UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
(Rule 13D-101)
Information to be included in statements
filed pursuant to Rule 13d-1(a) and
amendments thereto filed pursuant
to Rule 13d-2(a)
BATH NATIONAL CORPORATION
(Name of Issuer)
COMMON STOCK, PAR VALUE $5.00 PER SHARE
(Title of Class of Securities)
07-1122105
(CUSIP Number)
Bruce J. Baker Peter G. Humphrey
Nixon Peabody LLP Financial Institutions, Inc.
1300 Clinton Square 220 Liberty Street
Rochester, NY 14604 Warsaw, NY 14569
716-263-1232 716-786-1100
Hugh T. Wilkinson Douglas McCabe
Elias Matz, Tiernan & Herrick, L.L.P. Bath National Corporation
12th Floor 44 Liberty Street
734 15th Street, N.W. Bath, NY 14810
Washington, D.C. 20005 607-776-9661
202-347-0300
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
November 2, 2000
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(e), (f), or (g), check the following box / /.
NOTE: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See ss. 240.13d-7(b) for other
parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter the
disclosures provided in a prior cover page.
<PAGE>
The information required in the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
(Continued on following pages)
<PAGE>
--------------------------------------------------------------------------------
CUSIP NO. 07-1122105
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSON
IRS NO. OF ABOVE PERSON (ENTITIES ONLY)
Financial Institutions, Inc.
16-0816610
---------- --------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(A) / /
(B) / X /
---------- --------------------------------------------------------------
3 SEC USE ONLY
---------- --------------------------------------------------------------
4 SOURCE OF FUNDS
OO
---------- --------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(D) OR 2(E) / /
---------- --------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
State of New York
---------- --------------------------------------------------------------
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:
---------- --------------------------------------------------------------
7 SOLE VOTING POWER
196,000
---------- --------------------------------------------------------------
<PAGE>
8 SHARED VOTING POWER
86,255*
---------- --------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
196,000
---------- --------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
---------- --------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY REPORTING
PERSON
282,255
---------- --------------------------------------------------------------
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES / /
---------- --------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
18.8%
---------- --------------------------------------------------------------
14 TYPE OF REPORTING PERSON
CO
---------- --------------------------------------------------------------
*Financial Institutions, Inc. has an option to purchase 196,000 shares of the
common stock of the common stock of Bath National Corporation ("Bath")
exercisable upon the occurrence of certain events.
**Financial Institutions, Inc. and Peter G. Humphrey were each named as proxy
and attorney-in-fact to vote certain shares of the common stock of Bath National
Corporation with respect to certain matters relating to the merger of
wholly-owned subsidiary of Financial Institutions, Inc. with and into Bath.
<PAGE>
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CUSIP NO. 07-1122105
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSON
IRS NO. OF ABOVE PERSON (ENTITIES ONLY)
Peter G. Humphrey
---------- --------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(A) / /
(B) / X /
---------- --------------------------------------------------------------
3 SEC USE ONLY
---------- --------------------------------------------------------------
4 SOURCE OF FUNDS
OO
---------- --------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(D) OR 2(E) / /
---------- --------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
---------- --------------------------------------------------------------
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:
---------- --------------------------------------------------------------
7 SOLE VOTING POWER
0
---------- --------------------------------------------------------------
<PAGE>
8 SHARED VOTING POWER
86,255
---------- --------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
0
---------- --------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
---------- --------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY REPORTING
PERSON
86,255
---------- --------------------------------------------------------------
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES / /
---------- --------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.7%
---------- --------------------------------------------------------------
14 TYPE OF REPORTING PERSON
IN
---------- --------------------------------------------------------------
*Financial Institutions, Inc. and Peter G. Humphrey were each named as proxy and
attorney-in-fact to vote certain shares of the common stock of Bath National
Corporation ("Bath") with respect to certain matters relating to the merger of
wholly-owned subsidiary of Financial Institutions, Inc. with and into Bath.
<PAGE>
--------------------------------------------------------------------------------
CUSIP NO. 07-1122105
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSON
IRS NO. OF ABOVE PERSON (ENTITIES ONLY)
Laverne H. Billings
---------- --------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(A) / /
(B) / X /
---------- --------------------------------------------------------------
3 SEC USE ONLY
---------- --------------------------------------------------------------
4 SOURCE OF FUNDS
OO
---------- --------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(D) OR 2(E) / /
---------- --------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
---------- --------------------------------------------------------------
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:
---------- --------------------------------------------------------------
7 SOLE VOTING POWER
0
---------- --------------------------------------------------------------
<PAGE>
8 SHARED VOTING POWER
7,070*
---------- --------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
7,070
---------- --------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
---------- --------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY REPORTING
PERSON
7,070
---------- --------------------------------------------------------------
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES / /
---------- --------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.4%
---------- --------------------------------------------------------------
14 TYPE OF REPORTING PERSON
IN
---------- --------------------------------------------------------------
*Financial Institutions, Inc. and Peter G. Humphrey were each named as proxy and
attorney-in-fact to vote certain shares of the common stock of Bath National
Corporation ("Bath") with respect to certain matters relating to the merger of
wholly-owned subsidiary of Financial Institutions, Inc. with and into Bath.
<PAGE>
--------------------------------------------------------------------------------
CUSIP NO. 07-1122105
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSON
IRS NO. OF ABOVE PERSON (ENTITIES ONLY)
Theodore P. Capron
---------- --------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(A) / /
(B) / X /
---------- --------------------------------------------------------------
3 SEC USE ONLY
---------- --------------------------------------------------------------
4 SOURCE OF FUNDS
OO
---------- --------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(D) OR 2(E) / /
---------- --------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
---------- --------------------------------------------------------------
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:
---------- --------------------------------------------------------------
7 SOLE VOTING POWER
0
---------- --------------------------------------------------------------
<PAGE>
8 SHARED VOTING POWER
2,400*
---------- --------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
2,400
---------- --------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
---------- --------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY REPORTING
PERSON
2,400
---------- --------------------------------------------------------------
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES / /
---------- --------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.1%
---------- --------------------------------------------------------------
14 TYPE OF REPORTING PERSON
IN
---------- --------------------------------------------------------------
*Financial Institutions, Inc. and Peter G. Humphrey were each named as proxy and
attorney-in-fact to vote certain shares of the common stock of Bath National
Corporation ("Bath") with respect to certain matters relating to the merger of
wholly-owned subsidiary of Financial Institutions, Inc. with and into Bath.
<PAGE>
--------------------------------------------------------------------------------
CUSIP NO. 07-1122105
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSON
IRS NO. OF ABOVE PERSON (ENTITIES ONLY)
Robert H. Cole
---------- --------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(A) / /
(B) / X /
---------- --------------------------------------------------------------
3 SEC USE ONLY
---------- --------------------------------------------------------------
4 SOURCE OF FUNDS
OO
---------- --------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(D) OR 2(E) / /
---------- --------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
---------- --------------------------------------------------------------
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:
---------- --------------------------------------------------------------
7 SOLE VOTING POWER
0
---------- --------------------------------------------------------------
<PAGE>
8 SHARED VOTING POWER
15,653
---------- --------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
15,653
---------- --------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
---------- --------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY REPORTING
PERSON
15,653
---------- --------------------------------------------------------------
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES / /
---------- --------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
1.0%
---------- --------------------------------------------------------------
14 TYPE OF REPORTING PERSON
IN
---------- --------------------------------------------------------------
*Financial Institutions, Inc. and Peter G. Humphrey were each named as proxy and
attorney-in-fact to vote certain shares of the common stock of Bath National
Corporation ("Bath") with respect to certain matters relating to the merger of
wholly-owned subsidiary of Financial Institutions, Inc. with and into Bath.
<PAGE>
--------------------------------------------------------------------------------
CUSIP NO. 07-1122105
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSON
IRS NO. OF ABOVE PERSON (ENTITIES ONLY)
Herbert Fort
---------- --------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(A) / /
(B) / X /
---------- --------------------------------------------------------------
3 SEC USE ONLY
---------- --------------------------------------------------------------
4 SOURCE OF FUNDS
OO
---------- --------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(D) OR 2(E) / /
---------- --------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
---------- --------------------------------------------------------------
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:
---------- --------------------------------------------------------------
7 SOLE VOTING POWER
0
---------- --------------------------------------------------------------
<PAGE>
8 SHARED VOTING POWER
842
---------- --------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
842
---------- --------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
---------- --------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY REPORTING
PERSON
842
---------- --------------------------------------------------------------
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES / /
---------- --------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.1%
---------- --------------------------------------------------------------
14 TYPE OF REPORTING PERSON
OO
---------- --------------------------------------------------------------
*Financial Institutions, Inc. and Peter G. Humphrey were each named as proxy and
attorney-in-fact to vote certain shares of the common stock of Bath National
Corporation ("Bath") with respect to certain matters relating to the merger of
wholly-owned subsidiary of Financial Institutions, Inc. with and into Bath.
<PAGE>
--------------------------------------------------------------------------------
CUSIP NO. 07-1122105
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSON
IRS NO. OF ABOVE PERSON (ENTITIES ONLY)
Edward C. Galpin
---------- --------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(A) / /
(B) / X /
---------- --------------------------------------------------------------
3 SEC USE ONLY
---------- --------------------------------------------------------------
4 SOURCE OF FUNDS
OO
---------- --------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(D) OR 2(E) / /
---------- --------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
---------- --------------------------------------------------------------
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:
---------- --------------------------------------------------------------
7 SOLE VOTING POWER
0
---------- --------------------------------------------------------------
<PAGE>
8 SHARED VOTING POWER
7,909
---------- --------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
7,909
---------- --------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
---------- --------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY REPORTING
PERSON
7,909
---------- --------------------------------------------------------------
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES / /
---------- --------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.5%
---------- --------------------------------------------------------------
14 TYPE OF REPORTING PERSON
IN
---------- --------------------------------------------------------------
*Financial Institutions, Inc. and Peter G. Humphrey were each named as proxy and
attorney-in-fact to vote certain shares of the common stock of Bath National
Corporation ("Bath") with respect to certain matters relating to the merger of
wholly-owned subsidiary of Financial Institutions, Inc. with and into Bath.
<PAGE>
--------------------------------------------------------------------------------
CUSIP NO. 07-1122105
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSON
IRS NO. OF ABOVE PERSON (ENTITIES ONLY)
L.E. Hopkins Family Partnership
---------- --------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(A) / /
(B) / X /
---------- --------------------------------------------------------------
3 SEC USE ONLY
---------- --------------------------------------------------------------
4 SOURCE OF FUNDS
OO
---------- --------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(D) OR 2(E) / /
---------- --------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
State of New York
---------- --------------------------------------------------------------
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:
---------- --------------------------------------------------------------
7 SOLE VOTING POWER
0
---------- --------------------------------------------------------------
<PAGE>
8 SHARED VOTING POWER
10,969
---------- --------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
10,969
---------- --------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
---------- --------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY REPORTING
PERSON
10,969
---------- --------------------------------------------------------------
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES / /
---------- --------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.7%
---------- --------------------------------------------------------------
14 TYPE OF REPORTING PERSON
PN
---------- --------------------------------------------------------------
*Financial Institutions, Inc. and Peter G. Humphrey were each named as proxy and
attorney-in-fact to vote certain shares of the common stock of Bath National
Corporation ("Bath") with respect to certain matters relating to the merger of
wholly-owned subsidiary of Financial Institutions, Inc. with and into Bath.
<PAGE>
--------------------------------------------------------------------------------
CUSIP NO. 07-1122105
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSON
IRS NO. OF ABOVE PERSON (ENTITIES ONLY)
Lawrence C. Howell
---------- --------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(A) / /
(B) / X /
---------- --------------------------------------------------------------
3 SEC USE ONLY
---------- --------------------------------------------------------------
4 SOURCE OF FUNDS
OO
---------- --------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(D) OR 2(E) / /
---------- --------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
---------- --------------------------------------------------------------
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:
---------- --------------------------------------------------------------
7 SOLE VOTING POWER
0
---------- --------------------------------------------------------------
<PAGE>
8 SHARED VOTING POWER
2,955*
---------- --------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
2,955
---------- --------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
---------- --------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY REPORTING
PERSON
2,955
---------- --------------------------------------------------------------
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES / /
---------- --------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.1%
---------- --------------------------------------------------------------
14 TYPE OF REPORTING PERSON
IN
---------- --------------------------------------------------------------
*Financial Institutions, Inc. and Peter G. Humphrey were each named as proxy and
attorney-in-fact to vote certain shares of the common stock of Bath National
Corporation ("Bath") with respect to certain matters relating to the merger of
wholly-owned subsidiary of Financial Institutions, Inc. with and into Bath.
<PAGE>
--------------------------------------------------------------------------------
CUSIP NO. 07-1122105
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSON
IRS NO. OF ABOVE PERSON (ENTITIES ONLY)
Constance Manikas
---------- --------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(A) / /
(B) / X /
---------- --------------------------------------------------------------
3 SEC USE ONLY
---------- --------------------------------------------------------------
4 SOURCE OF FUNDS
OO
---------- --------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(D) OR 2(E) / /
---------- --------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
---------- --------------------------------------------------------------
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:
---------- --------------------------------------------------------------
7 SOLE VOTING POWER
0
---------- --------------------------------------------------------------
<PAGE>
8 SHARED VOTING POWER
1,020
---------- --------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
1,020
---------- --------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
---------- --------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY REPORTING
PERSON
1,020
---------- --------------------------------------------------------------
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES / /
---------- --------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.1%
---------- --------------------------------------------------------------
14 TYPE OF REPORTING PERSON
IN
---------- --------------------------------------------------------------
*Financial Institutions, Inc. and Peter G. Humphrey were each named as proxy and
attorney-in-fact to vote certain shares of the common stock of Bath National
Corporation ("Bath") with respect to certain matters relating to the merger of
wholly-owned subsidiary of Financial Institutions, Inc. with and into Bath.
<PAGE>
--------------------------------------------------------------------------------
CUSIP NO. 07-1122105
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSON
IRS NO. OF ABOVE PERSON (ENTITIES ONLY)
Douglas L. McCabe
---------- --------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(A) / /
(B) / X /
---------- --------------------------------------------------------------
3 SEC USE ONLY
---------- --------------------------------------------------------------
4 SOURCE OF FUNDS
OO
---------- --------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(D) OR 2(E) / /
---------- --------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
---------- --------------------------------------------------------------
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:
---------- --------------------------------------------------------------
7 SOLE VOTING POWER
0
---------- --------------------------------------------------------------
<PAGE>
8 SHARED VOTING POWER
2,423*
---------- --------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
2,423
---------- --------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
---------- --------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY REPORTING
PERSON
2,423
---------- --------------------------------------------------------------
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES / /
---------- --------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.1%
---------- --------------------------------------------------------------
14 TYPE OF REPORTING PERSON
IN
---------- --------------------------------------------------------------
*Financial Institutions, Inc. and Peter G. Humphrey were each named as proxy and
attorney-in-fact to vote certain shares of the common stock of Bath National
Corporation ("Bath") with respect to certain matters relating to the merger of
wholly-owned subsidiary of Financial Institutions, Inc. with and into Bath.
<PAGE>
--------------------------------------------------------------------------------
CUSIP NO. 07-1122105
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSON
IRS NO. OF ABOVE PERSON (ENTITIES ONLY)
Joseph F. Meade, Jr.
---------- --------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(A) / /
(B) / X /
---------- --------------------------------------------------------------
3 SEC USE ONLY
---------- --------------------------------------------------------------
4 SOURCE OF FUNDS
OO
---------- --------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(D) OR 2(E) / /
---------- --------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
---------- --------------------------------------------------------------
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:
---------- --------------------------------------------------------------
7 SOLE VOTING POWER
0
---------- --------------------------------------------------------------
<PAGE>
8 SHARED VOTING POWER
12,000
---------- --------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
12,000
---------- --------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
---------- --------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY REPORTING
PERSON
12,000
---------- --------------------------------------------------------------
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES / /
---------- --------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.8%
---------- --------------------------------------------------------------
14 TYPE OF REPORTING PERSON
IN
---------- --------------------------------------------------------------
*Financial Institutions, Inc. and Peter G. Humphrey were each named as proxy and
attorney-in-fact to vote certain shares of the common stock of Bath National
Corporation ("Bath") with respect to certain matters relating to the merger of
wholly-owned subsidiary of Financial Institutions, Inc. with and into Bath.
<PAGE>
--------------------------------------------------------------------------------
CUSIP NO. 07-1122105
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSON
IRS NO. OF ABOVE PERSON (ENTITIES ONLY)
Freeman H. Smith, III
---------- --------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(A) / /
(B) / X /
---------- --------------------------------------------------------------
3 SEC USE ONLY
---------- --------------------------------------------------------------
4 SOURCE OF FUNDS
OO
---------- --------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(D) OR 2(E) / /
---------- --------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
---------- --------------------------------------------------------------
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:
---------- --------------------------------------------------------------
7 SOLE VOTING POWER
0
---------- --------------------------------------------------------------
<PAGE>
8 SHARED VOTING POWER
12,000
---------- --------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
12,000
---------- --------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
---------- --------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY REPORTING
PERSON
12,000
---------- --------------------------------------------------------------
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES / /
---------- --------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.8%
---------- --------------------------------------------------------------
14 TYPE OF REPORTING PERSON
IN
---------- --------------------------------------------------------------
*Financial Institutions, Inc. and Peter G. Humphrey were each named as proxy and
attorney-in-fact to vote certain shares of the common stock of Bath National
Corporation ("Bath") with respect to certain matters relating to the merger of
wholly-owned subsidiary of Financial Institutions, Inc. with and into Bath.
<PAGE>
--------------------------------------------------------------------------------
CUSIP NO. 07-1122105
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSON
IRS NO. OF ABOVE PERSON (ENTITIES ONLY)
Patrick Sullivan
---------- --------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(A) / /
(B) / X /
---------- --------------------------------------------------------------
3 SEC USE ONLY
---------- --------------------------------------------------------------
4 SOURCE OF FUNDS
OO
---------- --------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(D) OR 2(E) / /
---------- --------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
---------- --------------------------------------------------------------
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:
---------- --------------------------------------------------------------
7 SOLE VOTING POWER
0
---------- --------------------------------------------------------------
<PAGE>
8 SHARED VOTING POWER
10,314
---------- --------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
10,314
---------- --------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
---------- --------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY REPORTING
PERSON
10,314
---------- --------------------------------------------------------------
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES / /
---------- --------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.6%
---------- --------------------------------------------------------------
14 TYPE OF REPORTING PERSON
IN
---------- --------------------------------------------------------------
*Financial Institutions, Inc. and Peter G. Humphrey were each named as proxy and
attorney-in-fact to vote certain shares of the common stock of Bath National
Corporation ("Bath") with respect to certain matters relating to the merger of
wholly-owned subsidiary of Financial Institutions, Inc. with and into Bath.
<PAGE>
--------------------------------------------------------------------------------
CUSIP NO. 07-1122105
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSON
IRS NO. OF ABOVE PERSON (ENTITIES ONLY)
Alan J. Wilcox
---------- --------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(A) / /
(B) / X /
---------- --------------------------------------------------------------
3 SEC USE ONLY
---------- --------------------------------------------------------------
4 SOURCE OF FUNDS
OO
---------- --------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(D) OR 2(E) / /
---------- --------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
---------- --------------------------------------------------------------
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:
---------- --------------------------------------------------------------
7 SOLE VOTING POWER
0
---------- --------------------------------------------------------------
<PAGE>
8 SHARED VOTING POWER
700
---------- --------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
700
---------- --------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
---------- --------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY REPORTING
PERSON
700
---------- --------------------------------------------------------------
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES / /
---------- --------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.1%
---------- --------------------------------------------------------------
14 TYPE OF REPORTING PERSON
IN
---------- --------------------------------------------------------------
*Financial Institutions, Inc. and Peter G. Humphrey were each named as proxy and
attorney-in-fact to vote certain shares of the common stock of Bath National
Corporation ("Bath") with respect to certain matters relating to the merger of
wholly-owned subsidiary of Financial Institutions, Inc. with and into Bath.
<PAGE>
ITEM 1. SECURITY AND ISSUER.
This Schedule relates to shares of the Common Stock, par value $.01 per
share ("Common Stock") of Bath National Corporation (the "Issuer" or "Bath").
The Issuer's principal executive office is located at 44 Liberty Street, Bath,
New York, 14810.
ITEM 2. IDENTITY AND BACKGROUND.
This Statement is being filed by (a)Financial Institutions, Inc., Peter
G. Humphrey, President and Chief Executive Officer of Financial Institutions,
Inc. and (b) Laverne H. Billings, Theodore P. Capron, Robert H. Cole, Herbert
Fort, Edward C. Galpin, Lisle E. Hopkins, Lawrence C. Howell, Constance Manikas,
Douglas L. McCabe, Joseph F. Meade, Jr., Freeman H. Smith, III, Patrick
Sullivan, and Alan J. Wilcox (collectively, the "Bath Filing Shareholders") in
connection with (i) an Agreement and Plan of Merger (the "Merger Agreement"),
dated as of November 2, 2000, by and among Financial Institutions, Inc., its
wholly owned subsidiary FI Subsidiary I Inc., and BATH, (ii) the Stock Option
Agreement (the "Option Agreement") between Bath and Financial Institutions, Inc.
dated as of November 2, 2000, and (iii) the Shareholders Voting Agreement and
Irrevocable Proxy (the "Shareholders Agreement") among Financial Institutions,
Inc., FI Subsidiary I Inc. and the Bath Filing Shareholders, dated as of
November 2, 2000, which grants each of Financial Institutions, Inc. and Peter G.
Humphrey (collectively, the "Financial Institutions Proxyholders") the right, as
proxy and attorney-in-fact (with full power of substitution), for and in the
name, place and stead of the Bath Filing Shareholders, to vote the Bath Filing
Shareholders' shares of Common Stock or grant any consent or approval with
respect to such Shareholders shares of Bath Common Stock under certain
circumstances described below. The Merger Agreement, the Shareholders Agreement
and the Option Agreement are incorporated by reference as exhibits to this
Schedule 13D.
Financial Institutions, Inc. ("FII") is organized as a corporation
under the laws of the State of New York, and its principal business address is
220 Liberty Street, Warsaw, NY 14569. FII is a community bank holding company in
Western and Central New York State. The names, business addresses, principal
occupations and citizenship of the directors and executive officers of FII are
set forth in Annex A hereto and are incorporated herein by reference.
Certain additional information regarding the individual Financial
Institutions Proxyholders and the Bath Filing Shareholders is set forth below:
<TABLE>
<CAPTION>
Name Business or Occupation, Employer; Citizenship or
Residence Address Business and Address Jurisdiction
-------------------------- ----------------------------- --------------------------------- --------------------
<S> <C> <C> <C>
1. Peter G. Humphrey 220 Liberty Street President and Chief Executive Officer United States
Warsaw, NY 14569 Financial Institutions, Inc.
220 Liberty Street
Warsaw, NY 14564
2. Financial Institutions 220 Liberty Street Financial Institutions, Inc. United States
Inc. Warsaw, NY 14569 220 Liberty Street
Warsaw, NY 14564
3. Laverne H. Billings 44 Liberty Street Bath National Corporation United States
Bath, NY 14810 44 Liberty Street
Bath, NY 14810
Director
4. Theodore P. Capron 44 Liberty Street Bath National Corporation United States
Bath, NY 14810 44 Liberty Street
Bath, NY 14810
Director
<PAGE>
5. Robert H. Cole 44 Liberty Street Bath National Corporation United States
Bath, NY 14810 44 Liberty Street
Bath, NY 14810
Director
6. Herbert Fort 44 Liberty Street Bath National Corporation United States
Bath, NY 14810 44 Liberty Street
Bath, NY 14810
Director
7. Edward C. Galpin 44 Liberty Street Bath National Corporation United States
Bath, NY 14810 44 Liberty Street
Bath, NY 14810
Director, CFO
8. L.E. Family 44 Liberty Street Bath National Corporation United States
Partnership Bath, NY 14810 44 Liberty Street
Bath, NY 14810
Director
9. Lawrence C. Howell 44 Liberty Street Bath National Corporation United States
Bath, NY 14810 44 Liberty Street
Bath, NY 14810
Director
10. Constance Manikas 44 Liberty Street Bath National Corporation United States
Bath, NY 14810 44 Liberty Street
Bath, NY 14810
Director
11. Douglas L. McCabe 44 Liberty Street Bath National Corporation United States
Bath, NY 14810 44 Liberty Street
Bath, NY 14810
Director, CEO
12. Joseph F. Meade, Jr. 44 Liberty Street Bath National Corporation United States
Bath, NY 14810 44 Liberty Street
Bath, NY 14810
Director
13. Freeman H. Smith, III 44 Liberty Street Bath National Corporation United States
Bath, NY 14810 44 Liberty Street
Bath, NY 14810
Director
14. Patrick Sullivan 44 Liberty Street Bath National Corporation United States
Bath, NY 14810 44 Liberty Street
Bath, NY 14810
Director
<PAGE>
15. Alan J. Wilcox 44 Liberty Street Bath National Corporation United States
Bath, NY 14810 44 Liberty Street
Bath, NY 14810
Director
</TABLE>
None of the individual Bath Filing Shareholders, the Financial
Institutions Proxyholders or any of their directors or executive officers have
during the last five years, been (i) convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors), or (ii) a party to a
civil proceeding of a judicial or administrative body of competent jurisdiction
as a result of which he, she or it is or was subject to a judgment, decree or
final order enjoining future violations of, or prohibiting or mandating
activities subject to, federal or state securities laws or finding any violation
with respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
In consideration of and as a condition to FII entering into the Merger
Agreement, FII and Peter G. Humphrey has been appointed proxy and
attorney-in-fact to vote the shares of Bath Common Stock owned by the Bath
Filing Shareholders as of November 2, 2000, and have been granted certain other
rights under the Shareholders Agreement.
