(c) Subject to the provisions of this Agreement, at the Effective Time, automatically by virtue of the Merger and without any action on the part of any Person, each share of William Penn Common Stock (excluding Treasury Stock, Mid Penn Owned Shares and ESOP Loan Shares) issued and outstanding immediately prior to the Effective Time shall be converted into the right to receive 0.426 shares of Mid Penn Common Stock (the “Exchange Ratio”). The shares of Mid Penn Common Stock to be issued to holders of William Penn Common Stock as set forth in this Article III is referred to as the “Merger Consideration.” (d) After the Effective Time, shares of William Penn Common Stock shall be no longer outstanding and shall automatically be cancelled and shall cease to exist, and shall represent thereafter by operation of this section only the right to receive the Merger Consideration as set forth in this Article III and, if applicable, any dividends or distributions with respect thereto or any dividends or distributions with a record date prior to the Effective Time that were declared or made by William Penn on such shares of William Penn Common Stock in accordance with this Agreement on or prior to the Effective Time. (e) Stock Options. (1) At the Effective Time, each option granted by William Penn to purchase shares of William Penn Common Stock (“William Penn Option”) which is outstanding and unexercised immediately prior to the Effective Time, whether or not then vested and exercisable, shall cease to represent a right to acquire shares of William Penn Common Stock and shall be converted automatically into an option to purchase shares of Mid Penn Common Stock, and Mid Penn shall assume each William Penn Option, and, thereafter, each such assumed William Penn Option shall continue to be subject to the terms of the applicable William Penn Benefit Plan or other agreement by which it is evidenced, except that from and after the Effective Time, (i) Mid Penn and a disinterested committee of the Mid Penn board of directors shall be substituted for William Penn and the committee of the William Penn board of directors administering such William Penn Benefit Plan, (ii) each William Penn Option assumed by Mid Penn may be exercised solely for shares of Mid Penn Common Stock, (iii) the number of shares of Mid Penn Common Stock subject to such William Penn Option shall be equal to the number of shares of William Penn Common Stock subject to such William Penn Option immediately prior to the Effective Time multiplied by the Exchange Ratio, provided that any fractional shares of Mid Penn Common Stock resulting from such multiplication shall be rounded down to the nearest share and (iv) the per share exercise price under each such William Penn Option shall be adjusted by dividing the per share exercise price under each such William Penn Option by the Exchange Ratio, provided that such exercise price shall be rounded up to the nearest cent. Notwithstanding clauses (iii) and (iv) of the immediately preceding sentence, each William Penn Option which is an “incentive stock option” shall be adjusted as required by Sections 409A and 424 of the Code, and the regulations and guidance promulgated thereunder, so as not to constitute a modification, extension or renewal of the option within the meaning of Sections 409A and 424(h) of the Code. Mid Penn and William Penn agree to take all necessary steps to effect the foregoing provisions of this Section 3.1(e)(1), including in the case of Mid Penn taking all corporate action necessary to reserve for issuance a sufficient number of shares of Mid Penn Common Stock for delivery upon exercise of the options to issue shares of Mid Penn Common Stock issued in accordance herewith. (2) As soon as practicable after the Effective Time, Mid Penn shall use its reasonable efforts to file a registration statement on Form S-3 or Form S-8, as the case may be (or any successor or other appropriate forms), with respect to the shares of Mid Penn Common Stock subject to the options referred to in Section 3.1(e)(1) and shall use its reasonable efforts to maintain the current status of the prospectus or prospectuses contained therein for so long as such options remain outstanding in the case of a Form S-8 or, in the case of a Form S-3, until the shares subject to such options may be sold without a further holding period under Rule 144 of the Securities Act. (3) As soon as practicable after the Effective Time, Mid Penn shall deliver to the holders of William Penn Options at the Effective Time appropriate notices setting forth the effect of the adjustments described in Section 3.1(e)(1) and advising of the registration of the shares of Mid Penn Common Stock issuable upon exercise thereof after consummation of the Merger. A-12
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