended, provide
that the board shall, in connection with the exercise of its
business judgment involving any actual or proposed transaction
which would or may involve a change in control of Provident, in
determining what is in the best interests of Provident and its
stockholders and in making any recommendation to its
stockholders, give due consideration to all relevant factors,
including, but not limited to the social and economic effect on
the employees, depositors and customers of, and others dealing
with, Provident and its subsidiaries and on the communities in
which Provident and its subsidiaries operate or are located, and
the reputation and business practices of the offeror and its
management and affiliates as they would affect the employees.
MGCL § 3-105(e) provides that a proposed
consolidation, merger, share exchange, or transfer shall be
approved by the stockholders of a corporation by the affirmative
vote of two-thirds of all the votes entitled to be cast on the
matter. Providents articles of incorporation, as amended,
provide, consistent with this requirement, that the affirmative
vote of the holders of two-thirds of the issued and outstanding
shares of capital stock entitled to vote shall be required to
approve a merger or consolidation of Provident with or into any
other corporation (or the sale, lease or exchange of all or
substantially all of Providents property and assets).
MGCL § 3-702 (the Maryland control share statute)
requires a two-thirds vote of disinterested shares in order to
approve voting rights for shares held by a stockholder in excess
of any one of three thresholds of ownership 10%, 33%
and 50%. The MGCL provides that, unless the charter or by-laws
of a corporation provide otherwise, if voting rights for control
shares (in excess of the 50% threshold) are approved, all
stockholders (other than the acquiring person) shall have the
rights under the MGCL of dissenters to a merger. Provident has
not adopted articles or bylaws opting out of any part of such
statute.
MGCL § 3-202 provides that a stockholder of a Maryland
corporation has the right to demand and receive payment of the
fair value of its shares from the successor if, among other
events, the corporation consolidates or merges with another
corporation. The fair value provisions of the MGCL do not apply,
however, if the shares are, among other categories, traded on a
national securities exchange (as is the case in the present
context), unless the transaction giving rise to the combination
is covered by MGCL § 3-602 or exempted by MGCL
§ 3-603 (i.e., the Business Combination
Moratorium Statute described above), in which case the value of
the shares shall be determined with reference to such
provisions. Provident stockholders do not have the appraisal
rights described in the immediately preceding sentences in
connection with the merger and consummation of the transactions
contemplated by the merger agreement.
64
Indemnification
of Directors and Officers
M&T. Under M&Ts amended and
restated by-laws, all current and former officers and directors
of M&T are indemnified against any threatened, pending or
completed actions and appeals to the fullest extent permitted
under the NYBCL. An officer or director shall be indemnified for
any action initiated by such officer or director if such action
was authorized by M&Ts Board of Directors.
NYBCL § 721 prohibits indemnification of officers and
directors for acts finally adjudicated to be committed in bad
faith, resulting from active or deliberate dishonesty, or
resulting in a personal gain to which such an officer or
director was not legally entitled.
Provident. Under Providents articles of
incorporation, as amended, and amended and restated bylaws, all
current and former directors and officers of Provident are
indemnified to the fullest extent authorized by the MGCL,
including the advance of expenses.
MGCL § 2-418 permits indemnification of any director
or officer made party to a proceeding by reason of service in
that capacity unless it is established that the act or omission
of the director or officer was material to the matter giving
rise to the proceeding, and was committed in bad faith or
resulted from active and deliberate dishonesty, or that the
director or officer actually received an improper benefit in
money, property or services, or in the case of any criminal
proceeding, that the director or officer had reasonable cause to
believe the act or omission was unlawful. A determination must
be made that a director or officer has met the required standard
of conduct before the director or officer may be indemnified.
The determination may be made by a majority vote of
disinterested directors, by special legal counsel (selected by
the disinterested directors) or by the stockholders.
The MGCL further provides that indemnification may be made
against judgments, penalties, fines, settlements and reasonable
expenses actually incurred by the director or officer in
connection with the proceeding. However, in a stockholder
derivative suit, a corporation may not indemnify a director or
officer in respect of a proceeding in which he or she is
adjudged liable to the corporation.
The MGCL further provides that a director or officer who has
been successful, on the merits or otherwise, in the defense of
any proceeding to which he or she is made party by reason of his
or her own service in that capacity, shall be indemnified
against reasonable expenses incurred in connection with such
proceeding.
The MGCL provides for an advance of reasonable expenses to
directors or officers upon the directors or officers
written affirmation of his or her good faith belief that he or
she has met the required standard of conduct and after
undertaking to repay the corporation if it is determined that
the standard has not been met.
Amendments
to Articles/Certificate of Incorporation and By-Laws
M&T. Under the M&T amended and
restated by-laws, M&Ts by-laws may be amended or
repealed by a vote of a majority of shares of M&T entitled
to vote in the election of directors, or by a vote of a majority
of the entire M&T Board of Directors.
Under NYBCL § 803(a), a corporations certificate
of incorporation may be amended or changed by a vote of the
board and a vote of a majority of all outstanding shares
entitled to vote. A corporations certificate of
incorporation may require a greater vote.
M&Ts restated certificate of incorporation, as
amended, and its amended and restated by-laws require the
unanimous approval of the M&T Board of Directors or the
affirmative vote of at least 80% of the outstanding shares of
M&T common stock to amend, modify or repeal the sections of
M&Ts by-laws conferring special rights to AIB. This
provision automatically terminates on the first date after the
date that AIB ceases to be the beneficial owner of at least 5%
of outstanding M&T common stock.
Provident. Under Providents articles of
incorporation, as amended, and amended and restated bylaws,
Providents Board of Directors has the power and authority
to amend, alter and repeal the bylaws.
Under MGCL § 2-604, a corporations charter may
be amended only after the board adopts a resolution that
declares the proposed amendment is advisable and directs the
proposed amendment be submitted for consideration at either an
annual meeting or as special meeting of the stockholders. Notice
must then be given to each stockholder
65
entitled to vote on the proposed amendment and to each
stockholder not entitled to vote on it, if the contract rights
of his stock, as expressly set forth in the charter, would be
altered by the amendment. MGCL § 2-604(d) requires the
proposed amendment be approved by the stockholders of the
corporation by the affirmative vote of two-thirds of all the
votes entitled to be cast on the matter. A corporations
articles of incorporation may require a greater vote.
Providents articles of incorporation, as amended, provide
that an amendment of the articles of incorporation requires the
approval of the affirmative vote of two-thirds of the issued and
outstanding capital stock; except that any amendment concerning
certain specified matters including the removal of directors,
fixation of the number of directors, and classification of the
Board, requires the affirmative vote of 80% of the issued and
outstanding shares of capital stock.
LEGAL
MATTERS
The validity of the M&T common stock to be issued in
connection with the merger will be passed upon for M&T by
Mark W. Yonkman, Senior Vice President and General Counsel of
M&T. Certain U.S. federal income tax consequences
relating to the merger will also be passed upon for M&T by
Wachtell, Lipton, Rosen & Katz, and for Provident by
Sullivan & Cromwell LLP.
EXPERTS
The consolidated financial statements of M&T and
managements assessment of the effectiveness of internal
control over financial reporting (which is included in
Managements Report on Internal Control over Financial
Reporting) incorporated into this proxy statement/prospectus by
reference to the Annual Report on
Form 10-K
for the year ended December 31, 2007 have been so
incorporated in reliance on the report of PricewaterhouseCoopers
LLP, an independent registered public accounting firm, given on
the authority of said firm as experts in auditing and accounting.
The consolidated financial statements of Provident Bankshares
Corporation and subsidiaries included in Providents Annual
Report on Form
10-K as of
December 31, 2007 and 2006, and for each of the years in
the
three-year
period ended December 31, 2007 and managements
assessment of the effectiveness of internal control over
financial reporting as of December 31, 2007, have been
incorporated by reference herein in this proxy
statement/prospectus
in reliance upon the reports of KPMG LLP, independent
registered public accounting firm, incorporated by reference
herein, and upon the authority of said firm as experts in
accounting and auditing. The aforementioned report, with
respect to the consolidated financial statements, refers to
changes in the Corporations method of accounting for
share-based
compensation with the adoption, effective January 1, 2006,
of Statement of Financial Accounting Standards
(SFAS) No. 123R,
Share-Based
Payment and its method of accounting for defined benefit
pension and other postretirement plans as of December 31,
2006, in accordance with SFAS No. 158, Employers
Accounting for Defined Benefit Pension and Other Postretirement
Plans.
The prospective financial information for Provident included in
this proxy statement/prospectus has been prepared by, and is the
responsibility of, the management of Provident.
PricewaterhouseCoopers LLP, KPMG LLP and Deloitte & Touche
LLP (Providents current independent registered public
accounting firm) have neither examined, compiled nor performed
any procedures with respect to the prospective financial
information and, accordingly, PricewaterhouseCoopers LLP, KPMG
LLP and Deloitte & Touche LLP do not express an opinion or
any other form of assurance with respect thereto. The
PricewaterhouseCoopers LLP and KPMG LLP reports incorporated by
reference into this proxy statement/prospectus relate only to
the historical financial information of M&T and Provident,
respectively. The PricewaterhouseCoopers LLP and KPMG LLP
reports do not extend to any prospective financial information
and should not be read to do so. The prospective financial
information was not prepared with a view toward compliance with
published guidelines of the SEC or the guidelines established by
the American Institute of Certified Public Accountants for
preparation and presentation of prospective financial
information.
66
STOCKHOLDER
PROPOSALS FOR NEXT YEAR
M&T
To be eligible under the SECs stockholder proposal rule
(Rule 14a-8)
and under M&Ts by-laws for inclusion in
M&Ts proxy statement, proxy card, and presentation at
M&Ts 2009 Annual Meeting of Stockholders (currently
scheduled to be held on April 21, 2009), a proper stockholder
proposal must have been received by M&T at its principal
offices at One M&T Plaza 5th Floor, Buffalo, NY 14203
no later than November 6, 2008, which is 120 calendar days
before the date on which M&T first mailed its proxy
statement for 2008. The notice must be in the manner and form
required by M&Ts by-laws. If the date of the 2009
Annual Meeting is changed, the dates set forth above may change.
Provident
Provident intends to hold a 2009 annual meeting of stockholders
only if the merger agreement is terminated. For a stockholder
proposal to be considered for inclusion in Providents
proxy statement and form of proxy relating to the Provident 2009
annual meeting of stockholders (in the event this meeting is
held), the Secretary of Provident must have received the
proposal, at 114 East Lexington Street, Baltimore, Maryland
21202, not later than November 12, 2008. However, if
Providents 2009 annual meeting of stockholders is held on
a date more than 30 calendar days from April 16, 2009, a
stockholder proposal must be received within a reasonable time
before Provident begins to print and mail its proxy solicitation
materials for the Provident 2009 annual meeting. Any stockholder
proposals will be subject to
Rule 14a-8
under the Exchange Act.