ITEM 4. PURPOSE OF THE TRANSACTION
On November 2, 2000, FII, FI Subsidiary I, Inc.("FI Subsidiary") and
Bath entered into the Merger Agreement pursuant to which FI Subsidiary will
merge with and into Bath with Bath as the surviving corporation. Upon
consummation of the merger all of the outstanding shares of the surviving
corporation will be held by FII and the board will consist of approximately five
to seven of the existing directors of Bath and five new appointees. The
aggregate purchase price payable by FII consists of approximately $62 million in
cash. For each share of Bath Common Stock, Bath Shareholders will receive cash
consideration of $48. Bath Common stock would no longer be publicly sold over
the counter or otherwise. Completion of the merger is subject to customary
conditions, including the approval by Bath Shareholders and regulatory
approvals. The Merger Agreement may be terminated under certain circumstances
including if (a) Bath does not obtain the required stockholder approval, (b) the
merger is not consummated by June 30, 2001, or (c) Bath receives and its board
of directors approves a change in control of Bath, which Bath's board concludes
is materially more favorable to Bath's Shareholders from a financial point of
view than the transactions contemplated by the Merger Agreement, subject to
certain conditions and limitations. The terms of the Merger Agreement are
incorporated herein by reference.
FII, FI Subsidiary and the Bath Filing Shareholders entered into the
Shareholders Agreement as a condition of Financial Institutions, Inc. entering
into the Merger Agreement. Pursuant to the terms of the Shareholders Agreement,
the Bath Filing Shareholders have each agreed that at any meeting of
Shareholders of Bath, however called, the Bath Filing Shareholders will vote all
of their shares of Bath Common Stock: (i) in favor of the adoption and approval
of the Merger Agreement and the transactions contemplated by the Merger
Agreement (the "Merger Proposal"), (ii) against any merger agreement or merger
(other than the merger contemplated by the Merger Agreement), consolidation,
combination, share exchange, sale of substantial assets, reorganization,
recapitalization, dissolution, liquidation or winding up of or by Bath, and
(iii) against any amendment to Bath's certificate of incorporation or by-laws or
other proposal or transaction involving Bath or any of its subsidiaries, which
amendment or other proposal or transaction would be reasonably likely to impede,
frustrate, prevent, hinder, delay or nullify the Merger Agreement or the
Shareholders Agreement or the transactions contemplated thereby or change the
voting rights of the Bath Common Stock or other voting securities of Bath. The
Bath Filing Shareholders also appointed each of FII, Peter G. Humphrey as proxy
and attorney-in-fact to vote their Bath Common Stock in the same manner for the
Merger Proposal and against contrary proposals. The Bath common Filing
Shareholders also agreed not to (a) transfer ownership of their shares of Bath
stock, (b) enter into any contract, option or arrangement with respect to the
transfer of their shares, or (c) enter into any other voting arrangement with
respect to their shares during the term of the Shareholders Agreement. The
Shareholders Agreement will terminate upon the termination of the Merger
Agreement in accordance with its terms.
<PAGE>
FII and Bath entered into a Stock Option Agreement as a condition of
FII entering into the Merger Agreement. Pursuant to the terms of the Stock
Option Agreement, FII has the option to purchase 196,000 shares of Common Stock
of Bath at $37.00 per share upon the occurrence of a n acquisition of 20% or
more of change in control of the then outstanding shares of Common Stock of Bath
(a "Purchase Event"). The Option shall terminate upon the earliest to occur of
(i) the time immediately prior to the closing of the merger, (ii) 12 months
after the first occurrence of a Purchase Event, (iii) termination of the Merger
Agreement by both parties prior to the occurance of a Purchase Event, or (iv) 18
months after the termination of the Merger Agreement due to a willful breach by
Bath of any representation, warranty or agreement contained therein. The Option
may not be exercised at any time when Financial Institutions is in material
breach of any of its representations, warranties or agreements contained in the
Merger Agreement such that Bath would be entitled to terminate the Merger
Agreement.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
<TABLE>
<CAPTION>
Shares Owned Beneficially Power to Vote Power to Direct Disposition
Reporting Person Class Number % of Class Sole Shared Sole Shared
---------------- ----- ------ ---------- ---- ------ ---- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Financial Institutions,
Inc. (1) Common 282,255 18.8% 0 282,255 0 0
Peter G. Humphrey (1) Common 86,255 5.7% 0 86,255 0 0
Laverne H. Billings (1) Common 7,070 0.4% 7,070 7,070 0
Theodore P. Capron (1) Common 2,400 0.1% 0 2,400 2,400 0
Robert H. Cole (1) Common 15,653 1.0% 0 15,653 15,653 0
Herbert Fort (1) Common 842 * 0 842 842 0
Edward C. Galpin (1) Common 7,909 0.5% 0 7,909 7,909 0
L.E. Hopkins Family
Partnership (1) Common 10,969 0.7% 0 10,969 10,969 0
Lawrence C. Howell (1) Common 2,955 0.1% 0 2,955 2,955 0
Constance Manikas (1) Common 1,020 * 0 1,020 1,020 0
Douglas L. McCabe (1) Common 2,423 * 0 2,423 2,423 0
Joseph F. Meade, Jr. (1) Common 12,000 0.8% 0 12,000 12,000 0
Freeman H. Smith, III (1) Common 12,000 0.8% 0 12,000 12,000 0
Patrick Sullivan (1) Common 10,314 0.6% 0 10,314 10,314 0
Alan J. Wilcox (1) Common 700 * 0 700 700 0
</TABLE>
(1) FII and Peter G. Humphrey have been named as proxy and
attorney-in-fact to vote the shares of Bath Common Stock held by
the Bath Filing Shareholders as described herein.
*Less than 0.1%.
The percentages of ownership set forth in this Schedule 13D are based
upon 1,499,857 which is the sum of the 196,000 shares of stock issued pursuant
to the Option Agreement and the 1,303,857 shares of the Issuer's Common Stock
outstanding based on the representations of the Issuer in the Merger Agreement.
Each of FII and Peter G. Humphrey declares that the filing of this
Schedule 13D shall not be construed as an admission that such person is, for the
purposes of Section 13(d) of the Act, the beneficial owner of any Bath Common
Stock, as to which he or it disclaims beneficial ownership.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
SECURITIES OF THE ISSUER
Other than the Merger Agreement described in response to Item 4 (which response
is incorporated in this Item 6 by reference), and the Option Agreement and the
Shareholders Agreement described in response to Items 3 and 4 (which responses
are incorporated in this Item 6 by reference) and the transactions contemplated
thereby, there are no contracts, arrangements, understandings or relationships
among the persons named in Item 2 or between
<PAGE>
such person and any other person with respect to the shares of Bath Common Stock
or, to the best knowledge of FII, among any of FII's executive officers and
directors or, to the best knowledge of FII, between any of FII's executive
officers and directors and any other person, with respect to the shares of Bath
Common Stock.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
1. Joint Filing Agreement, dated as of November 13, 2000, among
the Financial Institutions Proxy Holders and the Bath Filing Shareholders.
2. Agreement and Plan of Merger dated as of November 2, 2000
among Financial Institutions, Inc., FI Subsidiary I, Inc. and Bath National
Corporation.
3. Shareholders Voting Agreement and Irrevocable Proxy dated as
of November 2, 2000 between Financial Institutions, Inc., FI Subsidiary I, Inc.
and each of the BATH Filing Shareholders.
4. Stock Option Agreement dated as of November 2, 2000 between
Financial Institutions, Inc. and Bath National Corporation.
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of the undersigned's knowledge
and belief I certify that the information set forth in this statement is true,
complete and correct.
Dated: November 13, 2000 Financial Institutions, Inc.
By:/s/Peter G. Humphrey
---------------------------------
Peter G. Humphrey
President and Chief Executive Officer
Dated: November 13, 2000 /s/Peter G. Humphrey
------------------------------------
Peter G. Humphrey
Dated: November 13, 2000 /s/Laverne H. Billings
------------------------------------
Laverne H. Billings
Dated: November 13, 2000 /s/Theodore P. Capron
------------------------------------
Theodore P. Capron
Dated: November 13, 2000 /s/Robert H. Cole
------------------------------------
Robert H. Cole
Dated: November 13, 2000 /s/Herbert Fort
------------------------------------
Herbert Fort
Dated: November 13, 2000 /s/Edward C. Galpin
------------------------------------
Edward C. Galpin
L.E. Hopkins Family Partnership
Dated: November 13, 2000 By:/s/Lisle E. Hopkins
-----------------------------------
Lisle E. Hopkins
Dated: November 13, 2000 /s/Lawrence C. Howell
-----------------------------------
Lawrence C. Howell
Dated: November 13, 2000 /s/Constance Manikas
-----------------------------------
Constance Manikas
Dated: November 13, 2000 /s/Douglas L. McCabe
-----------------------------------
Douglas L. McCabe
Dated: November 13, 2000 ____________________________________
Joseph F. Meade, Jr.
Dated: November 13, 2000 ____________________________________
Freeman H. Smith, III
<PAGE>
Dated: November 13, 2000 /s/Patrick Sullivan
------------------------------------
Patrick Sullivan
Dated: November 13, 2000 /s/Alan J. Wilcox
------------------------------------
Alan J. Wilcox
<PAGE>
Schedule A
<TABLE>
<CAPTION>
Name Address Occupation Citizenship
---- ------- ---------- -----------
<S> <C> <C> <C>
1. W.J. Humphrey, Jr. 220 Liberty Street Retired United States
Warsaw, NY 14569
2. Peter G. Humphrey 220 Liberty Street President and United States
Warsaw, NY 14569 CEO of Financial
Institutions
3. Jon J. Cooper 220 Liberty Street President of Wyoming United States
Warsaw, NY 14569 County Bank
4. Barton P. Dambra 220 Liberty Street President of United States
Warsaw, NY 14569 Markin Tubing
5. James R. Hardie 220 Liberty Street President of Austin United States
Warsaw, NY 14569 Wise Agency, Inc.
6. Donald G. Humphrey 220 Liberty Street Retired United States
Warsaw, NY 14569
7. W.J. Humphrey, III 220 Liberty Street President of Pavillion United States
Warsaw, NY 14569 State Bank
8. Thomas L. Kime 220 Liberty Street President National United States
Warsaw, NY 14569 Bank of Geneva
9. H. Jack South 220 Liberty Street Retired United States
Warsaw, NY 14569
10. Donald I. Wickham 220 Liberty Street Kassen Associates United States
Warsaw, NY 14569
11. James H. Wycoff 220 Liberty Street Professor SUNY United States
Warsaw, NY 14569 Albany
12. John Tyler 220 Liberty Street Retired Attorney United States
Warsaw, NY 14569
</TABLE>
<PAGE>
Exhibit 1
Joint Filing Agreement
In accordance with Rule 13d-1(k) promulgated under the Securities
Exchange Act of 1934, as amended, each of the persons named below agrees to the
joint filing of this Schedule 13D, including amendments thereto, with respect to
the shares of Common Stock, par value $5.00 per share, of Bath National Bank and
further agrees that this Joint Filing Agreement be filed with the Securities and
Exchange Commission as an exhibit to such filings, provided, however, that no
person shall be responsible for the completeness or accuracy of the information
concerning the other persons making the filing, unless such person knows or has
reason to believe such information is inaccurate (as provided in Rule
13d-1(k)(1)(ii)). This Joint Filing Agreement may be executed in one or more
counterparts, all of which together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the persons named below have executed this Joint
Filing Agreement on the dates set forth below.
Dated: November 13, 2000 Financial Institutions, Inc.
By:/s/Peter G. Humphrey
------------------------------------
Peter G. Humphrey
President and Chief Executive Officer
Dated: November 13, 2000 /s/Peter G. Humphrey
-------------------------------------
Peter G. Humphrey
Dated: November 13, 2000 /s/Laverne H. Billings
------------------------------------
Laverne H. Billings
Dated: November 13, 2000 /s/Theodore P. Capron
------------------------------------
Theodore P. Capron
Dated: November 13, 2000 /s/Robert H. Cole
------------------------------------
Robert H. Cole
Dated: November 13, 2000 /s/Herbert Fort
------------------------------------
Herbert Fort
Dated: November 13, 2000 /s/Edward C. Galpin
-----------------------------------
Edward C. Galpin
L.E. Hopkins Family Partnership
Dated: November 13, 2000 By:/s/Lisle E. Hopkins
--------------------------------
Lisle E. Hopkins
<PAGE>
Dated: November 13, 2000 /s/Lawrence C. Howell
------------------------------------
Lawrence C. Howell
Dated: November 13, 2000 /s/Constance Manikas
------------------------------------
Constance Manikas
Dated: November 13, 2000 /s/Douglas L. McCabe
------------------------------------
Douglas L. McCabe
Dated: November 13, 2000 ____________________________________
Joseph F. Meade, Jr.
Dated: November 13, 2000 ____________________________________
Freeman H. Smith, III
Dated: November 13, 2000 /s/Patrick Sullivan
------------------------------------
Patrick Sullivan
Dated: November 13, 2000 /s/Alan J. Wilcox
------------------------------------
Alan J. Wilcox
<PAGE>
Exhibit 2
AGREEMENT AND PLAN OF MERGER
DATED AS OF NOVEMBER 2, 2000
AMONG
FINANCIAL INSTITUTIONS, INC.,
FI SUBSIDIARY I, INC.
AND
BATH NATIONAL CORPORATION
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of November
2, 2000, by and among FINANCIAL INSTITUTIONS, INC. ("Parent"), a New York
corporation, FI SUBSIDIARY I, INC. ("Merger Subsidiary"), a New York corporation
and a wholly-owned subsidiary of Parent, and BATH NATIONAL CORPORATION (the
"Company"), a New York corporation.
WHEREAS, the respective Boards of Directors of Parent, Merger
Subsidiary and the Company have approved the merger of the Merger Subsidiary
with and into the Company (the "Merger"), upon the terms and subject to the
conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing premises and the
representations, warranties and agreements contained herein the parties hereto
agree as follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger. Upon the terms and subject to the conditions of
this Agreement, at the Effective Time (as defined in Section 1.3), Merger
Subsidiary shall be merged with and into the Company and the separate existence
of Merger Subsidiary shall thereupon cease, and the Company shall continue as
the surviving corporation in the Merger (the "Surviving Corporation") under the
name Bath National Corporation, as a subsidiary of Parent. Following the
consummation of the Merger, it is anticipated that the Surviving Corporation
will be merged into the Parent, leaving Bath National Bank as a direct
subsidiary of the Parent.
Section 1.2 Closing. Subject to the satisfaction or waiver of the
conditions set forth in Article VIII, the closing of the Merger will take place
as promptly as practicable (and in any event within ten business days) after
satisfaction or waiver of the conditions set forth in Sections 8.1(a), 8.1(b)
and 8.3(d), at the offices of Nixon Peabody LLP, Rochester, New York, unless
another date, time or place is agreed to in writing by the parties hereto (the
"Closing Date") unless this Agreement shall have been terminated and the
transactions herein contemplated shall have been abandoned pursuant to Section
9.1. It is anticipated that the Closing Date will occur prior to April 30, 2001.
Section 1.3 Effective Time of the Merger. The Merger shall become
effective upon the filing of a certificate of merger ("Certificate of Merger")
pursuant to and in compliance with this Agreement and Section 907 of Business
Corporation Law of the State of New York (the "New York Law") with the Secretary
of State of the State of New York. When used in this Agreement, the term
"Effective Time" shall mean the time at which the Certificate of Merger has been
filed and become effective in accordance with New York Law.
Section 1.4 Effect of the Merger. The Merger shall, from and after the
Effective Time, have all the effects provided by applicable New York Law. If at
any time after the Effective Time the Surviving Corporation shall consider or be
advised that any further deeds,
<PAGE>
-2-
conveyances, assignments or assurances in law or any other acts are necessary,
desirable or proper to vest, perfect or confirm, of record or otherwise, in the
Surviving Corporation, the title to any property or rights of Merger Subsidiary
or the Company to be vested in the Surviving Corporation, by reason of, or as a
result of, the Merger, or otherwise to carry out the purposes of this Agreement,
the Company and the Merger Subsidiary agree that the Surviving Corporation and
its proper officers and directors shall execute and deliver all such deeds,
conveyances, assignments and assurances in law and do all things necessary,
desirable or proper to vest, perfect or confirm title to such property or rights
in the Surviving Corporation and otherwise to carry out the purposes of this
Agreement, and that the proper officers and directors of the Surviving
Corporation are fully authorized in the name of each of the Company and the
Merger Subsidiary or otherwise to take any and all such action.
Section 1.5 Modifications of Structure. Notwithstanding any provision
of this Agreement to the contrary, Parent, with the prior written consent of the
Company, which consent shall not be unreasonably withheld, may elect, subject to
the filing of all necessary applications and the receipt of all required
regulatory approvals, to modify the structure of the transactions contemplated
hereby so long as (i) there are no material adverse federal income tax
consequences to the shareholders of the Company as a result of such
modification, (ii) the consideration to be paid to holders of Company Common
Stock (as defined below) under this Agreement is not thereby changed in kind or
reduced in amount solely because of such modification and (iii) such
modification will not be likely to materially delay or jeopardize receipt of any
required regulatory approvals or impair or prevent the satisfaction of any
conditions to the Effective Time.
Section 1.6 Dissenters' Rights. Notwithstanding any other provision of
this Agreement to the contrary, shares of the Company Common Stock (as defined
below) that are outstanding immediately prior to the Effective Time and that are
held by shareholders who shall have not voted in favor of the Merger or
consented thereto in writing and who properly shall have delivered to the
Company written demand for appraisal of the fair value of such shares in
accordance with New York Law (collectively, the "Dissenters' Shares") shall not
be converted into or represent the right to receive the Merger Consideration.
Such shareholders instead shall be entitled to receive payment of the fair value
of such shares held by them in accordance with the provisions of New York Law,
except that all Dissenters' Shares held by shareholders who shall have failed to
perfect or who effectively shall have withdrawn or otherwise lost their
Dissenters' Rights under New York Law shall thereupon be deemed to have been
converted into and to have become exchangeable, as of the Effective Time, for
the right to receive, without any interest thereon, the Merger Consideration in
the manner provided in Section 3.1 below. The Company shall give Parent (i)
prompt notice of any written demands for appraisal of the fair value of any
shares of Common Stock, attempted withdrawals of such demands and any other
instruments served pursuant to New York Law and received by the Company relating
to shareholders' rights of appraisal, and (ii) the opportunity to direct all
negotiations and proceedings with respect to demands for appraisal under New
York Law. The Company shall not, except with the prior written consent of
Parent, voluntarily make any payment with respect to, or settle or offer to
settle, any such demand for appraisal.
<PAGE>
-3-
ARTICLE II
THE SURVIVING CORPORATION
Section 2.1 Certificate of Incorporation. At the Effective Time, the
Certificate of Incorporation of the Company shall be amended and restated to
read substantially in the form of the Certificate of Incorporation of the Merger
Subsidiary as in effect immediately prior to the Effective Time and shall be the
Certificate of Incorporation of the Surviving Corporation after the Effective
Time, until thereafter changed or amended as provided therein or by applicable
law.
Section 2.2 By-laws. At the Effective Time, the By-laws of the
Surviving Corporation shall be amended and restated to read substantially in the
form of the By-laws of the Merger Subsidiary as in effect immediately prior to
the Effective Time until thereafter changed or amended as provided therein or by
applicable law.
Section 2.3 Board of Directors; Officers. The persons and/or categories
of persons listed on Schedule 2.3 as directors and officers shall be the
directors and officers of the Surviving Corporation immediately after the
Effective Time and the persons listed on Schedule 2.3 shall hold the offices set
forth after their respective names in the Surviving Corporation immediately
after the Effective Time, in each case, until the earlier of their respective
resignations or the time that their respective successors are duly elected or
appointed and qualified.
ARTICLE III
CONVERSION OF SHARES
Section 3.1 Merger Consideration. As of the Effective Time, by virtue
of the Merger and without any action on the part of any shareholder of the
Company or Merger Subsidiary:
(a) Subject to the provisions of this Agreement, each of the
1,303,857 issued and outstanding shares of Common Stock, par value $5.00, of the
Company (the "Company Common Stock") as of the Effective Time shall be cancelled
and by operation of law be converted into and represent the right to receive
from the Parent, $48.00 in cash (the "Merger Consideration"). As of the
Effective Time, each share of Company Common Stock held by the Company as
treasury stock shall be cancelled and retired without any consideration being
paid or exchanged therefor.
(b) Subject to the provisions of this Agreement, at the
Effective Time the shares of the common stock of Merger Subsidiary outstanding
immediately prior to the Merger shall be converted, by virtue of the Merger and
without any action on the part of the holder thereof, into one hundred shares of
the common stock of the Surviving Corporation, par value of $.01 per share,
which one hundred shares of the Surviving Corporation Common Stock shall
constitute all of the issued and outstanding capital stock of the Surviving
Corporation and shall be owned by Parent.
3.2 Shareholders' Rights at the Effective Time. On and after the
Effective Time, the certificates that immediately prior to the Effective Time
represented shares of the Company Common Stock (the "Certificates") shall cease
to represent any rights with respect to the
<PAGE>
-4-
Company and shall only represent the right to receive the Merger Consideration
provided in Section 3.1(a) and Holders of certificates theretofore evidencing
shares of Company Common Stock shall cease to have any rights as shareholders of
the Company, except as provided herein or by law.
3.3 Surrender and Exchange of Share Certificates.
(a) Prior to the Effective Time, the Parent shall deposit, or
shall cause to be deposited, in a segregated account with a bank or trust
company selected by the Parent and reasonably acceptable to the Company for the
benefit of the Holders of shares of Company Common Stock, for payment in
accordance with this Section 3.3, an amount of cash sufficient to pay the
aggregate Merger Consideration to be paid pursuant to Section 3.1.
(b) On the Closing Date, or within three Business Days
thereafter, Parent or its agent shall cause to be mailed to each person who was
a Holder of record of shares of the Company Common Stock immediately prior to
the Effective Time: (i) a letter of transmittal (the "Letter of Transmittal"),
and (ii) instructions for use in effecting the surrender of the Certificates
nominally representing the Company Common Stock in exchange for cash payable
pursuant to Section 3.2.
(c) After the Effective Time, each Holder of a Certificate
("Holder") shall surrender and deliver such Certificate to Parent or its agent
together with a duly completed and executed Letter of Transmittal. Letters of
Transmittal shall be mailed no later than three (3) Business Days after the
Closing Date, and blank form Letters of Transmittal will be made available for
pickup at the main office of the Company. Within three business days after
receipt of a duly completed and executed Letter of Transmittal, together with
the related Certificate or an affidavit and indemnity bond as provided in
Section 3.3(e) hereof, Parent shall pay or cause to be paid to the Holder of
such Certificate the Merger Consideration for each share of Company Common Stock
previously evidenced by such certificate. Payment shall be made by good bank
check mailed by first class mail to the Holder at the address specified in the
transmittal letter. Upon such surrender and delivery, the Holder shall receive a
check representing the Merger Consideration payable in respect of Company Common
Stock pursuant to Section 3.2. Until so surrendered and exchanged, each
Certificate formerly representing outstanding shares of Company Common Stock
shall after the Effective Time be deemed for all purposes to evidence only the
right to receive the Merger Consideration as provided in Section 3.2.
(d) At the Effective Time, the stock transfer books of the
Company shall be closed and no transfer of shares of Company Common Stock shall
be made thereafter, other than transfers of shares of Company Common Stock that
have occurred prior to the Effective Time. In the event that, after the
Effective Time, certificates are presented for transfer to the transfer agent
for the Company, the Merger Subsidiary or Parent, they shall be delivered to
Parent or its agent and exchanged for the Merger Consideration payable pursuant
to Section 3.2. Upon proper surrender of a Certificate for exchange and
cancellation to the Parent or its agent, together with such properly completed
Letter of Transmittal, duly executed, the Holder of such Certificate shall be
entitled to receive in exchange therefor, the Merger Consideration, and the
Certificate so surrendered shall forthwith be cancelled. No interest shall
accrue or be paid on the Merger
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Consideration payable upon the surrender of any Certificate for the benefit of
the Holder of such Certificate.
(e) Neither the Company, Merger Subsidiary or Parent shall be
liable to any Holder of shares of Company Common Stock with respect to any funds
delivered to a public official pursuant to any applicable abandoned property,
escheat or similar law, rule, regulation, statute, order, judgment or decree.
(f) In the event any Certificates shall have been lost, stolen
or destroyed, Parent shall pay the amount specified in Section 3.1(a) to which
the person claiming that his or her Certificates have been lost, stolen or
destroyed is entitled in exchange for such lost, stolen or destroyed
Certificates upon the making of an affidavit of that fact by such person and the
delivery of a bond or other security, in an amount not to exceed the applicable
Merger Consideration, as Parent may reasonably require.
Section 3.4 Proxy Statement.
(a) For purposes of holding the meeting of the Company
shareholders to approve the Merger (the "Company Proposal"), the Company will
prepare a proxy statement satisfying in all material respects all requirements
of applicable Law, including without limitation the Securities Exchange Act of
1934, as amended, and the rules and regulations of the Securities and Exchange
Commission (the "SEC") thereunder (the "Exchange Act"). Such proxy statement in
the form mailed by the Company to its shareholders, together with any and all
amendments or supplements thereto, is herein referred to as the "Proxy
Statement."
(b) The Company agrees that none of the information relating
to the Company and its Subsidiaries to be included in the Proxy Statement, as of
the date(s) such Proxy Statement is mailed to shareholders of the Company and up
to and including the date(s) of the meeting of shareholders to which such Proxy
Statement relates, will contain any untrue statement of a material fact or omit
to state a material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, provided that
information as of a later date shall be deemed to modify information as of an
earlier date. The Proxy Statement mailed by the Company to its shareholders in
connection with the meetings of shareholders at which this Agreement will be
considered by such shareholders will comply as to form in all material respects
with the Exchange Act and the rules and regulations promulgated thereunder. The
Company agrees promptly to advise Parent if, at any time prior to the meeting of
the shareholders of the Company referenced herein, any information provided by
it in the Proxy Statement is or becomes incorrect or incomplete in any material
respect and to provide Parent with the information needed to correct such
inaccuracy or omission. Company concurrently will furnish its shareholders with
such supplemental information as may be necessary in order to cause the Proxy
Statement to comply with applicable law after the mailing thereof to the
shareholders of the Company. The Company will provide Parent the opportunity to
review and comment on the draft Proxy Statement, but Parent will assume no
responsibility for its adequacy or compliance with applicable laws and
regulations, other than with respect to material provided by the Parent or its
representatives to the Company in writing specifically for inclusion in the
Proxy Statement.
