UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report: February 26, 1996
ARROW FINANCIAL CORPORATION
(Exact name of Registrant as specified in its charter)
New York 0-12507 22-2448962
State or other Commission (IRS Employer
Jurisdiction of File Number Identification
incorporation or Number)
organization
250 GLEN STREET, GLENS FALLS, NEW YORK 12801
(Address of principal executive offices) (Zip Code)
Registrant's telephone number: 518 745-1000
Item 5. Other Events
Definitive Agreements to Sell Substantially all Assets of
Green Mountain Bank
On February 26 and 27, 1996, Registrant entered into
definitive agreements with two different banking organizations
that will result, if both are consummated, in the disposition by
Registrant of substantially all the remaining assets and business
of Registrant's banking subsidiary in Vermont, Green Mountain
Bank, Rutland, Vermont ("GMB").
Registrant entered into an agreement with ALBANK, FSB,
Albany, New York ("ALBANK"), pursuant to which ALBANK will
acquire substantially all of the loans, and deposits of GMB as
well as five of the six remaining banking offices of GMB
(excluding the premises constituting GMB's main office at 80 West
Street, Rutland, Vermont). Registrant also entered into an
agreement with Vermont National Bank, Brattleboro, Vermont
("VNB"), pursuant to which VNB will acquire the trust business of
GMB.
Both transactions are subject to regulatory approvals and
are expected to be consummated at some point in the third quarter
of 1996. Neither transaction requires the approval of
Registrant's shareholders. Registrant's press release
announcing the two transactions is attached hereto as Exhibit
99.1.
Previously, on January 15, 1996, Registrant completed the
sale to Mascoma Savings Bank, Lebanon, New Hampshire, of eight
branches of GMB located in eastern Vermont, including all
deposits at the branches and certain loans and other assets
related to the branches.
(A) ALBANK Agreement
Registrant, its wholly-owned subsidiary, Arrow Vermont
Corporation ("AVC"), and AVC's wholly-owned subsidiary, GMB,
entered into a Purchase and Assumption Agreement, dated February
26, 1996, with ALBANK (the "ALBANK Agreement"). Under the terms
of the ALBANK Agreement, at closing ALBANK will acquire from GMB
certain loans (the "Loans") comprising substantially all the
remaining loans of GMB, including all consumer loans (except
overdraft deposit accounts and loans 60 days or more past due),
mortgage loans, commercial loans, lines of credit and commitments
to lend. ALBANK also will acquire from GMB certain other assets
of GMB including GMB's real and personal property interest in its
remaining banking offices, excluding the real and personal
property associated with GMB's main office at 80 West Street,
Rutland, Vermont. In addition, at closing ALBANK will assume
substantially all the deposits liabilities of GMB (the "Deposit
Liabilities"), including the deposits held at GMB's main office
and certain deposits held in IRA and custodial deposit accounts.
ALBANK will not acquire GMB's trust business.
Based on the assets and deposit liabilities of GMB at the
signing date, if the ALBANK Agreement is consummated ALBANK will
assume approximately $110 million in Deposit Liabilities and will
acquire approximately $112 million in net book value of Loans.
Under a separate agreement between Registrant, AVC, GMB and
ALBANK, also executed by the parties on February 26, 1996, (the
"Mortgage Servicing Agreement"), Registrant agreed to sell to
ALBANK at the closing of the principal transaction the mortgage
servicing business of GMB. As of the signing date, GMB was
servicing approximately $45 million in principal amount of
mortgage loans previously originated by GMB or its predecessor
banks and sold to various purchasers in the secondary mortgage
market. Consummation of the Mortgage Servicing Agreements is
contingent upon consummation of the ALBANK Agreement.
Both transactions are subject to satisfaction of various
conditions, including receipt of all required regulatory
approvals and no material adverse changes in the business or
properties of GMB being transferred to ALBANK. Upon consummation
of the two agreements, ALBANK will pay to GMB an amount in cash
essentially equal to the book value of the Loans and other assets
acquired (less an agreed-upon allowance for loan losses) minus
the dollar amount of Deposit Liabilities assumed, plus a premium
of 7.5 percent of the Deposit Liabilities assumed.
The ALBANK Agreement and the Mortgage Servicing Agreement
are attached hereto as exhibits and incorporated herein by this
reference in their entirety. The foregoing summaries of the two
agreements do not purport to be complete and are qualified in
their entirety by reference to such exhibits.
(B) VNB Agreement
Registrant, AVC, and GMB entered into a Stock Purchase
Agreement dated February 27, 1996 with VNB (the "VNB Agreement").
Under the VNB Agreement, VNB will acquire, at the closing, all of
the trust accounts and trust business of GMB and will assume
GMB's responsibilities to its trust customers, as well as certain
other contracts applicable to GMB's trust operations. The only
trust relationships of GMB not to be acquired by VNB are customer
IRA accounts in the trust form that are 100 percent invested in
GMB deposit accounts at closing. In addition, VNB will acquire
from GMB the personal property used by GMB's trust
department. VNB will not acquire or lease any of GMB's banking
offices, but for a short period of time after the closing, VNB
may lease from GMB a small portion of the building theretofore
serving as GMB's main office at 80 West Street in Rutland, for
back-room operations during the transition period. Consummation
of the transaction is subject to certain conditions, including
receipt of all required regulatory approvals and maintenance by
GMB of a specified level of trust business prior to closing.
Under the VNB Agreement, Registrant will effect the transfer
of the trust business by first chartering a new trust subsidiary
under Vermont statute to transfer to the new trust subsidiary,
immediately prior to closing, all of GMB's trust accounts and
trust business. At closing, Registrant will transfer to VNB all
the stock of the trust subsidiary. The transfer of GMB's trust
accounts and business to the trust subsidiary will require the
approval of a Vermont Probate Court.
Also under the VNB Agreement, at closing VNB and Registrant
will enter into a four-year trust servicing agreement, pursuant
to which VNB will agree to provide certain data processing
services to the trust departments of the Registrant's other
subsidiary banks, similar to the services currently provided to
those banks by GMB's trust department, for an annual payment of
$300,000 per year, subject to annual evaluation and other
adjustments in certain circumstances.
At closing, in return for GMB's transferring the trust
business and entering into the data processing agreement, VNB
will pay to GMB as a base purchase price $3.23 million. Up to an
additional $570,000 many be payable by VNB to GMB ninety days
after the closing (or in part at later dates under certain
circumstances), depending upon VNB's retention of certain levels
of the acquired trust business at the end of such period or
periods.
The VNB Agreement is attached hereto as an exhibit and
incorporated herein by this reference in its entirety. The
foregoing summary of the agreement does not purport to be
complete and is qualified in its entirety by reference to such
exhibit.
Item 7. Financial Statements, Pro Forma Financial Information
and Exhibits
( A ) Financial Statements - not applicable
( B ) Pro Forma Financial Information - not applicable
( C ) Exhibits - The following exhibits are submitted herewith:
Exhibit
Number Exhibit
2.1 Purchase and Assumption Agreement among
Arrow Financial Corporation, Arrow Vermont
Corporation, Green Mountain Bank and
ALBANK, FSB, dated February 26, 1996
2.2 Service Purchasing Agreement among Arrow
Financial Corporation, Arrow Vermont
Corporation, Green Mountain Bank and
ALBANK, FSB, dated February 26, 1996
2.3 Stock Purchase Agreement among Arrow
Financial Corporation, Arrow Vermont
Corporation, Green Mountain Bank and
Vermont National Bank, dated February 27,
1996
99.1 Press Release dated February 27, 1996
Announcing definitive agreements for the sale
of Green Mountain Bank's remaining banking
operations to ALBANK, FSB, and trust
operations to Vermont National Bank.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned hereto duly authorized.