Providents amended and restated bylaws provide that in
order for a stockholder to make nominations for the election of
directors or proposals for business to be brought before the
annual meeting, a stockholder must deliver notice of such
nominations
and/or
proposals to the Corporate Secretary not less than 90 days
before the date of the annual meeting; provided that if less
than 100 days notice or prior public disclosure of
the date of the annual meeting is given to stockholders, such
notice must be delivered not later than the close of the tenth
day following the day on which notice of the date of the annual
meeting was mailed to stockholders or prior public disclosure of
the meeting date was made.
OTHER
MATTERS
As of the date of this proxy statement/prospectus,
Providents Board of Directors knows of no matters that
will be presented for consideration at the special meeting other
than as described in this proxy statement/prospectus.
Providents common stockholders may, however, be asked to
vote on a proposal to adjourn or postpone the special meeting
including, if necessary, to allow more time to solicit votes to
approve the merger agreement and the transactions contemplated
thereby. If any other matters properly come before the Provident
special meeting, or any adjournments or postponements of that
meeting, and are voted upon, the enclosed proxies will be deemed
to confer discretionary authority on the individuals that they
name as proxies to vote the shares represented by these proxies
as to any of these matters. The individuals named as proxies
intend to vote or not to vote in accordance with the
recommendation of the management of Provident.
STOCKHOLDERS
SHARING AN ADDRESS
Only one copy of this proxy statement/prospectus is being
delivered to multiple stockholders of Provident unless Provident
has previously received contrary instructions from one or more
of stockholders. Stockholders who hold shares in street
name can request further information on householding
through their banks, brokers or other holders of record. On
written or oral request to Computershare Investor Services,
Providents stock transfer agent at 250 Royall Street,
Canton, Massachusetts 02021 (781)-575-2000, Provident will
deliver promptly a separate copy of this proxy
statement/prospectus to a stockholder at a shared address to
which a single copy of the document was delivered. Stockholders
sharing an address who wish, in the future, to receive separate
copies or a single copy of Providents proxy statements and
annual reports should provide written or oral notice to
Computershare Investor Services, at the address and telephone
number set forth above. Holders in street name who
wish, in the future, to
67
receive separate copies or a single copy of Providents
proxy statements and annual reports, must contact their banks
and brokers.
WHERE YOU
CAN FIND MORE INFORMATION
M&T has filed a registration statement with the SEC under
the Securities Act that registers the shares of M&T common
stock to be issued in the merger to Provident common
stockholders and includes this proxy statement/prospectus. The
registration statement, including the attached exhibits and
schedules, contains additional relevant information about
M&T and its common stock, Provident and the combined
company. The rules and regulations of the SEC allow us to omit
some information included in the registration statement from
this proxy statement/prospectus.
In addition, M&T (File
No. 1-9861)
and Provident (File
No. 0-16421)
file reports, proxy statements and other information with the
SEC under the Exchange Act. You may read and copy this
information at the Public Reference Room of the SEC,
100 F Street, N.E., Washington, D.C. 20549. You
may obtain information on the operation of the Public Reference
Room by calling the SEC at l-800-SEC-0330.
The SEC also maintains an Internet site that contains reports,
proxy statements and other information about issuers, like
M&T and Provident, that file electronically with the SEC.
The address of that site is
http://www.sec.gov.
M&Ts Internet address is
http://www.mtb.com
and Providents Internet address is
http://www.provbank.com.
The information on our Internet sites is not a part of this
proxy statement/prospectus.
You can also inspect reports, proxy statements and other
information about M&T at the offices of the NYSE,
20 Broad Street, New York, New York 10005.
The SEC allows M&T and Provident to incorporate by
reference information into this proxy
statement/prospectus. This means that M&T and Provident can
disclose important information to you by referring you to
another document filed separately with the SEC. The information
incorporated by reference is considered to be a part of this
proxy statement/prospectus, except for any information that is
superseded by information that is included directly in this
proxy statement/prospectus.
This proxy statement/prospectus incorporates by reference the
documents listed below that M&T and Provident have
previously filed with the SEC. They contain important
information about our companies and their financial condition.
|
|
|
M&T Filings
|
|
Period or Date Filed
|
|
Annual Report on
Form 10-K
|
|
Year ended December 31, 2007
|
Proxy Statement on Schedule 14A
|
|
March 6, 2008
|
Quarterly Reports on
Form 10-Q
|
|
Quarters ended March 31, 2008; June 30, 2008; September 30, 2008
|
Current Reports on
Form 8-K
|
|
April 15, 2008; May 19, 2008; July 14, 2008; September 8, 2008;
September 12, 2008; October 21, 2008; November 7, 2008; December
23, 2008; December 24, 2008; January 22, 2009; and
January 28, 2009 (in each case, except to the extent
furnished but not filed)
|
The description of M&T common stock set forth in
M&Ts registration statements on
Form 8-A
filed pursuant to Section 12 of the Exchange Act, and any
amendment or report filed for the purpose of updating any such
description
|
|
January 28, 1997 and May 20, 1998
|
68
|
|
|
Provident Filings
|
|
Period or Date Filed
|
|
Annual Report on
Form 10-K
|
|
Year ended December 31, 2007
|
Proxy Statement on Schedule 14A
|
|
March 12, 2008
|
Quarterly Reports on
Form 10-Q
|
|
Quarters ended March 31, 2008; June 30, 2008;
September 30, 2008
|
Current Reports on
Form 8-K
|
|
April 11, 2008; April 16, 2008; April 17, 2008;
April 25, 2008; May 21, 2008; July 3, 2008; July 17,
2008; August 13, 2008; September 12, 2008;
October 17, 2008; October 27, 2008; November 17,
2008; November 19, 2008; December 22, 2008, and
January 27, 2009 (in each case, except to the extent
furnished but not filed)
|
M&T and Provident incorporate by reference additional
documents that they may file with the SEC pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act
between the date of this proxy statement/prospectus and the date
of Providents special meeting (other than the portions of
those documents not deemed to be filed). These documents include
periodic reports, such as Annual Reports on
Form 10-K,
Quarterly Reports on
Form 10-Q
and Current Reports on
Form 8-K,
as well as proxy statements.
M&T has supplied all information contained or incorporated
by reference into this proxy statement/prospectus relating to
M&T, and Provident has supplied all such information
relating to Provident.
You can obtain any of the documents incorporated by reference
into this proxy statement/prospectus through M&T or
Provident, as the case may be, or from the SEC through the
SECs Internet site at the address described above.
Documents incorporated by reference are available from the
companies without charge, excluding any exhibits to those
documents unless the exhibit is specifically incorporated by
reference as an exhibit in this proxy statement/prospectus. You
can obtain documents incorporated by reference into this proxy
statement/prospectus by requesting them in writing or by
telephone from the appropriate company at the following address:
|
|
|
M&T Bank Corporation
Attention: Shareholder Relations
One M&T Plaza
Buffalo, New York 14203
(716) 842-5138
|
|
Provident Bankshares Corporation
Attention: Stockholder Relations
114 East Lexington Street
Baltimore, Maryland 21202
(410) 277-2080
|
If you would like to request documents, please do so by
April 1, 2009 to receive them before the Provident special
meeting. If you request any incorporated documents from our
companies, we will mail them to you by first-class mail, or
another equally prompt means, within one business day after we
receive your request.
We have not authorized anyone to give any information or make
any representation about the merger or our companies that is
different from, or in addition to, that contained in this proxy
statement/prospectus or in any of the materials that M&T or
Provident have incorporated into this proxy
statement/prospectus. Therefore, if anyone does give you
information of this sort, you should not rely on it. If you are
in a jurisdiction where offers to exchange or sell, or
solicitations of offers to exchange or purchase, the securities
offered by this proxy statement/prospectus or the solicitation
of proxies is unlawful, or if you are a person to whom it is
unlawful to direct these types of activities, then the offer
presented in this proxy statement/prospectus does not extend to
you. The information contained in this proxy
statement/prospectus speaks only as of the date of this proxy
statement/prospectus unless the information specifically
indicates that another date applies.