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(c) The Company will make any preliminary filings of the Proxy
Statement with the SEC as promptly as reasonably practicable, pursuant to Rule
14a-6 under the Securities Exchange Act, and shall, with the Parent's
cooperation, respond to any comments with respect thereto received from the SEC.
(d) The Company shall mail the Proxy Statement to its
shareholders and hold the Company's shareholder meeting to vote on the Merger
proposal as promptly as reasonably practicable.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Merger Subsidiary
that, except as disclosed in the Disclosure Schedule which has been delivered to
Parent prior to the execution of this Agreement (the "Disclosure Schedule"):
Section 4.1 Organization and Qualification.
(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of New York. Each of
the Company and its Subsidiaries has the requisite corporate power and authority
to carry on its business as it is now being conducted and is duly qualified or
licensed to do business, and is in good standing, in each jurisdiction where the
character of its properties owned or held under lease or the nature of its
activities makes such qualification necessary. The Company has heretofore made
available to Parent and Merger Subsidiary a complete and correct copy of the
Certificate of Incorporation and By-laws or comparable organizational documents,
each as amended to the date hereof, of the Company and each of its Subsidiaries.
The Company is a bank holding company registered with the Federal Reserve Board
under the BHCA. Neither the Company nor any of its Subsidiaries are in violation
of any provision of its Certificate of Incorporation or By-Laws.
(b) Bath National Bank (the "Bank") is a national bank
organized, validly existing and in good standing under the laws of the United
States. The deposits of the Bank are insured by the FDIC through the BIF to the
fullest extent permitted by law, and all premiums and assessments required to be
paid in connection therewith have been paid when due by the Company. Each other
Company Subsidiary is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation or organization.
BNC Financial Services and its employees have all licenses required in order to
conduct the business as presently conducted.
(c) The Bank is a member in good standing of the FHLB of New
York and owns the requisite amount of stock therein.
(d) Except as disclosed in the Disclosure Schedule, the
respective minute books of the Company and each Subsidiary accurately records in
all material respects, all material corporate actions of their respective
shareholders and boards of directors (including committees) through the date of
this Agreement.
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Section 4.2 Capitalization.
(a) The authorized capital stock of the Company consists of
1,500,000 shares of Common Stock $5.00 par value per share and 300,000 shares of
Preferred Stock, $10.00 par value per share. 1,303,857 shares of Company Common
Stock are validly issued and outstanding, fully paid and non-assessable and
61,944 shares of common stock are held by the Company as treasury shares. No
shares of Company's Preferred Stock have been issued or are outstanding. There
are no bonds, debentures, notes or other indebtedness issued or outstanding
having general voting rights with respect to the Company. Except as contemplated
by this Agreement, there are no options, warrants, calls or other rights,
agreements or commitments presently outstanding obligating the Company to issue,
deliver or sell shares of its capital stock, or obligating the Company to grant,
extend or enter into any such option, warrant, call or other such right,
agreement or commitment other than the Stock Option Agreement dated even date
herewith and attached as Exhibit A hereto (the "Lockup Option").
(b) All the outstanding shares of capital stock of each
Subsidiary of the Company are validly issued, fully paid and non-assessable and,
except for shares of preferred stock of Bath United Home, Inc., are owned by the
Company or by a wholly-owned Subsidiary of the Company, free and clear of any
Liens. There are no existing options, warrants, calls or other rights,
agreements or commitments of any character relating to the sale, issuance or
voting of any shares of the issued or unissued capital stock of any of the
Subsidiaries of the Company which have been issued, granted or entered into by
the Company or any of its Subsidiaries. The Subsidiaries of the Company are
listed in Section 4.2 of the Disclosure Schedule.
(c) Except as set forth on the Disclosure Schedule, other than
its Subsidiaries, the Company does not own or control, directly or indirectly, a
greater than 10% equity interest in any corporation, company, association,
partnership, joint venture or other entity. The Company has no obligation to
acquire any additional equity interests in any entity.
(d) The authorized capital stock of the Bank consists of
100,000 shares of Common Stock, par value $10.00 per share ("Bank Common Stock")
and no shares of preferred stock. As of the date hereof, (i) 100,000 shares of
Bank Common Stock are issued and outstanding, all of which are owned directly or
indirectly by the Company, all of which are duly authorized, validly issued,
fully paid, non-assessable and free of preemptive rights, with no personal
liability attaching to the ownership thereof, (ii) no shares of Bank Common
Stock are held in the treasury of the Bank, and (iii) no shares of Bank Common
Stock are held by any of the Company's Subsidiaries. Each share of Bank Common
Stock owned by the Company or any of its Subsidiaries is free and clear of all
security interests, liens, claims, pledges, options, rights of first refusal,
agreements, limitations on the Company's or any of its Subsidiaries' voting
rights, charges and other encumbrances of any nature whatsoever.
Section 4.3 Authority Relative to this Agreement. The Company has the
necessary corporate power and authority to execute and deliver this Agreement
and, subject to approval of this Agreement and the transactions contemplated
hereby by the Holders of the Company Common Stock, to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby by the Company have
been duly and validly authorized and approved by the Company's Board of
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Directors and no other corporate proceedings on the part of the Company are
necessary to authorize or approve this Agreement or to consummate the
transactions contemplated hereby (other than, with respect to the Merger, the
approval of this Agreement by the necessary vote of the shareholders of the
Company). This Agreement has been duly executed and delivered by the Company,
and assuming the due authorization, execution and delivery by Parent and Merger
Subsidiary, and subject to the stockholder approval referred to in the preceding
sentence, constitutes the valid and binding obligation of the Company
enforceable against the Company in accordance with its terms except as such
enforceability may be limited by general principles of equity or principles
applicable to creditors' rights generally.
Section 4.4 No Conflicts, Required Filings and Consents.
(a) None of the execution and delivery of this Agreement by
the Company, the consummation by the Company of the transactions contemplated
hereby or compliance by the Company with any of the provisions hereof will (i)
subject to approval by the Company's shareholders referred to in Section 4.3,
conflict with or violate the Certificate of Incorporation or By-laws of the
Company or the comparable organizational documents of any of the Company's
Subsidiaries, (ii) subject to receipt or filing of the required Consents
referred to in Section 5.4(b), result in a Violation of any statute, ordinance,
rule, regulation, order, judgment or decree applicable to the Company or any of
the Company's Subsidiaries (a "Violation"), or by which any of them or any of
their respective properties or assets may be bound or affected, or (iii) subject
to receipt or filing of the required Consents referred to in Section 5.4(b),
result in a Violation pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which the Company or any of the Company's Subsidiaries is a party
or by which the Company or any of the Company's Subsidiaries or any of their
respective properties may be bound or affected.
(b) None of the execution and delivery of this Agreement by
the Company, the consummation by the Company of the transactions contemplated
hereby or compliance by the Company with any of the provisions hereof will
require any Consent of any Regulatory Authority to be received by the Company,
except for (i) compliance with any applicable requirements of the Exchange Act,
(ii) the filing of the Certificate of Merger pursuant to New York Law, (iii)
certain state takeover and securities statutes, and (iv) bank regulatory
approvals. The Company has no reason to believe that (i) any required Consents
or approvals will not be received, or that (ii) any public body or authority,
including the United States Environmental Protection Agency or the New York
State Department of Environmental Conservation the consent or approval of which
is not required or any filing which is not required, will object to the
completion of the transactions contemplated by this Agreement.
Section 4.5 Reports and Financial Statements.
(a) Since January 1, 1996, the Company has filed with the SEC
all forms, reports, schedules, registration statements and definitive proxy
statements (the "Company SEC Reports") required to be filed by it with the SEC.
As of their respective dates, the Company SEC Reports complied as to form with
the requirements of the Exchange Act or the Securities Act, as the case may be,
and in all material respects with the rules and regulations of the SEC
thereunder applicable to such Company SEC Reports. As of their respective dates
and as of the date any
<PAGE>
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information from such Company SEC Reports has been incorporated by reference,
the Company SEC Reports 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 light of the circumstances under which they were
made, not misleading. The Company has filed all contracts, agreements and other
documents or instruments required to be filed as exhibits to the Company SEC
Reports.
(b) The consolidated statements of financial condition of the
Company as of December 31, 1999 and 1998 and the related consolidated statements
of income, shareholders' equity and cash flows for each of the three years in
the period ended December 31, 1999 (including the related notes and schedules
thereto) contained in the Company's Form 10-K for the year ended December 31,
1999 present fairly the consolidated financial position and the consolidated
results of operations and cash flows of the Company and its consolidated
Subsidiaries as of the dates or for the periods presented therein in conformity
with United States generally accepted accounting principles ("GAAP") applied on
a consistent basis during the periods involved except as otherwise noted
therein, including in the related notes.
(c) The consolidated condensed statements of financial
condition and the related statements of income and cash flows (including, in
each case, the related notes thereto) of the Company contained in the Form 10-Q
for the quarterly periods ended March 31, 2000, June 30, 2000 and September 30,
2000 (the "Quarterly Financial Statements") have been prepared in accordance
with the requirements for interim financial statements contained in Regulation
S-X. The Quarterly Financial Statements reflect all adjustments necessary to
present fairly in accordance with GAAP, the consolidated financial position,
results of operations and cash flows of the Company for all periods presented
therein, except as otherwise noted thereon including in the related notes.
Section 4.6 Information. None of the information supplied or to be
supplied by the Company for inclusion or incorporation by reference in the
definitive Proxy Statement will, at the time of filing with the SEC, at the time
of the mailing of the Proxy Statement or any amendments or supplements thereto
to the Company's shareholders or at the time of the Company's stockholder
meeting to approve this Agreement, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading. The Proxy Statement will comply as to
form with the applicable provisions of the Exchange Act and the rules and
regulations thereunder.
Section 4.7 Litigation. Except as set forth on the Disclosure Schedule,
there is no suit, action or proceeding pending or, to the Knowledge of the
Company, threatened against or affecting the Company or any of its Subsidiaries,
nor is there any judgment, decree, injunction or order of any Governmental
Entity or arbitrator outstanding against the Company or any of its Subsidiaries.
The Company has furnished to the Parent copies of all attorney responses to the
request of the independent auditors for the Company and its Subsidiaries in so
far as they relate to loss contingencies of the Company and its Subsidiaries for
the period from December 31, 1995 to September 30, 2000 and a written list of,
and documents relating to, all claims, suits, actions, proceedings or
investigations pending against the Company or any of its Subsidiaries.
<PAGE>
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Section 4.8 Absence of Certain Changes or Events. Except as disclosed
on the Disclosure Schedule, or as contemplated by this Agreement, since
September 30, 2000, the Company has conducted its business only in the ordinary
course, and there has not been (i) any change that could have a Material Adverse
Effect, (ii) any declaration, setting aside or payment of any dividend or other
distribution (whether in cash, stock or property) with respect to any of the
Company's capital stock, or, any redemption, purchase or other acquisition of
any of its capital stock, (iii) any split, combination or reclassification of
any of the Company's capital stock or, except with respect to the Lockup Option,
any issuance or the authorization of any issuance of any other securities in
respect of, in lieu of or in substitution for shares of the Company's capital
stock, any granting by the Company or any of its Subsidiaries to any officer of
the Company of any increase in compensation, except in the ordinary course of
business consistent with prior practice or as required under employment or
severance agreements in effect as of December 31, 1999, any granting by the
Company or any of its Subsidiaries to any officer of the Company of any increase
in severance or termination pay, except as required under employment, severance
or termination agreements or plans in effect as of December 31, 1999 or (z) any
entry by the Company or any of its Subsidiaries into any employment, severance
or termination agreement with any officer of the Company, or any increase in
benefits available under or establishment of any Company Benefit Plan (as
defined below) except in the ordinary course of business consistent with past
practice, (v) any damage, destruction or loss, whether or not covered by
insurance, or (vi) any material change in accounting methods, principles or
practices by the Company.
Section 4.9 Employee Benefit Plans.
(a) The Disclosure Schedule sets forth a complete and correct
list of all employee benefit or compensation plans, agreements or arrangements,
including "employee benefit plans," as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and including, but
not limited to, plans, agreements or arrangements relating to former employees,
including, but not limited to, retiree medical plans or life insurance,
sponsored, maintained or contributed to by the Company or any entity which is
considered one employer with the Company under Section 4001 of ERISA or Section
414 of the Code (an "ERISA Affiliate") (together such plans, agreements or
arrangements are referred to as the "Company Benefit Plans"). The Company and
its ERISA Affiliates have complied with the terms of all Company Benefit Plans,
and no default exists with respect to the obligations of the Company or any of
its ERISA Affiliates under such Company Benefit Plans.
(b) Each Company Benefit Plan is in writing and the Company
has previously furnished Parent with a true and complete copy of each Company
Benefit Plan document, including all amendments thereto, and a true and complete
copy of each material document prepared in connection with each such Company
Benefit Plan, including, without limitation, (i) a copy of each trust or other
funding arrangement, (ii) each summary plan description and summary of material
modifications, (iii) the most recently filed Internal Revenue Service ("IRS")
Form 5500, including all attachments thereto, (iv) the most recently received
IRS determination letter for each such Company Benefit Plan, and (v) the most
recently prepared actuarial report and financial statement in connection with
each such Company Benefit Plan. Neither the Company nor any ERISA Affiliate has
any express or implied commitment (i) to create or incur liability with respect
to or cause to exist any other employee benefit plan,
<PAGE>
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program or arrangement, (ii) to enter into any contract or agreement to provide
compensation or benefits to any individual or (iii) to modify, change or
terminate any Company Benefit Plan, other than with respect to a modification,
change or termination required by ERISA or the Code.
Section 4.10 ERISA.
(a) Each of the Company Benefit Plans which is intended to
meet the requirements of Section 401(a) of the Internal Revenue Code of 1986, as
amended (the "Code"), has been determined by the Internal Revenue Service to be
"qualified," within the meaning of such Section of the Code and the Company has
no Knowledge of any circumstances which could result in revocation of such
determination. No Company Benefit Plan is subject to Title IV of ERISA and the
Company and its current and former ERISA Affiliates have never sponsored,
maintained or contributed to an employee benefit plan that is subject to Title
IV of ERISA. There have not been any non-exempt "prohibited transactions," as
such term is defined in Section 4975 of the Code or Section 406 of ERISA,
involving the Company Benefit Plans which could subject the Company, its ERISA
Affiliates or Parent to the penalty or tax imposed under Section 502(i) of ERISA
or Section 4975 of the Code. Except as disclosed in the Disclosure Schedule,
neither the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will (i) result in any payment (including,
without limitation, severance, unemployment compensation or golden parachute)
becoming due to any director or employee of the Company, (ii) increase any
benefits otherwise payable under any Company Benefit Plan or (iii) result in the
acceleration of the time of payment or vesting of any such benefits.
(b) No notice of a "reportable event," within the meaning of
Section 4043 of ERISA for which the 30-day reporting requirement has not been
waived, has been required to be filed for any Company Benefit Plan which is an
"employee pension benefit plan" within the meaning of Section 3(2) of ERISA and
which is intended to meet the requirements of Section 401(a) of the Code (a
"Pension Plan"), or by the Company or any ERISA Affiliate within the 60-month
period ending on the date hereof.
(c) As of the date hereof, neither any Pension Plan nor any
single-employer plan of an ERISA Affiliate has an "accumulated funding
deficiency" (whether or not waived) within the meaning of Section 412 of the
Code or Section 302 of ERISA. Neither the Company nor its ERISA Affiliates has
provided, or is required to provide, security to any Pension Plan or to any
single-employer plan of an ERISA Affiliate pursuant to Section 401(a)(29) of the
Code. Neither the Company nor any ERISA Affiliate has incurred any liability
under, arising out of or by operation of Title IV of ERISA), including, without
limitation, any material liability in connection with the termination or
reorganization of any employee pension benefit plan subject to Title IV of
ERISA, and no fact or event exists which could give rise to any such material
liability.
(d) The Company and its ERISA Affiliates are not and have
never been a sponsor or liable with respect to any multi-employer plan within
the meaning of Section 3(37) of ERISA.
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(e) All contributions and premiums required by law or by the
terms of any Company Benefit Plan in which employees of the Company and its
ERISA Affiliates participate or any agreement relating thereto have been timely
made (without regard to any waivers granted with respect thereto).
(f) Each of the Company Benefit Plans has been maintained in
accordance with its terms, applicable collective bargaining agreements and all
provisions of applicable laws and regulations. All amendments and actions
required to bring each of such Benefit Plans into conformity in all material
respects with all of the applicable provisions of ERISA and other applicable
laws and regulations have been made or taken except to the extent that such
amendments or actions are not required by law to be make or taken until a date
after the Closing Date.
(g) The liabilities of each Company Benefit Plan or Pension
Plan that has been terminated or otherwise wound up, have been fully discharged
in compliance with applicable law.
(h) Except as set forth on the Disclosure Schedule, neither
the Company nor any ERISA Affiliate maintains a welfare benefit plan providing
continuing benefits after the termination of employment (other than as required
by Section 4980B of the Code and at the former employee's own expense), and the
Company and each of the ERISA Affiliates have complied in all material respects
with the notice and continuation requirements of Section 4980B of the Code and
the regulations thereunder.
(i) Except as set forth on the Disclosure Schedule, no
payments or benefits under any Company Benefit Plan or other agreement of the
Company will be considered an excess parachute payments under Section 280G of
the Code or trigger a limitation on the ability of the Company to take a
deduction under Section 162(m) of the Code.
(j) There has been no violation of ERISA with respect to the
filing of applicable returns, reports, documents and notices regarding any of
the Company Benefit Plans with the Secretary of Labor or the Secretary of the
Treasury or the furnishing of such notices or documents to the participants or
beneficiaries of the Company Benefit Plans which, either individually or in the
aggregate, could result in a Material Adverse Effect on the Company.
(k) There are no pending legal proceedings, claims or
administrative actions which have been asserted or instituted against any of the
Company Benefit Plans, the assets of any such Plans or the Company or any ERISA
Affiliate or the plan administrator or any fiduciary of the Company Benefit
Plans with respect to the operation of such plans.
Section 4.11 Taxes. The Company and its Subsidiaries have duly filed
all material, federal, state and local income, franchise, excise, real and
personal property and other tax returns and reports (including, but not limited
to, those filed on a consolidated, combined or unitary basis) required to have
been filed by the Company and its Subsidiaries prior to the date hereof. All of
the foregoing returns and reports are true and correct in all material respects,
and the Company and its Subsidiaries have paid or, prior to the Effective Time
will pay, all taxes, interest and penalties shown on such returns or reports as
being due or (except to the extent the
<PAGE>
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same are contested in good faith) claimed to be due to any federal, state, local
or other taxing authority. The Company has paid and will pay all installments of
estimated taxes due on or before the Effective Time. All taxes and state
assessments and levies which the Company and its Subsidiaries are required by
law to withhold or collect have been withheld or collected and have been paid to
the proper governmental authorities or are held by the Company for such payment.
The Company and its Subsidiaries have paid or made adequate provision in
accordance with GAAP in the financial statements of the Company for all taxes
payable in respect of all periods ending on or prior to the date of this
Agreement and will have made or provided for all taxes payable in respect of all
periods ending on or prior to the Closing Date. As of the date hereof, all
deficiencies proposed as a result of any audits have been paid or settled.
Section 4.12 Compliance with Applicable Laws.
Except as disclosed in the Disclosure Schedule;
(a) The Company and its Subsidiaries hold all licenses,
franchises, permits and authorizations necessary for the lawful conduct of their
respective businesses under, and have complied in all material respects with,
applicable laws, statutes, orders, rules or regulations of any federal, state or
local governmental authority relating to them.
(b) Neither the Company nor any of its Subsidiaries has
received any notification or communication from any Regulatory Authority (i)
asserting that the Company or any of its Subsidiaries is not in material
compliance with any of the statutes, regulations or ordinances which such
Regulatory Authority enforces; (ii) threatening to revoke any license,
franchise, permit or governmental authorization; (iii) requiring or threatening
to require the Company or any of its Subsidiaries, or indicating that the
Company or any of its Subsidiaries may be required to enter into a cease and
desist order, agreement or memorandum of understanding or any other agreement
with any federal or state governmental agency or authority which is charged with
the supervision or regulation of banks, engages in the insurance of bank
deposits restricting or limiting, or purporting to restrict or limit, in any
material respect the operations of the Company or any of its Subsidiaries,
including without limitation any restriction on the payment of dividends; or
(iv) directing, restricting or limiting, or purporting to direct, restrict or
limit, in any manner the operations of the Company or any of its Subsidiaries,
including without limitation any restriction on the payment of dividends or in
any manner relates to its capital adequacy, credit policies, management or
overall safety and soundness or such entity's ability to perform its obligations
hereunder, and neither the Company nor any of its Subsidiaries has received
written notification from any such federal or state governmental entity that any
such Person may be requested to enter into, or otherwise be subject to, any such
commitment, letter, written agreement, memorandum of understanding or cease and
desist order (any such notice, communication, memorandum, agreement or order
described in this sentence is hereinafter referred to as a "Regulatory
Agreement"). Neither the Company nor any of its Subsidiaries is a party to any
commitment, letter (other than letters addressed to regulated depository
institutions generally), written agreement, memorandum of understanding or order
to cease and desist with any federal or state governmental entity charged with
the supervision or regulation of banks or bank holding companies or engaged in
the insurance of bank deposits which restricts materially the conduct of its
business. The Bank was rated "Satisfactory" or better following its most recent
Community Reinvestment Act examination by the regulatory
<PAGE>
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agency responsible for its supervision. Neither the Bank nor any of its
Subsidiaries has received any notice of and none of such Persons has any
Knowledge of any planned or threatened objection by any community group to the
transactions contemplated hereby.
Section 4.13 Voting Requirements. The affirmative vote of the Holders
of at least two-thirds of the total number of votes entitled to be cast by the
Holders of the Company Common Stock outstanding as of the record date for the
Company's shareholder meeting to approve this Agreement is the only vote of the
Holders of any class or series of the Company's capital stock or other
securities necessary to be received by the Company in order to approve this
Agreement and the transactions contemplated by this Agreement.
Section 4.14 Material Contracts.
(a) Except as set forth in any of the Disclosure Schedule or
the index of exhibits in the Company's Annual Report on Form 10-K for the years
ended December 31, 1999, 1998 and 1997, except for this Agreement and the other
Related Agreements, neither the Company nor any of its Subsidiaries is a party
to or is bound by (a) any agreement, arrangement, or commitment that is material
to the financial condition, results of operations or business of the Company,
except those entered into in the ordinary course of business; (b) any written
(or oral, if material) agreement, arrangement, or commitment relating to the
employment, including without limitation, employment as a consultant of any
person or the election or retention in office or severance of any present or
former director or officer of the Company or any of its Subsidiaries; (c) any
contract, agreement, or understanding with any labor union; (d) any agreement by
and among the Company or any Subsidiary of the Company; (e) any contract or
agreement or amendment thereto that would be required to be filed as an exhibit
to a Form 10-K filed by the Company prior to the date hereof that has not been
filed as an Exhibit to the Form 10-K filed by it for 1999; (f) any agreement,
arrangement, or commitment (whether written or oral) which, upon the
consummation of the transactions contemplated by this Agreement, will result in
any payment (whether of severance pay or otherwise) becoming due from the
Company or any of its Subsidiaries to any officer or employee thereof, (g) any
agreement, arrangement or commitment (whether written or oral) which materially
restricts the conduct of any line of business by the Company or any of its
Subsidiaries, or (h) any agreement, arrangement or commitment (whether written
or oral) (including any stock option plan, stock appreciation rights plan,
restricted stock plan or stock purchase plan) any of the benefits of which will
be increased, or the vesting of the benefits of which will be accelerated, by
the occurrence of any of the transactions contemplated by this Agreement, or the
value of any of the benefits of which will be calculated on the basis of any of
the transactions contemplated by this Agreement. The Company has previously
delivered to the Parent true and complete copies of all employment, severance,
consulting and deferred compensation agreements which are in writing and to
which the Company or any of its Subsidiaries is a party. Each contract,
arrangement, commitment or understanding of the type described in this Section,
whether or not set forth in Section 4.14 of the Disclosure Schedule, is referred
to herein as a "Company Contract."
(b) (i) Each Company Contract listed on the Disclosure
Schedule is legal, valid and binding upon the Company or Company Subsidiary, as
the case may be, and in full force and effect, (ii) the Company and each Company
Subsidiary has in all material respects performed all obligations required to be
performed by it to date under each such Company
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Contract, and (iii) no event or condition exists which constitutes or, after
notice or lapse of time or both, would constitute, a material default on the
part of the Company or any Company Subsidiary under any such Company Contract
other than any such default which would not have a Material Adverse Effect upon
the Company.
Section 4.15 Title to Property. The Company and each of its
Subsidiaries has good and defensible title to all of its real properties and
material assets, free and clear of all Liens, except liens for taxes not yet due
and payable and except for properties leased or rented by the Company or any of
its Subsidiaries. All leases, easements, licenses, rights of way, and other
rights pursuant to which the Company or any of its Subsidiaries lease from
others or otherwise have the right to use real or personal property (the
"Company Real Property Rights"), are valid and effective in accordance with
their respective terms, and there is not, under any of such leases, easements,
licenses, and other rights, any existing default or event of default (or event
which with notice or lapse of time, or both, would constitute a default), other
than a default which would not have a Material Adverse Effect upon the Company.
