Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
DATED AS OF NOVEMBER 2, 2000
AMONG
FINANCIAL INSTITUTIONS, INC.,
FI SUBSIDIARY I, INC.
AND
BATH NATIONAL CORPORATION
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,
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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.
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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
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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
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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.
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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,
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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.
-12-
(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
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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
-14-
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
-15-
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,
-16-
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
-17-
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
-18-
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. Section 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. Section 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
-19-
Subsidiaries or the conduct of business by the Company or any of its
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
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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;
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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
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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.
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