69
ANNEX A
EXECUTION
COPY
AGREEMENT AND PLAN OF MERGER
dated as of December 18, 2008
among
Provident Bankshares Corporation,
Merger Sub, as herein defined,
and
M&T Bank Corporation
A-1
TABLE OF
CONTENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Page
|
|
ARTICLE I
The Merger
|
|
1.1
|
|
|
The Merger
|
|
|
A-6
|
|
|
1.2
|
|
|
Effective Time
|
|
|
A-7
|
|
|
1.3
|
|
|
Closing
|
|
|
A-7
|
|
|
1.4
|
|
|
Bank Merger
|
|
|
A-7
|
|
|
1.5
|
|
|
Parent Board
|
|
|
A-7
|
|
|
ARTICLE II
Conversion or Cancellation of Shares
|
|
2.1
|
|
|
Conversion or Cancellation of Shares
|
|
|
A-7
|
|
|
2.2
|
|
|
Fractional Shares
|
|
|
A-8
|
|
|
2.3
|
|
|
Exchange of Old Certificates for New Certificates
|
|
|
A-8
|
|
|
2.4
|
|
|
Adjustment of Exchange Ratio
|
|
|
A-9
|
|
|
2.5
|
|
|
Withholding Rights
|
|
|
A-9
|
|
|
ARTICLE III
Conduct of Business Pending Merger
|
|
3.1
|
|
|
Company Forbearances
|
|
|
A-10
|
|
|
3.2
|
|
|
Parent Forbearances
|
|
|
A-11
|
|
|
3.3
|
|
|
Coordination of Dividends
|
|
|
A-12
|
|
|
3.4
|
|
|
Cooperation on Tax Matters
|
|
|
A-12
|
|
|
3.5
|
|
|
Integration Planning
|
|
|
A-12
|
|
|
ARTICLE IV
Representations
|
|
4.1
|
|
|
Disclosure Schedules
|
|
|
A-12
|
|
|
4.2
|
|
|
Standard
|
|
|
A-12
|
|
|
4.3
|
|
|
Representations
|
|
|
A-13
|
|
|
ARTICLE V
Covenants
|
|
5.1
|
|
|
Reasonable Best Efforts
|
|
|
A-20
|
|
|
5.2
|
|
|
Stockholder Approvals
|
|
|
A-20
|
|
|
5.3
|
|
|
Registration Statement/Proxy Statement
|
|
|
A-21
|
|
|
5.4
|
|
|
Press Releases
|
|
|
A-21
|
|
|
5.5
|
|
|
Access; Information
|
|
|
A-22
|
|
|
5.6
|
|
|
Acquisition Proposals
|
|
|
A-22
|
|
|
5.7
|
|
|
Takeover Laws and Provisions
|
|
|
A-24
|
|
|
5.8
|
|
|
Regulatory Applications
|
|
|
A-24
|
|
|
5.9
|
|
|
Options and Restricted Stock
|
|
|
A-24
|
|
|
5.10
|
|
|
Indemnification and Insurance
|
|
|
A-25
|
|
|
5.11
|
|
|
Benefit Plans
|
|
|
A-26
|
|
|
5.12
|
|
|
Notification of Certain Matters
|
|
|
A-27
|
|
|
5.13
|
|
|
Exemption from Liability Under Section 16(b)
|
|
|
A-27
|
|
|
5.14
|
|
|
Assumption by Parent of Certain Obligations
|
|
|
A-27
|
|
|
5.15
|
|
|
Formation of Merger Sub; Accession
|
|
|
A-28
|
|
A-2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Page
|
|
ARTICLE VI
Conditions
|
|
6.1
|
|
|
Conditions to Each Partys Obligation to Effect the Merger
|
|
|
A-28
|
|
|
6.2
|
|
|
Conditions to Obligation of Parent
|
|
|
A-28
|
|
|
6.3
|
|
|
Conditions to Obligation of the Company
|
|
|
A-29
|
|
|
ARTICLE VII
Termination
|
|
7.1
|
|
|
Termination by Mutual Consent
|
|
|
A-29
|
|
|
7.2
|
|
|
Termination by Parent
|
|
|
A-29
|
|
|
7.3
|
|
|
Termination by the Company
|
|
|
A-30
|
|
|
7.4
|
|
|
Effect of Termination and Abandonment
|
|
|
A-30
|
|
|
ARTICLE VIII
Miscellaneous
|
|
8.1
|
|
|
Survival
|
|
|
A-31
|
|
|
8.2
|
|
|
Modification or Amendment
|
|
|
A-31
|
|
|
8.3
|
|
|
Waiver of Conditions
|
|
|
A-31
|
|
|
8.4
|
|
|
Counterparts
|
|
|
A-31
|
|
|
8.5
|
|
|
Governing Law
|
|
|
A-31
|
|
|
8.6
|
|
|
Notices
|
|
|
A-32
|
|
|
8.7
|
|
|
Entire Agreement, Etc
|
|
|
A-32
|
|
|
8.8
|
|
|
Definition of subsidiary and affiliate;
Covenants with Respect to Subsidiaries and Affiliates
|
|
|
A-32
|
|
|
8.9
|
|
|
Specific Performance
|
|
|
A-32
|
|
|
8.10
|
|
|
Expenses
|
|
|
A-32
|
|
|
8.11
|
|
|
Interpretation; Effect
|
|
|
A-33
|
|
|
8.12
|
|
|
Severability
|
|
|
A-33
|
|
|
8.13
|
|
|
No Third Party Beneficiaries
|
|
|
A-33
|
|
|
8.14
|
|
|
Waiver of Jury Trial
|
|
|
A-33
|
|
|
8.15
|
|
|
Submission to Jurisdiction; Selection of Forum
|
|
|
A-34
|
|
A-3
INDEX OF
DEFINED TERMS
|
|
|
|
|
Location of
|
Term
|
|
Definition
|
|
Acquisition Proposal
|
|
5.6(a)
|
Affiliate
|
|
8.8
|
Approvals
|
|
5.8(a)
|
Articles of Merger
|
|
1.2(a)
|
Bank Merger
|
|
1.4
|
Benefit Plans
|
|
4.3(m)(1)
|
Change in Recommendation
|
|
5.2(b)
|
Chosen Courts
|
|
8.15
|
Closing
|
|
1.3
|
Closing Date
|
|
1.3
|
Company
|
|
Preamble
|
Company Common Stock
|
|
Recital B
|
Company Material Contract
|
|
4.3(k)
|
Company Meeting
|
|
5.2(a)
|
Company Option
|
|
5.9(a)
|
Company Options
|
|
5.9(a)
|
Company Preferred Stock
|
|
Recital B
|
Company Restricted Stock
|
|
5.9(b)
|
Company Series A Preferred Stock
|
|
Recital B
|
Company Series B Preferred Stock
|
|
Recital B
|
Company Series A Purchase Agreement
|
|
5.14
|
Company Stock Plans
|
|
5.9(a)
|
Confidentiality Agreement
|
|
5.6(a)
|
Consideration
|
|
2.1(b)(2)
|
Disclosure Schedule
|
|
4.1
|
Effective Time
|
|
1.2(a)
|
Employees
|
|
4.3(m)(1)
|
Environmental Laws
|
|
4.3(o)
|
ERISA
|
|
4.3(m)(1)
|
ERISA Affiliate
|
|
4.3(m)(3)
|
ERISA Plans
|
|
4.3(m)(2)
|
Exception Share
|
|
2.3(e)
|
Exchange Act
|
|
5.6(a)
|
Exchange Agent
|
|
2.3(a)
|
Exchange Fund
|
|
2.3(a)
|
Exchange Ratio
|
|
2.1(a)
|
Governing Documents
|
|
3.1(h)
|
Governmental Entity
|
|
4.3(f)(1)
|
Indemnified Liabilities
|
|
5.10(a)
|
Indemnified Party
|
|
5.10(a)
|
Insurance Amount
|
|
5.10(b)
|
Internal Revenue Code
|
|
Recital C
|
IRS
|
|
4.3(m)(2)
|
Liens
|
|
4.3(c)(2)
|
Maryland Department
|
|
1.2(a)
|
A-4
|
|
|
|
|
Location of
|
Term
|
|
Definition
|
|
Material Adverse Effect
|
|
4.2(b)
|
Material Contract
|
|
4.3(k)
|
Measurement Price
|
|
2.2
|
Merger
|
|
1.1(a)
|
Merger Sub
|
|
5.15
|
MGCL
|
|
1.1(b)
|
Multiemployer Plan
|
|
4.3(m)(2)
|
New Certificate
|
|
2.3(a)
|
New Share
|
|
2.3(a)
|
NYSE
|
|
2.2
|
Old Certificate
|
|
2.1(d)
|
Old Share
|
|
2.1(d)
|
Parent
|
|
Preamble
|
Parent Common Stock
|
|
Recital A
|
Parent Option
|
|
5.9(a)
|
Parent Preferred Stock
|
|
Recital A
|
party
|
|
8.11(d)
|
Pension Plan
|
|
4.3(m)(2)
|
Person
|
|
8.11(e)
|
Plan
|
|
Preamble
|
Previously Disclosed
|
|
3.1
|
Proxy Statement
|
|
5.3(a)
|
Registration Statement
|
|
5.3(a)
|
Regulatory Approvals
|
|
4.3(f)(2)
|
Regulatory Authorities
|
|
4.3(i)(1)
|
Regulatory Filings
|
|
4.3(g)(1)
|
Representatives
|
|
5.6(a)
|
Rights
|
|
4.3(b)(3)
|
SEC
|
|
4.3(f)(1)
|
Securities Act
|
|
4.3(g)(1)
|
Series A Preferred Consideration
|
|
2.1(b)(1)
|
Series B Preferred Consideration
|
|
2.1(b)(2)
|
Significant Subsidiary
|
|
5.6(a)
|
Single-Employer Plan
|
|
4.3(m)(3)
|
subsidiary
|
|
8.8
|
Superior Proposal
|
|
5.6(a)
|
Surviving Corporation
|
|
1.1(a)
|
Takeover Laws
|
|
4.3(t)
|
Takeover Provisions
|
|
4.3(t)
|
Tax
|
|
4.3(p)(4)
|
Tax Returns
|
|
4.3(p)(1)
|
Taxes
|
|
4.3(p)(4)
|
Termination Date
|
|
7.2(b)
|
Termination Fee
|
|
7.4(b)
|
Treasury Purchase Agreement
|
|
3.1(b)
|
Warrant
|
|
3.1(b)
|
A-5
AGREEMENT AND PLAN OF MERGER, dated as of
December 18, 2008, (this Plan), among
M&T Bank Corporation (Parent), Provident
Bankshares Corporation (Company) and, from
and after its accession to this Agreement in accordance with
Section 5.15, Merger Sub.
RECITALS
A. Parent. Parent is a New York
corporation with its principal executive offices located in
Buffalo, New York. As of the date hereof, Parent has
(i) 250,000,000 authorized shares of common stock, par
value $0.50 per share (Parent Common Stock),
of which not more than 110,352,254 shares are outstanding
and not more than 10,044,357 shares are held in the
treasury of Parent, and (ii) 1,000,000 authorized shares of
preferred stock, par value $1.00 per share (Parent
Preferred Stock), of which no shares are outstanding.
B. Company. The Company is a
Maryland corporation with its principal executive offices
located in Baltimore, Maryland. As of the date hereof, the
Company has (i) 100,000,000 authorized shares of common
stock, par value $1.00 per share (Company Common
Stock), of which not more than 33,511,560 shares
are outstanding and not more than 10,550,701 shares are
held in the treasury of the Company, and (ii) 5,000,000
authorized shares of serial preferred stock, par value $1.00 per
share (Company Preferred Stock), of which
51,215 shares have been designated as Series A
Mandatory Convertible Non-Cumulative Preferred Stock
(Company Series A Preferred Stock), all
of which are outstanding, and 151,000 shares have been
designated as Fixed Rate Cumulative Perpetual Preferred Stock,
Series B (Company Series B Preferred
Stock), all of which are outstanding.
C. Intention of the Parties. Each
of the parties to this Plan intends that the Merger (as
hereinafter defined) shall qualify as a reorganization under
Section 368(a) of the Internal Revenue Code of 1986, as
amended (the Internal Revenue Code) and that
this Plan shall constitute a plan of reorganization
for purposes of Sections 354 and 361 of the Internal
Revenue Code.
D. Approvals. The board of
directors of Parent has determined that this Plan and the
transactions contemplated hereby are advisable and in the best
interests of its stockholders and authorized Parent to consent
to the adoption of this Plan by Merger Sub in accordance with
Section 5.15. The board of directors of the Company has
(1) declared that this Plan and the transactions
contemplated hereby are advisable and (2) directed that
this Plan and the transactions contemplated hereby be submitted
for consideration at a special meeting of the Companys
stockholders.
NOW, THEREFORE, in consideration of their mutual promises
and obligations, the parties hereto approve, adopt and make this
Plan and prescribe the terms and conditions hereof and the
manner and mode of carrying it into effect, which are as follows:
ARTICLE I
The Merger
1.1 The Merger. (a) Subject
to the terms and conditions of this Plan, at the Effective Time
(as hereinafter defined), the Company shall merge with and into
Merger Sub (the Merger), and the separate
corporate existence of the Company shall thereupon cease. Merger
Sub shall be the surviving corporation in the Merger
(hereinafter sometimes referred to as the Surviving
Corporation) and a wholly owned subsidiary of Parent
and shall continue to be governed by the laws of Maryland.