Neither the Company nor any Subsidiary is a party or is subject to any Company
Real Property Rights that is required to be described in or filed as an exhibit
to any Company SEC Report that is not so described in or filed as required by
the Securities Act or the Exchange Act, as the case may be. The Company has made
available to Parent true and accurate copies of the Company Real Property
Rights. All such Company Real Property Rights are valid and binding and are in
full force and effect and enforceable against the Company or its Subsidiaries in
accordance with their respective terms. No Consent of any person is needed in
order that each such Company Real Property Rights shall continue in full force
and effect in accordance with its terms without penalty, acceleration or rights
of early termination by reason of the consummation of the transactions
contemplated by this Agreement, and neither the Company nor any of its
Subsidiaries is in violation or breach of or default under any such Company Real
Property Rights; nor to the Company's knowledge is any other party to any such
Company Real Property Rights in violation or breach of or default under any such
Company Real Property Rights.
Section 4.16 Intellectual Property.
(a) The Company and its Subsidiaries, directly or indirectly,
own, or are licensed or otherwise possess legally enforceable rights to use, all
patents, trademarks, trade names, service marks, copyrights and any applications
therefor, technology, know-how and tangible or intangible proprietary
information or material that are material to the business of the Company and its
Subsidiaries (the "Company Intellectual Property Rights").
(b) Either the Company or one of its Subsidiaries is the sole
and exclusive owner of, or the exclusive or non-exclusive licensee of, with all
right, title and interest in and to (free and clear of any liens or
encumbrances), the Company Intellectual Property Rights, and, in the case of the
Company Intellectual Property Rights owned by the Company or one of its
Subsidiaries, has sole and exclusive rights (and is not contractually obligated
to pay any compensation to any third party in respect thereof) to the use
thereof or the material covered thereby in connection with the services or
products in respect of which the Company Intellectual Property Rights are being
used. Except as described in the Disclosure Schedule, no claims with respect to
the Company Intellectual Property Rights have been asserted or, to the Knowledge
of the Company, are threatened by any person: (i) to the effect that the
manufacture, sale, licensing,
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or use of any of the services or products of the Company or any of its
Subsidiaries as now manufactured, sold or licensed or used or proposed for
manufacture, use, sale or licensing by the Company or any of its Subsidiaries
infringes on any copyright, patent, trade mark, service mark or trade secret of
a third party, (ii) against the use by the Company or any of its Subsidiaries of
any trademarks, service marks, trade names, trade secrets, copyrights, patents,
technology or know-how and applications used in the business of the Company and
any of its Subsidiaries as currently conducted or as proposed to be conducted,
or (iii) challenging the ownership by the Company or any of its Subsidiaries or
the validity of any of the Company Intellectual Property Rights. All registered
trademarks, service marks and copyrights held by the Company and the
Subsidiaries are valid and subsisting, except to the extent any failure does not
constitute a Company Material Adverse Effect. To the Knowledge of the Company,
there is no unauthorized use, infringement or misappropriation of any of the
Company Intellectual Property Rights by any third party, including any employee
or former employee of the Company or any of its Subsidiaries. No Intellectual
Property Right is subject to any outstanding decree, order, judgment, or
stipulation restricting in any manner the licensing thereof by the Company or
any Subsidiary. Neither the Company nor any of the Subsidiaries has entered into
any agreement (other than exclusive distribution agreements) under which the
Company or any of the Subsidiaries is restricted from selling, licensing or
otherwise distributing any of its products to any class of customers, in any
geographic area, during any period of time or in any segment of the market.
(c) Each of the Company and its Subsidiaries is in compliance
with all material requirements and guidelines applicable to it as a provider of
services using Information Technology and imposed by any Bank Regulator or the
Federal Financial Institutions Examination Council ("FFIEC"), that require such
Information Technology to be Year 2000 Compliant (such deadlines, material
requirements and guidelines, as they may be in effect from time to time, being
referred to in this Agreement as the "Year 2000 Regulatory Requirements") and it
has not received any written notice or oral notice from a Regulatory Authority
to one of its officers or senior executive employees with respect to any adverse
action against it relating to Year 2000 Compliance. The Company and its
Subsidiaries have previously made available to Parent copies of all Year 2000
Readiness Statements and other statements that the Company or any of its
Subsidiaries has provided, and currently provides, to customers, vendors and
Regulatory Authorities. As used in this Agreement, "Year 2000 Ready" shall mean
that Information Technology is designed to be used prior to, during and after
the calendar year 2000 A.D. and such Information Technology will accurately
receive, provide and process date/time data (including, without limitation,
calculating, comparing and sequencing) from, into and between the twentieth and
twenty-first centuries A.D., and leap year calculations and will not
malfunction, cease to function or provide invalid or incorrect results as a
result of date/time data (including, without limitation, to the extent that
other Information Technology used in combination with such Information
Technology properly exchanges date/time data with it).
Section 4.17 Interested Party Transactions. Since December 31, 1999, no
event has occurred that would be required to be reported by the Company pursuant
to Item 404 of Regulation S-K promulgated by the SEC. Except as set forth in
Schedule 4.17 of the Disclosure Schedule, neither the Company nor any of its
Subsidiaries is a party to any transaction (including any loan or other credit
accommodation) with any Affiliate of the Company or any Company Affiliate. All
such transactions (a) were made in the ordinary course of business, (b) were
made
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on substantially the same terms, including interest rates and collateral, as
those prevailing at the time for comparable transactions with other Persons, and
(c) did not involve more than the normal risk of collectability or present other
unfavorable features. No loan or credit accommodation to any Affiliate of the
Company or any Company Subsidiary is presently in default or, during the three
year period prior to the date of this Agreement, has been in default or has been
restructured, modified or extended. Neither the Company nor any Company
Subsidiary has been notified that principal and interest with respect to any
such loan or other credit accommodation will not be paid when due or that the
loan grade classification accorded such loan or credit accommodation by the
Company is inappropriate.
Section 4.18 Undisclosed Liabilities. Except (i) as disclosed in the
Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1999
(or in any subsequently filed Company SEC Reports), and (ii) liabilities
incurred subsequent to September 30, 2000 in the ordinary course of business or
in connection with this Agreement, neither the Company nor any of its
Subsidiaries has any liabilities or any obligations of any nature whether or not
accrued, contingent or otherwise, that would be required by generally accepted
accounting principles to be reflected on the consolidated statement of financial
condition of the Company and its Subsidiaries (including the notes thereto). No
investigation or review by any Governmental Entity with respect to the Company
or any of its Subsidiaries is pending or, to the Company's best Knowledge,
threatened, nor has any such Governmental Entity indicated an intention to
conduct any such investigation or review.
Section 4.19 Environmental Matters.
(a) Except as set forth in the Disclosure Schedule, each of
the Company and its Subsidiaries and, to the best Knowledge of the Company, the
Loan Properties (each as hereinafter defined), are, and have been, in compliance
with all applicable environmental laws and with all rules, regulations,
standards and requirements of the United States Environmental Protection Agency
(the "EPA") and of state and local agencies with jurisdiction over pollution or
protection of the environment, except in each case as have not been or would not
be material.
(b) There is no suit, claim, action or proceeding pending or,
to the best Knowledge of the Company threatened, before any Governmental
Authority or other forum in which the Company or any of its Subsidiaries has
been or, with respect to threatened proceedings, may be, named as a defendant,
responsible party or potentially responsible party (i) for alleged noncompliance
)including by any predecessor), with any environmental law, rule, regulation,
standard or requirement or (ii) relating to the release into or presence in the
Environment (as hereinafter defined) or any Hazardous Materials (as hereinafter
defined) or Oil (as hereinafter defined) occurring at or on a site owned, leased
or operated by the Company or any of its Subsidiaries except in each case as has
not been or would not be material.
(c) To the best Knowledge of the Company, there is no suit,
claim, action or proceeding pending or threatened, before any Governmental
Authority or other forum in which any Loan Property has been or, with respect to
threatened proceedings, may be, named as a defendant, responsible party or
potentially responsible party (i) for alleged noncompliance (including by any
predecessor) with any environmental law, rule, regulation, standard or
requirement of (ii) relating to the release into or presence in the Environment
of any Hazardous
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Material or Oil whether or not occurring at or on a site owned, leased or
operated as a Loan Property, except in each case as have not been or would not
be material.
(d) Except as set forth in Section 4.19 of the Disclosure
Schedule, neither the Company nor any of its Subsidiaries, nor to their best
Knowledge, any Loan Property, has received any written notice indicating that
there is a possibility that a suit, claim, action or proceeding as described in
subsection (b) or (c) of this Section 4.19 could be initiated except in each
case as has not been or would not be material. No facts or circumstances have
come to the Company's attention which have caused it to believe that a material
suit claim action or proceeding as described in subsection (b) or (c) of this
Section 4.19 could reasonably be expected to occur.
(e) During the period of (i) the Company's or any of its
Subsidiaries' ownership or operation of any of their respective current
properties or (ii) the Company's or any of its Subsidiaries' holding of a
security interest in a Loan Property, to the best Knowledge of the Company,
there has been no release or presence of Hazardous Material or Oil in, on, under
or affecting such property or Loan Property, except where such release or
presence is not or would not, either individually or in the aggregate, be
material. To the best Knowledge of the Company, prior to the period of (x) the
Company's or any of its Subsidiaries' ownership or operation of any of their
respective current properties or any previously owned or operated properties, or
(y) the Company's or any of its Subsidiaries' holding of a security interest in
a Loan Property, there was no release or presence of Hazardous Material or Oil
in, on, under or affecting any such property or Loan Property, except where such
release or presence is not or would not, either individually or in the
aggregate, be material.
(f) Neither the Company nor any of its Subsidiaries is an
owner or operator of any Loan Property and there are no Participation
Facilities.
(g) The following definitions apply for purposes of this
Section 4.19: (i) "Loan Property" means any property in which the Company or any
of its Subsidiaries holds a security interest, and, where required by the
context (as a result of foreclosure), said term means the owner or operator of
such property; (ii) "Participation Facility" means any facility in which the
Company or any of its Subsidiaries participates or has participated in the
management and, where required by the context, said term means the owner or
operator of such property; (iii) "Hazardous Material" means any pollutant,
contaminant, or hazardous substance or hazardous material as defined in or
pursuant to the Comprehensive Environmental Response, Compensation, and
Liability Act, 42 U.S.C. ss.9601 et seq., or any other federal, state, or local
environmental law, regulation, or requirement; (iv) "Oil" means oil or petroleum
of any kind or origin or in any form, as defined in or pursuant to the Federal
Clean Water Act, 33 U.S.C. ss.1251 et seq., or any other federal, state, or
local environmental law, regulation, or requirement; and (v) "Environment" means
any soil, surface waters, groundwaters, stream sediments, surface or subsurface
strata, and ambient air, and any other environmental medium.
Section 4.20 Restrictions on Business Activities. There is no material
agreement, judgment, injunction, order or decree binding upon the Company or any
of its Subsidiaries or any of their properties which has had or could reasonably
be expected to have the effect of prohibiting or materially impairing any
business practice of the Company or any of its Subsidiaries or the conduct of
business by the Company or any of its
<PAGE>
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Subsidiaries as currently conducted or as proposed to be conducted by the
Company.
Section 4.21 Certain Business Practices. Neither the Company nor any of
its Subsidiaries nor, to the Knowledge of the Company, any director, officer, or
employee of the Company or any of its Subsidiaries, has in any material respect
(i) used any funds for unlawful contributions, gifts, entertainment or other
unlawful payments relating to political activity, (ii) made any unlawful payment
to any foreign or domestic government official or employee or to any foreign or
domestic political party or campaign or violated any provision of the Foreign
Corrupt Practices Act of 1977, as amended, (iii) consummated any transaction,
made any payment, entered into any agreement or arrangement or taken any other
action in violation of Section 1128B(b) of the Social Security Act, as amended,
or (iv) made any other similar unlawful payment.
Section 4.22 Brokers. Except for CIBC World Markets, no broker or
finder is entitled to any broker's or finder's fee in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Company.
Section 4.23 Board Approval. The Board of Directors of the Company by
resolutions duly adopted by required vote of those voting at a meeting duly
called and held and not subsequently rescinded or modified in any way (the
"Company Board Approval"), has duly (i) subject to Section 7.7 hereof,
determined that this Agreement and the Merger are fair to and in the best
interests of the Company and its shareholders, (ii) approved this Agreement and
the Merger and (iii) subject to Section 7.7 hereof, recommended that the
shareholders of the Company adopt this Agreement and approve the Merger and
directed that this Agreement and the transactions contemplated hereby be
submitted for consideration by the Company's shareholders at the Shareholders
Meeting. The Company Board Approval constitutes approval of this Agreement and
the Merger for purposes of Section 907 of the New York Business Corporation Law
and no state takeover statute is applicable to the Merger or the other
transactions contemplated hereby.
Section 4.24 Opinions of the Company's Financial Advisor and Attorneys,
and Accountant's Comfort Letter. The Company has received the opinion of the
Company's Financial Advisor, dated the date of this Agreement, to the effect
that, as of such date, the Merger Consideration is fair from a financial point
of view to the Company and its shareholders, a copy of which opinion has been
made available to Parent.
Section 4.25 Deposits. None of the deposits of the Company or any
Company Subsidiary is a "brokered" deposit as defined in 12 U.S. Code Section
1831f(g).
Section 4.26 Regulation O. Except as otherwise disclosed in writing to
the Parent on or prior to the date hereof, the Company and its Subsidiaries have
made no loan which is subject to Regulation O promulgated by the Board of
Governors of the Federal Reserve System.
Section 4.27 Loan Portfolio.
(a) With respect to each loan owned by the Company or the Bank
in whole or in part (each, a "Loan"), to the best Knowledge of the Company and
the Bank:
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(i) the note and the related security documents are each
legal, valid and binding obligations of the maker or obligor
thereof, enforceable against such maker or obligor in
accordance with their terms;
(ii) neither the Company nor the Bank, nor any prior Holder of
a Loan, has modified the note or any of the related security
documents in any material respect or satisfied, cancelled or
subordinated the note or any of the related security documents
except as otherwise disclosed by documents in the applicable
Loan file;
(iii) the Company, the Bank or another Company Subsidiary is
the sole Holder of legal and beneficial title to each Loan (or
the Company's applicable participation interest, as
applicable), except as otherwise referenced on the books and
records of the Company;
(iv) the note and the related security documents, copies of
which are included in the Loan files, are true and correct
copies of the documents they purport to be and have not been
suspended, amended, modified, cancelled or otherwise changed
except as otherwise disclosed by documents in the applicable
Loan file;
(v) there is no pending or threatened condemnation proceeding
or similar proceeding affecting the property that serves as
security for a Loan, except as otherwise referenced on the
books and records of the Company and its Subsidiaries;
(vi) there is no litigation or proceeding pending or
threatened relating to the property that serves as security
for a Loan that would reasonably be expected to have a
Material Adverse Effect upon the borrower or guarantor of the
related Loan, or upon the loan itself, except as otherwise
disclosed by documents in the applicable Loan file; and
(vii) with respect to a Loan held in the form of a
participation, the participation documentation is legal,
valid, binding and enforceable, except as otherwise disclosed
by documents in the applicable Loan file.
(b) The allowance for possible loan and lease losses reflected
in the Company's audited statement of condition at December 31, 1999 and
unaudited September 30, 2000 financial statements was, and the allowance for
possible losses shown on the balance sheets in the Company's Securities
Documents for periods ending after September 30, 2000 have been and will be,
adequate, as of the dates thereof, under GAAP.
(c) The Disclosure Schedule 4.27 sets forth by category the
amounts of all loans, leases, advances, credit enhancements, other extensions of
credit, commitments and interest-bearing assets of the Company and the Company
Subsidiaries that have been classified (whether regulatory or internal) as
"Special Mention," "Substandard," "Doubtful," "Loss" or words of similar import
as of September 30, 2000. The other real estate owned ("OREO") included in any
non-performing assets of the Company or any of the Company Subsidiaries is
carried net of reserves at the lower of cost or fair value, less estimated
selling costs, based on
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current independent appraisals or evaluations or current management appraisals
or evaluations; provided, however, that "current" shall mean within the past 12
months.
Section 4.28 Administration of Fiduciary Accounts. Each of the Company
and its Subsidiaries has properly administered in all material respects all
accounts for which it acts as a fiduciary, including, but not limited to,
accounts for which it serves as a trustee, agent, custodian, personal
representative, guardian, conservator or investment advisor, in accordance with
the terms of the governing documents and applicable law. The accountings for
each such fiduciary account are true and correct in all material respects and
accurately reflects the assets of such fiduciary account.
Section 4.29 Insurance. Section 4.29 of the Disclosure Schedule sets
forth a summary of all material policies of insurance of the Company and its
Subsidiaries currently in effect, which summary is accurate and complete in all
material respects. All of the policies relating to insurance maintained by the
Company or any of its Subsidiaries with respect to its material properties and
the conduct of its business in any material respect (or any comparable policies
entered into as a replacement therefor) are in full force and effect and,
neither the Company nor any of its Subsidiaries has received any notice of
cancellation with respect thereto and there have been no lapses of coverage. All
property and casualty insurance policies are written on an occurrence basis.
Except as set forth in Section 4.29 of the Disclosure Schedule, all life
insurance policies on the lives of any of the current and former officers and
directors of the Company or any of its Subsidiaries which are maintained by the
Company or any such Subsidiary which are otherwise included as assets on the
books of the Company or such Subsidiary (i) are, or will at the Effective Time
be, owned by the Company or such Subsidiary, as the case may be, free and clear
of any claims thereon by the officers or members of their families, except with
respect to the death benefits thereunder, as to which the Company or such
Subsidiary agree that there will not be an amendment prior to the Effective Time
without the consent of the Parent, and (ii) are accounted for properly as assets
on the books of the Company or such Subsidiary in accordance with GAAP in all
material respects.
Section 4.30 Disclosure. No representation or warranty by the Company
in this Agreement and no statement contained in any exhibit, list, certificate,
document or schedule delivered or to be delivered pursuant to this Agreement
contains or will contain any untrue statement of a material fact or omits or
will omit any material fact necessary in order to make the statement contained
therein in light of the circumstances under which they were made not misleading.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUBSIDIARY
Parent and Merger Subsidiary jointly and severally represent and
warrant to the Company that, except as disclosed in the Parent Disclosure
Schedule which has been delivered to the Company prior to the execution of this
Agreement (the "Parent Disclosure Schedule"):
Section 5.1 Organization and Qualification. Parent is a corporation
duly organized, validly existing and in good standing under the laws of the
State of New York. Merger
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Subsidiary is a corporation duly organized, validly existing and in good
standing under the laws of the State of New York.
Section 5.2 Ownership of Merger Subsidiary. Merger Subsidiary is a
direct wholly-owned subsidiary of Parent.
Section 5.3 Authority Relative to Agreement. Each of Parent and Merger
Subsidiary has the necessary corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby by Parent and Merger Subsidiary have been duly
and validly authorized and approved by the respective Boards of Directors of
Parent and Merger Subsidiary and by Parent as the sole stockholder of Merger
Subsidiary and no other corporate proceedings on the part of Parent or Merger
Subsidiary are necessary to authorize and approve this Agreement or to
consummate the transactions contemplated hereby. The Parent has no reason to
believe that (i) any required Consents or approvals will not be received, or
that (ii) any public body or authority, including the United States
Environmental Protection Agency or the New York State Department of
Environmental Conservation the consent or approval of which is not required or
any filing which is not required, will object to the completion of the
transactions contemplated by this Agreement. This Agreement has been duly
executed and delivered by each of Parent and Merger Subsidiary, and assuming the
due authorization, execution and delivery by the Company, constitutes the valid
and binding obligation of Parent and Merger Subsidiary enforceable against each
of them in accordance with its terms except as such enforceability may be
limited by general principles of equity or principles applicable to creditors'
rights generally.
Section 5.4 No Conflicts; Required Filings and Consents.
(a) None of the execution and delivery of this Agreement by
Parent or Merger Subsidiary, the consummation by Parent or Merger Subsidiary of
the transactions contemplated hereby or compliance by Parent or Merger
Subsidiary with any of the provisions hereof will (i) conflict with or violate
the Certificate of Incorporation or By-laws of Parent or Merger Subsidiary, (ii)
subject to receipt or filing of the required Consents (as defined herein)
referred to in Section 5.4(b), conflict with or violate any statute, ordinance,
rule, regulation, order, judgment or decree applicable to Parent or Merger
Subsidiary, or by which either of them or any of their respective properties or
assets may be bound or affected, or (iii) result in a violation or breach of or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, or result in the creation of any
lien, charge, security interest, pledge, or encumbrance of any kind or nature
(any of the foregoing being a "Lien") on any of the property or assets of Parent
or Merger Subsidiary (any of the foregoing referred to in clause (ii) or this
clause (iii) being a "Violation") pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which Parent or Merger Subsidiary is a party or by
which Parent or Merger Subsidiary or any of their respective properties may be
bound or affected.
(b) None of the execution and delivery of this Agreement by
Parent or Merger Subsidiary, the consummation by Parent or Merger Subsidiary of
the transactions contemplated
<PAGE>
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hereby or compliance by Parent or Merger Subsidiary with any of the provisions
hereof will require any consent, waiver, license, approval, authorization, order
or permit of, or registration or filing with or notification to any government
or subdivision thereof, domestic, foreign, multinational or supranational or any
administrative, governmental or regulatory authority, agency, commission, court,
tribunal or body, domestic, foreign, multinational or supranational (a
"Governmental Entity"), except for (i) compliance with any applicable
requirements of the Exchange Act, (ii) the filing of the certificate of merger
under New York Law, (iii) certain state takeover, securities and "blue sky"
statutes, and (iv) the obtaining of regulatory approvals as set forth in
Disclosure Schedule 5.4 (any of the foregoing being a "Consent").
Section 5.5 Brokers. Other than Keefe, Bruyette & Woods, Inc. no broker
or finder is entitled to any broker's or finder's fee in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Parent or Merger Subsidiary.
Section 5.6 Ability to Pay Merger Consideration. Parent will have
available to it as of the Effective Time sufficient cash to pay the aggregate
Merger Consideration to shareholders of the Company as set forth in Section 3.1.
Section 5.7 Absence of Certain Changes or Events. There has not been
any material adverse change in the business, operations, prospects, assets or
financial condition of Parent since June 30, 2000 and to the best Knowledge of
the Parent, no fact or condition exists which Parent believes will cause such a
material adverse change in the future.
Section 5.8 Legal Proceedings. Neither Parent nor the Merger Subsidiary
is a party to any, and there are no pending, or to the best Knowledge of Parent
and the Merger Subsidiary, threatened legal, administrative, arbitration or
other proceedings, claims, actions or governmental investigations of any nature
against Parent or Merger Subsidiary, except such proceedings, claims actions or
governmental investigations which in the good faith judgment of Parent and
Merger Subsidiary will not have a Material Adverse Effect on the business,
operations, assets or financial condition of Parent and Merger Subsidiary.
Neither Parent nor the Merger Subsidiary is a party to any order, judgment or
decree which materially adversely affects the business, operations, assets or
financial condition of Parent and Merger Subsidiary.
Section 5.9 Disclosure. No representation or warranty by the Parent or
Merger Subsidiary in this Agreement, no information provided by Parent in
writing for inclusion in the Company Proxy Statement and no statement contained
in any exhibit, list, certificate, document or schedule delivered or to be
delivered pursuant to this Agreement contains or will contain any untrue
statement of a material fact or omits or will omit any material fact necessary
in order to make the statement contained therein in light of the circumstances
under which they were made not misleading.
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
Section 6.1 Conduct of the Business Pending the Merger
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(a) From and after the date hereof, prior to the Effective
Time, except as contemplated by this Agreement or unless Parent shall otherwise
agree in writing, the Company shall, and shall cause its Subsidiaries to, carry
on their respective businesses in the usual, regular and ordinary course in
substantially the same manner as heretofore conducted and to use reasonable
efforts to conduct their business in a manner consistent with the budgets and
plans heretofore made available to Parent, and shall, and shall cause its
Subsidiaries to, use best efforts to preserve intact their present business
organizations, keep available the services of their employees and preserve their
relationships with customers, suppliers, licensors, licensees, distributors and
others having business dealings with them to the end that their goodwill and
on-going businesses shall not be impaired in any material respect at the
Effective Time and shall take no action which would materially adversely affect
or materially delay the ability of the Company to obtain any necessary approvals
of any Governmental Authority required for the transactions contemplated hereby
or to perform its covenants and agreements under this Agreement or the Parent
Option. Unless Parent shall otherwise agree in writing, prior to the Effective
Time, the Company shall not and shall not permit its Subsidiaries to allow any
representation or warranty of the Company to become inaccurate or:
(i) declare, set aside, or pay any dividends on, or make any
other distributions in respect of, any of its capital stock in
excess of current regular $.30 quarterly dividend amounts
declared and payable per past practice, other than dividends
and distributions by any Subsidiary to its parent(s) [or the
dividend on REIT preferred stock] required to be paid by its
terms, split, combine or reclassify any of its capital stock
or, issue or authorize the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its
capital stock, or except as permitted by clause (ii) below,
purchase, redeem or otherwise acquire any shares of capital
stock of the Company or any of its Subsidiaries or any other
equity securities thereof or any rights, warrants, or options
to acquire any such shares or other securities other than
purchases, redemptions or acquisitions of equity securities of
Subsidiaries of the Company or rights, warrants or options to
acquire such securities;
(ii) other than in connection with the Lockup Option, issue,
deliver, sell, pledge or otherwise encumber any shares of its
capital stock, any other voting securities of the Company or
any securities convertible into, or any rights, warrants or
options to acquire, any such shares or voting securities;
(iii) amend its Certificate of Incorporation, By-laws or
other comparable organizational documents of any of its
Subsidiaries;
(iv) acquire or agree to acquire by merging or consolidating
with, or by purchasing a substantial portion of the assets of,
or by any other manner, any business or any corporation,
partnership, joint venture, association or other business
organization or division thereof, or any assets that are
material, individually or in the aggregate, to the Company and
its Subsidiaries;
(v) subject to a Lien or sell, lease or otherwise dispose of
any of its material properties or assets except in the
ordinary course of business;
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(vi) incur any indebtedness for borrowed money or any
non-deposit liability or guarantee any such indebtedness of
another person, issue or sell any debt securities of the
Company or any of its Subsidiaries, guarantee any debt
securities of another person or enter into any "keep well" or
other agreement to maintain any financial condition of another
person, except, in any such case, for borrowings or other
transactions incurred in the ordinary course of business
including to repay existing indebtedness pursuant to the terms
thereof, or except in the ordinary course of business, make
any loans, advances or capital contributions to, or
investments in, any other person, other than to the Company or
any direct or indirect Subsidiary of the Company or settle or
compromise any material claims or litigation;
(vii) except for commitments issued prior to the date of this
Agreement, make any new loan or other credit facility
commitment (including without limitation, lines of credit and
letters of credit) to any borrower or group of affiliated
borrowers in excess of $250,000 in the aggregate, or increase,
compromise, extend, renew or modify (for not more than one
year) any existing loan or commitment outstanding in excess of
$500,000, and provide to Parent for its review in advance of
any proposed approvals by the Bank any real estate secured
loans in excess of $500,000 and any unsecured loans in excess
of $75,000.