Dated March 14, 1996
ARROW FINANCIAL CORPORATION
By: s/ John J. Murphy
Executive Vice President,
Treasurer & CFO
(Chief Accounting Officer)
EXHIBIT INDEX
Exhibit
Number Exhibit
2.1 Purchase and Assumption Agreement among
Arrow Financial Corporation, Arrow Vermont
Corporation, Green Mountain Bank and
ALBANK, FSB, dated February 26, 1996 (1)
2.2 Service Purchasing Agreement among Arrow
Financial Corporation, Arrow Vermont
Corporation, Green Mountain Bank and
ALBANK, FSB, dated February 26, 1996
2.3 Stock Purchase Agreement among Arrow
Financial Corporation, Arrow Vermont
Corporation, Green Mountain Bank and
Vermont National Bank, dated February 27,
1996 (1)
99.1 Press Release dated February 27, 1996
Announcing definitive agreements for the sale
of Green Mountain Bank's remaining banking
operations to ALBANK, FSB, and trust
operations to Vermont National Bank.
(1) - Schedules and attachments to this exhibit will be
furnished to the Commission upon request.
Exhibit 2.1
PURCHASE AND ASSUMPTION AGREEMENT
between
ARROW FINANCIAL CORPORATION,
ARROW VERMONT CORPORATION,
GREEN MOUNTAIN BANK
and
ALBANK, FSB
dated as of February 26, 1996
TABLE OF CONTENTS
1. DEFINITIONS.
2. TERMS OF PURCHASE.
(a) Purchase and Sales of Assets
(b) Transfer of Assets
(c) Proration
(d) Items in Transit
(e) Books and Records
(f) Sales Taxes
(g) Contracts
(h) No Purchase of Trust Business; Trust Transfer
Transactions
(i) Actions Against Former Affiliates
(j) OREO
3. CONVEYANCE OF ASSETS
(a) Real Property Assets
(b) Personal Property and Safe Deposit Boxes
(c) Cash on Hand
(d) Account Loans
(e) Overdraft Lines of Credit
(f) Other Loans
(g) Servicing Business
(h) Late Fee Receivable
4. LIABILITIES.
(a) Assumption of Liabilities
(b) Non-Assumption of Liabilities
5. CONSIDERATION AND SETTLEMENT
6. APPROVALS
7. AGREEMENTS OF THE COMPANY
(a) Access to Records and Information
(b) Further Assurances
(c) Consents
(d) Notice
(e) Non-Competition Agreement
(f) Conduct of Business Prior to Closing
(g) Items in the Company's Possession
(h) Electronic Funds Transfer Transactions
(i) Insurance
(j) Compliance with Law/Maintenance of Property
(k) Tapes and Trial Balances and Loan Data
(l) Communications with Customers
(m) Training of Employees
(n) Environmental Audit
8. AGREEMENTS OF ALBANK.
(a) Performance of Liabilities
(b) Further Assurances
(c) Compliance with Law
(d) Change of Name, Notice
(e) Conversion of Draft Accounts
(f) Electronic Funds Transfer Transactions
(g) Obligations to Reimburse the Company
(h) Obligation with Respect to Certain Troubled
Debt Restructures
(i) Non-Competition Agreement
9. AGREEMENTS OF THE COMPANY AND ALBANK WITH
RESPECT TO EMPLOYEES.
(a) Employee Obligations
(b) Employee Procedures
(c) Employee Benefits
10. COMPUTER SERVICES
11. THE CLOSING.
12. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
(a) Corporate Organization, Powers and Authority;
Records
(b) No Violation
(c) Consents and Approvals
(d) Title to Real and Personal Property;