(b) The Merger shall have the effects specified in this
Plan and the Maryland General Corporation Law (the
MGCL).
(c) At the Effective Time, the Certificate of Incorporation
of the Company, as then in effect, shall be the Certificate of
Incorporation of the Surviving Corporation, except with respect
to the name of the Surviving Corporation, and the By-Laws of
Merger Sub, as then in effect, shall be the By-Laws of the
Surviving Corporation.
(d) The name of the Surviving Corporation shall be the name
of the Company.
A-6
1.2 Effective
Time. (a) Subject to the terms and
conditions of this Plan, on or before the Closing Date, the
parties will execute and Parent will cause articles of merger
(the Articles of Merger) to be filed with the
Maryland State Department of Assessments and Taxation (the
Maryland Department) as provided in
Section 3-107
of the MGCL. The Merger shall become effective at such time as
the Articles of Merger has been filed, or at such other time as
may be specified therein. The date and time at which the Merger
becomes effective is herein referred to as the
Effective Time.
(b) Parent and the Company will each cause the Effective
Time to occur not later than the fifth business day following
the satisfaction or waiver of the last of the conditions
specified in Sections 6.1(a), (b) and (d) of this
Plan, but subject to the satisfaction or waiver of the other
conditions set forth in Article VI. Notwithstanding
anything to the contrary in this Section 1.2(b), Parent and
the Company may cause the Effective Time to occur on such
earlier or later day following the satisfaction or waiver of
such conditions as they may agree, consistent with the
provisions of the MGCL.
1.3 Closing. The closing of the
Merger (the Closing) shall take place at such
time and place as Parent and the Company shall agree, on the
date when the Effective Time is to occur (the Closing
Date).
1.4 Bank Merger. As soon as
practicable after the execution and delivery of this Plan,
Provident Bank of Maryland shall enter into an agreement with a
Parent bank subsidiary to be specified by Parent, pursuant to
which Provident Bank of Maryland will merge with and into such
Parent bank subsidiary (the Bank Merger). The
parties intend that the Bank Merger will become effective
immediately following the Effective Time.
1.5 Parent Board. Parent agrees to
cause one current member of the board of directors of the
Company designated by the Company and reasonably acceptable to
Parent to be appointed to the board of directors of Parent
immediately after the Effective Time.
ARTICLE II
Conversion
or Cancellation of Shares
2.1 Conversion or Cancellation of
Shares. At the Effective Time, by virtue of
the Merger and without any action on the part of any stockholder:
(a) Company Common Stock. Each share of
Company Common Stock issued and outstanding immediately prior to
the Effective Time, other than Exception Shares (as hereinafter
defined), shall be converted into the right to receive, but
subject to the other provisions of this Section 2.1 and
possible adjustment as set forth in Section 2.4, 0.171625
fully paid and nonassessable shares of Parent Common Stock (the
Exchange Ratio).
(b) Company Preferred Stock.
(1) Each share of Company Series A Preferred Stock
issued and outstanding immediately prior to the Effective Time
shall be converted into the right to receive, but subject to the
other provisions of this Section 2.1, one share of a series
of Parent Preferred Stock (the Series A Preferred
Consideration) to be designated, prior to the Closing
Date, as Mandatory Convertible Non-Cumulative Preferred Stock
and having powers, preferences and rights such that the holders
of the Company Series A Preferred Stock are not adversely
affected by such conversion.
(2) Each share of Company Series B Preferred Stock
issued and outstanding immediately prior to the Effective Time
shall be converted into the right to receive, but subject to the
other provisions of this Section 2.1, one share of Parent
Preferred Stock (the Series B Preferred
Consideration and, together with the Exchange Ratio
and the Series A Preferred Consideration, the
Consideration) to be designated, prior to the
Closing Date, as Fixed Rate Cumulative Perpetual Preferred Stock
and having rights, preferences, privileges and voting powers
such that the rights, preferences, privileges and voting powers
of the Company Series B Preferred Stock are not adversely
affected by such conversion and having rights, preferences,
privileges and voting powers, and limitations and restrictions
that, taken as a whole, are not materially less favorable than
the rights, preferences, privileges and voting powers, and
limitations and restrictions of the Company Series B
Preferred Stock immediately prior to such conversion, taken as a
whole.
A-7
(c) Merger Sub Capital Stock. Each share
of common stock, par value $0.01 per share, of Merger Sub
outstanding immediately prior to the Effective Time shall remain
outstanding as one share of common stock of the Surviving
Corporation.
(d) Cancellation of Old Shares. Each
share of Company Common Stock issued and outstanding immediately
prior to the Effective Time, other than Exception Shares,
each share of Company Series A Preferred Stock and each
share of Company Series B Preferred Stock is hereinafter
defined as an Old Share. At the Effective
Time, Old Shares shall cease to be outstanding, shall be
canceled and retired and shall cease to exist, and each holder
of a certificate (an Old Certificate)
formerly representing Old Shares shall thereafter cease to have
any rights with respect to such shares, except the right to
receive, without interest, upon exchange of such Old Certificate
in accordance with Section 2.3, the Consideration
applicable to such Old Shares.
(e) Exception Shares. At the Effective
Time, (1) each Exception Share owned by Parent or the
Company or their respective subsidiaries shall be cancelled and
retired and shall cease to exist and no consideration shall be
delivered in exchange therefor, and (2) each Exception
Share held by any direct or indirect wholly owned subsidiary of
Parent or the Company shall be converted into the right to
receive the Exchange Ratio. Exception Share
means a share of Company Common Stock or Company Series A
Preferred Stock owned or held, other than in a bona fide
fiduciary or agency capacity or in satisfaction of a debt
previously contracted in good faith, by Parent, the Company or a
subsidiary of either.
2.2 Fractional
Shares. Notwithstanding any other provision
of this Article II, no fractional shares of Parent Common
Stock will be issued pursuant to the Merger. Instead, Parent
will pay or cause to be paid to the holder of any Old Shares
that would, pursuant to paragraph 2.1, otherwise be
entitled to receive fractional shares of Parent Common Stock an
amount in cash, rounded to the nearest cent and without
interest, equal to the product of (i) the fraction of a
share to which such holder would otherwise have been entitled
and (ii) the Measurement Price. As used in this Plan, the
term Measurement Price means the average of
the daily high and low per share sales prices of Parent Common
Stock on the New York Stock Exchange (the
NYSE), as reported in the New York City
edition of The Wall Street Journal or, if not reported
therein, in another authoritative source mutually agreed by
Parent and the Company, for the last trading day immediately
prior to the Closing Date.
2.3 Exchange of Old Certificates for New
Certificates.
(a) Exchange Agent. At or before the
Effective Time, Parent shall appoint a commercial bank or trust
company (the Exchange Agent) (which entity
shall be reasonably acceptable to the Company) to act as
exchange agent hereunder and make available or cause to be made
available to the Exchange Agent certificates or, at
Parents option, evidence of shares in book entry form
(each, a New Certificate), representing the
shares of Parent Common Stock issuable pursuant to
Section 2.1(a) in exchange for Company Common Stock, the
shares of Parent Preferred Stock issuable pursuant to
Section 2.1(b) in exchange for Company Series A
Preferred Stock and the shares of Parent Preferred Stock
issuable pursuant to Section 2.1(c) in exchange for Company
Series B Preferred Stock (each, a New
Share) and cash in amounts sufficient to allow the
Exchange Agent to make all deliveries of New Certificates and
payments that may be required in exchange for Old Certificates
pursuant to this Article II (collectively, the
Exchange Fund). Any portion of the Exchange
Fund that remains unclaimed by the stockholders of the Company
as of the first anniversary of the Effective Time may, to the
extent permitted by applicable law, be paid to Parent. In such
event, any holder of Old Certificates who has not theretofore
exchanged his or her Old Certificates for New Certificates
and/or cash
in lieu of fractional shares pursuant to this Article II
shall thereafter be entitled to look exclusively to Parent, and
only as a general creditor thereof in the case of cash in lieu
of fractional shares, for the shares of Parent Common Stock
and/or
Parent Preferred Stock
and/or cash
in lieu of fractional shares to which he or she may be entitled
upon exchange of such Old Certificates pursuant to this
Article II, in each case, without any interest thereon.
Notwithstanding the foregoing, neither the Exchange Agent nor
any party hereto shall be liable to any holder of Old
Certificates for any amount properly delivered to a public
official pursuant to applicable abandoned property, escheat or
similar laws.
(b) Exchange Procedures. As promptly as
reasonably practicable following the Effective Time, Parent
shall cause the Exchange Agent to mail or deliver to each Person
who was, immediately prior to the Effective Time, a holder of
record of an Old Certificate, a form of letter of transmittal
(which shall specify that delivery shall be effected, and risk
of loss and title to Old Certificates shall pass, only upon
proper delivery of such certificates to the
A-8
Exchange Agent) containing instructions for use in effecting the
surrender of Old Certificates in exchange for the consideration
to which such Person may be entitled pursuant to this
Article II. Each holder of record of an Old Certificate
that has surrendered its Old Certificates will be entitled to
receive a New Certificate representing the shares of Parent
Common Stock or Parent Preferred Stock, as the case may be,
issuable in exchange therefor
and/or a
check representing cash payable pursuant to this
Article II. No interest will accrue or be paid with respect
to any New Certificates or cash to be delivered upon surrender
of Old Certificates. If any New Certificate is to be issued or
cash is to be paid in a name other than that in which the Old
Certificate surrendered in exchange therefor is registered, it
will be a condition to the exchange that the Person requesting
the exchange (1) pay any transfer or other Taxes required
by reason of the issuance of the New Certificate or the making
of the cash payment in a name other than the name of the holder
of the surrendered Old Certificate or (2) establish to the
satisfaction of Parent (or the Exchange Agent, as the case may
be) that any such Taxes have been paid or are not applicable.
(c) Distributions with Respect to Unexchanged
Shares. No dividends or other distributions with
respect to Parent Common Stock having a record date after the
Effective Time will be paid to any holder of record of Company
Common Stock until such holder has surrendered the Old
Certificate representing such stock as provided herein. Subject
to the effect of applicable law, following surrender of any such
Old Certificates, there shall be paid to the holder of New
Certificates issued in exchange therefor, without interest, the
amount of dividends or other distributions with a record date
after the Effective Time previously payable with respect to the
shares of Parent Common Stock represented thereby. To the extent
permitted by law, holders of Company Common Stock who receive
Parent Common Stock in the Merger shall be entitled to vote
after the Effective Time at any meeting of Parent stockholders
the number of whole shares of Parent Common Stock into which
their respective shares of Company Common Stock are converted,
regardless of whether such holders have exchanged their Old
Certificates for New Certificates in accordance with the
provisions of this Plan, but beginning 30 days after the
Effective Time no such holder shall be entitled to vote on any
matter until such holder surrenders such Old Certificate for
exchange as provided in Section 2.3(b). For the avoidance
of doubt, until such time as the relevant Old Certificates are
exchanged for New Certificates, dividends or other distributions
payable with respect to the Parent Preferred Stock exchangeable
for Company Preferred Stock hereunder will be paid after the
Effective Time to any holder of record of the Company Preferred
Stock, such holder shall be entitled to vote after the Effective
Time at any meeting of holders of Parent Preferred Stock of the
applicable series, regardless of whether such holders have
exchanged their Old Certificates for New Certificates in
accordance with the provisions of this Plan.