(viii) enter into, renew, extend or modify any other
transaction with any Affiliate;
(ix) enter into any futures contract, option, interest rate
caps, interest rate floors, interest rate exchange agreement
or other agreement or take any other action for purposes of
hedging the exposure of its interest-earning assets and
interest-bearing liabilities to changes in market rates of
interest;
(x) make any change in policies with regard to the extension
of credit, the establishment of reserves with respect to the
possible loss thereon or the charge off of losses incurred
thereon, investment, asset/liability management or other
material banking policies in any material respect except as
may be required by changes in applicable law or regulations or
in GAAP or by applicable regulatory authorities or enter into
any new areas of lending, new loan categories or loan types,
or open new loan origination offices;
(xi) sell any OREO or loan (other than loans secured by one-
to four-family real estate) and OREO properties which generate
no book loss);
(xii) authorize any of, or commit or agree to take any of, the
foregoing actions;
(xiii) recruit, hire or contract with any new personnel, at
either the Company or the Bank level, except with respect to
non-officer positions, in which case Parent will be provided a
copy of the job posting in advance of internal posting or
publication; or
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(xiv) authorize or permit any employee salary or benefit
increases in excess of 10% of an employee's level of salary or
benefits existing at September 30, 2000, provided, however,
that the Bank may pay bonuses to its senior executive officers
in 2000 as provided in Schedule 6.1(a)(xiv).
For purposes of this Section 6.1, it shall not be considered in the ordinary
course of business for the Company or any of its Subsidiaries to do any of the
following: (i) make any sale, assignment, transfer, pledge, hypothecation or
other disposition of any assets having a book or market value, whichever is
greater, in the aggregate in excess of $100,000, other than pledges of assets to
secure government deposits, to exercise trust powers, sales of assets received
in satisfaction of debts previously contracted in the normal course of business,
issuance of loans, sales of previously purchased government guaranteed loans, or
transactions in the investment securities portfolio by the Company or any of its
Subsidiaries or repurchase agreements made, in each case, in the ordinary course
of business; or (ii) undertake or enter any lease, contract, capital expenditure
or other commitment for its account, other than in the normal course of
providing credit to customers as part of its banking business, involving a
payment by the Company or any of its Subsidiaries of more than $50,000 annually,
or containing a material financial commitment and extending beyond 12 months
from the date hereof.
(b) Compliance with Regulatory Directives. The Company and its
Board shall comply in all respects with the directives and corrective action set
forth in the Matters Requiring Board Attention ("MRBA") section of the most
recent OCC Report of Examination presented to the Board.
(c) Advice of Changes. The Company shall promptly provide the
Parent copies of all filings made by the Company with any Governmental Entity in
connection with this Agreement and the transactions contemplated hereby. The
Company shall, before settling or compromising any income tax liability of the
Company or any of its Subsidiaries, consult with Parent and its advisors as to
the positions and elections that will be taken or made with respect to such
matter.
6.2 System Conversions. From and after the date hereof, the Parent and
the Company shall meet on a regular basis to discuss and plan for the conversion
of the Company's and its Subsidiaries' data processing and related electronic
informational systems to those used by the Parent and its Subsidiaries, which
planning shall include, but not be limited to, discussion of the possible
termination by the Company of third-party service provider arrangements
effective at the Effective Time or at a date thereafter, non-renewal of personal
property leases and software licenses used by the Company or any of its
Subsidiaries in connection with its systems operations, retention of outside
consultants and additional employees to assist with the conversion, and
outsourcing, as appropriate, of proprietary or self-provided system services, it
being understood that the Company shall not be obligated to take any such action
prior to the Effective Time and provided further that no conversion shall take
place prior to the Effective Time. In the event that the Company or any of its
Subsidiaries takes, at the request of the Parent, any action relative to third
parties to facilitate the conversion that results in the imposition of any
termination fees, expenses or charges, the Parent shall indemnify the Company
and its Subsidiaries for any such fees, expenses and charges, and the costs of
reversing the conversion
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process, if for any reason the Merger is not consummated in accordance with the
terms of this Agreement.
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.1 Access to Information. From the date hereof through the
Effective Time, the Company and its Subsidiaries shall afford to Parent and
Parent's accountants, counsel and other representatives full and reasonable
access during normal business hours (and at such other times as the parties may
mutually agree) to its properties, books, contracts, commitments, records and
personnel and, during such period, shall furnish promptly to Parent (i) a copy
of each report, schedule and other document filed or received by it pursuant to
the requirements of federal securities laws, and (ii) all other information
concerning its business, properties and personnel as Parent may reasonably
request. Neither the Company or any of its Subsidiaries shall be required to
provide access to or to disclose information where such access or disclosure
would violate or prejudice the rights of its customers, jeopardize any
attorney-client privilege or contravene any law, rule, regulation, order,
judgment, decree, fiduciary duty or binding agreement entered into prior to the
date of this Agreement. The parties hereto will advise each other in writing if,
and make approximate substitute disclosure arrangement under circumstances in
which, the restrictions of the preceding sentence apply. Furthermore,
notwithstanding anything to the contrary herein, the Company shall not be
required to provide Parent with any information regarding a Takeover Proposal
(as hereinafter defined) except as required by Section 7.7 hereof. Parent shall
hold, and shall cause its employees, agents and representatives to hold, in
confidence all "Confidential Information" in accordance with the terms of the
Confidentiality Agreement dated October 6, 2000 between Parent and the Company,
which shall remain in full force and effect in accordance with the terms
thereof, including, without limitation, in the event of termination of this
Agreement. No investigation pursuant to this Section 7.1 shall limit any
representation or warranty of the Company.
Section 7.2 Shareholders' Meeting. The Company shall take all action
necessary, in accordance with applicable law and its Certificate of
Incorporation and By-laws, to convene the Company Special Meeting as promptly as
reasonably practicable after the date on which the SEC clears the definitive
Proxy Statement for the purpose of considering and taking action upon the Merger
and this Agreement.
Section 7.3 Public Announcements. On or before the Closing Date, Parent
and the Company shall not (nor shall they permit any of their respective
Affiliates to), without prior consultation with the other party and such other
party's review of and consent to any public announcement concerning the
transactions contemplated by this Agreement, issue any press release or make any
public announcement with respect to such Transactions except such disclosures as
may be required by law. During such period, Parent and the Company shall, to the
extent practicable, allow the other party reasonable time to review and comment
on such release or announcement in advance of its issuance and use reasonable
efforts in good faith to reflect the reasonable and good faith comments of such
other party, provided, however, no party shall be prevented from making any
disclosure required by law at the time so required. The parties
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intend that the initial announcement of the terms of the Merger shall be made by
joint press release of Parent and the Company.
Section 7.4 Undertakings by the Company
(a) The Company shall provide Parent, within ten (10) days of
the end of each calendar month, a written list of nonperforming assets (the term
"nonperforming assets," for purposes of this subsection, means (i) loans that
are "troubled debt restructuring" as defined in Statement of Financial
Accounting Standards No. 15, "Accounting by Debtors and Creditors for Troubled
Debt Restructuring," (ii) loans on nonaccrual, (iii) real estate owned, (iv) all
loans ninety (90) days or more past due as of the end of such month and (v)
impaired loans);
(b) On or before the Effective Time, and at the request of
Parent, the Company shall establish, consistent with GAAP, such additional
accruals and reserves as may be necessary to conform the accounting reserve
practices and methods (including credit loss practices and methods) of the
Company to those of Parent (as such practices and methods are to be applied to
the Company from and after the Closing Date) and Parent's plans with respect to
the conduct of the business of the Company following the Merger and otherwise to
reflect Merger-related expenses and costs incurred by the Company, provided,
however, that the Company shall not be required to take such action (i) more
than two (2) business days prior to the Closing Date and (ii) unless Parent
agrees in writing that all conditions to closing set forth in Section 8.3 have
been satisfied or waived (except for the expiration of any applicable waiting
periods); prior to the delivery by Parent of the writing referred to in the
preceding clause, the Company shall provide Parent a written statement,
certified without personal liability by the chief executive officer of the
Company and dated the date of such writing, that the representation made in
Sections 4.27(a) and (b) hereof is true as of such date or, alternatively,
setting forth in detail the circumstances that prevent such representation from
being true as of such date; and no accrual or reserve made by the Company or any
of its Subsidiaries pursuant to this subsection, or any litigation or regulatory
proceeding arising out of any such accrual or reserve, shall constitute or be
deemed to be a breach or violation of any representation, warranty, covenant,
condition or other provision of this Agreement or to constitute a termination
event within the meaning of Section 9.1 hereof. No action shall be required to
be taken by the Company pursuant to this Section 7.4 if, in the opinion of the
Company's independent auditors, such action would contravene GAAP.
Section 7.5 Efforts; Consents.
(a) Subject to the terms and conditions of this Agreement,
each of the parties hereto agrees to take, or cause to be taken, all actions and
to do, or cause to be done, all things necessary, proper or advisable to
consummate and make effective as promptly as practicable the transactions
contemplated by this Agreement and the Merger and to cooperate with each other
in connection with the foregoing. Without limiting the generality of the
foregoing, each of the Company, Merger Subsidiary and Parent shall make or cause
to be made all required filings with or applications to Regulatory Authorities
(including under the Exchange Act, the Federal Reserve Act, and the National
Bank Act, and, with respect to BNC Financial Services (if required), the New
York Insurance Law, and use its best efforts to (i) obtain all necessary
consents of all Regulatory Authorities and other third parties, necessary for
the parties to
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consummate the transactions contemplated hereby, (ii) oppose, lift or rescind
any injunction or restraining order or other order adversely affecting the
ability of the parties to consummate the transactions contemplated hereby, and
(iii) fulfill all conditions to this Agreement.
(b) Without limiting the foregoing, the Company and Parent
shall cooperate in promptly preparing and filing as soon as practicable, all
necessary documentation, to effect all applications, notices, petitions and
filings, to obtain as promptly as practicable all permits, consents, approvals
and authorizations of all third parties and Governmental and Regulatory
Authorities which are necessary or advisable to consummate the transactions
contemplated by this Agreement (including, without limitation, the Merger), and
to comply with the terms and conditions of all such permits, consents, approvals
and authorizations of all such Governmental Authorities. The Parent and the
Company shall have the right to review in advance, and, to the extent
practicable, each will consult the other on, in each case subject to applicable
laws relating to the exchange of information, all the information relating to
the Parent or the Company, as the case may be, and any of their respective
Subsidiaries, which appear in any filing made with, or written materials
submitted to, any third party or any Governmental or Regulatory Authority in
connection with the transactions contemplated by this Agreement. In exercising
the foregoing right, each of the parties hereto shall act reasonably and as
promptly as practicable. The parties hereto agree that they will consult with
each other with respect to the obtaining of all permits, consents, approvals and
authorizations of all third parties and Governmental or Regulatory Authorities
necessary or advisable to consummate the transactions contemplated by this
Agreement and each party will keep the other apprised of the status of matters
relating to completion of the transactions contemplated herein.
(c) The Parent and the Company shall, upon request, furnish
each other with all information concerning themselves, their Subsidiaries,
directors, officers and shareholders and such other matters as may be reasonably
necessary or advisable in connection with the Company Proxy Statement or any
other statement, filing, notice or application made by or on behalf of the
Parent or the Company or any of their respective Subsidiaries to any
Governmental Entity or Regulatory Authority in connection with the Merger and
the other transactions contemplated by this Agreement.
(d) The Parent and the Company shall promptly advise and
inform each other upon receiving (and the Parent shall so advise with respect to
communications received by any Affiliate of the Parent) any communication,
written or oral, from any Governmental or Regulatory Authority whose consent or
approval is required for consummation of the transactions contemplated by this
Agreement. To the extent that any such communication is in writing, the
receiving party shall furnish a copy to the other party.
Section 7.6 Notice of Breaches. The Company shall give prompt notice to
Parent, and Parent or Merger Subsidiary shall give prompt notice to the Company,
of (i) any representation or warranty made by it contained in this Agreement
which has become untrue or inaccurate in any material respect, or (ii) the
failure by it to comply with or satisfy in any material respect any covenant,
condition, or agreement to be complied with or satisfied by it under this
Agreement; provided, however, that such notification shall not excuse or
otherwise affect the representations, warranties, covenants or agreements of the
parties or the conditions to the obligations of the parties under this
Agreement.
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Section 7.7 Acquisition Proposals.
(a) The Company shall, and shall direct and cause its
officers, directors, employees, representatives and agents to, immediately cease
any discussions or negotiations with any parties that may be ongoing with
respect to a Takeover Proposal (as hereinafter defined). The Company shall not,
nor shall it permit any of its Subsidiaries to, nor shall it authorize or permit
any of its officers, directors or employees or any investment banker, financial
advisor, attorney, accountant or other representative retained by it or any of
its Subsidiaries to, directly or indirectly: (i) solicit, initiate or encourage,
including by way of furnishing information, or take any other action designed or
reasonably likely to facilitate, including, without limitation, any adoption of
any rights or similar plan, the grant of any option or proxy or otherwise except
to Parent, any inquiries or the making of any proposal which constitutes, or may
reasonably be expected to lead to, any Takeover Proposal or (ii) subject to
paragraph (b) of this Section 7.7, provide any information or data to any third
party in connection with any Takeover Proposal or participate in any discussions
or negotiations regarding any Takeover Proposal. Without limiting the foregoing,
it is understood that any violation of the restrictions set forth in the
preceding sentence by any officer or director of the Company or any of its
Subsidiaries or any investment banker, financial advisor, attorney, accountant,
or other representative of the Company or any of its Subsidiaries, whether or
not acting on behalf of the Company or any of its Subsidiaries, shall be deemed
to be a breach of this Section 7.7 by the Company. "Takeover Proposal" means any
inquiry, proposal or offer from any person relating to any direct or indirect
acquisition or purchase of 15% or more of the assets of the Company and its
Subsidiaries or 15% or more of any class of equity securities of the Company or
any of its Subsidiaries, any tender offer or exchange offer that if consummated
would result in any person beneficially owning 15% or more of any class of
equity securities of the Company or any of its Subsidiaries, any merger,
consolidation, share exchange, business combination, recapitalization,
liquidation, dissolution or similar transaction involving the Company or any of
its Subsidiaries (other than the transactions contemplated by this Agreement) or
any other transaction the consummation of which could reasonably be expected to
impede, interfere with, prevent or materially delay the Merger or which would
reasonably be expected to diminish materially the benefits to Parent of the
transactions contemplated by this Agreement.
(b) Except as set forth in this Section 7.7, neither the Board
of Directors of the Company nor any committee thereof shall: (i) withdraw or
modify, or propose publicly to withdraw or modify, in a manner adverse to
Parent, or take any action not explicitly permitted by this Agreement that would
be inconsistent with, the approval or recommendation by such Board of Directors
or such committee of the Company Proposal, (ii) approve or recommend, or propose
publicly to approve or recommend, any Takeover Proposal, (iii) provide any
information or data to any third party in connection with a Takeover Proposal or
participate in any discussions or negotiations regarding any Takeover Proposal
or (iv) cause the Company to enter into any letter of intent, agreement in
principle, acquisition agreement or other similar agreement (each, an
"Acquisition Agreement") related to any Takeover Proposal. Notwithstanding the
foregoing, in the event that prior to the Effective Time the Board of Directors
of the Company determines in good faith, upon advice from outside counsel, that
it is necessary to do so in order to comply with their fiduciary duties under
applicable law, the Board of Directors of the Company may (subject to this and
the following sentences): (x) withdraw or modify its approval or recommendation
of the Company Proposal, or (y) approve or recommend a Superior Proposal (as
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defined below) or terminate this Agreement (and concurrently with or after such
termination, if it so chooses, cause the Company to enter into any Acquisition
Agreement with respect to any Superior Proposal), but in each of the cases set
forth in this clause (y), only at a time that is after the fifth (5th) day
following Parent's receipt of written notice advising Parent that the Board of
Directors of the Company has received a Superior Proposal, specifying the
material terms and conditions of such Superior Proposal and identifying the
person making such Superior Proposal. For purposes of this Agreement, a
"Superior Proposal" means any bona fide proposal made by a third party to
acquire, directly or indirectly, for consideration consisting of cash and/or
securities, more than 50% of the voting power of the shares of the Company
Common Stock then outstanding or all or substantially all the assets of the
Company and otherwise on terms which the Board of Directors of the Company
determines in its good faith judgment (based on the advice of CIBC World
Markets, or another financial advisor mutually acceptable to the Company and
Parent) to be materially more favorable to the Company's shareholders than the
Merger and for which third-party financing, to the extent required, is then
firmly committed.
(c) In addition to the obligations of the Company set forth in
paragraphs (a) and (b) of this Section 7.7, the Company shall promptly (but in
any event within forty-eight hours of receipt) advise Parent orally and in
writing of any request by any person for information about the Company or of any
Takeover Proposal, the material terms and conditions of such request or the
Takeover Proposal and the identity of the person making such request or the
Takeover Proposal. The Company shall keep Parent fully and promptly informed of
the status and details (including amendments or proposed amendments) of any
request by any person for information about the Company or of any Takeover
Proposal.
(d) Nothing contained in this Section 7.7 shall prohibit the
Company from taking and disclosing to its shareholders a position contemplated
by Rule 14e-2(a) promulgated under the Securities Exchange Act or from making
any disclosure to the Company's shareholders if, in the good faith judgment of
the Board of Directors of the Company, after consultation with outside counsel,
failure so to disclose would be inconsistent with applicable law; provided,
however, neither the Company nor its Board of Directors nor any committee
thereof shall, except as permitted by Section 7.7(b), withdraw or modify, or
propose publicly to withdraw or modify, its position with respect to the Company
Proposal or approve or recommend, or propose publicly to approve or recommend, a
Takeover Proposal.
Section 7.8 Related Agreements. Simultaneously with the execution and
delivery of this Agreement, or as otherwise provided below, and as material
consideration for the execution and delivery of this Agreement by Parent and
Merger Subsidiary, the following Persons are executing and delivering the
agreements (collectively, the "Related Agreements"):
(a) Each of the executive officers and the other Persons
listed on Schedule 7.8(a) to this Agreement is entering into a shareholders'
voting and proxy agreement (the "Shareholders' Agreement") pursuant to which
such Persons agree to vote the shares of the Company Common Stock owned by them
in favor of the Merger and this Agreement at the Company Special Meeting and
provide the proxies named therein with such Person's irrevocable proxy with
respect to such vote.
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(b) As of the date hereof, the Company is entering into the
Lockup Option, in the form of Exhibit A, with the Parent pursuant to which the
Company grants to Parent the option to purchase 196,000 shares of Company Common
Stock for an exercise price per share of $37.00, exercisable on the terms and
conditions described therein.
Section 7.9 Advice of Changes. The Parent and the Company shall each
promptly advise the other party of any change or event having a Material Adverse
Effect on it or which it believes would or would be reasonably likely to cause
or constitute a material breach of any of its representations, warranties or
covenants contained herein; provided, however, that the delivery of any notice
pursuant to this Section shall not limit or otherwise affect the remedies
available hereunder to the party receiving such notice.
Section 7.10 Update of Disclosure Schedules. From time to time prior to
the Effective Time, the Company will promptly supplement or amend the Disclosure
Schedule to reflect any matter which, if existing, occurring or known at the
date of this Agreement, would have been required to be set forth or described in
the Disclosure Schedule or which is necessary to correct any information on the
Disclosure Schedule which has been rendered inaccurate thereby. No supplement or
amendment to the Disclosure Schedule nor any investigation by the Parent, before
or after execution of this Agreement, shall have any effect for the purpose of
determining satisfaction of the conditions set forth in Section 8.3 hereof or
compliance by the Company with the covenants set forth in Articles VI and VII
hereof.
Section 7.11 Indemnification. (a) From and after the Effective Time
through the third anniversary of the Effective Time, Parent shall indemnify and
hold harmless each present and former director, officer and employee of the
Company and Bath and its Subsidiaries determined as of the Effective Time (the
"Indemnified Parties") against any costs or expenses (including reasonable
attorneys' fees), judgments, fines, losses, claims, damages or liabilities
(collectively, "Costs") incurred in connection with any claim, action, suit,
proceeding or investigation, whether civil, criminal, administrative or
investigative, arising out of matters existing or occurring at or prior to the
Effective Time, whether asserted or claimed prior to, at or after the Effective
Time to the extent covered by directors and officers insurance maintained by the
Company (collectively, "Claims"), to the fullest extent to which such
Indemnified Parties would be entitled under New York law, the Certificate of
Incorporation and By-laws of the Company or Bath as in effect on the date
hereof.
Any Indemnified Party wishing to claim indemnification under this
Section 7.11(a), upon learning of any such claim, action, suit, proceeding or
investigation, shall promptly notify Parent, but the failure to so notify shall
not relieve Parent of any liability it may have to such Indemnified Party if
such failure does not materially prejudice Parent. In the event of any such
claim, action, suit, proceeding or investigation (whether arising before or
after the Effective Time), (i) Parent shall have the right to assume the defense
thereof and Parent shall not be liable to such Indemnified Parties for any legal
expenses of other counsel or any other expenses subsequently incurred by such
Indemnified Parties in connection with the defense thereof, except that if the
Parent elects not to assume such defense or counsel for the Indemnified Parties
advises that there are issues which raise conflicts of interest between Parent
and the Indemnified Parties, the Indemnified Parties may retain counsel which is
reasonably satisfactory to Parent and Parent shall pay, promptly as statements
therefore are received, the reasonable fees and expenses of
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such counsel for the Indemnified Parties (which may not exceed one firm in any
jurisdiction unless the use of one counsel of such Indemnified Parties would
present such counsel with a conflict of interest), (ii) the Indemnified Parties
will cooperate in the defense of any such matter, and (iii) Parent shall not be
liable for any settlement effected without its prior written consent, which
consent shall not be unreasonably withheld.
In the event that Parent or any of its respective successors or assigns
(i) consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger or
(ii) transfers all or substantially all of its properties and assets to any
person, then, and in each such case, the successors and assigns of such entity
shall assume the obligations set forth in this Section 7.11, which obligations
are expressly intended to be for the irrevocable benefit of, and shall be
enforceable by, each of the Indemnified Parties.
(b) From and after the Effective Time, Parent shall maintain a
directors' and officers' liability insurance policy covering the Indemnified
Parties Costs in connection with any Claims for a period of not less than three
(3) years after the Effective Time at annual premiums no greater than 150% of
the annual premium of the directors' and officers' liability insurance
maintained by the Company and Bath as of the date hereof.
Section 7.12 Certain Post-Merger Agreements.
The parties hereto agree to the following arrangements following the
Effective Time:
(a) Directors and Officers of the Bank. Immediately following
the Effective Time, Douglas L. McCabe shall serve as President of the Bank. As
of the Effective Time, Mr. McCabe shall enter into an employment agreement with
the Bank substantially in the form of Schedule 7.12(a)(i) hereto. As of the
Effective Time, the Bank and Edward C. Galpin shall enter into a Consulting and
Non-Compete Agreement substantially in the form of Schedule 7.12(a)(ii) hereto.
As of the Effective Time, Parent and the Bank shall take all necessary and
appropriate steps so that the Board of Directors of the Bank shall consist of
not more than 12 persons and shall include as members Edward C. Galpin, Douglas
L. McCabe and five other current directors of the Bank as shall be mutually
agreed upon by Parent and the Company.
(b) Severance and Change in Control Agreements. Any officer of
the Bank who has a severance or change in control agreement with The Bank (each
a "Contract Officer") which is disclosed on Schedule 7.12(b)(i) shall receive as
of the Effective Time, the severance or termination payments provided for in
their respective agreements ("Contract Payments") and as described and
quantified in reasonable detail on Schedule 7.12(b)(i), provided that in the
case of Mr. McCabe and Mr. Galpin, the severance payment shall be reduced as
described in Schedule 7.12(b)(i) and Exhibits 1 and 2 to Schedule 7.12(b)(ii).
As a condition to receiving their Contract Payments, each Contract Officer shall
sign and deliver to Parent a release agreement in the form set forth in the
Exhibits to Schedule 7.12(b)(ii).