Encumbrances; and Leases
(e) Loan Portfolio
(f) Absence of Certain Changes or Events
(g) Legal Proceedings
(h) Taxes and Tax Returns
(i) Officers and Employees
(j) Other Statements and Reports
(k) Agreements with Regulatory Agencies
(l) Environmental Matters
(m) Insurance
(n) Transactions with Certain Persons
(o) Disclosure
(p) Brokers or Finders
(q) No Foreign Person
(r) Reaffirmance of Representations and Warranties
13. REPRESENTATIONS AND WARRANTIES OF ALBANK
(a) Corporate Organization; Powers and Authority
(b) No Violation
(c) Consents and Approvals
(d) Legal Proceedings
(e) Agreements with Regulatory Agencies
(f) Disclosure
(g) Brokers or Finders
14. OTHER PROVISIONS
(a) Returned Items
(b) Holds
(c) Notices to Depositors
(d) ATM Cards
(e) Reimbursements
(f) Withholding
(g) Taxpayer Information
(h) Allocation of Purchase Price
(i) Public Disclosure; Confidentiality
(j) Advice of Changes
(k) References to Servicing Purchase Agreement
15. AGREEMENTS WITH RESPECT TO REAL PROPERTY
(a) Title
(b) Loss or Damage
(c) Environmental Assessment
(d) Price Abatement/Termination
16. CONDITIONS TO OBLIGATIONS OF ALBANK.
(a) Performance
(b) Representations and Warranties
(c) Authorization
(d) Absence of Litigation
(e) No Material Adverse Change
(f) Systems Conversion Complete
(g) Documents
17. CONDITIONS TO OBLIGATIONS OF THE COMPANY
(a) Performance
(b) Representations and Warranties
(c) Authorization
d) Absence of Litigation
(e) Documents
18. CONDITIONS TO OBLIGATIONS OF BOTH PARTIES.
(a) Approval of Regulatory Authorities
(b) Closing under Servicing Purchase Agreement
19. TERMINATION.
20. EFFECT ON THIRD PARTIES.
21. SURVIVAL OF REPRESENTATIONS, INDEMNIFICATION
AGREEMENTS AND CERTAIN OTHER MATTERS
(a) Survival
(b) Indemnification by ALBANK
(c) Indemnification by the Company
(d) Procedures
(e) Settlement
(f) Limitations
22. MISCELLANEOUS.
(a) Expenses
(b) Notices
(c) Successors and Assigns
(d) Counterparts
(e) Governing Law
(f) Captions
(g) Entire Agreement; Modifications; Waivers
EXHIBITS
A ALLL Amount Calculation
B Assumption Agreement
C Bill of Sale
D Land Descriptions
E Sale and Assignment Agreement
F Servicing Purchase Agreement
G Certification of Nonforeign Status
H Assignment and Assumption of Lease
I Estoppel Certificate
SCHEDULES
1.1 Account Loans
1.2 Commercial Loans
1.3 Commercial Mortgage Loans
1.4 Consumer Loans
1.5 Contracts
1.6 Deposit Liabilities
1.7 Fee Branches
1.8 Leased Branches
1.9 Leases
1.10 OREO
1.11 Overdraft Lines of Credit
1.12 Personal Property
1.13 Residential Mortgage Loans
2(b) Actual Owners of Assets
3(b) Encumbrances
7(f)(vii).1 Commitments to invest in fixed
assets or leasehold improvements
7(f)(vii).2 Items contained in GMB's 1996
capital expenditure budget
7(i) Insurance Policies
8(h) TDR Loans
12(a)(iv) Exceptions to representations and
warranties regarding corporate power and authority
to execute Agreement
12(c) Exceptions to representations and
warranties regarding consents and approvals
12(d)(i) Exceptions to representations and
warranties regarding title to Real Property and
Personal Property
12(d)(ii) Exceptions to representations and
warranties regarding notice of zoning and
environmental violations
12(e)(i) Exceptions to representations and
warranties regarding validity and legality of
Loans
12(e)(ii) Exceptions to representations and
warranties regarding mortgage documentation
12(e)(iii) Exceptions to representations and
warranties regarding mortgages and security
interests in properties securing Loans
12(e)(iv) Exceptions to representations and
warranties regarding Loans' compliance with
applicable policies and laws
12(e)(v) Exceptions to representations and
warranties regarding delinquent loans
12(e)(vi) Loan Commitments
12(f) Exceptions to representations and
warranties regarding material changes or events
12(g) Exceptions to representations and
warranties regarding legal proceedings
12(h) Exceptions to representations and
warranties regarding filing of tax returns
12(i) Employees
12(j).1 Exceptions to representations and
warranties regarding timely filing of regulatory
reports and statements
12(j).2 Exceptions to representations and
warranties regarding regulatory violations
12(k) Exceptions to representations and
warranties regarding agreements with regulatory
agencies
12(l) Exceptions to representations and
warranties regarding environmental matters
12(n) Loans to Interested Persons
PURCHASE AND ASSUMPTION AGREEMENT
THIS PURCHASE AND ASSUMPTION AGREEMENT, dated
as of February 26, 1996 (this "Agreement"),
between Arrow Financial Corporation ("AFC"), a New
York business corporation having its principal
office at 250 Glen Street, Glens Falls, New York,
Arrow Vermont Corporation ("AVC"), a Vermont
business corporation having its principal office
at 80 West Street, Rutland, Vermont, and Green
Mountain Bank ("GMB"), a Vermont-chartered banking
corporation with its principal office at 80 West
Street, Rutland, Vermont (sometimes collectively
referred to as the "Company"), and ALBANK, FSB, a
federally-chartered stock savings bank ("ALBANK"),
having its principal office at 10 North Pearl
Street, Albany, New York,
W I T N E S S E T H :
THAT WHEREAS, AFC is a bank holding company
which owns all of the capital stock of AVC, which
in turn owns all of the capital stock of GMB, a
Vermont banking corporation conducting business in
the State of Vermont; and
WHEREAS, ALBANK is a federal savings bank
conducting business in the states of New York,
Massachusetts and Vermont; and
WHEREAS, the deposit accounts of GMB are
insured by the Bank Insurance Fund ("BIF") of the
Federal Deposit Insurance Corporation (the
"FDIC"), the deposit accounts of ALBANK are
insured by the Savings Association Insurance Fund
("SAIF") of the FDIC (except for certain accounts
insured by the BIF) and the acquisition of deposit
accounts by ALBANK is subject to the approval of
the Office of Thrift Supervision ("OTS"); and
WHEREAS, GMB operates six branch offices
located at (i) 49 Main Street, Proctor, Vermont
(the "Proctor Branch"), (ii) Main Street,
Poultney, Vermont (the "Poultney Branch"), (iii) 7
Merchants Row, Middlebury, Vermont (the
"Middlebury Branch"), (iv) 80 West Street,
Rutland, Vermont (the "Rutland Branch"), (v) Route
30, Winhall Township, Vermont (the "Bondville
Branch"), and (vi) Route 149 at Bullfrog Hollow,
West Pawlet, Vermont (the "Pawlet Branch")
(individually, a "Branch," and collectively, the
"Branches"); and
WHEREAS, ALBANK desires to acquire the
Branches and to continue their operation as branch
offices of ALBANK (except for the Rutland Branch,
which ALBANK will not operate as a branch office
and as to which ALBANK will acquire only certain
assets and liabilities), and in connection
therewith ALBANK desires to acquire certain assets
and assume certain liabilities of the Company, as
hereinafter provided, and the Company desires to
transfer to ALBANK such assets and liabilities,
all in accordance with the terms and conditions
hereinafter set forth;
NOW, THEREFORE, for good and valuable
consideration, the receipt and sufficiency of
which are hereby acknowledged by the parties, the
parties hereto agree as follows:
1. DEFINITIONS.
As used herein, the following terms shall
have the following meanings:
"Account Loans" shall mean loans allocated to
the Branches which are secured by Deposits as
shown on the books and records of the Company and
which are fully secured as to principal, accrued
interest and late charges, if any. Account Loans
as of the date of Schedule 1.1 hereto are listed
on Schedule 1.1 hereto (and are to be updated (y)
as set forth in Section 7(k)(ii) and (z) as of the
Pre-closing Close of Business).
The phrase "allocated to the Branches" as to
an Asset means an Asset originated in or
administered by any of the Branches or shown on
the books and records of the Company as allocated
to any of the Branches, and as to a Deposit means
a Deposit assigned by the Company to any of the
Branches in accordance with its usual and
customary practices and procedures.
"Additional OREO" shall mean any property
that ALBANK agrees to purchase pursuant to Section
2(j).
"ALLL" shall mean the allowance for loan and
lease losses.
"ALLL Amount" shall have the meaning set
forth in Exhibit A hereto.
"Assets" shall have the meaning set forth in
Section 2(a).
"Assignments" shall have the meaning set
forth in Section 16(g)(ii)(2).
"Assumed Custodial Deposit" shall mean any
Deposit held in a Transferable Custodial Account
at Closing and any Deposit held in a
Nontransferable Custodial Account that is assumed
by ALBANK at Closing in accordance with Section
4(a)(ii).
"Assumption Agreement" shall mean an
agreement for the assumption of the Liabilities,
substantially in the form of Exhibit B to this
Agreement.
"ATM" shall mean automated teller machine.
"Auto Loan Pricing Exception" shall mean any
auto dealer pricing irregularity, whether
identified before or after the Closing Date,
associated with any indirect automobile loan
included in the Loans made by the Company under a
program with auto dealerships, of the sort
identified in a recent regulatory examination of
the Bank.
"Banking Customer" shall have the meaning set
forth in Section 7(e).
"Bill of Sale" shall mean a bill of sale with
respect to the Personal Property, substantially in
the form of Exhibit C to this Agreement.
"Business Day" shall mean any day other than
(i) a Saturday or Sunday or (ii) a day on which
banking and savings and loan institutions in the
states of Vermont and New York are authorized or
obligated by law or executive order to be closed.
"Cash on Hand" shall mean all of the cash at
the Branches, including, without limitation, petty
cash, vault cash, letter cash and ATM cash.
"Closing" shall have the meaning set forth in
Section 11.
"Closing Date" shall mean the date on which
the Closing takes place as set forth in Section
11.
"Code" shall mean the Internal Revenue Code
of 1986, as amended.
"Commercial Loans" shall mean secured and
unsecured loans (other than Commercial Mortgage
Loans and Account Loans) allocated to the Branches
made for commercial or industrial purposes.
Commercial Loans as of the date of Schedule 1.2
hereto are listed on Schedule 1.2 hereto (and are
to be updated (y) as set forth in Section 7(k)(ii)
and (z) as of the Pre-closing Close of Business).
"Commercial Mortgage Loans" shall mean loans
allocated to the Branches which are (i) secured by
a Mortgage encumbering real property improved with
five or more residential units or (ii) secured by
a Mortgage encumbering real property improved with
structures for business or commercial use, or
(iii) for the construction of either of the types
of property referred to in subclauses (i) and (ii)
above. Commercial Mortgage Loans as of the date
of Schedule 1.3 hereto are listed on Schedule 1.3
hereto (and are to be updated (y) as set forth in
Section 7(k)(ii) and (z) as of the Pre-closing
Close of Business).