(d) Transfers. At or after the Effective
Time, there shall be no transfers on the stock transfer books of
the Surviving Corporation of Old Shares.
(e) Lost, Stolen or Destroyed
Certificates. If any Old Certificate shall have
been lost, stolen or destroyed, upon the making of an affidavit
of that fact by the Person claiming such Old Certificate to be
lost, stolen or destroyed and, if required by Parent or the
Exchange Agent, the posting by such Person of a bond in such
reasonable amount as Parent or the Exchange Agent may direct as
indemnity against any claim that may be made against it with
respect to such Old Certificate, Parent or the Exchange Agent
shall, in exchange for such lost, stolen or destroyed Old
Certificate, issue or cause to be issued a New Certificate and
pay or cause to be paid the amounts, if any, deliverable in
respect to the Old Shares formerly represented by such Old
Certificate pursuant to this Article II.
2.4 Adjustment of Exchange
Ratio. If Parent changes (or the board of
directors of Parent sets a related record date that will occur
before the Effective Time for a change in) the number or kind of
shares of Parent Common Stock outstanding by way of a stock
split, stock dividend, recapitalization, reclassification,
reorganization or similar transaction, the Exchange Ratio will
be adjusted proportionately to account for such change.
2.5 Withholding Rights. Each of
Parent, the Surviving Corporation and the Exchange Agent shall
be entitled to deduct and withhold from the consideration
otherwise payable to any Person pursuant to this Plan such
amounts as it is required to deduct and withhold under the
Internal Revenue Code and the rules and regulations promulgated
thereunder, or any provision of state, local or foreign Tax law.
To the extent that amounts are so deducted or withheld by
Parent, the Surviving Corporation or the Exchange Agent, as the
case may be, such withheld amounts shall be treated for all
purposes of this Plan as having been paid to the Person in
respect to which such deduction and withholding was made.
A-9
ARTICLE III
Conduct of
Business Pending Merger
3.1 Company Forbearances. The
Company agrees that from the date hereof until the Effective
Time, except as expressly contemplated by this Plan or as set
forth in the corresponding paragraph of its Disclosure Schedule
(with respect to the latter exception only and subject to
Section 8.11(h), Previously Disclosed),
without the prior written consent of Parent (which consent shall
not be unreasonably withheld, delayed or conditioned), it will
not, and will cause each of its subsidiaries not to:
(a) Ordinary Course. Conduct its business
and the business of its subsidiaries other than in the ordinary
and usual course or fail to use commercially reasonable efforts
to preserve intact their business organizations and assets and
maintain their rights, franchises and existing relations with
customers, suppliers, employees and business associates, or take
any action reasonably likely to materially impair its ability to
perform its obligations under this Plan or to consummate the
transactions contemplated hereby and thereby.
(b) Capital Stock. (1) Issue, sell
or otherwise permit to become outstanding, or dispose of or
encumber or pledge or authorize or propose the creation of, any
additional shares of its stock other than pursuant to Rights
outstanding on the date hereof, including for the avoidance of
doubt pursuant to the Rights arising under the Warrant to
Purchase Common Stock (the Warrant) sold by
the Company to the United States Department of the Treasury
pursuant to that certain Letter Agreement and Securities
Purchase Agreement dated as of November 14, 2008 (the
Treasury Purchase Agreement) or the terms of
the Company Preferred Stock, (2) enter into any agreement
with respect to the foregoing or (3) permit any additional
shares of its stock to become subject to new grants, other
Rights or similar stock-based employee rights.
(c) Dividends, Etc. (1) Make,
declare, pay or set aside for payment any dividend, other than
(A) dividends on the Company Common Stock consistent with
past practice, (B) dividends on the Company Preferred Stock
in accordance with the terms thereof, (C) dividends from
its direct or indirect wholly owned subsidiaries to it or
another of its wholly owned subsidiaries, (D) dividends on
preferred stock of subsidiaries, the common stock of which is
wholly owned directly or indirectly by the Company, in
accordance with the terms thereof and (E) payments on trust
preferred securities, in accordance with the terms thereof or
(2) directly or indirectly adjust, split, combine, redeem,
reclassify, purchase or otherwise acquire, any shares of its
capital stock.
(d) Compensation; Employment Agreements;
Etc. Enter into or amend or renew any employment,
change of control, retention, consulting, severance or similar
agreements or arrangements with any of its directors, officers
or employees or those of its subsidiaries or grant any increase
in, set aside assets to fund or accelerate the payment or
vesting of, compensation or benefits or pay or provide any
compensation or benefits not required to be paid or provided,
except (1) for normal individual increases in annual base
salary or hourly pay rate to employees who are not directors or
executive officers, at times, in amounts and on other terms and
conditions in the ordinary course of business consistent with
past practice, (2) for other changes that are required by
applicable law, and (3) to satisfy contractual obligations
Previously Disclosed.
(e) Benefit Plans. Enter into, establish,
adopt or amend any Benefit Plan, except (1) as may be
required by applicable law, (2) to satisfy contractual
obligations Previously Disclosed, (3) for technical
amendments that are immaterial to both the Company and any
participant or (4) as required by such Benefit Plan or this
Plan.
(f) Dispositions. Sell, transfer,
mortgage, encumber or otherwise dispose of or discontinue any of
its assets, deposits, business or properties except for sales,
transfers, mortgages, encumbrances or other dispositions or
discontinuances in the ordinary course of business consistent
with past practice and in a transaction that, together with
other such transactions, is not material to it and its
subsidiaries, taken as a whole.
(g) Acquisitions. Acquire (other than by
way of foreclosures or acquisitions of control in a fiduciary or
similar capacity or in satisfaction of debts previously
contracted in good faith, in each case in the ordinary and usual
course of business consistent with past practice) all or any
portion of the assets, business, deposits or properties of any
other entity except in the ordinary course of business
consistent with past practice and in a transaction that,
together with other such transactions, is not material to it and
its subsidiaries, taken as a whole.
A-10
(h) Governing Documents. Amend its
articles of incorporation, bylaws or similar governing documents
(Governing Documents) or the Governing
Documents of any of its subsidiaries, except as contemplated by
this Plan.
(i) Accounting Methods. Implement or
adopt any change in its accounting principles, practices or
methods, other than as may be required by generally accepted
accounting principles, applicable regulatory accounting
requirements or applicable law.
(j) Contracts. Enter into, renew or
terminate any contract or agreement or amendment thereof, that
(1), other than loans, funding arrangements and other
transactions made in the ordinary course of the banking business
consistent with past practice, calls for aggregate annual
payments of $250,000 or more and which is not terminable on
60 days or less notice without payment of a premium or
penalty, (2) contains any non-competition or exclusive
dealing obligations or other obligation which purports to limit
or restrict in any respect the ability of the Company or its
subsidiaries to solicit customers or the manner in which, or the
localities in which, all or any portion of the business of the
Company or its Subsidiaries (or, following consummation of the
transactions contemplated hereby, the ability of Parent or any
of its subsidiaries) is or would be conducted, (3) contains
any agreement that grants any right of first refusal or right of
first offer or similar right or that limits or purports to limit
the ability of the Company or any of its subsidiaries (or,
following consummation of the transactions contemplated hereby,
the ability of Parent or any of its subsidiaries) to own,
operate, sell, transfer, pledge or otherwise dispose of any
assets or business or (4) contains any provision whereby
the consummation of the transactions contemplated hereby would
(A) constitute a breach or violation of, or a default
under, or give rise to any Lien, any acceleration of remedies
or, any right of termination or the loss of any benefit under,
such contract or agreement or (B) require any consent or
approval under any such contract or agreement.
(k) Claims. Settle any claim, action or
proceeding against it, except for settlements involving only
monetary remedies in the ordinary course of business consistent
with past practice not in excess of $100,000 individually or
$250,000 in the aggregate for all such settlements effected
after the date hereof and would not create precedent for claims
that are reasonably likely to be material to and the Company or
its subsidiaries or, after the Effective Time, Parent or its
subsidiaries.
(l) Adverse Actions. (1) Take any
action or knowingly fail to take any reasonable action that
would, or is reasonably likely to, prevent, impede or delay the
Merger from qualifying as a reorganization within the meaning of
Section 368(a) of the Internal Revenue Code or
(2) take any action that is reasonably likely to result in
(A) any of the conditions to the Merger set forth in
Article VI not being satisfied in a timely manner or
(B) a violation of any provision of this Plan except, in
each case, as may be required by applicable law or regulation.
(m) Capital Expenditures. Make any
capital expenditures in excess of (1) $50,000 per project
or related series of projects or (2) $250,000 in the
aggregate.
(n) Certain Tax Matters. Make, change or
revoke any material Tax election, change any material method of
Tax accounting, adopt or change any taxable year or period,
enter into any closing agreement with respect to Taxes, file any
material Tax Return or material amended Tax Return, settle or
compromise any material claim for Taxes, or surrender any
material claim for a refund of Taxes.
(o) Commitments. Agree or commit to do
any of the foregoing.
3.2 Parent Forbearances. Parent
agrees that from the date hereof until the Effective Time,
except as expressly contemplated by this Plan or as Previously
Disclosed or as required pursuant to this Plan or by applicable
law, without the prior written consent of the Company (which
consent shall not be unreasonably withheld, delayed or
conditioned), it will not, and, in the case of (b) only,
will cause each of its subsidiaries (including Merger Sub) not
to:
(a) Governing Documents. Amend its
Governing Documents in a manner that would affect the holders of
Company Common Stock, Company Series A Preferred Stock or
Company Series B Preferred Stock adversely relative to
other holders of Parent Common Stock, or the Parent Preferred
Stock to be issued as Series A Preferred Consideration or
Series B Preferred Consideration, respectively.
A-11
(b) Adverse Actions. (1) Take any
action or knowingly fail to take any reasonable action that
would, or is reasonably likely to, prevent, impede or delay the
Merger from qualifying as a reorganization within the meaning of
Section 368(a) of the Internal Revenue Code, (2) take
any action that is reasonably likely to result in (A) any
of the conditions to the Merger set forth in Article VI not
being satisfied in a timely manner or (B) a material
violation of any provision of this Plan except, in each case, as
may be required by applicable law or regulation, or
(3) declare or pay any extraordinary or special dividends
on or make any other extraordinary or special distributions in
respect of any of its capital stock.