(c) Employee Benefit Plans. After the Effective Time, Parent
or the Bank may take whatever action they deem appropriate with respect to the
Company Benefit Plans provided that benefits provided to current employees of
the Bank or any of its Subsidiaries who continue to be employees after the
Effective Time ("Continuing Employees") shall, in the aggregate be
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substantially similar to those offered under the current Company Benefit Plans
or to benefits offered to employees of Parent generally. Service to the Bank by
a Continuing Employee prior to the Effective Time shall be recognized as service
to Parent for purposes of eligibility to participate under the sick leave
policies, paid vacation policies, and medical, long-term disability and life
insurance plans of Parent if Continuing Employees participate in such plans of
Parent. Parent agrees that any pre-existing condition, limitation or exclusion
in its medical, long-term disability and life insurance plans shall not apply to
Continuing Employees or their covered dependents who are covered under a medical
or hospitalization indemnity plan maintained by the Bank on the Effective Time
and who then change coverage to the medical or hospitalization indemnity health
plan of Parent at the time such Continuing Employees are first given the option
to enroll. The parties agree that, as of the Effective Time, Mr. McCabe shall be
awarded options to acquire 37,000 shares of Parent Common Stock pursuant to the
terms and conditions of Parent's Stock Option Plan. Parent and the Company agree
that on or prior to the Effective time, the Bank may amend its Medical Benefits
Retirement Plan as described in Schedule 7.12(c).
ARTICLE VIII
CONDITIONS PRECEDENT
Section 8.1 Conditions to Each Party's Obligation to Effect the Merger.
The respective obligations of each party to effect the Merger shall be subject
to the fulfillment at or prior to the Effective Time of the following
conditions:
(a) This Agreement and the transactions contemplated hereby
shall have been approved and adopted by the requisite vote of the Holders of the
Company Common Stock;
(b) All necessary regulatory, governmental or third-party
approvals, waivers, clearances, authorizations and Consents (including, without
limitation, from the OCC) required to consummate the transactions contemplated
hereby shall have been obtained, all conditions required to be satisfied prior
to the Effective Time by the term of such approvals and consents shall have been
satisfied, any applicable waiting periods shall have expired or been terminated
and any other Consents from Regulatory Authorities and other third parties which
in any case are required to be received prior to the Effective Time with respect
to the transactions contemplated hereby shall have been received; and
(c) The consummation of the Merger shall not be restrained,
enjoined or prohibited by any order, judgment, decree, injunction or ruling of a
court of competent jurisdiction; provided, however, that the parties shall use
their best efforts to cause any such order, judgment, decree, injunction or
ruling to be vacated or lifted.
Section 8.2 Conditions to Obligation of the Company to Effect the
Merger. The obligation of the Company to effect the Merger shall be subject to
the fulfillment at or prior to the Effective Time of the additional conditions,
unless waived by the Company, that:
(a) The representations and warranties of Parent and Merger
Subsidiary contained in this Agreement shall be true in all material respects
when made and at and as of the
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Effective Time as if made at and as of such time, and the Company shall have
received a certificate of an authorized officer of Parent and Merger Subsidiary
to that effect.
(b) Parent and Merger Subsidiary shall have performed or
complied in all material respects with all agreements and covenants required to
be performed by each of them under this Agreement at or prior to the Effective
Time and the Company shall have received a certificate of the President of
Parent and Merger Subsidiary, without personal liability to that officer, to
that effect.
(c) The Company shall be in receipt of an opinion of counsel
from Nixon Peabody LLP, in the form of Exhibit B hereto.
Section 8.3 Conditions to Obligations of Parent and Merger Subsidiary
to Effect the Merger. The obligations of Parent and Merger Subsidiary to effect
the Merger shall be subject to the fulfillment at or prior to the Effective Time
of the additional following conditions, unless waived by Parent:
(a) The representations and warranties of the Company
contained in this Agreement shall be true in all material respects when made and
at and as of the Effective Time as if made at and as of such time, and Parent
and Merger Subsidiary shall have received a certificate of an authorized officer
of the Company, without personal liability to that officer, to that effect.
(b) The Company shall have performed or complied in all
material respects with all agreements and covenants required to be performed by
it under this Agreement at or prior to the Effective Time and Parent and Merger
Subsidiary shall have received a certificate of the President of the Company,
without personal liability to that officer, to such effect.
(c) Absence of Material Adverse Changes. There shall not have
occurred any change in the business, assets, financial condition or results of
operations of the Company or any of its Subsidiaries which has had, or is
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on the Company and its Subsidiaries taken as a whole.
(d) Parent shall be in receipt of an agreed upon procedures
letter from Urbach, Kahn & Werlin, P.C., in a form reasonably satisfactory to
the Parent and its counsel providing its review in accordance with Statements on
Auditing Standards ("SAS") No. 71, on the Company's unaudited financial
statements for the first three quarters of 2000 and the first and (provided that
the Closing Date is a date subsequent to June 30, 2001) second quarters of 2001.
(e) Parent shall be in receipt of an opinion of counsel from
Elias, Matz, Tiernan and Herrick, L.L.P. in the form of Exhibit C hereto.
(f) At or prior to the Effective Time, Company and Bank shall
deliver to Parent evidence satisfactory to Parent of the resignations of those
directors and officers of Company and Bank that are requested by Parent, such
resignations to be effective at the Effective Time. Such resignations shall not
affect any rights of those directors and officers to receive contracted-for
severance benefits to which they would otherwise be entitled.
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(g) The Related Agreements have been executed and delivered by
the respective parties thereto and continue in full force and effect.
(h) Parent and Merger Subsidiary shall have performed or
complied in all material respects with all agreements and covenants required to
be performed by each of them under this Agreement at or prior to the Effective
Time and the Company shall have received a certificate of the President of
Parent and Merger Subsidiary to that effect.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
Section 9.1 Termination. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after approval by the
shareholders of the Company:
(a) by mutual written consent of Parent and the Company;
(b) by the Company, upon a material breach of this Agreement
on the part of Parent or Merger Subsidiary which has not been cured within 30
days of written notice of such breach and which would have a Material Adverse
Effect on the Company or would materially impair the parties' abilities to
consummate the transactions contemplated hereby;
(c) by Parent, upon a material breach of this Agreement on the
part of the Company which has not been cured within 30 days of written notice of
such breach and which would have a Material Adverse Effect on the Parent or
would materially impair the parties' abilities to consummate the transaction
contemplated hereby;
(d) by Parent or the Company if any court of competent
jurisdiction shall have issued, enacted, entered, promulgated or enforced any
order, judgment, decree, injunction or ruling, after reasonable efforts on the
part of Parent and the Company to resist, resolve or lift, which permanently
restrains, enjoins or otherwise prohibits the Merger and such order, judgment,
decree, injunction or ruling shall have become final and nonappealable;
(e) by either Parent or the Company if the Merger shall not
have been consummated on or before June 30, 2001 (the "Upset Date") provided the
terminating party is not otherwise in material breach of its representations,
warranties or obligations under this Agreement;
(f) by either Parent or the Company upon written notice to the
other party 45 days after the date on which any Application for regulatory
approval shall have been denied or withdrawn at the request or recommendation of
the Regulatory Authority which must grant such regulatory approval, unless
within the 45-day period following such denial or withdrawal a petition for
rehearing or an amended Application has been filed with the applicable
Regulatory Authority, provided, however, that no party shall have the right to
terminate this Agreement pursuant to this Section 9.1(f) if such denial or
request or recommendation for withdrawal shall be due to the failure of the
party seeking to terminate this recommendation for withdrawal shall be due to
the failure of the party seeking to terminate this Agreement to perform or
observe the covenants and agreements of such party set forth herein;
<PAGE>
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(g) by either Parent or the Company if there has been no
Superior Proposal prior to the Company Special Meeting and the Company Special
Meeting (including as it may be adjourned from time to time) shall have
concluded without the Company having obtained the required shareholder approval
of this Agreement and the transactions contemplated hereby; or
(h) by the Company if it receives a Superior Proposal and the
Company's Board of Directors determines that it would be in accordance with
their fiduciary duties, based upon the advice of its outside legal counsel, to
accept the third party proposal; provided, however, that in such event the
Company shall not be permitted to terminate this Agreement pursuant to this
Section 9.1(h), (i) prior to the Special Meeting and (ii) after the Company
Special Meeting unless it has complied with the provisions of Section 7.7.
Notwithstanding any termination of this Agreement, the exercise by Parent of its
rights under the Lockup Option shall be governed by the terms of such Lockup
Option.
Section 9.2 Effect of Termination. In the event of termination of this
Agreement by either Parent or the Company, as provided in Section 9.1, this
Agreement shall forthwith become void and there shall be no liability hereunder
on the part of any of the Company, Parent or Merger Subsidiary or their
respective officers or directors; provided that Sections 9.2, 9.3 and 10.6 and
the second to last sentence of Section 7.1 shall survive the termination.
Section 9.3 Fees and Expenses.
(a) Whether or not the Merger is consummated, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated by this Agreement shall be paid by the party incurring such
expenses.
(b) In the event of a willful breach of any representation,
warranty, covenant or agreement contained in this Agreement, the breaching party
shall remain liable for any and all damages, costs and expenses, including all
reasonable attorneys' fees, sustained or incurred by the non-breaching party as
a result thereof or in connection therewith or with the enforcement of its
rights hereunder.
Section 9.4 Amendment. This Agreement may be amended by the parties
hereto at any time before or after approval hereof by the shareholders of the
Company, but, after such approval, no amendment shall be made which (i) changes
the form or decreases the amount of the Merger Consideration, (ii) in any way
materially adversely affects the rights of the Company's shareholders or (iii)
under applicable law would require approval of the Company's shareholders in any
such case referred to in clauses (i) and (ii), without the further approval of
such shareholders. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties hereto.
Section 9.5 Waiver. At any time prior to the Effective Time, the
parties hereto may, to the extent permitted by applicable law, (i) extend the
time for the performance of any of the obligations or other acts of any other
party hereto, (ii) waive any inaccuracies in the representations and warranties
by any other party contained herein or in any documents delivered by any other
party pursuant hereto and (iii) waive compliance with any of the agreements of
any other party or with any conditions to its own obligations contained herein.
Any agreement on the
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part of a party hereto to any such extension or waiver shall be valid only if
set forth in an instrument in writing signed on behalf of such party.
ARTICLE X
Section 10.1 Notices. All notices or other communications under this
Agreement shall be in writing and shall be given (and shall be deemed to have
been duly given upon receipt) by delivery in person, by telecopy (with
confirmation of receipt), or by registered or certified mail, postage prepaid,
return receipt requested, addressed as follows:
If to the Company:
Bath National Corporation
44 Liberty Street
Bath, New York 14810
Attention: Douglas McCabe, President and Chief Executive
Officer
Telecopy No.: 607-776-4510
With copies to:
Raymond A. Tiernan, Esq.
Elias, Matz, Tiernan & Herrick, L.L.P.
12th Floor, The Walker Building
734 15th Street
Washington, D.C. 20005
Telecopy: 202-347-2172
If to Parent or Merger Subsidiary:
Financial Institutions, Inc.
220 Liberty Street
Warsaw, New York 14569-0227
Attention: Peter G. Humphrey, President and Chief Executive
Officer
Telecopy: 716-786-1108
With a copy to:
Bruce J. Baker, Esq.
Nixon Peabody LLP
Clinton Square
Rochester, New York 14603
Telecopy: 716-263-1600
or to such other address as any party may have furnished to the other parties in
writing in accordance with this Section.
Section 10.2 Nonsurvival of Representations, Warranties and Agreements.
None of the representations, warranties, covenants and agreements in this
Agreement or in any instrument
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delivered pursuant to this Agreement shall survive the Effective Time, except
for those covenants and agreements contained herein and therein which by their
terms apply in whole or in part after the Effective Time, including, but not
limited to, the provisions of Sections 7.11 and 7.12 hereof.
Section 10.3 Specific Performance. The Company acknowledges that the
Company's Common Stock and the Company's business and assets are unique, and
that if the Company shall refuse to consummate the transaction contemplated by
this Agreement without cause and in breach of its obligations hereunder, such
failure by the Company will cause irreparable harm to Parent for which there
will be no adequate remedy at law, in which event Parent shall be entitled, in
addition to its other remedies at law, to specific performance of this
Agreement.
Section 10.4 Entire Agreement. This Agreement (including the documents
and instruments referred to herein), together with the Confidentiality Agreement
and the Lockup Option, constitutes the entire agreement and supersedes all other
prior agreements and understandings, both written and oral, among the parties,
or any of them, with respect to the subject matter hereof.
Section 10.5 Assignments; Parties in Interest. Neither this Agreement
nor any of the rights, interests or obligations hereunder may be assigned by any
of the parties hereto (whether by operation of law or otherwise) without the
prior written consent of the other parties. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any person
not a party hereto any right, benefit or remedy of any nature whatsoever under
or by reason of this Agreement, including to confer third party beneficiary
rights, except for the provisions of Article III and Sections 7.4, 7.6, 7.9,
7.11 and 7.12.
Section 10.6 Governing Law. This Agreement, shall be governed in all
respects by the laws of the State of New York (without giving effect to the
provisions thereof relating to conflicts of law). The exclusive venue for the
adjudication of any dispute or proceeding arising out of this Agreement or the
performance thereof shall be the courts located in the County of Monroe, State
of New York and the parties hereto and their affiliates each consents to and
hereby submits to the jurisdiction of any court located in the County of Monroe,
State of New York or Federal courts in the Western District of New York.
Section 10.7 Headings; Disclosure. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement. Any disclosure by the
Company or Parent in any portion of its respective Disclosure Schedule shall be
deemed disclosure in each other portion of such Disclosure Schedule.
Section 10.8 Certain Definitions and Rules of Construction.
(a) As used in this Agreement:
"Affiliate," as applied to any person, shall mean any other
person directly or indirectly controlling, controlled by, or under common
control with, that person; for purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling,"
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"controlled by" and "under common control with"), as applied to any person,
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of that person, whether through the
ownership of voting securities, by contract or otherwise.
"Agreement" means this Agreement and Plan of Merger.
"Applications" means the applications for regulatory approval
which are required by the transactions contemplated hereby.
"BHCA" means the Bank Holding Company Act of 1956, as amended.
"BIF" means the Bank Insurance Fund administered by the FDIC.
"Bank" means Bath National Bank, a wholly owned subsidiary of
the Company.
"Bank Regulatory Reports" means the Call Reports of the Bank
and accompanying schedules, as filed with the Federal Deposit Insurance
Corporation, for each calendar quarter beginning with the quarter ended
September 30, 1999, through the Closing Date, and all Annual, Quarterly and
Current Reports filed on Form Y-2 with the FRB by the Company from September 30,
1999 through the Closing Date.
"Business Day" shall mean any day, Monday-Friday, on which
national banks may legally be open for business in New York.
"Certificate of Merger" has the meaning set forth in Section
1.3.
"Certificates" has the meaning set forth in Section 3.2.
"Closing Date" has the meaning set forth in Section 1.2.
"Code" has the meaning set forth in Section 4.10(a).
"Company Benefit Plans" has the meaning set forth in Section
4.9.
"Company Common Stock" has the meaning set forth in Section
3.1(a).
"Company Intellectual Property Rights" has the meaning set
forth in Section 4.16(a).
"Company Contract" has the meaning set forth in Section 4.14.
"Company Permits" has the meaning set forth in Section 4.12.
"Company SEC Reports" shall have the meaning set forth in
Section 4.5(a).
"Consent" shall have the meaning set forth in Section 5.4(b).
"Disclosure Schedule" has the meaning set forth in Article IV,
Introduction.
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"Effective Time" shall have the meaning set forth in Section
1.3.
"Environmental Law" has the meaning set forth in Section 4.19.
"ERISA" shall have the meaning set forth in Section 4.9(a).
"ERISA Affiliate" has the meaning set forth in Section 4.9(a).
"Exchange Act" has the meaning set forth in Section 3.4(a).
"FDIA" means the Federal Deposit Insurance Act, as amended.
"FDIC" means the Federal Deposit Insurance Corporation.
"FHLB" means the Federal Home Loan Bank.
"FRB" means the Board of Governors of the Federal Reserve
System.
"GAAP" has the meaning set forth in Section 4.5(b).
"Hazardous Material" has the meaning set forth in Section
4.19(g).
"Information Technology" has the meaning set forth in Section
4.16(c).
"Knowledge" or any other formulation of "knowledge" shall
mean, the Knowledge of the Company's or the Bank's senior executive officers
with respect to the Company, and with respect to Parent and Merger Subsidiary,
the knowledge of Parent's senior executive officers;
"Law" means any constitution, statute, order, regulation,
directive, opinion, interpretive letter or embodiment of official action taken
at the federal or state law by an entity having jurisdiction over one or more
parties to this Agreement.
"Lien" shall have the meaning set forth in Section 5.4(a).
"Loan Property" shall have the meaning given to such term in
Section 4.19(g) of this Agreement.
"Lockup Option" shall have the meaning set forth in Section
4.2(a) and 7.9(b) of this Agreement.
"Material Adverse Effect" shall mean, with respect to the
Company and its Subsidiaries taken as a whole, Parent and its Subsidiaries taken
as a whole, and any other Person (including a Person who is a borrower or
guarantor of a Loan), a change or effect that is or is reasonably likely to be
materially adverse to the business, results of operations or financial condition
of such Person taken as a whole; provided, however, that "Material Adverse
Effect" shall not be deemed to include the impact of (a) any change in GAAP or
in banking or similar laws, rules or regulations of general applicability to
depository institutions and their holding companies (including changes in
insurance deposit assessment rates applicable to financial
<PAGE>
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institutions and their holding companies) or interpretations thereof by courts
and governmental authorities, (b) actions and omissions of the Company or the
Parent or any Subsidiaries taken with the prior written consent of the other
parties hereto, (c) changes in economic conditions affecting financial
institutions generally, including, but not limited to, changes in the general
level of market interest rates, and (d) the direct effects of compliance with
this Agreement on the operating performance of the parties including expenses
incurred by the parties hereto in consummating the transactions contemplated by
this Agreement.
"Merger Consideration" has the meaning set forth in Section
3.1(a).
"Merger Subsidiary" has the meaning set forth in the preamble
to this Agreement.
"OCC" means the Office of the Comptroller of the Currency.
"OREO" means other real estate owned as described in Section
4.27(c).
"Other Investments shall have the meaning set forth in Section
4.2(c).
"PGBC" means the Pension Benefit Guarantee Corporation as
described in 4.10(c).
"Parent Disclosure Schedule" has the meaning set forth in
Article IV, Introduction.
"Participation Facility" shall have the meaning given to such
term in Section 4.19(g) of this Agreement.
"Person" shall include individuals, corporations,
partnerships, trusts, other entities and groups (which term shall include a
"group" as such term is defined in Section 13(d)(3) of the Exchange Act);
"Proxy Statement" has the meaning set forth in Section 3.5(a).
"Quarterly Financial Statements" has the meaning set forth in
Section 4.5(c).
"Regulatory Agreement" has the meaning given to that term in
Section 4.12(b) of this Agreement.
"Regulatory Authority" means any agency or department of any
Federal or state government, including without limitation, the FDIC, the FRB,
the FHLBB, the OCC, the SEC or the respective staffs thereof.
"SEC" has meaning set forth in Section 3.5(a).
"Subsidiary" or "Subsidiaries" means, with respect to Parent,
the Company or any other person, any corporation, partnership, joint venture or
other legal entity of which Parent, the Company or such other person, as the
case may be (either alone or through or together with any other subsidiary),
owns, directly or indirectly, stock or other equity interests the Holders of
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which are generally entitled to more than 50% of the vote for the election of
the board of directors or other governing body of such corporation or other
legal entity;
"Violation" has the meaning set forth in Section 4.4(a).
"Year 2000 Ready" as the meaning set forth in Section 4.16(c).
(b) Other Rules of Construction.
(i) References in this Agreement to any gender shall include
references to all genders. Unless the context otherwise
requires, references in the singular include references in the
plural and vice versa. References to a party to this Agreement
or to other agreements described herein means those Persons
executing such agreements.
(ii) The words "include", "including" or "includes" shall be
deemed to be followed by the phrase "without limitation" or
the phrase "but not limited to" in all places where such words
appear in this Agreement.
(iii) This Agreement is the joint drafting product of Parent
and the Company and each provision has been subject to
negotiation and agreement and shall not be construed for or
against either party as drafter thereof.
(iv) Each case in this Agreement where a contract or
agreement, including this Agreement, is represented or
warranted to be enforceable will be deemed to include as a
limitation to the extent that enforceability may be subject to
applicable bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium or similar Laws affecting the
enforcement of creditors' rights generally and to general
equitable principles, whether applied in equity or at law.
(v) All references in the Agreement to financial terms shall
be deemed to refer to such terms as they are defined under
GAAP, consistently applied.
Section 10.8 Counterparts. This Agreement may be executed in two or
more counterparts which together shall constitute a single agreement.
Section 10.9 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economics or legal
substance of the transactions contemplated hereby are not affected in any manner
materially adverse to any party. Upon determination that any term or other
provision hereof is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible to the fullest extent
permitted by applicable law in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.
Section 10.10 Negotiated Agreement. This Agreement has been fully
negotiated by counsel representing each party to this Agreement. Thus, where
there is ambiguity regarding the
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meaning of particular language or terms of this Agreement, the language shall
not be construed against the drafting party.
<PAGE>
IN WITNESS WHEREOF, Parent, Merger Subsidiary and the Company have
caused this Agreement to be signed by their respective officers thereunder duly
authorized all as of the date first written above.
PARENT
FINANCIAL INSTITUTIONS, INC.
By /s/Peter G. Humphrey
-------------------------------------
Name: Peter G. Humphrey
Title: President and Chief Executive Officer
MERGER SUBSIDIARY
FI SUBSIDIARY I, INC.
By /s/Peter G. Humphrey
-------------------------------------------
Name: Peter G. Humphrey
Title: President and Chief Executive Officer
COMPANY
BATH NATIONAL CORPORATION
By /s/Douglas McCabe
------------------------------------------
Name: Douglas McCabe
Title: President
<PAGE>
Exhibit 3
SHAREHOLDERS' VOTING AGREEMENT AND IRREVOCABLE PROXY
SHAREHOLDERS' VOTING AGREEMENT AND IRREVOCABLE PROXY, dated as of
November 2, 2000, among FINANCIAL INSTITUTIONS, INC. ("Parent"), a New York
corporation, FI SUBSIDIARY I, INC. ("Merger Subsidiary"), a New York corporation
and a wholly-owned subsidiary of Parent, and each of the shareholders of BATH
NATIONAL CORPORATION (the "Company"), a New York corporation, who are listed on
and execute the signature pages attached hereto (each, a "Shareholder" and,
collectively, the "Shareholders").
WHEREAS, each Shareholder is the record and beneficial owner of the
number of shares of the Company set forth opposite his name on Schedule A
attached hereto (such shares, together with any other shares of capital stock of
the Company acquired by such Shareholder after the date hereof and during the
term of this Agreement (including through the exercise of any stock options,
warrants or similar instruments) being collectively referred to herein as the
"Subject Shares" of such Shareholder);
WHEREAS, the respective Boards of Directors of Parent, Merger
Subsidiary and the Company have approved the merger of the Company with and into
Merger Subsidiary (the "Merger") in accordance with the laws of the State of New
York and the provisions of a certain Agreement and Plan of Merger dated as of
November ___, 2000 (as the same may be amended, supplemented or otherwise
modified in accordance with its terms, the "Merger Agreement");
WHEREAS, Section 7.8(a) of the Merger Agreement requires the
Shareholders to execute and deliver this Agreement to Parent and Merger
Subsidiary;
NOW, THEREFORE, in consideration of the foregoing premises and the
representations, warranties and agreements contained herein, and for other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto, intending to be legally bound, agree as
follows:
1. Representations and Warranties of Each Shareholder. Each Shareholder
hereby, severally and not jointly, represents and warrants to Parent and Merger
Subsidiary that, except as disclosed in the Company Disclosure Schedule which
was delivered to Parent in connection with the Merger Agreement:
(1) Authority Relative to this Agreement. Such Shareholder has
the necessary power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. This Agreement has been duly
executed and delivered by such Shareholder, and assuming the due authorization,
execution and delivery by Parent and Merger Subsidiary, constitutes the valid
and binding obligation of such Shareholder enforceable against such Shareholder
in accordance with its terms except as such enforceability may be limited by
general principles of equity or principles applicable to creditors' rights
generally.
(2) The Subject Shares. Such Shareholder is the record and
beneficial owner of, or is the trustee that is the record holder of, and whose
beneficiaries are the beneficial owners of, and has good and valid title to, the
Subject Shares set forth opposite his name on Schedule A attached hereto. Such
Shareholder does not own, of record or beneficially, any shares of capital stock
of the Company other than the Subject Shares set forth opposite his name on
Schedule A
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attached hereto. The Subject Shares do not include shares over which such
Shareholder exercises control in a fiduciary capacity and no representation by
Shareholders is made thereby pursuant to the terms hereof. Such Shareholder has
the sole right to vote such Subject Shares and none of such Subject Shares are
subject to any voting trust or other agreement, arrangement or restriction with
respect to the voting of such Subject Shares, except as contemplated by this
Agreement.
2. Covenants of Each Shareholder. Each Shareholder hereby, severally
and not jointly, covenants and agrees with Parent and each other Shareholder as
follows:
(1) At any meeting of shareholders of the Company called to
vote upon the Merger and/or the Merger Agreement or at any adjournment thereof
or in any other circumstances upon which a vote, consent or other approval
(including by written consent) with respect to the Merger and/or the Merger
Agreement is sought, each Shareholder shall cause the Subject Shares to be
present at any such meeting for purposes of establishing and maintaining a
quorum and shall vote (or cause to be voted) the Subject Shares of such
Shareholder, including by executing a written consent solicitation if requested
by Parent or Merger Subsidiary, in respect of which such Shareholder then has or
exercises voting control, in favor of the Merger, the adoption by the Company of
the Merger Agreement and the approval of the terms thereof, each of the
transactions contemplated thereby and such other matters, if any, as may be
reasonably requested by Parent and/or Merger Subsidiary.