"Consumer Loans" shall mean secured and
unsecured loans allocated to the Branches made for
personal, family or household purposes, including
automobile and boat loans but not including
Account Loans. Consumer Loans as of the date of
Schedule 1.4 hereto are listed on Schedule 1.4
hereto (and are to be updated (y) as set forth in
Section 7(k)(ii) and (z) as of the Pre-closing
Close of Business)
"Contract" shall mean any agreement,
contract, lease (including the Premises Leases) or
other instrument made by or with respect to the
operation of any of the Branches (including an
agreement or contract with any customer regarding
any Safe Deposit Box at any of the Branches and
excluding any agreement, contract, lease or
instrument related to GMB's Trust Business)
included on Schedule 1.5 hereto (which schedule is
to be updated as of the Pre-closing Close of
Business).
"Contract Liabilities" shall mean the
liabilities of the Company under any of the
Contracts expressly assumed by ALBANK pursuant to
the terms hereof.
"Custodial Account" shall mean any IRA or
Keogh Plan Account.
"Custodial Deposit" shall mean any Deposit
held in a Custodial Account.
"Deposit" or "Deposits" shall mean
liabilities of GMB allocated to any of the
Branches which are defined as deposits pursuant to
Section 3(1) of the Federal Deposit Insurance Act,
as amended, 12 U.S.C. Sections 1813(1) et seq.,
including any collected and uncollected deposits
associated therewith, and any agreement relating
thereto entered into by GMB's customer in the
ordinary course in connection with making or
maintaining such deposit.
"Deposit Items" shall mean, for any date or
time, checks, drafts, withdrawal orders and items
of any kind which are deposited and credited to an
account at any of the Branches by GMB or GMB's
customers.
"Deposit Liabilities" for any date or
time shall mean those Deposits (which includes
collected and uncollected Deposits), plus accrued
but uncredited interest thereon, allocated to the
Branches or as shown on the books and records of
GMB with respect to the Branches as of the close
of business on such date or as of such time,
including but not limited to Custodial Deposits,
exclusive of (i) Deposits owed by GMB as trustee
in connection with its Trust Business, (ii)
Deposits that, as of the close of business on such
date or as of such time, have been designated
Excluded Custodial Deposits under Section
4(a)(ii), (iii) Deposits subject to remittance to
the State of Vermont pursuant to the laws of
abandoned property or escheat or similar laws as
of the close of business on such date or as of
such time, (iv) overdrawn Deposits as of the close
of business on such date or as of such time (other
than Deposits that may be overdrawn due to an
existing agreement between GMB and its customer
providing for overdraft protection), (v) Deposits
subject to legal restrictions which in the
Company's judgment prevent their transfer or in
ALBANK's judgment prevent their assumption,
including Deposits the transfer of which would
require the approval of a court which has not been
obtained and Deposits the assumption of which
would constitute a prohibited transaction under
Section 406 of the Employee Retirement Income
Security Act of 1974 or Section 4975 of the Code
for which no exemption is available, and (vi)
Deposits with respect to which the Company is a
party to litigation. Deposit Liabilities as of
the date of Schedule 1.6 hereto are listed on
Schedule 1.6 hereto and are to be updated as of
(y) the dates contemplated by Section 7(k)(i) and
(z) as of the Pre-closing Close of Business.
Schedule 1.6 indicates which Deposit Liabilities
are Nontransferable Custodial Accounts, specifying
which are IRA and which are Keogh Plan Accounts.
"Deposit Measuring Period" shall have
the meaning set forth in Section 5(a)(i)(F).
"Designated Employees" shall mean the
Employees designated by ALBANK as Employees to
whom it intends to offer employment, in accordance
with Section 9(b).
"Employee Agreement" shall have the
meaning provided in Section 7(f)(xiii).
"Employee Plan" shall have the meaning
provided in Section 7(f)(xiii).
"Employees" shall mean all employees of
GMB, excluding any such employees whose services
are predominately rendered in connection with the
Trust Business.
"Encumbrances" shall mean all mortgages,
claims, charges, liens, encumbrances, easements,
restrictions, options, pledges, calls,
commitments, security interests, conditional sales
agreements, title retention agreements, leases and
other restrictions of any kind and nature.
"Environment" shall have the meaning set
forth in Section 12(1)(vii).
"Environmental Laws" shall mean all
federal, state, county and local laws, regulations
or requirements relating to the Environment or any
Hazardous Material or Oil, all as may be amended
from time to time.
"Excluded Custodial Deposits" shall have
the meaning set forth in Section 4(a)(ii).
"Fee Branches" shall mean those
Purchased Branches listed on Schedule 1.7.
"Hazardous Material" shall have the
meaning set forth in Section 12(1)(vii).
"Improvements" shall mean the buildings,
structures and other improvements situated upon
the Land, which improvements, for purposes of this
Agreement, shall be deemed to exclude the Personal
Property and any signage of the Company.
"Intended Use" shall mean, with respect
to the Branches, the conduct of ALBANK's business
as a savings bank in the manner that ALBANK
currently conducts such business at its branch
offices in New York State, Massachusetts and
Vermont, and with respect to the OREO, in the case
of the OREO known as Sequoia, sale as a
development property, in the case of the OREO
known as Rivermill, operation prior to sale or
sale as a mixed use commercial property, and in
the case of Additional OREO, operation and sale as
determined by ALBANK.
"IRA" shall mean any Individual
Retirement Account all of the assets of which are
held in the form of Deposits at GMB.
"IRS" shall mean the Internal Revenue
Service.
"Keogh Plan Account" shall mean any
Keogh plan, all the assets of which are held in
the form of Deposits at GMB.
"Land" shall mean the parcels of land
described in Exhibit D annexed hereto and made
part hereof, including all easements, rights,
privileges, and appurtenances that in any way
belong or appertain to said parcels, and all the
estate, right, title and interest, if any, of the
Company in and to any land lying in the bed of any
street, road or avenue, open or proposed, in front
of or adjoining any of said parcels, to the center
line thereof, and all right, title and interest of
the Company in and to any award made or to be made
in lieu thereof and in and to any unpaid award for
damage to any portion of the Land by reason of
change of grade of any street.
"Landlords" shall mean the landlords of the
Company under the Leases.
"Late Fee Receivable" shall mean the amount
on GMB's books as of the Pre-closing Close of
Business representing accrued but uncollected fees
charged by GMB to borrowers in respect of late
payments on Loans.
"Leased Branches" means those Purchased
Branches listed as Leased Branches on Schedule
1.8.
"Leases" shall mean the leases under which
the Company is the tenant with respect to the
Leased Branches, copies of which are annexed to
Schedule 1.9.
"Liabilities" shall mean the Deposit
Liabilities and the Contract Liabilities.
"Licensed Lender" shall mean a corporation
duly organized and licensed under Title 8, Chapter
73, Sections 2201 et seq. of the Vermont Statutes
Annotated, which AFC presently intends to
establish as a wholly-owned subsidiary of itself,
AVC or GMB solely to work out loans or other real
estate owned received from GMB on or prior to the
Closing Date.
"Loans" shall mean the Account Loans, the
Overdraft Lines of Credit and the Other Loans.
"Material Adverse Effect" shall have the
meaning set forth in Section 12(a)(iii).