3.3 Coordination of
Dividends. Until the Effective Time, the
Company will coordinate with Parent regarding the declaration of
any dividends or other distributions with respect to the Company
Common Stock and the related record dates and payment dates, it
being intended that the holders of the Company Common Stock will
not receive more than one dividend, or fail to receive one
dividend, for any single calendar quarter on their shares of
Company Common Stock (including any shares of Parent Common
Stock received in exchange therefor in the Merger).
3.4 Cooperation on Tax
Matters. Company shall consult with Parent
regarding any significant transactions or Tax Return positions
reasonably expected to materially increase or affect the
Companys net operating losses or capital losses for any
taxable year or period and shall, in Companys reasonable
discretion, take account of Parents views on such matters
to the extent reasonably feasible. Until the Effective Time, the
Company shall cooperate in good faith with Parent on all Tax
matters, including requests by Parent that the Company or any of
its subsidiaries participate in certain reorganization
transactions prior to the Effective Time.
3.5 Integration Planning. To the
extent permitted by applicable law, commencing following the
date hereof, Parent and the Company shall cooperate and take all
actions reasonably necessary to facilitate the integration of
their respective businesses and operating systems, effective as
of the Closing Date, including by causing their respective
employees and officers, and their respective outside vendors and
contractors, to provide information, data and support and to
assist in performing such tasks, including equipment
installation, reasonably required to result in a successful
integration and conversion of Company Bank into Parent Bank at
the Closing. Without limiting the foregoing, subject to
applicable law, (a) the Company shall provide or cause to
be provided to Parent the information and files set forth on
Section 3.5 of Parents Disclosure Schedule within 10
business days following the date hereof, and (b) promptly
after execution of this Agreement, the parties shall prepare a
mutually acceptable conversion plan (as it may be modified,
amended and supplemented from time to time), covering, among
other matters, the conversion timetable, additional data, files
and information needed for integration and a definition of the
responsibilities and tasks that the parties will have in order
to effectuate the integration of their respective business and
operating systems by the Closing Date.
ARTICLE IV
Representations
4.1 Disclosure Schedules. On or
prior to the execution and delivery of this Plan, Parent has
delivered to the Company a schedule and the Company has
delivered to Parent a schedule (respectively, each schedule a
Disclosure Schedule) setting forth, among
other things, items the disclosure of which is necessary or
appropriate either in response to an express disclosure
requirement contained in a provision hereof or as an exception
to one or more representations contained in Section 4.3 or
to one or more of its covenants contained herein; provided
that the mere inclusion of an item in a Disclosure Schedule
as an exception to a representation shall not be deemed an
admission by a party that such item was required to be disclosed
therein.
4.2 Standard. (a) For all
purposes of this Plan, no representation of Parent or the
Company contained in Section 4.3 (other than the
representations contained in Section 4.3(b), which shall be
true and correct in all material respects, and
Sections 4.3(g)(3)(B) and 4.3(g)(4), which shall be true
and correct in all respects) shall be deemed untrue, and no
party hereto shall be deemed to have breached a representation,
as a consequence of the existence of any fact, event or
circumstance unless such fact, circumstance or event,
individually or taken together with all other facts, events or
circumstances inconsistent with any representation contained in
Section 4.3 (read for this purpose
A-12
without regard to any individual reference to
materiality or Material Adverse Effect
set forth therein) has had or is reasonably likely to have a
Material Adverse Effect with respect to Parent or the Company,
as the case may be.
(b) The term Material Adverse Effect
means an effect which (1) is materially adverse to the
business, financial condition or results of operations of
Parent, the Surviving Corporation or the Company, as the context
may dictate, and its subsidiaries, taken as a whole, or
(2) materially impairs the ability of Parent or the Company
to consummate the Merger; provided, however, that
in determining whether a Material Adverse Effect has occurred
under clause (1) there shall be excluded any effect to the
extent attributable to or resulting from (A) any changes in
laws, regulations or interpretations of laws or regulations
generally affecting the banking or bank holding company
businesses, (B) any change in generally accepted accounting
principles or regulatory accounting requirements, generally
affecting the banking or bank holding company businesses,
(C) events, conditions or trends in economic, business or
financial conditions generally or affecting the banking or bank
holding company businesses generally (including changes in
interest rates or securities ratings and changes in the markets
for securities), (D) changes in national or international
political or social conditions including the engagement by the
United States in hostilities, whether or not pursuant to the
declaration of a national emergency or war, or the occurrence of
any military or terrorist attack upon or within the United
States, or any of its territories, possessions or diplomatic or
consular offices or upon any military installation, equipment or
personnel of the United States, (E) actions or omissions of
Parent or the Company taken with the prior written consent of
the other party or actions that are taken by the parties,
consistent with the terms hereof, to consummate the transactions
contemplated hereby, or (F) the announcement of this Plan
and the transactions contemplated hereby, unless such effect
attributable to or resulting from any of clauses (A), (B),
(C) or (D) is materially disproportionately adverse to
the business or financial condition or results of operations of
Parent or the Company, as the context may dictate, as compared
to other companies in the banking or bank holding company
businesses.
4.3 Representations. Except as
Previously Disclosed (which phrase shall include, in this
Section 4.3, all items disclosed or contemplated by the
Companys or Parents public Regulatory Filings made
prior to the date hereof (but in each case excluding any
exhibits, risk factor disclosures contained under the heading
Risk Factors and any disclosure of risks included in
any forward-looking statements disclaimer)), the
Company hereby represents and warrants to Parent, and Parent
hereby represents and warrants to the Company, to the extent
applicable, in each case with respect to itself and its
subsidiaries, as follows:
(a) Organization, Standing and
Authority. It is a corporation duly organized,
validly existing and in good standing under the laws of the
jurisdiction of its incorporation. It is duly qualified to do
business and is in good standing in the states of the United
States and any foreign jurisdictions where its ownership or
leasing of property or assets or the conduct of its business
requires it to be so qualified.
(b) Capital Stock.
(1) The information in Recital A, in the case of Parent,
and in Recital B, in the case of the Company, is true and
correct.
(2) Its outstanding shares of capital stock have been duly
authorized and are validly issued and outstanding, fully paid
and nonassessable, not subject to any preemptive rights and were
not issued in violation of any preemptive rights.
(3) Except as set forth in this Plan or as Previously
Disclosed, except, in the case of Parent, pursuant to Parent
Preferred Stock and except, in the case of the Company, pursuant
to Company Preferred Stock or the Warrant, there are no shares
of its common stock authorized and reserved for issuance, it
does not have any Rights outstanding with respect to its capital
stock, and it does not have any commitment to authorize, issue
or sell any of its capital stock or Rights, except pursuant to
this Plan, outstanding options to purchase its capital stock and
the Benefit Plans. As used herein, Rights
means, with respect to any Person, securities or obligations
convertible into or exercisable or exchangeable for, or giving
any Person any right to subscribe for or acquire, or any
options, calls or commitments relating to, or any stock
appreciation right or other instrument the value of which is
determined in whole or in part by reference to the market price
or value of, shares of capital stock or earnings of such Person.
In the case of the Company, no stock option granted under any
Benefit Plan has any reload feature nor does any
Person have any right to be granted a stock option with such a
feature. In the case of the Company, no subsidiary of the
Company owns shares of Company Common Stock.
A-13
(4) In the case of Parent, any shares of Parent Common
Stock or Parent Preferred Stock issued in connection with the
Merger have been duly authorized and when issued in the Merger
will be validly issued and outstanding, fully paid and
nonassessable, not subject to any preemptive rights and not
issued in violation of any preemptive rights.
(5) In the case of the Company, none of its bonds,
debentures, notes or other indebtedness has the right to vote
(or is convertible into, or exchangeable for, securities having
the right to vote) on any matters on which its stockholders may
vote, and neither it nor any of its subsidiaries is a party to
any voting agreement with respect to the voting of any of its
capital stock, voting securities, or other equity interests.
Except for this Agreement, neither the Company nor any of its
subsidiaries is a party to any agreement pursuant to which any
Person is entitled to elect, designate or nominate any director
of it or its subsidiaries. Neither the Company nor any of its
subsidiaries has any outstanding obligations to repurchase,
redeem or otherwise acquire any of its shares of capital stock,
voting securities, other equity interests or Rights (other than
a cashless exercise of Company Options outstanding, and in
accordance with the terms in effect, as of the date hereof).
(c) Subsidiaries.
(1) The Company has Previously Disclosed a list of all of
its subsidiaries.
(2) In the case of the Company, (A) it owns, directly
or indirectly, all the issued and outstanding equity securities
of each of its subsidiaries, (B) no equity securities of
any of its subsidiaries are or may become required to be issued
(other than to it or its wholly owned subsidiaries) by reason of
any Right or otherwise, (C) there are no contracts,
commitments, understandings or arrangements by which any of its
subsidiaries is or may be bound to sell or otherwise transfer
any equity securities of any its subsidiaries (other than to it
or its wholly owned subsidiaries), (D) there are no
contracts, commitments, understandings, or arrangements relating
to its rights to vote or to dispose of such securities, and
(E) all the equity securities of each subsidiary held by it
or its subsidiaries have been duly authorized and are validly
issued and outstanding, fully paid and nonassessable (except as
provided under state law) and are owned by it or its
subsidiaries free and clear of all liens, pledges, security
interests, claims, provisions, preemptive or subscriptive rights
or other encumbrances or restrictions of any kind or Rights
(Liens).
(3) In the case of the Company, each of its subsidiaries
has been duly organized and is validly existing in good standing
under the laws of the jurisdiction of its organization, and is
duly qualified to do business and in good standing in the
jurisdictions where its ownership or leasing of property or the
conduct of its business requires it to be so qualified.
(d) Corporate Power. It and each of its
subsidiaries has the corporate or other power and authority to
carry on its business as it is now being conducted and to own
all its properties and assets; and it has the corporate power
and authority to execute, deliver and perform its obligations
under this Plan and to consummate the transactions contemplated
hereby and thereby.
(e) Corporate Authority.
(1) Subject to receipt of the stockholder approval
described in Section 4.3(e)(3), this Plan and the
transactions contemplated hereby and thereby have been
authorized by all necessary corporate action. This Plan is its
valid and legally binding obligation, enforceable in accordance
with its terms (except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer and similar laws of general applicability
relating to or affecting creditors rights or by general
equity principles).
(2) In the case of Parent, no vote of the holders of any
class or series of Parents capital stock is necessary to
approve and adopt this Plan and the transactions contemplated
hereby.