(2) At any meeting of shareholders of the Company or at any
adjournment thereof or in any other circumstances upon which such Shareholder's
votes, consents or other approvals are sought, such Shareholder shall vote (or
cause to be voted) the Subject Shares of such Shareholder, including by
executing a written consent solicitation if requested by Parent or Merger
Subsidiary, in respect of which such Shareholder then has or exercises voting
control, against (i) any merger agreement, merger (other than the Merger
Agreement and the Merger), consolidation, combination, share exchange, sale of
substantial assets, reorganization, recapitalization, dissolution, liquidation
or winding up of or by the Company (collectively, a "Takeover Proposal"), and
(ii) any amendment of the Company's certificate of incorporation or by-laws or
other proposal or transaction involving the Company or any of its subsidiaries,
which amendment or other proposal or transaction would be reasonably likely to
impede, frustrate, prevent, hinder, delay or nullify the Merger Agreement, the
Merger, this Agreement or any of the transactions contemplated thereby or hereby
or change in any manner the voting rights of any class of common stock or other
voting securities of the Company. Such Shareholder further agrees not to commit
or agree to take any action or enter into any agreement inconsistent with the
foregoing.
(3) Such Shareholder hereby waives, and agrees not to
exercise, any appraisal rights under the New York Business Corporation Law in
connection with the Merger.
3. Restrictions on Transfer. Each Shareholder, severally and not
jointly, covenants and agrees with Parent and Merger Subsidiary that, prior to
the Effective Time, neither such Shareholder nor any of his affiliates shall,
directly or indirectly, (1) give, offer, sell, transfer, assign, pledge,
hypothecate or otherwise dispose of the record or beneficial ownership of (any
such act, a "Transfer"), or consent to any Transfer of, any or all of the
Subject Shares of
<PAGE>
-3-
Shareholder or any interest therein, (2) enter into any contract, option,
commitment or other arrangement (including any profit sharing arrangement) with
respect to the Transfer of the Subject Shares, or (3) enter into any other
voting arrangement, whether by proxy, voting agreement, voting trust,
power-of-attorney or otherwise with respect to the Subject Shares.
4. Grant of Irrevocable Proxy; Appointment of Proxy.
(1) Each Shareholder hereby irrevocably and severally grants
to, and appoints, Parent and Peter G. Humphrey, or either of them, and any
individual who shall hereafter succeed Mr. Humphrey as Chairman and CEO of
Parent, and each of them individually, such Shareholder's proxy and
attorney-in-fact (with full power of substitution), for and in the name, place
and stead of such Shareholder, to vote such Shareholder's Subject Shares, or
grant a consent or approval in respect of such Subject Shares, in a manner
consistent with Section 2(1) and 2(2) hereof.
(2) Each Shareholder severally represents that any proxies
heretofore given in respect of such Shareholder's Subject Shares are not
irrevocable, or if irrevocable that, upon execution and delivery of this
Agreement, the valid consent to the revocation of such proxies from the party or
parties to whom such proxies were heretofore granted will be obtained and any
such proxies are hereby revoked to the extent necessary to effect the
transactions contemplated by this Agreement. Each Shareholder understands and
acknowledges that Parent and Merger Subsidiary are entering into the Merger
Agreement in reliance upon such Shareholder's execution, delivery and
performance of this Agreement.
(3) Each Shareholder hereby affirms that the irrevocable proxy
set forth in this Section 4 is given in connection with the execution of the
Merger Agreement, and that such irrevocable proxy is given to secure the
performance of the duties of such Shareholder in accordance with this Agreement.
Such Shareholder hereby further affirms that his irrevocable proxy is coupled
with an interest and may under no circumstances be revoked. Such irrevocable
proxy is executed and intended to be irrevocable in accordance with the
applicable provisions of the New York Business Corporation Law. Such irrevocable
proxy shall be valid until termination of this Agreement pursuant to Section 5
hereof.
5. Termination. This Agreement shall terminate immediately upon the
termination of the Merger Agreement by Parent, Merger Subsidiary and/or the
Company in accordance with the terms of the Merger Agreement; provided, however,
that no termination of this Agreement shall relieve any party hereto from
liability for breach of this Agreement prior to such termination.
Notwithstanding the foregoing, Section 8 hereof shall survive any termination of
this Agreement.
6. Several Obligations. Notwithstanding any other provision hereof,
each Shareholder's obligations hereunder are several, and not joint and several.
Upon execution hereof by Parent, Merger Subsidiary and any Shareholder, this
Agreement shall be binding upon and inure to the benefit of Parent, Merger
Subsidiary and each such Shareholder, regardless of the failure of any other
party listed on the signature page hereto to execute this Agreement.
<PAGE>
-4-
7. General Provisions.
(1) Notices. All notices or other communications under this
Agreement shall be in writing and shall be given (and shall be deemed to have
been duly given upon receipt) by delivery in person, by telecopy (with
confirmation of receipt), or by registered or certified mail, postage prepaid,
return receipt requested, addressed to the parties at their respective addresses
as set forth in Section 10.1 of the Merger Agreement or on Schedule A attached
hereto, as applicable, or to such other address as any party may have furnished
to the other parties in writing in accordance with this Section 7(1).
(2) Specific Performance. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. Accordingly, the parties further agree that each party shall
be entitled to an injunction or restraining order to prevent breaches of this
Agreement and to enforce specifically the terms and provisions hereof in any
court of the United States or any state having jurisdiction, this being in
addition to any other right or remedy to which such party may be entitled under
this Agreement, at law or in equity.
(3) Entire Agreement. This Agreement (including the documents
and instruments referred to herein) constitutes the entire agreement and
supersedes all other prior agreements and understandings, both written and oral,
among the parties, or any of them, with respect to the subject matter hereof.
(4) Assignments; Parties in Interest. Neither this Agreement
nor any of the rights, interests or obligations hereunder may be assigned by any
of the parties hereto (whether by operation of law or otherwise) without the
prior written consent of the other parties. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, its successors and
permitted assigns, and nothing in this Agreement, express or implied, is
intended to or shall confer upon any person not a party hereto any right,
benefit or remedy of any nature whatsoever under or by reason of this Agreement,
including conferring third party beneficiary rights.
(5) Effect. This Agreement relates solely to the capacity of
the undersigned as Shareholders or other beneficial owners of the Subject Shares
and is not in any way intended to affect the exercise by the undersigned of the
undersigned's responsibilities as directors of the Company or Bath National
Bank. It is further understood and agreed that this Agreement is not in any way
intended to affect the exercise by the undersigned of any fiduciary
responsibility which the undersigned may have in respect to any of the Subject
Shares held by the undersigned as of the date hereof.
(6) Governing Law. This Agreement shall be governed in all
respects by the laws of the State of New York (without giving effect to the
provisions thereof relating to conflicts of law). The exclusive venue for the
adjudication of any dispute or proceeding arising out of this Agreement or the
performance hereof shall be the courts located in the County of Monroe, State of
New York and the parties hereto and their affiliates each consents to and hereby
submits to the jurisdiction of any court located in the County of Monroe, State
of New York or Federal courts in the Western District of New York.
<PAGE>
-5-
(7) Headings. The descriptive headings herein are inserted for
convenience of reference only and are not intended to be part of or to affect
the meaning or interpretation of this Agreement.
(8) Certain Rules of Construction. References in this
Agreement to any gender shall include references to all genders. Unless the
context otherwise requires, references in the singular include references in the
plural and vice versa. References to a party to this Agreement or to other
agreements described herein means those persons executing such agreements. This
Agreement is the joint drafting product of Parent, Merger Subsidiary and each
Shareholder and each provision has been subject to negotiation and agreement and
shall not be construed for or against any party as drafter thereof. Capitalized
terms used but not defined herein shall have the meanings ascribed to them in
the Merger Agreement.
(9) Counterparts. This Agreement may be executed in two or
more counterparts which together shall constitute a single agreement.
(10) Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect. Upon determination that any term
or other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible to the fullest
extent permitted by applicable law in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.
8. Confidentiality; Public Announcements. Each Shareholder recognizes
that successful consummation of the transactions contemplated by this Agreement
(including the Merger) may be dependent upon confidentiality with respect to the
matters referred to herein. In this connection, pending public disclosure
thereof by Parent, Merger Subsidiary and/or the Company pursuant to the terms of
the Merger Agreement, each Shareholder hereby agrees not to issue any press
release or make any other public statement or disclose or discuss such matters
with anyone not a party to this Agreement (other than such Shareholder's counsel
and advisors, if any) without the prior written consent of Parent, except as
required by law.
<PAGE>
IN WITNESS WHEREOF, Parent, Merger Subsidiary and each Shareholder
listed on the attached signature pages have caused this Agreement to be signed
as of the date first written above.
Financial Institutions Inc.
By:/s/Peter G. Humphrey
-------------------------------
Peter G. Humphrey
President and Chief Executive Officer
FI Subsidiary I, Inc.
By:/s/Peter G. Humphrey
-------------------------------
Peter G. Humphrey
President and Chief Executive Officer
<PAGE>
SIGNATURE PAGE TO SHAREHOLDER'S VOTING AND PROXY AGREEMENT
Name of Shareholder:
/s/Laverne H. Billings
--------------------------
Number of Subject Shares Owned as of
November ____, 2000
Number of Shares of Common Stock
Beneficially Owned _________
Notice Address:
<PAGE>
SIGNATURE PAGE TO SHAREHOLDER'S VOTING AND PROXY AGREEMENT
Name of Shareholder:
/s/Theodore P. Capron
--------------------------
Number of Subject Shares Owned as of
November ____, 2000
Number of Shares of Common Stock
Beneficially Owned _________
Notice Address:
<PAGE>
SIGNATURE PAGE TO SHAREHOLDER'S VOTING AND PROXY AGREEMENT
Name of Shareholder:
/s/Robert H. Cole
--------------------------
Number of Subject Shares Owned as of
November ____, 2000
Number of Shares of Common Stock
Beneficially Owned _________
Notice Address:
<PAGE>
SIGNATURE PAGE TO SHAREHOLDER'S VOTING AND PROXY AGREEMENT
Name of Shareholder:
/s/Herbert Fort
--------------------------
Number of Subject Shares Owned as of
November ____, 2000
Number of Shares of Common Stock
Beneficially Owned _________
Notice Address:
<PAGE>
SCHEDULE A
SIGNATURE PAGE TO SHAREHOLDER'S VOTING AND PROXY AGREEMENT
Name of Shareholder:
/s/Edward C. Galpin
--------------------------
Number of Subject Shares Owned as of
November ____, 2000
Number of Shares of Common Stock
Beneficially Owned _________
Notice Address:
<PAGE>
SIGNATURE PAGE TO SHAREHOLDER'S VOTING AND PROXY AGREEMENT
Name of Shareholder:
/s/Lisle E. Hopkins
--------------------------
Number of Subject Shares Owned as of
November ____, 2000
Number of Shares of Common Stock
Beneficially Owned _________
Notice Address:
<PAGE>
SIGNATURE PAGE TO SHAREHOLDER'S VOTING AND PROXY AGREEMENT
Name of Shareholder:
/s/Lawrence C. Howell
--------------------------
Number of Subject Shares Owned as of
November ____, 2000
Number of Shares of Common Stock
Beneficially Owned _________
Notice Address:
<PAGE>
SIGNATURE PAGE TO SHAREHOLDER'S VOTING AND PROXY AGREEMENT
Name of Shareholder:
/s/Constance Manikas
--------------------------
Number of Subject Shares Owned as of
November ____, 2000
Number of Shares of Common Stock
Beneficially Owned _________
Notice Address:
<PAGE>
SIGNATURE PAGE TO SHAREHOLDER'S VOTING AND PROXY AGREEMENT
Name of Shareholder:
/s/Douglas L. McCabe
--------------------------
Number of Subject Shares Owned as of
November ____, 2000
Number of Shares of Common Stock
Beneficially Owned _________
Notice Address:
<PAGE>
SIGNATURE PAGE TO SHAREHOLDER'S VOTING AND PROXY AGREEMENT
Name of Shareholder:
/s/Joseph F. Meade. Jr.
--------------------------
Number of Subject Shares Owned as of
November ____, 2000
Number of Shares of Common Stock
Beneficially Owned _________
Notice Address:
<PAGE>
SIGNATURE PAGE TO SHAREHOLDER'S VOTING AND PROXY AGREEMENT
Name of Shareholder:
/s/Freeman H. Smith, III
--------------------------
Number of Subject Shares Owned as of
November ____, 2000
Number of Shares of Common Stock
Beneficially Owned _________
Notice Address:
<PAGE>
SIGNATURE PAGE TO SHAREHOLDER'S VOTING AND PROXY AGREEMENT
Name of Shareholder:
/s/Patrick Sullivan
--------------------------
Number of Subject Shares Owned as of
November ____, 2000
Number of Shares of Common Stock
Beneficially Owned _________
Notice Address:
<PAGE>
SIGNATURE PAGE TO SHAREHOLDER'S VOTING AND PROXY AGREEMENT
Name of Shareholder:
/s/Alan J. Wilcox
--------------------------
Number of Subject Shares Owned as of
November ____, 2000
Number of Shares of Common Stock
Beneficially Owned _________
Notice Address:
<PAGE>
NAME AND ADDRESS OWNED SUBJECT SHARES
Laverne H. Billings 7,070
Theodore P. Capron 2,400
Robert H. Cole 15,653
Herbert Fort (LIVING TRUST) 842
Edward C. Galpin 7,909
Lisle E. Hopkins 10,969
(L.E. Hopkins Family Partnership)
Lawrence C. Howell 2,955
Constance Manikas 1,020
Douglas L. McCabe 2,423
Joseph F. Meade, Jr. 12,000
Freeman H. Smith, III 12,000
Patrick Sullivan 10,314
Alan J. Wilcox 700
<PAGE>
Exhibit 4
STOCK OPTION AGREEMENT
This Stock Option Agreement (this "Agreement") is made as of the 2nd
day of November, 2000, between Financial Institutions, Inc., a New York
corporation ("Grantee"), and Bath National Corporation, a New York corporation
("Issuer").
RECITALS
Grantee, FI Subsidiary I, Inc. and Issuer are entering into an
Agreement and Plan of Merger, dated as of the date hereof (the "Plan"), which is
being executed by the parties hereto simultaneously with the execution of this
Agreement.
As a condition and inducement to Grantee's entering into the Plan and
in consideration therefor, Issuer has agreed to grant Grantee the Option (as
defined below).
In consideration of the foregoing and the mutual covenants and
agreements set forth herein and in the Plan, the parties hereto agree as
follows:
Section 1. Grant of Option.
(a) Issuer hereby grants to Grantee an unconditional, irrevocable
option (the "Option") to purchase, subject to the terms hereof, One hundred
ninety six thousand (196,000) fully paid and nonassessable shares (the "Option
Shares") of Common Stock, par value $5.00 per share (the "Common Stock"), of
Issuer at a price per share equal to $37 per share (the "Initial Price");
provided, however, that in the event Issuer issues or agrees to issue (other
than pursuant to options and warrants to issue Common Stock or shares of
convertible stock convertible into shares of Common Stock in effect or
outstanding as of the date hereof) any shares of Common Stock at a price less
than the Initial Price (as adjusted pursuant to Section 3(b) hereof), such price
shall be equal to such lesser price (such price, as adjusted as hereinafter
provided, the "Option Price"). The number of shares of Common Stock that may be
received upon the exercise of the Option and the Option Price are subject to
adjustment as herein set forth.
Section 2. Exercise of Option.
(a) Timing of Exercise, Termination. Grantee may exercise the Option,
in whole or part, at any time and from time to time subsequent to the occurrence
of a Purchase Event (as defined below); provided that the Option shall terminate
and be of no further force and effect upon the earliest to occur of (i) the time
immediately prior to the Effective Time, (ii) 12 months after the first
occurrence of a Purchase Event, (iii) termination of the Plan in accordance with
the terms thereof prior to the occurrence of a Purchase Event (other than a
termination of the Plan by Grantee pursuant to Section 9.1(c) thereof due to a
willful breach by Issuer of any representation, warranty or agreement contained
therein or by Grantee and Issuer pursuant to Section 9.1(a) thereof if Grantee
shall at that time have been entitled to terminate the Plan pursuant to Section
9.1(c) thereof due to a willful breach by Issuer of any representation, warranty
or agreement contained therein) or (iv) 18 months after the termination of the
Plan by Grantee pursuant to Section 9.1(c) thereof due to a willful breach by
Issuer of any representation, warranty or agreement contained therein or by
Grantee and Issuer pursuant to Section 9.1(a) thereof if Grantee shall at that
time have been entitled to terminate the Plan pursuant to Section 9.1(c) thereof
due to a willful breach by Issuer of any representation, warranty or
<PAGE>
-2-
agreement contained therein. The events described in clauses (i) - (iv) in the
preceding sentence are hereinafter collectively referred to as an "Exercise
Termination Event." Notwithstanding anything to the contrary contained herein,
the Option may not be exercised at any time when Grantee is in material breach
of any of its representations, warranties or agreements contained in the Plan
such that Issuer would be entitled to terminate the Plan pursuant to Section
9.1(b) thereof.
(b) Purchase Event. The term "Purchase Event" shall mean the
acquisition by any Person (other than Grantee or any Grantee Subsidiary or any
Issuer Subsidiary acting in a fiduciary capacity in the ordinary course of
business (provided that the foregoing exception shall not apply to any Person
for whom or which such Issuer Subsidiary is acting in such fiduciary capacity))
of Beneficial Ownership of shares of Common Stock, such that, upon the
consummation of such acquisition, such Person has Beneficial Ownership, in the
aggregate, of 20% or more of the then outstanding shares of Common Stock
(c) Notice by Issuer. Issuer shall notify Grantee promptly in writing
of the occurrence of any Purchase Event; provided, however, that the giving of
such notice by Issuer shall not be a condition to the right of Grantee to
exercise the Option.
(d) Notice of Exercise. In the event that Grantee is entitled to and
wishes to exercise the Option, it shall send to Issuer a written notice (the
"Option Notice" and the date of which being hereinafter referred to as the
"Notice Date") specifying (i) the total number of shares of Common Stock it will
purchase pursuant to such exercise, (ii) the aggregate purchase price as
provided herein, and (iii) a period of time (that shall not be less than three
business days nor more than twenty (20) business days) running from the Notice
Date (the "Closing Date") and a place at which the closing of such purchase
shall take place; provided, that, if prior notification to or approval of the
Federal Reserve Board or any other Regulatory Authority is required in
connection with such purchase (each, a "Notification" or an "Approval," as the
case may be), (a) Grantee shall promptly file, or cause to be filed, the
required notice or application for approval ("Notice/Application"), (b) Grantee
shall expeditiously process, or cause to be expeditiously processed, the
Notice/Application, and (c) for the purpose of determining the Closing Date
pursuant to clause (iii) of this sentence, the period of time that otherwise
would run from the Notice Date shall instead run from the later of (x) in
connection with any Notification, the date on which any required notification
periods have expired or been terminated, and (y) in connection with any
Approval, the date on which such approval has been obtained and any requisite
waiting period or periods shall have expired. For purposes of Section 2(a)
hereof, any exercise of the Option shall be deemed to occur on the Notice Date
relating thereto.
(e) Payments. At the closing referred to in Section 2(e) hereof,
Grantee shall pay to Issuer the aggregate Option Price for the shares of Common
Stock specified in the Option Notice in immediately available funds by wire
transfer to a bank account designated by Issuer; provided,
<PAGE>
-3-
however, that failure or refusal of Issuer to designate such a bank account
shall not preclude Grantee from exercising the Option.
(f) At the initial closing referred to in Section 2(e) hereof, Issuer
shall pay Grantee an amount in cash equal to three million dollars ($3,000,000)
less the difference between (A) the market/offer price (as defined in Section
7(a)) of the Common Stock and (B) $37.00; multiplied by 196,000.
(g) Delivery of Common Stock. At such closing, subject to any requisite
Notification and/or Approval having been made or given and being in full force
and effect, and only following payment as set forth in Section 2(e) hereof,
Issuer shall deliver to Grantee a certificate or certificates representing the
number of shares of Common Stock specified in the Option Notice and, if the
Option should be exercised in part only, a new Option evidencing the rights of
Grantee thereof to purchase the balance of the shares of Common Stock
purchasable hereunder. Grantee shall deliver to Issuer a letter at such closing
that Grantee will not offer to sell or otherwise dispose of any Option Shares in
violation of applicable law or the terms of this Agreement.
(h) Common Stock Certificates. Certificates for Common Stock delivered
at a closing hereunder shall be endorsed with a restrictive legend substantially
as follows:
The transfer of the shares represented by this certificate is
subject to resale restrictions arising under the Securities
Act of 1933, as amended, and the certain provisions of an
agreement between Financial Institutions Inc. and Bath
National Corporation ("Issuer") dated as of the 2nd day of
November, 2000. A copy of such agreement is on file at the
principal office of Issuer and will be provided to the holder
hereof without charge upon receipt by Issuer of a written
request therefor.
It is understood and agreed that: (i) the reference to the resale restrictions
of the Securities Act in the above legend shall be removed by delivery of
substitute certificate(s) without such reference if Grantee shall have delivered
to Issuer a copy of a letter from the staff of the Securities and Exchange
Commission, or an opinion of counsel, in form and substance reasonably
satisfactory to Issuer, to the effect that such legend is not required for
purposes of the Securities Act; (ii) the reference to the provisions of this
Agreement in the above legend shall be removed by delivery of substitute
certificate(s) without such reference if the shares have been sold or
transferred in compliance with the provisions of this Agreement and under
circumstances that do not require the retention of such reference; and (iii) the
legend shall be removed in its entirety if the conditions in the preceding
clauses (i) and (ii) are both satisfied. In addition, such certificates shall
bear any other legend as may be required by law.
(i) Holder of Record. Upon the giving by Grantee to Issuer of an Option
Notice and the tender of the applicable purchase price in immediately available
funds on the Closing Date, subject to any requisite Notification and/or Approval
having been made or given and being in full force and effect, Grantee shall be
deemed to be the holder of record of the number of shares of Common Stock
specified in the Option Notice, notwithstanding that the stock transfer books
<PAGE>
-4-
of Issuer shall then be closed or that certificates representing such shares of
Common Stock shall not then actually be delivered to Grantee. Issuer shall pay
all expenses and any and all United States federal, state and local taxes and
other charges that may be payable in connection with the preparation, issue and
delivery of stock certificates under this Section 2 in the name of Grantee.
Section 3. Issuer's Covenants.
(a) Available Shares. Issuer agrees that it shall at all times until
the termination of this Agreement have reserved for issuance upon the exercise
of the Option that number of authorized and reserved shares of Common Stock
equal to the maximum number of shares of Common Stock at any time and from time
to time issuable hereunder, all of which shares shall, upon issuance pursuant
hereto, be duly authorized, validly issued, fully paid, nonassessable, and
delivered free and clear of all claims, liens, encumbrances and security
interests and not subject to any preemptive rights.
(b) Compliance. Issuer agrees that it shall not, by amendment of its
articles of incorporation or through reorganization, consolidation, merger,
dissolution or sale of assets, or by any other voluntary act, avoid or seek to
avoid the observance or performance of any of the covenants, stipulations or
conditions to be observed or performed hereunder by Issuer.
(c) Certain Actions, Applications and Arrangements. Issuer shall
promptly take all action as may from time to time be required (including (i)
complying with all premerger notification, reporting and waiting period
requirements specified in 15 U.S.C. ss. 18a and regulations promulgated
thereunder, and (ii) in the event, under the Bank Holding Company Act of 1956,
as amended (the "B.H.C. Act"), or the Change in Bank Control Act of 1978, as
amended, or any state banking law, prior approval of or notice to the Federa1
Reserve Board or to any other Regulatory Authority is necessary before the
option may be exercised, cooperating with Grantee in preparing such applications
or notices and providing such information to each such Regulatory Authority as
it may require) in order to permit Grantee to exercise the Option and Issuer
duly and effectively to issue shares of Common Stock pursuant hereto, and to
protect the rights of Grantee against dilution.
Section 4. Exchange of Option. This Agreement and the Option granted
hereby are exchangeable, without expense, at the option of Grantee, upon
presentation and surrender of this Agreement at the principal office of Issuer,
for other agreements providing for Options of different denominations entitling
the holder thereof to purchase, on the same terms and subject to the same
conditions as are set forth herein, in the aggregate the same number of shares
of Common Stock purchasable hereunder. The terms "Agreement" and "Option" as
used in this Section 4 include any agreements and related options for which this
Agreement and the Option granted hereby may be exchanged. Upon receipt by Issuer
of evidence reasonably satisfactory to it of the loss, theft, destruction or
mutilation of this Agreement, and (in the case of loss, theft or destruction) of
reasonably satisfactory indemnification, and upon surrender and cancellation of
this Agreement, if mutilated, Issuer shall execute and deliver a new Agreement
of like tenor and date. Any such new Agreement executed and delivered shall
constitute an additional contractual obligation on the part of Issuer, whether
or not the Agreement so lost, stolen, destroyed or mutilated shall at any time
be enforceable by anyone.
<PAGE>
-5-
Section 5. Adjustments. The number of shares of Common Stock
purchasable upon the exercise of the Option shall be subject to adjustment from
time to time as follows:
(a) In the event of any change in the Common Stock by reason of stock
dividends, split-ups, mergers, recapitalizations, combinations, subdivisions,
conversions, exchanges of shares or the like, the type and number of shares of
Common Stock purchasable upon exercise hereof shall be appropriately adjusted
and proper provision shall be made so that, in the event that any additional
shares of Common Stock are to be issued or otherwise to become outstanding as a
result of any such change (other than pursuant to an exercise of the Option),
the number of shares of Common Stock that remain subject to the Option shall be
increased so that, after such issuance and together with shares of Common Stock
previously issued pursuant to the exercise of the Option (as adjusted on account
of any of the foregoing changes in the Common Stock), it represents the same
proportion of the number of shares of Common Stock then issued and outstanding
as such proportion before the applicable event described in this Section 5(a).
(b) Whenever the number of Option Shares purchasable upon exercise
hereof is adjusted as provided in this Section 5, the Option Price shall be
adjusted by multiplying the Option Price by a fraction, the numerator of which
shall be equal to the number of Option Shares purchasable prior to the
adjustment and the denominator of which shall be equal to the number of Option
Shares purchasable after the adjustment.