"Mortgage" shall mean a mortgage, deed of
trust or other security instrument creating a lien
upon real property and any other property
described therein, together with any assignment,
reinstatement, extension, endorsement or
modification thereof.
"Nontransferable Custodial Account" shall
mean any Nontransferable IRA or Nontransferable
Keogh Plan Account.
"Nontransferable IRA" or "Nontransferable
Keogh Plan Account" for any date or time shall
mean any IRA or Keogh Plan Account, respectively,
which, as of the close of business on such date or
as of such time, is not a Transferable IRA or
Transferable Keogh Plan Account, in light of all
laws, rules, regulations, documentation and
customer agreements or directions then applicable
to such account.
"Oil" shall have the meaning set forth in
Section 12(l)(vii).
"OREO" shall mean the properties known as
"Rivermill" (valued for purposes of this Agreement
at $800,000) and "Sequoia" (valued for purposes of
this Agreement at $130,000) and more particularly
described on Schedule 1.10, together with any
Additional OREO described on Schedule 1.10, which
shall be revised each time that Additional OREO is
added on or prior to the Pre-closing Close of
Business.
"Other Loans" shall mean Commercial Mortgage
Loans, Residential Mortgage Loans, Consumer Loans,
Commercial Loans and TDR Loans.
"Overdraft Lines of Credit" shall mean the
principal amount, accrued interest and late
charges, if any, with respect to all overdraft
lines of credit allocated to the Branches and
which are not sixty (60) days or more delinquent
in the payment of principal or interest (as
determined from the date that any such payment was
actually due and without respect to any grace
period relating to the assessment of late fees).
Overdraft Lines of Credit as of the date of
Schedule 1.11 hereto are listed on Schedule 1.11
hereto (and are to be updated (y) as set forth in
Section 7(k)(ii) and (z) as of the Pre-closing
Close of Business).
"Payment Items" shall mean, for any date or
time, checks, drafts, withdrawal orders and other
similar items drawn on an account at any of the
Branches.
"Permitted Encumbrances" shall have the
meaning set forth in Section 3(b).
"Permitted Exceptions" shall have the meaning
set forth in Section 3(a).
"Personal Property" shall mean all of the
furniture, furnishings, equipment, leasehold
improvements, trade fixtures and other tangible
personal property, owned or (to the extent of its
lessee's interest) leased by the Company (except
the Improvements) at the Purchased Branches. The
Personal Property as of the date hereof is listed
on Schedule 1.12 hereto (which list is to be
updated as of the Pre-closing Close of Business).
"Pre-closing Close of Business" shall mean
the close of business on the Business Day
immediately preceding the Closing Date.
"Premises Leases" shall mean the leases under
which the Company is the landlord, copies of which
are annexed to Schedule 1.5.
"Prepaid Expenses" shall have the meaning set
forth in Section 2(a)(vii).
"Proration Charges" shall have the meaning
set forth in Section 2(c).
"Purchased Branches" shall mean all the
Branches except for the Rutland Branch.
"Real Property" shall mean the Land and
Improvements and the OREO but shall exclude those
parcels of land upon which is situated GMB's
office at 80 West Street, Rutland, Vermont, and
all buildings, structures and other improvements
on such excluded parcels.
"Real Property Assets" shall mean all of the
Company's right, title and interest in and to the
Real Property and in and to the estates of the
Company as tenant under the Leases.
"Residential Mortgage Loans" shall mean loans
allocated to the Branches secured by a Mortgage
encumbering real property improved with
residential units for one to four families, and
loans to construct such units, and home equity
lines of credit. Residential Mortgage Loans as of
the date of Schedule 1.13 hereto are listed on
Schedule 1.13 hereto (and are to be updated (y) as
set forth in Section 7(k)(ii) and (z) as of the
pre-Closing Close of Business).
"Safe Deposit Boxes" shall mean all safe
deposit boxes located at each of the Branches.
"Sale and Assignment Agreement" shall mean an
agreement for the sale and assignment of the
Account Loans, the Overdraft Lines of Credit and
the Other Loans, substantially in the form of
Exhibit E to this Agreement.
"Servicing Purchase Agreement" shall mean an
agreement between AFC, AVC and GMB and ALBANK of
even date herewith, providing for the sale,
transfer and conveyance of the Servicing Business,
attached as Exhibit F to this Agreement.
"Servicing Business" shall have the meaning
set forth in the Servicing Purchase Agreement.
"Small Loans" shall have the meaning set
forth in Section 12(e)(vii).
"Systems Conversion" shall have the meaning
set forth in Section 10.
"Taxes" shall have the meaning set forth in
Section 12(h).
"TDR Loans" shall have the meaning set forth
in Section 8(h).
"TIN" shall mean Taxpayer Identification
Number.
"Title Company" shall have the meaning set
forth in Section 15(a).
"Title Objections" shall have the meaning set
forth in Section 15(a).
"Transferable Custodial Account" shall mean
any Transferable IRA or Transferable Keogh Plan
Account.
"Transferable IRA" or a "Transferable Keogh
Plan Account" for any date or time shall mean any
IRA or Keogh Plan Account with respect to which,
as of the close of business on such date or as of
such time, GMB may resign as trustee or custodian
and appoint ALBANK as successor trustee or
custodian, without the consent, approval or other
action of any other party (other than ALBANK's
acceptance of such appointment), including the
grantor of the IRA or named fiduciary of the Keogh
Plan or any court, in light of all laws, rules,
regulations, documentation, and customer
agreements or directions then applicable to such
account, and shall also mean any IRA or Keogh Plan
Account as to which the grantor of the IRA or
named fiduciary of the Keogh Plan has instructed
GMB to name ALBANK as successor trustee or
custodian.
"Trust Business" shall mean all trust
accounts of GMB and all tangible and intangible
assets, liabilities and obligations of the Company
used in, or made by or with respect to, the
operations of GMB in its trust business, but
excluding any Custodial Accounts that are in trust
form, any assets, liabilities or obligations used
therein or made with respect thereto, and any
Assumed Custodial Deposits held in trust accounts.
"Trust Customer" shall mean as of a specified
date, those persons, including partnerships,
trusts, estates, corporations and individuals,
having trust accounts, trust relationships or
other trust-related customer business with GMB
that constitutes part of the Trust Business.
"Trust Transfer Transaction" shall have the
meaning set forth in Section 2(h).
"Violation Notice" shall have the meaning set
forth in Section 12(d)(ii).
2. TERMS OF PURCHASE.
(a) Purchase and Sales of Assets. At the
Closing, subject to the terms and conditions set
forth herein, the Company shall sell, convey,
assign, transfer and deliver to ALBANK, and ALBANK
shall purchase from the Company, all of the
Company's right, title and interest as of the
Pre-closing Close of Business in and to the
following assets (collectively, the "Assets"):
(i) the Real Property Assets, subject
to Section 2(j) with respect to OREO;
(ii) the Personal Property and the Safe
Deposit Boxes;
(iii) the Cash on Hand;
(iv) the Loans;
(v) the Servicing Business, unless the
Servicing Purchase Agreement has been terminated,
as provided for therein;
(vi) all rights to the Late Fee
Receivable;
(vii) all prepaid expenses of the
Branches determined in accordance with generally
accepted accounting principles as of the
Pre-closing Close of Business (the "Prepaid
Expenses");
(viii) all rights to and under each
of the Contracts to be assigned to ALBANK, subject
to Section 2(g); and
(ix) all records and original documents
pertaining to the Real Property Assets, the
Personal Property, the Cash on Hand, the Loans,
the Servicing Business, the Prepaid Expenses, the
Late Fee Receivable and the Contracts.