(3) In the case of the Company, the affirmative vote of the
holders of two-thirds of the issued and outstanding shares of
Company Common Stock entitled to vote to adopt this Plan is the
only vote of the holders of any class or series of the
Companys capital stock necessary to approve and adopt this
Plan and the transactions contemplated hereby.
A-14
(f) Regulatory Approvals; No Defaults.
(1) No consents or approvals of, or filings or
registrations with, any governmental or regulatory authority,
agency, court, commission or other entity, domestic or foreign
(Governmental Entity) or with any third party
are required to be made or obtained by it or any of its
subsidiaries in connection with the execution, delivery or
performance by it of this Plan or to consummate the Merger
except for (A) filings and approvals of applications with
and by federal and state banking authorities as Previously
Disclosed, (B) filings with the Securities and Exchange
Commission (SEC) and state securities
authorities, (C) the stockholder approval described in
Section 5.2(a), (D) the filing of the Articles of
Merger with the Maryland Department pursuant to
Section 3-107
of the MGCL, and (E) the execution and delivery by the
Company and the relevant trustees or agents of supplemental
indentures and relevant documents under the provisions of the
Companys trust preferred securities instruments and the
Company and its subsidiaries debt indentures set forth on
Section 5.14 of the Companys Disclosure Schedule.
(2) Subject to receipt of the regulatory approvals and
completion of the other matters referred to in the preceding
paragraph (the Regulatory Approvals), and the
expiration of related waiting periods, and required filings
under federal and state securities laws, the execution, delivery
and performance of this Plan and the consummation of the
transactions contemplated hereby do not and will not
(A) constitute a breach or violation of, or a default
under, or give rise to any Lien, any acceleration of remedies,
any right of termination or the loss of any benefit under, any
law, rule or regulation or any judgment, decree, order,
governmental permit or license, or material agreement, indenture
or instrument of it or of any of its subsidiaries or to which it
or any of its subsidiaries or properties is subject or bound,
(B) constitute a breach or violation of, or a default
under, its Governing Documents or (C) require any consent
or approval under any such law, rule, regulation, judgment,
decree, order, governmental permit or license, material
agreement, indenture or instrument.
(3) As of the date hereof, it (a) knows of no reason
why (1) all Regulatory Approvals from any Governmental
Entity required for the consummation of the transactions
contemplated by this Plan should not be obtained on a timely
basis or (2) the opinion of tax counsel referred to, in the
case of Parent, in Section 6.2(c) and, in the case of the
Company, in Section 6.3(c) should not be obtained on a
timely basis and (b) has no reason to believe that the
Merger will fail to qualify as a reorganization under
Section 368(a) of the Internal Revenue Code.
(g) Financial Reports and Regulatory Documents; Material
Adverse Effect.
(1) Its Annual Report on
Form 10-K
for the fiscal year ended December 31, 2007, and all other
reports, registration statements, definitive proxy statements or
information statements filed by it or any of its subsidiaries
subsequent to December 31, 2007 under the Securities Act of
1933, as amended (Securities Act), or under
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act or
under the securities regulations of the SEC, in the form filed
(collectively, its Regulatory Filings) with
the SEC as of the date filed, (A) complied in all material
respects as to form with the applicable requirements under the
Securities Act or the Exchange Act, as the case may be, and
(B) did not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein
or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and
each of the balance sheets or statements of condition contained
in or incorporated by reference into any such Regulatory Filing
(including the related notes and schedules thereto) fairly
presented in all material respects its financial position and
that of its subsidiaries as of its date, and each of the
statements of income and changes in stockholders equity
and cash flows or equivalent statements in such Regulatory
Filings (including any related notes and schedules thereto)
fairly presented in all material respects, the results of
operations, changes in stockholders equity and changes in
cash flows, as the case may be, of it and its subsidiaries for
the periods to which they relate, in each case in accordance
with GAAP consistently applied during the periods involved,
except in each case as may be noted therein, subject to normal
year-end audit adjustments in the case of unaudited statements.
(2) Since December 31, 2007, it and its subsidiaries
have not incurred any liability other than in the ordinary
course of business consistent with past practice.
A-15
(3) In the case of the Company only, since
December 31, 2007, (A) it and its subsidiaries have
conducted their businesses in the ordinary and usual course
consistent with past practice (excluding the incurrence of
expenses related to this Plan and the transactions contemplated
hereby) and (B) no event has occurred or circumstance
arisen that, individually or taken together with all other
facts, circumstances and events (described in any paragraph of
Section 4.3 or otherwise), has had or is reasonably likely
to have a Material Adverse Effect with respect to it.
(4) In the case of Parent only, since December 31,
2007, no event has occurred or circumstance arisen that,
individually or taken together with all other facts,
circumstances and events (described in any paragraph of
Section 4.3 or otherwise), has had or is reasonably likely
to have a Material Adverse Effect with respect to it.
(h) Litigation. Except as Previously
Disclosed, there is no suit, action or proceeding pending or, to
the knowledge of it, threatened against or affecting it or any
of its subsidiaries (and it is not aware of any basis for any
such suit, action or proceeding) (1) that, individually or
in the aggregate, is material to it and its subsidiaries, taken
as a whole, or (2) that is reasonably likely to prevent or
delay it in any material respect from performing its obligations
under, or consummating the transactions contemplated by, this
Plan.
(i) Regulatory Matters.
(1) Except as Previously Disclosed, neither it nor any of
its subsidiaries is a party to or is subject to any written
order, decree, agreement, memorandum of understanding or similar
arrangement with, or a commitment letter or similar submission
to, or extraordinary supervisory letter from, any Governmental
Entity charged with the supervision or regulation of financial
institutions or issuers of securities or engaged in the
insurance of deposits or the supervision or regulation of it or
any of its subsidiaries (collectively, the Regulatory
Authorities).
(2) Except as Previously Disclosed, neither it nor any of
its subsidiaries has been advised by any Regulatory Authority
that such Regulatory Authority is contemplating issuing or
requesting (or is considering the appropriateness of issuing or
requesting) any such written order, decree, agreement,
memorandum of understanding, commitment letter, supervisory
letter or similar submission. Except as Previously Disclosed,
there are no formal or informal investigations relating to any
material regulatory matters pending before any Governmental
Entity with respect to it or its subsidiaries.
(j) Compliance with Laws. Except as
Previously Disclosed, it and each of its subsidiaries:
(1) conducts its business in compliance with all applicable
federal, state, local and foreign statutes, laws, regulations,
ordinances, rules, judgments, orders or decrees applicable
thereto or to the employees conducting such businesses,
including, without limitation, the Sarbanes-Oxley 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 of 2001, the Bank Secrecy Act and all other applicable fair
lending laws and other laws relating to discriminatory business
practices; and
(2) has all permits, licenses, authorizations, orders and
approvals of, and has made all filings, applications and
registrations with, all Governmental Entities that are required
in order to permit them to own or lease their properties and to
conduct their businesses as presently conducted; all such
permits, licenses, certificates of authority, orders and
approvals are in full force and effect and, to its knowledge, no
suspension or cancellation of any of them is threatened.
(k) Material Contracts; Defaults. Except
for those agreements and other documents filed as exhibits to
its Regulatory Filings, as of the date hereof, neither it nor
any of its subsidiaries is a party to, bound by or subject to
any agreement, contract, arrangement, commitment or
understanding (1) that is a material contract
within the meaning of Item 601(b)(10) of the SECs
Regulation S-K,
(2) in the case of the Company, (A) that contains
(x) any non-competition or exclusive dealing agreements or
other agreement or obligation which purports to limit or
restrict in any respect the ability of the Company or its
subsidiaries (or, following consummation of the transactions
contemplated hereby, Parent or any of its subsidiaries) to
solicit customers or the manner in which, or the localities in
which, all or any portion of the business of the Company and its
A-16
subsidiaries (or, following consummation of the transactions
contemplated hereby, Parent or any of its subsidiaries) is or
would be conducted or (y) any agreement that grants any
right of first refusal or right of first offer or similar right
or that limits or purports to limit the ability of the Company
or any of its subsidiaries (or, following consummation of the
transactions contemplated hereby, Parent or any of its
subsidiaries) to own, operate, sell, transfer, pledge or
otherwise dispose of any assets or business, (B) that
involves performance of services or delivery of goods or
materials to, or expenditures by, the Company or any of its
subsidiaries of an amount or value in excess of $200,000 over
its remaining term, other than loans, funding arrangements and
other transactions made in the ordinary course of the banking
business, or any such agreement, contract, arrangement,
commitment or understanding that is terminable on 60 days
or less notice without payment of any termination fee or
penalty, (C) with respect to the employment of any
directors, officers, employees or consultants, other than in the
ordinary course of business consistent with past practice,
(D) with or to a labor union or guild (including any
collective bargaining agreement), (E) containing a
most favored nation clause or other similar term
providing preferential pricing or treatment to a party (other
than the Company or its subsidiaries) that is material to the
Company or its subsidiaries, or (F) providing for the
indemnification by the Company or its subsidiaries of any Person
(other than customary agreements with vendors providing goods or
services to the Company or its subsidiaries where the potential
indemnity obligations thereunder are not reasonably expected to
be material to the Company). Each agreement, contract,
arrangement, commitment or understanding of the type described
in this Section 4.3(k), whether or not Previously
Disclosed, is referred to as a Company Material
Contract. Neither the Company nor any of its
subsidiaries is in default under any Company Material Contract,
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.
(l) No Brokers; Fairness Opinion.
(1) No action has been taken by it that would give rise to
any claim against any party hereto for a brokerage commission,
finders fee or other like payment with respect to the
transactions contemplated by this Plan, except as Previously
Disclosed.
(2) Prior to the execution of this Plan, the Company has
received an opinion from Sandler ONeill &
Partners, L.P. to the effect that as of the date thereof and
subject to the matters set forth therein, the Exchange Ratio is
fair, from a financial point of view, to the holders of Company
Common Stock. Such opinion has not been amended or rescinded as
of the date of this Plan.
(m) Employee Benefit Plans. In the case
of the Company,
(1) All benefit, employment, severance, change in control
and other compensation and benefits plans, contracts,
agreements, policies or arrangements covering the Companys
and each of their subsidiaries current or former employees of it
and its subsidiaries (the Employees) and its
current or former directors, including, but not limited to,
employee benefit plans within the meaning of
Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended (ERISA), and supplemental
pension and executive retirement, qualified and non-qualified
deferred compensation, rabbi trust, stock option, stock
purchase, stock appreciation rights, stock based, incentive and
bonus plans and agreements (the Benefit
Plans), other than Benefit Plans that are not
material, are Previously Disclosed. Copies of all Benefit Plans
and all amendments thereto, all summary plan descriptions, the
most recently filed Form 5500 and the most recent IRS
determination letter have been made available to the other party.