Section 6. Registration Rights.
(a) Upon the occurrence of a Purchase Event that occurs prior to an
Exercise Termination Event, Issuer shall, at the request of Grantee (whether on
its own behalf or on behalf of any subsequent holder of the Option (or part
thereof) or any holder of the shares of Common Stock issued pursuant hereto),
promptly prepare, file and keep current a registration statement under the
Securities Act covering any shares issued and issuable pursuant to the Option
and shall use its best efforts to cause such registration statement to become
effective and remain current in order to permit the sale or other disposition of
any shares of Common Stock issued upon total or partial exercise of the Option
in accordance with any plan of disposition requested by Grantee. Issuer shall
use its best efforts to cause such registration statement first to become
effective and then to remain effective for such period not in excess of 180 days
from the day such registration statement first becomes effective. Grantee shall
have the right to demand two such registrations at Issuer's expense. Grantee
shall provide all information reasonably requested by Issuer for inclusion in
any registration statement to be filed hereunder. In connection with any such
registration, Issuer and Grantee shall provide each other with representations,
warranties, indemnities and other agreements customarily given in connection
with such registrations. If requested by Grantee in connection with such
registration, Issuer and Grantee shall become a party to any underwriting
agreement relating to the sale of such shares, but only to the extent of
obligating themselves in respect of representations, warranties, indemnities and
other agreements customarily included in such underwriting agreements.
(b) In the event that Grantee requests Issuer to file a registration
statement following the failure to obtain any approval required to exercise the
Option as described in Section 9 hereof, the closing of the sale or other
disposition of the Common Stock or other securities
<PAGE>
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pursuant to such registration statement shall occur substantially simultaneously
with the exercise of the Option.
(c) Except where applicable state law prohibits such payments, Issuer
shall pay all expenses (including without limitation registration fees,
qualification fees, blue sky fees and expenses (including the fees and expenses
of counsel), legal expenses, including the reasonable fees and expenses of one
counsel to the holders whose Option Shares are being registered, printing
expenses and the costs of special audits or "cold comfort" letters, expenses of
underwriters, excluding discounts and commissions but including liability
insurance if Issuer so desires or the underwriters so require, and the
reasonable fees and expenses of any necessary special experts) in connection
with each registration pursuant to this Section 6 (including the related
offerings and sales by holders of option Shares) and all other qualifications,
notification or exemptions pursuant to this Section 6.
(d) In connection with any registration under this Section 6, Issuer
hereby indemnifies Grantee, and each officer, director and controlling person of
Grantee, and each underwriter thereof, including each person, if any, who
controls such holder or underwriter within the meaning of Section 15 of the
Securities Act, against all expenses, losses, claims, damages and liabilities
caused by any untrue, or alleged untrue, statement contained in any registration
statement or prospectus or notification or offering circular (including any
amendments or supplements thereto) or any preliminary prospectus, or caused by
any omission, or alleged omission, to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
except insofar as such expenses, losses, claims, damages or liabilities of such
indemnified party are caused by any untrue statement or alleged untrue statement
that was included by Issuer in any such registration statement or prospectus or
notification or offering circular (including any amendments or supplements
thereto) in reliance upon and in conformity with, information furnished in
writing to Issuer by such indemnified party expressly for use therein, and
Issuer and each officer, director and controlling person of Issuer shall be
indemnified by such Grantee, or by such underwriter, as the case may be, for all
such expenses, losses, claims, damages and liabilities caused by any untrue, or
alleged untrue, statement, that was included by Issuer in any such registration
statement or prospectus or notification or offering circular (including any
amendments or supplements thereto) in reliance upon, and in conformity with,,
information furnished in writing to Issuer by such holder or such underwriter,
as the case may be, expressly for such use.
Promptly upon receipt by a party indemnified under this Section 6(d) of
notice of the commencement of any action against such indemnified party in
respect of which indemnity or reimbursement may be sought against any
indemnifying party under this Section 6(d), such indemnified party shall notify
the indemnifying party in writing of the commencement of such action, but the
failure so to notify the indemnifying party shall not relieve it of any
liability which it may otherwise have to any indemnified party under this
Section 6(d). In case notice of commencement of any such action shall be given
to the indemnifying party as above provided, the indemnifying party shall be
entitled to participate in and, to the extent it may wish, jointly with any
other indemnifying party similarly notified, to assume the defense of such
action at its own expense, with counsel chosen by it and reasonably satisfactory
to such indemnified party. The indemnified party shall have the right to employ
separate counsel in any such action and participate in the defense thereof, but
the fees and expenses of such counsel (other than
<PAGE>
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reasonable costs of investigation) shall be paid by the indemnified party unless
(i) the indemnifying party either agrees to pay the same, (ii) the indemnifying
party fails to assume the defense of such action with counsel reasonably
satisfactory to the indemnified party, or (iii) the indemnified party has been
advised by counsel that one or more legal defenses may be available to the
indemnifying party that may be contrary to the interests of the indemnified
party. No indemnifying party shall be liable for the fees and expenses of more
than one separate counsel for all indemnified parties or for any settlement
entered into without its consent, which consent may not be unreasonably
withheld.
If the indemnification provided for in this Section 6(d) is unavailable
to a party otherwise entitled to be indemnified in respect of any expenses,
losses, claims, damages or liabilities referred to herein, then the indemnifying
party, in lieu of indemnifying such party otherwise entitled to be indemnified,
shall contribute to the amount paid or payable by such party to be indemnified
as a result of such expenses, losses, claims, damages or liabilities in such
proportion as is appropriate to reflect the relative fault of Issuer, Grantee
and the underwriters in connection with the statements or omissions which
resulted in such expenses, losses, claims, damages or liabilities, as well as
any other relevant equitable considerations. The amount paid or payable by a
party as a result of the expenses, losses, claims, damages and liabilities
referred to above shall be deemed to include any legal or other fees or expenses
reasonably incurred by such party in connection with investigating or defending
any action or claim; provided, however, that in no case shall Grantee be
responsible, in the aggregate, for any amount in excess of the net offering
proceeds attributable to its Option Shares included in the offering. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. Any obligation by any Grantee
to indemnify shall be several and not joint with other holders of Option Shares.
Section 7. Option Repurchase.
(a) Upon the occurrence of a Purchase Event that occurs prior to an
Exercise Termination Event, (i) at the request (the date of such request being
the "Request Date") of Grantee, delivered within 30 days of the Purchase Event
(or such later period as may be provided pursuant to Section 9 hereof), Issuer
shall repurchase the Option from Grantee at a price (the "Option Repurchase
Price") equal to the amount by which (A) the market/offer price (as defined
below) exceeds (B) the Option Price:, multiplied by the number of shares for
which the Option may then be exercised, and (ii) at the request (the date of
such request being the "Request Date") of the owner of Option Shares from time
to time (the "Owner"), delivered within 30 days of a Purchase Event, Issuer
shall repurchase such number of the Option Shares from the Owner as the Owner
shall designate at a price (the "Option Share Repurchase Price") equal to the
market/offer price multiplied by the number of Option Shares so designated. The
term "market/offer price" shall mean the highest of (i) the price per share of
Common Stock at which a tender offer or exchange offer therefor has been made
after the date hereof and on or prior to the Request Date, (ii) the price per
share of Common Stock paid or to be paid by any third party pursuant to an
agreement with Issuer (whether by way of a merger, consolidation or otherwise),
(iii)-the highest closing price for shares of Common Stock within the 90-day
period ending on the Request Date as reported on The Nasdaq Stock Market's
National Market (as reported in The Wall Street Journal or, if not reported
therein, in another mutually agreed upon authoritative source), or (iv)
<PAGE>
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in the event of a sale of all or substantially all of Issuer's assets, the sum
of the price paid in such sale for such assets and the current market value of
the remaining assets of Issuer as determined by a nationally-recognized
independent investment banking firm mutually selected by Grantee or the Owner,
as the case may be, on the one hand, and Issuer, on the other hand, divided by
the number of shares of Common Stock of Issuer outstanding at the time of such
sale. In determining the market/offer price, the value of consideration other
than cash shall be determined by a nationally-recognized independent investment
banking firm mutually selected by Grantee or Owner, as the case may be, on the
one hand, and Issuer, on the other hand, whose determination shall be conclusive
and binding on all parties.
(b) Grantee or the Owner, as the case may be, may exercise its right to
require Issuer to repurchase the Option and/or any Option Shares pursuant to
this Section 7 by surrendering for such purpose to Issuer, at its principal
office, a copy of this Agreement or certificates for Option Shares, as
applicable, accompanied by a written notice or notices stating that Grantee or
the Owner, as the case may be, elects to require Issuer to repurchase the Option
and/or the Option Shares in accordance with the provisions of this Section 7. As
immediately as practicable, and in any event within five business days after the
surrender of the Option and/or certificates representing Option Shares and the
receipt of such notice or notices relating thereto, Issuer shall deliver or
cause to be delivered to Grantee the Option Repurchase Price or to the Owner the
Option Share Repurchase Price or the portion thereof that Issuer is not then
prohibited from so delivering under applicable law and regulation or as a
consequence of administrative policy.
(c) Issuer hereby undertakes to use its best efforts to obtain all
required regulatory and legal approvals and to file any required notices as
promptly as practicable in order to accomplish any repurchase contemplated by
this Section 7. Nonetheless, to the extent that Issuer is prohibited under
applicable law or regulation, or as a consequence of administrative policy, from
repurchasing the option and/or the Option Shares in full, Issuer shall
immediately so notify Grantee and/or the Owner and thereafter deliver or cause
to be delivered, from time to time, to Grantee and/or the Owner, as appropriate,
the portion of the Option Repurchase Price and the Option Share Repurchase
Price, respectively, that it is no longer prohibited from delivering, within
five business days after the date on which Issuer is no longer so prohibited;
provided, however, that if Issuer at any time after delivery of a notice of
repurchase pursuant to Section 7(b) is prohibited under applicable law or
regulation, or as a consequence of administrative policy, from delivering to
Grantee and/or the Owner, as appropriate, the Option Repurchase Price and the
Option Share Repurchase Price, respectively, in full, Grantee or Owner may
revoke its notice of repurchase of the Option or the Option Shares either in
whole or in part whereupon, in the case of a revocation in part, Issuer shall
promptly (i) deliver to Grantee and/or the Owner, as appropriate, that portion
of the Option Purchase Price or the Option Share Repurchase Price that Issuer is
not prohibited from delivering after taking into account any such revocation,
and (ii) deliver, as appropriate, either (A) to Grantee, a new Agreement
evidencing the right of Grantee to purchase that number of shares of Common
Stock equal to the number of shares of Common Stock purchasable immediately
prior to the delivery of the notice of repurchase less the number of shares of
Common Stock covered by the portion of the Option repurchased, or (B) to the
Owner, a certificate for the number of Option Shares covered by the revocation.
<PAGE>
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(d) Issuer shall not enter into any agreement with any party (other
than Grantee or a Grantee Subsidiary) for an Acquisition Transaction unless the
other party thereto assumes all the obligations of Issuer pursuant to this
Section 7 in the event that Grantee or Owner elects, in its sole discretion, to
require such other party to perform such obligations.
Section 8. Substitute Option.
(a) Grant of Substitute Option. In the event that prior to an Exercise
Termination Event, Issuer shall enter into an agreement (i) to consolidate or
merge with any Person, other than Grantee or a Grantee Subsidiary, and shall not
be the continuing or surviving corporation of such consolidation or merger, (ii)
to permit any Person, other than Grantee or a Grantee Subsidiary, to merge into
Issuer and Issuer shall be the continuing or surviving corporation, but, in
connection with such merger, the then outstanding shares of Common Stock shall
be changed into or exchanged for stock or other securities of any other Person
or cash or any other property or the then outstanding shares of Common Stock
shall after such merger represent less than 50% of the outstanding shares and,
share equivalents of the merged company, or (iii) to sell or otherwise transfer
all or substantially all of its or any significant Issuer Subsidiary's assets to
any Person, other than Grantee or a Grantee Subsidiary, then, and in each such
case, the agreement governing such transaction shall make proper provision so
that the Option shall, upon the consummation of such transaction and upon the
terms and conditions set forth herein, be converted into, or exchanged for, an
option (the "Substitute Option"), at the election of Grantee, of either (x) the
Acquiring Corporation (as defined below), or (y) any Person that controls the
Acquiring Corporation (the Acquiring Corporation and any such controlling Person
being hereinafter referred to as the "Substitute Option Issuer").
(b) Exercise of Substitute Option. The Substitute Option shall be
exercisable for such number of shares of the Substitute Common Stock (as is
hereinafter defined) as is equal to the market/offer price (as defined in
Section 7 hereof), multiplied by the number of shares of the Common Stock for
which the Option was theretofore exercisable immediately prior to the event
described in Section 8(a), divided by the Average Price (as is hereinafter
defined). The exercise price of the Substitute Option per share of the
Substitute Common Stock (the "Substitute Purchase Price") shall then be equal to
the product of the Option Price multiplied by a fraction in which the numerator
is the number of shares of Common Stock for which the Option was theretofore
exercisable immediately prior to the event described in Section 8(a) and the
denominator is the number of shares for which the Substitute Option is
exercisable.
(c) Terms of Substitute Option. The Substitute Option shall otherwise
have the same terms as the Option, provided, however, that if the terms of the
Substitute Option cannot, for legal reasons, be the same as the Option, such
terms shall be as similar as possible and in no event less advantageous to
Grantee.
(d) Substitute Option Definitions. The following terms have the
meanings indicated:
(i) "Acquiring Corporation" shall mean (i) the continuing
or surviving corporation of a consolidation or merger
with Issuer (if other than Issuer), (ii) Issuer in a
merger in which Issuer is the continuing or surviving
<PAGE>
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Person, and (iii) the transferee of all or any
substantial part of Issuer's assets (or the assets of
any significant Issuer Subsidiary);
(ii) "Substitute Common Stock" shall mean the common stock
issued by the Substitute Option Issuer upon exercise
of the Substitute Option; and
(iii) "Average Price" shall mean the average bid and asked
price of a share of the Substitute Common Stock for
the one year immediately preceding the consolidation,
merger or sale in question, but in no event higher
than the average of the bid and asked price of the
shares of the Substitute Common Stock on the day
preceding such consolidation, merger or sale,
provided, however, that if such closing price is not
ascertainable due to an absence of a public market
for the Substitute Common Stock, "Average Price"
shall mean the higher of (i) the price per share of
Substitute Common Stock paid or to be paid by any
third party pursuant to an agreement with the issuer
of the Substitute Common Stock and (ii) the book
value per share, calculated in accordance with
generally accepted accounting principles, of the
Substitute Common Stock immediately prior to exercise
of the Substitute Option; provided, further, that if
Issuer is the issuer of the Substitute Option, the
Average Price shall be computed with respect to a
share of common stock issued by the Person merging
into Issuer or by any company which controls or is
controlled by such merging Person, as Grantee may
elect.
(e) Cap on Substitute Option. In no event, pursuant to any of the
foregoing paragraphs, shall the Substitute Option be exercisable for more than
that proportion of the outstanding Substitute Common Stock equal to the
proportion of the outstanding Common Stock of Issuer which Grantee had the right
to acquire immediately prior to the issuance of the Substitute Option. In the
event that the Substitute Option would be exercisable for more than a proportion
of the outstanding Substitute Common Stock referred to in the immediately
preceding paragraph but for this clause (e), the Substitute Option Issuer shall
make a cash payment to Grantee equal to the excess of (i) the value of the
Substitute Option without giving effect to the limitation in this clause (e)
over (ii) the value of the Substitute Option after giving effect to the
limitation in this clause (e). This difference in value shall be determined by a
nationally recognized investment banking firm mutually selected by Grantee, on
the one hand, and Issuer, on the other hand.
Section 9. Extension of Exercise Right. Notwithstanding Section 2,
Section 6, Section 7 and Section 11 hereof, if Grantee has given the notice
referred to in one or more of such Sections, the exercise of the rights
specified in any such Section shall be extended (a) if the exercise of such
rights requires obtaining regulatory approvals (including any required waiting
periods) to the extent necessary to obtain all regulatory approvals for the
exercise of such rights, and (b) to the extent necessary to avoid liability
under Section 16(b) of the Exchange Act by reason of such exercise; provided,
however, that in no event shall any closing date occur more than 6 months after
the related Notice Date, and, if the closing date shall not have occurred within
such period due to the failure to obtain any required approval by the Federal
Reserve Board or any other Regulatory Authority despite the best efforts of
Issuer or the Substitute
<PAGE>
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Option Issuer, as the case may be, to obtain such approvals, the exercise of the
Option shall be deemed to have been rescinded as of the related Notice Date. In
the event (a) Grantee receives official notice that an approval of the Federal
Reserve Board or any other Regulatory Authority required for the purchase and
sale of the Option Shares shall not be issued or granted, or (b) a closing date
has not occurred within 6 months after the related Notice Date due to the
failure to obtain any such required approval, Grantee shall be entitled to
exercise the Option in connection with the resale of the Option Shares pursuant
to a registration statement as provided in Section 6.
Section 10. Issuer's Representations and Warranties. Issuer hereby
represents and warrants to Grantee as follows:
(a) Corporate Authority. Issuer has full corporate power and authority
to execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by the Board of Directors of Issuer and no other corporate proceedings on the
part of Issuer are necessary to authorize this Agreement or to consummate the
transactions so contemplated. This Agreement has been duly executed and
delivered by Issuer.
(b) Availability of Shares. Issuer has taken all necessary corporate
action to authorize and reserve and to permit it to issue, and at all times from
the date hereof through the termination of this Agreement in accordance with its
terms shall have reserved for issuance upon the exercise of the Option, that
number of shares of Common Stock equal to the maximum number of shares of Common
Stock at any time and from time to time issuable hereunder, and all such shares,
upon issuance pursuant hereto, shall be duly authorized, validly issued, fully
paid, non-assessable, and shall be delivered free and clear of all claims,
liens, encumbrances and security interests and not subject to any preemptive
rights.
(c) No Violations. The execution, delivery and performance of this
Agreement does not or shall not, and the consummation by Issuer of any of the
transactions contemplated hereby shall not, constitute or result in (A) a breach
or violation of, or a default under, its articles of incorporation or by-laws,
or the comparable governing instruments of any of the Issuer Subsidiaries, or
(B) a breach or violation of, or a default under, any agreement, lease,
contract, note, mortgage, indenture, arrangement or other obligation of it or
any of the Issuer Subsidiaries (with or without the giving of notice, the lapse
of time or both) or under any law, rule, ordinance or regulation or judgment,
decree, order, award or governmental or non-governmental permit or license to
which it or any of the Issuer Subsidiaries is subject, that would, in any case
give any other person the ability to prevent or enjoin Issuer's performance
under this Agreement in any material respect.
Section 11. Assignment. Neither of the parties hereto may assign any of
its rights or delegate any of its obligations under this Agreement or the Option
created hereunder to any other Person without the express written consent of the
other party; provided, however, that until the date at which the Federal Reserve
Board has approved an application by Grantee under the B.H.C. Act to acquire the
shares of Common Stock subject to the Option, other than to a wholly owned
subsidiary of Grantee, Grantee may not assign its rights under the Option except
in (i) a widely dispersed public distribution, (ii) a private placement in which
no one party acquires the right to purchase in excess of 2% of the voting shares
of Issuer, (iii) an assignment to a single
<PAGE>
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party (e.g., a broker or investment banker) for the purpose of conducting a
widely dispersed public distribution on Grantee's behalf, or (iv) any other
manner approved by the Federal Reserve Board. The term "Grantee," as used in
this Agreement, shall also be deemed to refer to Grantee's permitted assigns.
Any attempted assignment prohibited by this Section 11 is void and without
effect.
Section 12. Filings and Consents. Each of Grantee and Issuer shall use
its reasonable efforts to make all filings with, and to obtain consents of, all
third parties and Regulatory Authorities necessary to the consummation of the
transactions contemplated by this Agreement, including, without limitation,
making application if necessary, for listing of the shares of Common Stock
issuable hereunder on any exchange or quotation system and applying to the
Federal Reserve Board under the B.H.C. Act and to state banking authorities for
approval to acquire the shares issuable hereunder.
Section 13. Remedies. The parties hereto acknowledge that damages would
be an inadequate remedy for a breach of this Agreement by either party hereto
and that the obligations of the parties shall hereto be enforceable by either
party hereto through injunctive or other equitable relief. Both parties further
agree to waive any requirement for the securing or posting of any bond in
connection with the obtaining of any such equitable relief and that this
provision is without prejudice to any other rights that the parties hereto may
have for any failure to perform this Agreement.
Section 14. Severability. If any term, provision, covenant or
restriction contained in this Agreement is held by a court or a federal or state
regulatory agency of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions and covenants and
restrictions contained in this Agreement shall remain in full force and effect,
and shall in no way be affected, impaired or invalidated.
Section 15. Notices. All notices, requests, claims, demands and other
communications hereunder shall be deemed to have been duly given when delivered
in Person, by cable, telegram, telecopy or telex, or by registered or certified
mail (postage prepaid, return receipt requested) at the respective addresses of
the parties set forth in the Plan.
Section 16. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement and shall be effective at the time
of execution.
Section 17. Expenses. Except as otherwise expressly provided herein,
each of the parties hereto shall bear and pay all costs and expenses incurred by
it or on its behalf in connection with the transactions contemplated hereunder,
including fees and expenses of its own financial consultants, investment
bankers, accountants and counsel.
Section 18. Limitation of Value.
(a) Notwithstanding any other provision of this Agreement, in no event
shall the Grantee's Total Benefit (as hereinafter defined) exceed $3.0 million
and, if it otherwise would exceed such amount, the Grantee, at its sole
election, shall either (i) reduce the number of shares of Common Stock subject
to this Option, (ii) deliver to Issuer for cancellation Option Shares
<PAGE>
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previously purchased by Grantee, (iii) pay cash to Issuer, or (iv) any
combination thereof, so that Grantee's actually realized Total Benefit shall not
exceed $3.0 million after taking into account the foregoing actions.
(b) Notwithstanding any other provision of this Agreement, this Option
may not be exercised for a number of shares as would, as of the date of
exercise, result in a Notional Total Benefit (as defined below) of more than
three million dollars ($3,000,000); provided that nothing in this sentence shall
restrict any exercise of the Option permitted hereby on any subsequent date.
(c) As used herein, the term "Total Benefit" shall mean the aggregate
amount (before taxes) of the following: (i) the amount received by Grantee
pursuant to Issuers' repurchase of the Option (or any portion thereof) pursuant
to Section 7, (ii) (x) the amount received by Grantee pursuant to Issuer's
repurchase of Option Shares pursuant to Section 7, less (y) Grantee's purchase
price for such Option Shares, (iii) (x) the net cash amounts received by Grantee
pursuant to the sale of Option Shares (or any other securities into which such
Option Shares are converted or exchanged) to any unaffiliated party, less (y)
the Grantee's purchase price of such Option Shares, (iv) any cash payments made
by Issuer pursuant to Section 2(e)(2), (v) any amounts received by Grantee on
the transfer of the Option (or any portion thereof) to any unaffiliated party,
and (vi) any amount equivalent to the foregoing with respect to the Substitute
Option.
(d) As used herein, the term "Notional Total Benefit" with respect to
any number of shares as to which Grantee may propose to exercise this Option
shall be the Total Benefit determined as of the date of such proposed exercise
assuming that this Option were exercised on such date for such number of shares
and assuming that such shares, together with all other Option Shares held by
Grantee and its affiliates as of such date, were sold for cash at the average of
the bid and asked prices for the Common Stock on the preceding trading day (less
customary brokerage commissions) and Grantee also received the cash payment
called for by Section 2(f).
(e) If Grantee transfers the Option, either in whole or in part, the
Total Benefit shall apply to Grantee and to all subsequent holders of the Option
in the aggregate such that the Total Benefit realized by such persons may not
exceed three million dollars ($3,000,000) in the aggregate. All references to
Grantee in this Section 18 shall include any and all subsequent holders of the
Option.
(f) The provisions of this Section 18 shall survive the occurrence of
an Exercise Termination Event.
Section 19. Entire Agreement. Except as otherwise expressly provided
herein or in the Plan and the Confidentiality Agreement, this Agreement contains
the entire agreement between the parties with respect to the transactions
contemplated hereunder and supersedes all prior arrangements or understandings
with respect thereof, written or oral. The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the parties hereto
and their respective successors and permitted assigns. Nothing in this
Agreement, expressed or implied, is intended to confer upon any party, other
than the parties hereto, and their respective successors except as assigns, any
rights, remedies, obligations or liabilities under or by reason of this
Agreement, except as expressly provided herein.
<PAGE>
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Section 20. Definitions. Capitalized terms used in- this Agreement and
not defined herein but defined in the Plan shall have the meanings assigned
thereto in the Plan.
Section 21. Effect on Plan. Nothing contained in this Agreement shall
be deemed to authorize Issuer or Grantee to breach any provision of the Plan.
Section 22. Selections. In the event that any selection or
determination is to be made by Grantee hereunder and at the time of such
selection or determination there is more than one Grantee, such selection shall
be made by a majority in interest of such Grantees.
Section 23. Further Assurances. In the event of any exercise of the
option by Grantee, Issuer and such Grantee shall execute and deliver all other
documents and, instruments and take all other action that may be reasonably
necessary in order to consummate the transactions provided for by such exercise.
Section 24. Voting. Except to the extent Grantee exercises the Option,
Grantee shall have no rights to vote or receive dividends or have any other
rights as a shareholder with respect to shares of Common Stock covered hereby.
Section 25. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
<PAGE>
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IN WITNESS WHEREOF, each of the parties has caused this Stock Option
Agreement to be executed on its behalf by their officers thereunto duly
authorized, all as of the date first above written.
BATH NATIONAL CORPORATION
By:/s/Douglas McCabe
--------------------------------------------
Douglas McCabe
President
FINANCIAL INSTITUTIONS, INC.
By:/s/Douglas McCabe
--------------------------------------------
Peter G. Humphrey
President and Chief Executive Officer