(b) Transfer of Assets. The transfer of the
Assets hereunder to ALBANK shall be by appropriate
deeds, bills of sale or assignments substantially
in the forms annexed hereto as exhibits and, to
the extent the transfer of particular Assets is
not covered by such forms, in forms acceptable to
both ALBANK and the Company, together with such
additional documents and instruments as shall be
reasonably necessary to consummate such transfer.
Schedule 2(b) to this Agreement identifies the
actual owner or owners (whether GMB, AVC and/or
AFC) of each of the Assets as of the date hereof.
The Company shall not take any action, or permit
any omission, to affect, as between GMB, AVC or
AFC, the ownership of any such Assets prior to the
Closing without the prior written consent of
ALBANK, such consent not to be unreasonably
withheld.
(c) Proration. Except as otherwise
specifically provided in this Agreement, it is the
intention of the parties hereto that the Company
shall operate for its own account the business
being transferred pursuant to this Agreement until
the Pre-closing Close of Business, and that ALBANK
shall operate for its own account the business
being transferred pursuant to this Agreement
effective on and after the Closing Date. Thus,
except as otherwise specifically provided in this
Agreement or the Servicing Purchase Agreement,
items of income and expense, including, but not
limited to, payments of rent, taxes, utilities and
other amounts required to be paid by the tenant
under the Leases, all personal property taxes
applicable to the Personal Property to be
transferred hereunder, employee compensation,
insurance premiums related to the Branches or the
Assets (provided, however, that such insurance is
to continue in effect for the benefit of ALBANK on
and after the Closing Date), FDIC insurance
premiums related to the Deposit Liabilities, and
fee income, shall be prorated as of the
Pre-closing Close of Business on the basis of
30-day months and a 360-day year (or with respect
to FDIC insurance premiums, real estate taxes and
water and sewer rents and charges as hereinafter
provided) ("Proration Charges"). To the extent
that the Company may have prepaid any of the
Proration Charges as of the Pre-closing Close of
Business or if the amount thereof is then a known
sum certain, such as security deposits made by the
Company with respect to any Lease or other
transferred assets or assumed liabilities, all of
which shall be held on and after the Closing Date
for the benefit of ALBANK, then the amount of such
Prepaid Expenses shall be used in calculating the
payments pursuant to Section 5. To the extent
that the amount of any of the Proration Charges is
not known as of the Pre-closing Close of Business,
then the parties shall pay to the appropriate
payee (including, if applicable, the other party)
their respective pro rata share of the same after
the Closing Date within ten (10) days after
written demand therefor. Prorations of FDIC
premiums for periods subsequent to the Closing
Date shall be determined on the basis of a
fraction, the numerator of which is the amount of
the Deposit Liabilities assumed by ALBANK
hereunder and the denominator of which is the
amount of Deposits at the Branches used in
calculating FDIC insurance premiums; provided,
however, that such fraction shall not be greater
than one (1.0). Real estate taxes, water and
sewer charges, and fuel charges shall be
appropriately apportioned as follows: (i) current
real estate taxes and water and sewer rents and
charges, if any, on the basis of the fiscal year
for which assessed, and (ii) water meter charges,
if applicable, as hereinafter provided. If, with
respect to one or more of the Branches, (x) the
Closing shall occur before the tax rate for the
Real Property is fixed, the apportionment of real
estate taxes for said Branch(es) shall be upon the
basis of the tax rate for the next preceding year
applied to the latest assessed valuation and (y)
there is a water meter on the Real Property, the
Company shall furnish a reading to a date not more
than thirty (30) days prior to the Closing Date,
and the unfixed meter charge based thereon for the
intervening time shall be apportioned on the basis
of such last reading. The Company will use its
best efforts to obtain final bills as of the
Pre-closing Close of Business for all Proration
Charges. The Company shall be entitled to any Tax
refund received by ALBANK after the Closing Date
with respect to Taxes paid by the Company for
periods ending prior to the Closing Date.
(d) Items in Transit. ALBANK shall obtain
the benefit of all items relating to or
originating from the Branches which are in transit
as of the Pre-closing Close of Business and are
handled in accordance with the Company's usual and
customary practices and procedures.
(e) Books and Records. The Company shall
deliver to ALBANK: (i) all records and original
documents located at the Branches or in
centralized servicing areas pertaining to the
Branches, Assets or Liabilities acquired from the
Company pursuant to this Agreement and the
Servicing Purchase Agreement; and (ii) an account
history of all accounts related to Deposit
Liabilities, Account Loans and Overdraft Lines of
Credit for a period including at least the year in
which the Closing Date occurs and the calendar
year prior to the Closing Date, or such lesser
period for which the Company customarily retains
such records. Such records and documents shall
include all existing signature cards, legal files,
pending files, all Deposit agreements, Account
Loan agreements, Overdraft Line of Credit
agreements and computer records. Subject to the
provisions of Section 14(i), the records and
documents acquired by ALBANK hereunder shall be
open for inspection by the Company, its authorized
representatives and regulators, and the Company
may, at its own expense, make such copies of and
excerpts from such books and records as it may
deem desirable. ALBANK agrees to maintain all
books and records relating to the Branches for the
period required by law, unless the Company shall,
applicable law permitting, agree upon a shorter
period. ALBANK shall give the Company notice
before ALBANK destroys or otherwise disposes of
any such books and records, and, subject to the
provisions of Section 14(i), the Company shall
have the opportunity to have any such books and
records as are scheduled for destruction by ALBANK
delivered to the Company, at the Company's
expense, if requested by the Company following
such notice.
(f) Sales Taxes. All sales taxes on
Personal Property which are payable or arise as a
result of this Agreement or the consummation of
the purchase and sale contemplated by this
Agreement shall be paid or paid for by ALBANK
whether such taxes are imposed, under applicable
law, upon ALBANK or the Company.
(g) Contracts. ALBANK may elect to be
assigned the rights of the Company, and to assume
the liabilities of the Company, under any Contract
that it elects to continue by giving written
notice to the Company of such Contracts at least
10 Business Days prior to the Closing Date. Upon
receipt of such notice, the Company will
immediately advise ALBANK whether any breaches,
defaults, claims or similar occurrences have
occurred or are pending or, to the knowledge of
the Company, threatened with respect to any such
Contract, and ALBANK may notify the Company within
two Business Days of receiving such advice whether
it elects to be assigned the rights and to assume
the liabilities of the Company under such
Contract.