(2) All Benefit Plans, other than multiemployer
plans within the meaning of Section 3(37) of ERISA
(each a Multiemployer Plan) are in
substantial compliance with ERISA, the Internal Revenue Code and
other applicable laws. Each Benefit Plan which is subject to
ERISA (the ERISA Plans) that is an
employee pension benefit plan within the meaning of
Section 3(2) of ERISA (Pension Plan),
and that is intended to be qualified under Section 401(a)
of the Internal Revenue Code has received a favorable
determination letter from the Internal Revenue Service (the
IRS), and it is not aware of any
circumstances that are reasonably likely to result in the loss
of the qualification of such plan under Section 401(a) of
the Internal Revenue Code.
(3) No liability under Subtitle C or D of Title IV of
ERISA has been or is expected to be incurred by the Company or
any of its subsidiaries with respect to any ongoing, frozen or
terminated single-employer plan,
A-17
within the meaning of Section 4001(a)(15) of ERISA,
currently or formerly maintained by any of them, or the
single-employer plan of any entity which is considered one
employer with the Company under Section 4001 of ERISA or
Section 414 of the Internal Revenue Code (an ERISA
Affiliate) (each a Single-Employer
Plan). With respect to each Single-Employer Plan,
(i) there does not exist any accumulated funding deficiency
within the meaning of Section 412 of the Code or
Section 302 of ERISA, whether or not waived; (ii) the
fair market value of the assets of such Single-Employer Plan
equals or exceeds the actuarial present value of all accrued
benefits under such Plan (whether or not vested) on a
termination basis; (iii) no reportable event within the
meaning of Section 4043(c) of ERISA for which the
30-day
notice requirement has not been waived has occurred or is
reasonably expected to occur; and (iv) the PBGC has not
instituted proceedings to terminate any such Single-Employer
Plan and, to the Companys knowledge, no condition exists
that presents a reasonable risk that such proceedings will be
instituted or which would constitute grounds under
Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any such Single-Employer
Plan. None of the Company, its subsidiaries or any of their
respective ERISA Affiliates has contributed to a Multiemployer
Plan or a plan that has two or more contributing sponsors at
least two of which are not under common control, within the
meaning of Section 4063 of ERISA within the past five years.
(4) All material contributions required to be made under
each Benefit Plan have been timely made and all obligations to
make contributions in respect of each Benefit Plan have been
properly accrued and reflected in the Regulatory Filings as of
the date of such filings.
(5) As of the date hereof, there is no material pending or,
to the knowledge of the Company threatened, litigation relating
to the Benefit Plans. Neither the Company nor any of its
subsidiaries has any obligations for retiree health and life
benefits under any ERISA Plan or collective bargaining agreement.
(6) Neither the execution of this Plan, stockholder
approval of this Plan nor the consummation of the transactions
contemplated hereby will (w) entitle any of its employees
or any of its subsidiaries to severance pay or any increase in
severance pay upon any termination of employment after the date
hereof, (x) accelerate the time of payment or vesting or
result in any payment or funding (through a grantor trust or
otherwise) of compensation or benefits under, increase the
amount payable or result in any other obligation pursuant to,
any of the Benefit Plans, or (y) result in payments under
any of the Benefit Plans which would not be deductible under
Section 162(m) or Section 280G of the Internal Revenue
Code.
(n) Labor Matters. In the case of the
Company, neither it nor any of its subsidiaries is a party to or
is bound by any collective bargaining agreement, contract or
other agreement or understanding with a labor union or labor
organization, nor is it or any of its subsidiaries the subject
of a proceeding asserting that it or any such subsidiary has
committed an unfair labor practice (within the meaning of the
National Labor Relations Act) or seeking to compel it or any of
its subsidiaries to bargain with any labor organization as to
wages or conditions of employment, nor is there any strike or
other material labor dispute involving it or any of its
subsidiaries pending or, to its knowledge, threatened, nor to
its knowledge is there any activity involving its or any of its
subsidiaries employees seeking to certify a collective
bargaining unit or engaging in other organizational activity.
(o) Environmental Matters. To its
knowledge, neither its conduct nor its operation or the conduct
or operation of its subsidiaries nor any condition of any
property presently or previously owned, leased or operated by
any of them (including, without limitation, in a fiduciary or
agency capacity), violates or violated Environmental Laws and no
condition has existed or event has occurred with respect to any
of them or any such property that, with notice or the passage of
time, or both, is reasonably likely to result in liability under
Environmental Laws. To its knowledge, no property on which it or
any of its subsidiaries holds a Lien, violates or violated
Environmental Laws and no condition has existed or event has
occurred with respect to any such property that, with notice or
the passage of time, or both, is reasonably likely to result in
liability under Environmental Laws. Neither it nor any of its
subsidiaries has received any written notice from any Person
that it or its subsidiaries or the operation or condition of any
property ever owned, leased, operated, or held as collateral or
in a fiduciary capacity by any of them are or were in violation
of or otherwise are alleged to have liability under any
Environmental Law, including, but not limited to, responsibility
(or potential responsibility) for the cleanup or other
remediation of any pollutants, contaminants, or hazardous or
toxic wastes, substances
A-18
or materials at, on, beneath, or originating from, any such
property. Environmental Laws means all
applicable local, state and federal environmental, health and
safety laws and regulations, including the Resource Conservation
and Recovery Act, the Comprehensive Environmental Response,
Compensation, and Liability Act, the Clean Water Act, the
Federal Clean Air Act, and the Occupational Safety and Health
Act, each as amended, regulations promulgated thereunder, and
state counterparts.
(p) Tax Matters.
(1) (A) All material returns, amended returns or other
reports (including elections, declarations, disclosures,
schedules, estimates and information returns) with respect to
Taxes (as hereinafter defined) (Tax Returns)
that are required to be filed (taking into account any
extensions of time within which to file) by or with respect to
it and its subsidiaries have been duly and timely filed, and all
such Tax Returns are complete and accurate in all respects,
(B) all Taxes shown to be due on the Tax Returns referred
to in clause (A) have been duly and timely paid in full,
(C) all Taxes that it or any of its subsidiaries is
obligated to withhold from amounts owing to any employee,
creditor or third party have been paid over to the proper
Governmental Entity in a timely manner, to the extent due and
payable, and (D) neither it nor any of its subsidiaries has
taken or agreed to take any action or is aware of any fact or
circumstance that would prevent or impede, or would be
reasonably likely to prevent or impede, the Merger from
qualifying as a reorganization under Section 368(a) of the
Internal Revenue Code.
(2) In the case of the Company and its subsidiaries,
(A) the Tax Returns referred to in clause (A) of
subsection (p)(1) have been examined by the Internal Revenue
Service or the appropriate Tax authority or the period for
assessment of the Taxes in respect of which such Tax Returns
were required to be filed has expired, (B) all deficiencies
asserted or assessments made as a result of such examinations
have been duly and timely paid in full or are being contested in
good faith through appropriate proceedings, (C) no issues
that have been raised by the relevant taxing authority in
connection with the examination of any of the Tax Returns
referred to in clause (A) of subsection (p)(1) are
currently pending, and (D) no extensions or waivers of
statutes of limitation have been given by or requested with
respect to any of its Taxes or those of its subsidiaries.
(3) In the case of the Company, (A) it has made
available to Parent true and correct copies of the
U.S. federal income Tax Returns filed by it and its
subsidiaries for each of the three most recent fiscal years
ended; (B) it has made provision in accordance with GAAP,
in the financial statements included in the Regulatory Filings
filed prior to the date hereof, for all Taxes that accrued on or
before the end of the most recent period covered by its
Regulatory Filings filed prior to the date hereof;
(C) neither it nor any of its subsidiaries is a party to
any Tax allocation or sharing agreement, is or has been a member
of an affiliated group filing consolidated or combined Tax
returns (other than a group of which the Company is or was the
common parent) or otherwise has any liability for the Taxes of
any Person (other than its own Taxes and those of its
subsidiaries); (D) neither it nor any of its subsidiaries
has participated in a listed transaction as defined
in Treasury
Regulation Section 1.6011-4;
(E) no Liens for Taxes exist with respect to any of its
assets or properties or those of its subsidiaries, except for
statutory Liens for Taxes not yet due and payable or that are
being contested in good faith and reserved for in accordance
with GAAP; and (F) neither it nor any of its subsidiaries
has been a party to any distribution occurring during the last
three years in which the parties to such distribution treated
the distribution as one to which Section 355 of the
Internal Revenue Code applied.
(4) As used herein, Tax and
Taxes means all federal, state, local or
foreign taxes, charges, fees, levies or other assessments,
however denominated, including, without limitation, all net
income, gross income, gains, gross receipts, sales, use, ad
valorem, goods and services, capital, production, transfer,
franchise, windfall profits, license, withholding, payroll,
employment, disability, employer health, excise, estimated,
severance, stamp, occupation, property, environmental,
unemployment or other taxes, custom duties, fees, assessments or
charges of any kind whatsoever, together with any interest and
any penalties, additions to tax or additional amounts imposed by
any taxing authority whether arising before, on or after the
Closing Date.
(q) Derivative Instruments. All interest
rate swaps, caps, floors, option agreements, futures and forward
contracts and other similar risk management arrangements,
whether entered into for its own account, or for the account of
one or more of its subsidiaries or their customers, if any, were
entered into (1) in accordance with prudent business
practices and all applicable laws, rules, regulations and
regulatory policies
A-19
and (2) with counterparties believed to be financially
responsible at the time; and each of them constitutes the valid
and legally binding obligation of such party or one of its
subsidiaries, enforceable in accordance with its terms (except
as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer and
similar laws of general applicability relating to or affecting
creditors rights or by general equity principles), and are
in full force and effect. Neither it nor its subsidiaries, nor
to its knowledge, any other party thereto, is in breach of any
of its obligations under any such agreement or arrangement.
(r) Trust Business. It and each of
its Subsidiaries has properly administered all accounts for
which it acts as a fiduciary, including but not limited to,
accounts for which it serves as trustee, agent, custodian,
personal representative, guardian, conservator or investment
advisor, in accordance with the terms of the governing documents
and applicable laws and regulations. Neither it nor its
subsidiaries, nor has any of their respective directors,
officers or employees, committed any breach of trust with
respect to any such fiduciary account and the records for each
such fiduciary account.
(s) Insurance. It and its subsidiaries
are insured with reputable insurers against such risks and in
such amounts as its management reasonably has determined to be
prudent in accordance with industry practices. All of the
insurance policies, binders, or bonds maintained by it or its
subsidiaries are in full force and effect; it and its
subsidiaries are not in material default thereunder.
(t) Takeover Laws and Provisions. It has
taken all action required to be taken by it in order to exempt
this Plan and the transactions contemplated hereby from, and
this Plan and the transactions contemplated hereby are exempt
from, the requirements of an