(h) No Purchase of Trust Business; Trust
Transfer Transactions. ALBANK is not purchasing,
and no provision of this Agreement shall be
construed to convey or transfer, GMB's Trust
Business. Nothing in this Agreement shall
preclude the Company from negotiating and entering
into an agreement or agreements with one or more
parties unaffiliated with the Company or ALBANK
(any such party, a "Counterparty") involving the
transfer by the Company to the Counterparty of any
of the Trust Business or the assets or liabilities
of the Company related thereto (specifically
excluding any Custodial Accounts and Assumed
Custodial Deposits) or any business combination
transaction accomplishing the equivalent of any
such transfer (any such transaction, a "Trust
Transfer Transaction"), provided, however, that
(i) the Company shall not enter into an agreement
for or consummate any such Trust Transfer
Transaction if doing so would (A) materially
impair the ability of the parties to this
Agreement to consummate the transactions provided
for herein under the terms and conditions provided
for herein, or (B) subject to the provisions of
Section 11, materially affect the timing of such
consummation or materially decrease the likelihood
that the transactions provided for herein will be
completed; (ii) on and after consummation of any
such Trust Transfer Transaction, all the
obligations, covenants, agreements,
representations, warranties and indemnifications
incurred or given by the Company and its
affiliates in and under this Agreement shall
continue to be the obligations, covenants,
agreements, representations, warranties and
indemnifications of AFC and its continuing
subsidiaries and affiliates, regardless of whether
the Counterparty in such Trust Transfer
Transaction succeeds, as a matter of law or
contract, to any of the foregoing upon
consummation of such transaction; (iii) on and
after consummation of any such Trust Transfer
Transaction, all the rights obtained by ALBANK and
its affiliates in and under this Agreement as
against the Company and its affiliates shall
continue to be rights possessed by ALBANK and its
affiliates as against AFC and its continuing
subsidiaries and affiliates, regardless of whether
such rights also may then be asserted by ALBANK
and its affiliates, as a matter of law or
contract, against the Counterparty in such Trust
Transfer Transaction; (iv) the Company shall
include in the definitive agreement for any Trust
Transfer Transaction (the "Trust Transfer
Agreement") a provision under which each
Counterparty thereto (A) agrees, from the
execution of such Trust Transfer Agreement until
the date that is three years after consummation of
the Trust Transfer Transaction, not to use to its
own advantage, and to ensure that none of its
affiliates uses to its advantage, any non-public
information relating to the Company, specifically
including GMB, obtained by such Counterparty
directly or indirectly from the Company or its
current or former employees that does not
reasonably relate to the Trust Business being
acquired by such Counterparty in the Trust
Transfer Transaction ("Counterparty Restricted
Information"), whether such Counterparty
Restricted Information may have been or may be
obtained by the Counterparty, its affiliates,
representatives, or agents or employees of any of
the foregoing (collectively, the "Counterparty
Group") in the course of negotiations or
investigations leading to execution of the Trust
Transfer Agreement or consummation of the Trust
Transfer Transaction or may be obtained by any of
the Counterparty Group after such consummation
from former employees of the Company, which
provisions shall specifically reference, without
limiting the generality of the foregoing, that
information related to deposit and lending
operations of GMB is Counterparty Restricted
Information, and shall further specifically
reference as a prohibited usage of Counterparty
Restricted Information thereunder, any
solicitation by such Counterparty or its
affiliates of any Individual Retirement Account or
Keogh Plan business from those customers of GMB
whose IRAs and Keogh Plan Accounts are not being
transferred to the Counterparty thereunder, to the
extent that such customers may have been or may be
specifically identified by the Counterparty or its
affiliates as a result of information obtained by
any one or more of the Counterparty Group from the
Company or its employees in the course of
negotiations or investigations leading to
execution of the Trust Transfer Agreement or
consummation of the Trust Transfer Transaction or
after consummation thereof from former employees
of the Company, and (B) agrees to return to the
Company, destroy or not make use of all of such
Counterparty Restricted Information taking the
form of documents, books, records or tapes and to
destroy any electronic records in its possession
containing such Counterparty Restricted
Information; (v) from the date hereof until three
years after the Closing Date hereunder, the
Company will not disclose or make available to any
Counterparty in any Trust Transfer Transaction
(except for any required disclosure under
regulatory applications) any of the nonpublic
information directly or indirectly related to any
of the Assets or Liabilities being acquired or
assumed by ALBANK hereunder, except for any such
information (non-customer specific, in any event)
which is also directly related to the Trust
Business being acquired by the Counterparty or
Counterparties under the Trust Transfer Agreement
and is necessary to be disclosed to the
Counterparty or Counterparties thereunder,
provided that the Company will in no event
disclose during such period to any Counterparty in
any Trust Transfer Transaction or any person
proposed to be a Counterparty in any such
transaction the identity of those IRA or Keogh
Plan Account customers whose Custodial Deposits
are being transferred to ALBANK hereunder; and
(vi) the Company shall fully indemnify ALBANK as
provided in Section 21(c)(iv) with respect to any
and all claims or charges by such Counterparty (or
any other third party) against ALBANK with respect
to GMB's operation of the Trust Business prior to
the consummation of any Trust Transfer
Transaction.
(i) Actions Against Former Affiliates. If,
after the date hereof, the Company elects to
pursue any claim or action, in law or equity, or
becomes a named party to any action by or in the
right of the Company, against or with respect to
any of the directors or officers, past or present,
of GMB or AVC or the predecessor companies of
either, relating to any loans to, or other
transactions involving, such persons or their
affiliates but not involving the Loans or other
Assets subject to this Agreement, the Company
shall be entitled to any and all proceeds of any
such claim or action. If, after the Effective
Date, ALBANK or its successors or affiliates
nevertheless shall receive any proceeds of any
such claim or action, ALBANK shall assure that
such proceeds are delivered and given over
immediately to the Company. ALBANK agrees that,
if the Company, in its sole discretion, shall
request that ALBANK, before or after the Closing
Date, provide the Company with copies of documents
in its possession that would assist the Company in
the prosecution of any such claim or the retention
by the Company of any such right, title or
interest in and to any such future proceeds,
ALBANK shall as soon as is practicable, and at the
expense of the Company, provide the Company with
copies of such documents, provided, however, that
ALBANK receives satisfactory indemnification from
the Company with respect to any claims, costs,
actions or legal proceedings brought against or
incurred by ALBANK or any of its affiliates as a
result of the production of documents by ALBANK or
the doing of any other act or thing or the
execution and delivery of any document or
instrument by ALBANK in order to assist and
cooperate with the Company.
(j) OREO. In the event that prior to the
Closing Date, the Company acquires real property
as other real estate owned as a result of
foreclosure or acceptance of deed in lieu of
foreclosure (each such property, "New OREO"), the
Company shall provide ALBANK with all
documentation regarding the related Loan, such
foreclosure and such New OREO. Thereafter, the
parties shall endeavor in good faith to agree on a
purchase price for the New OREO. If the parties
agree, the New OREO shall become Additional OREO
and the purchase price therefor shall be added to
the OREO Amount, as provided in Section
5(a)(i)(I). If the parties are unable to agree on
a purchase price therefor, ALBANK shall not be
required to purchase such New OREO.
3. CONVEYANCE OF ASSETS.
(a) Real Property Assets. At the Closing,
subject to the terms and conditions set forth
herein, the Company shall convey, assign and
transfer to ALBANK all of the Company's right,
title and interest in and to the Real Property
Assets, subject to (i) the Leases and the Premises
Leases; (ii) the title exceptions, other than
Title Objections, contained in the commitment(s)
issued by the Title Company; (iii) any state of
facts shown on current accurate surveys or survey
inspections of the Real Property obtained in
accordance with Section 15(a), provided that none
of said facts interferes with the Intended Use of
any portion of the Real Property and provided
further that none of said facts constitutes a
Title Objection; (iv) laws, ordinances and
governmental regulations governing the occupancy
or use of the Real Property, provided that none of
the foregoing interferes with the Intended Use of
any portion of the Real Property; and (v) real
estate taxes and water and sewer rents and charges
not yet due and payable, provided that the same
are apportioned at the Closing as provided in
Section 2(c) (collectively the "Permitted
Exceptions").
(b) Personal Property and Safe Deposit
Boxes. At the Closing, subject to the terms and
conditions set forth herein, the Company shall
convey, assign and transfer to ALBANK all of the
Company's right, title and interest in and to the
Personal Property and Safe Deposit Boxes as of the
Pre-closing Close of Business, free and clear of
all Encumbrances other than the Encumbrances
existing on the date hereof listed on Schedule
3(b) and immaterial Encumbrances incurred
subsequent to the date hereof and prior to the
Pre-closing Close of Business in the ordinary
course of the Company's business (collectively,
the "Permitted Encumbrances"). The Company shall
cause the Bill of Sale to be delivered to ALBANK
on the Closing Date to effect such conveyance,
assignment and transfer, which shall contain a
brief description of the items being transferred.
(c) Cash on Hand. At the Closing, subject
to the terms and conditions set forth herein, the
Company shall deliver to ALBANK all Cash on Hand,
as of the Pre-closing Close of Business.
(d) Account Loans. At the Closing, subject
to the terms and conditions set forth herein, the
Company shall convey, assign and transfer to
ALBANK all of GMB's right, title and interest in
and to the Account Loans as of the Pre-closing
Close of Business, free and clear of all
Encumbrances. The Company shall cause the Sale
and Assignment Agreement to be delivered to ALBANK
to effect such conveyance, assignment and
transfer, which shall specify the Account Loans
being transferred. At the Closing, the Company
shall also deliver to ALBANK the original executed
promissory notes or other evidences of
indebtedness relating to the Account Loans, duly
endorsed or otherwise assigned in favor of ALBANK,
together with any ancillary agreements between GMB
and the borrowers relating to such Account Loans
and any passbooks held by GMB as collateral for
such Account Loans.
(e) Overdraft Lines of Credit. At the
Closing, subject to the terms and conditions set
forth herein, the Company shall convey, assign and
transfer to ALBANK all of GMB's right, title and
interest in and to the Overdraft Lines of Credit
as of the Pre-closing Close of Business, free and
clear of all Encumbrances. The Company shall
cause the Sale and Assignment Agreement to be
delivered to ALBANK to effect such conveyance,
assignment and transfer, which shall specify the
Overdraft Lines of Credit being transferred. At
the Closing, the Company shall deliver to ALBANK
the original executed documentation relating to
the Overdraft Lines of Credit being transferred,
duly endorsed or otherwise assigned in favor of
ALBANK or, if such originals are unavailable,
copies thereof duly endorsed or otherwise assigned
in favor of ALBANK.
(f) Other Loans. At the Closing, subject to
the terms and conditions set forth herein, the
Company shall convey, assign and transfer to
ALBANK all of GMB's right, title and interest in
and to the Other Loans as of the Pre-closing Close
of Business, free and clear of all Encumbrances.
The Company shall cause the Sale and Assignment
Agreement to be delivered to ALBANK to effect such
conveyance, assignment and transfer, which shall
specify the Other Loans being transferred. At the
Closing, the Company shall also deliver to ALBANK
the original executed promissory notes, mortgage
notes or other evidences of indebtedness relating
to the Other Loans; the Mortgages, duly endorsed
or otherwise assigned in favor of ALBANK; mortgage
assignments; consolidation, extension, written
assurance or substitution agreements; security
agreements; UCC financing statements; guarantees,
assignments of leases, rents and profits; and any
other ancillary agreements between GMB and the
borrowers relating to such Other Loans.
(g) Servicing Business. At the Closing,
subject to the terms and conditions set forth
herein and in the Servicing Purchase Agreement,
the Company shall convey, assign and transfer to
ALBANK all of GMB's right, title and interest in
and to the Servicing Business as provided in the
Servicing Purchase Agreement, unless the Servicing
Purchase Agreement has been terminated, as
provided for therein.
(h) Late Fee Receivable. At the Closing,
the Company shall convey, assign and transfer to
ALBANK all of the Company's right, title and
interest in and to the Late Fee Receivable.
4. LIABILITIES.
(a) Assumption of Liabilities. At the
Closing, subject to the terms and conditions set
forth herein, ALBANK shall assume and undertake to
pay, perform, fulfill and discharge, as of the
Pre-closing Close of Business, the Liabilities as
shown on the books and records of the Company as
of the Pre-closing Close of Business, in
accordance with the terms of such Liabilities in
effect at such time, and none other. The
assumption of Liabilities shall be by the
Assumption Agreement and such other documents as
shall reasonably be deemed necessary by the
Company and ALBANK to effect such assumption.
(i) On the Closing Date, the Company
shall deliver to ALBANK the signature cards,
orders and contracts between the Company and the
depositors at each of the Branches in respect of
the Deposit Liabilities as of 12:01 a.m. on the
Business Day immediately prior to the Closing Date
and other records of a similar character in the
Company's possession at such time, all deposit
slips, canceled checks, withdrawal orders and
statements in the Company's possession
representing or reflecting charges to said
depositors, and all books of account, records and
microfilm, and the forms of rules and regulations
applicable to the Branches.
(ii) As of the Pre-closing Close of
Business, GMB shall resign as trustee or
custodian, as applicable, under the Transferable
Custodial Accounts and appoint ALBANK as successor
trustee or custodian, as applicable, thereunder,
and ALBANK agrees to accept each such appointment
and to assume all fiduciary obligations with
respect thereto as of the Pre-closing Close of
Business. The Deposits held in such accounts as
of the Pre-closing Close of Business shall be
included in the Deposit Liabilities hereunder as
"Assumed Custodial Deposits." The Deposits in the
Nontransferable Custodial Accounts as of the
Pre-closing Close of Business also shall be
included in the Deposit Liabilities hereunder as
"Assumed Custodial Deposits" unless (A) ALBANK, by
written notice delivered to the Company at least
thirty (30) days prior to the anticipated Closing
Date, shall have elected for "good cause" as
identified by ALBANK to the Company to have some
or all such Deposits excluded from the Deposit
Liabilities, in which event such deposits shall be
excluded from the Deposit Liabilities hereunder,
or (B) the grantor of any Nontransferable IRA or
the named fiduciary of any Nontransferable Keogh
Plan Account shall have given express instructions
to GMB for the naming of a successor trustee or
custodian, as applicable, on or prior to the
Pre-closing Close of Business and such named
successor trustee or custodian is not ALBANK (any
deposits excluded under (A) and (B), "Excluded
Custodial Deposits"). The "good cause" identified
by ALBANK under clause (A) of the foregoing
sentence shall not include any earlier
determination by GMB that it is unable to resign
as trustee or custodian and/or appoint ALBANK as
successor trustee or custodian with respect to any
Nontransferable Custodial Accounts. On and after
the Closing Date, GMB shall continue to serve as
trustee or custodian, as applicable, of each
Nontransferable IRA and Nontransferable Keogh Plan
Account, whether the Deposits held therein as of
the Pre-closing Close of Business are Assumed
Custodial Deposits or Excluded Custodial Deposits,
unless on or prior to the Pre-closing Close of
Business the grantor of any Nontransferable IRA or
the named fiduciary of any Nontransferable Keogh
Plan shall have given GMB express instructions
naming ALBANK as the successor trustee or
custodian, as applicable, in which event GMB shall
comply with such instructions and such IRA or
Keogh Plan Account will become a Transferable
Custodial Account. With respect to any
Nontransferable Custodial Account that is an
Assumed Custodial Deposit for which GMB continues
to serve as trustee or custodian on and after the
Closing Date, GMB shall (i) use its best efforts
to obtain, and cooperate with ALBANK's efforts to
obtain, the documentation or customer agreements
or directions necessary to permit GMB to resign as
trustee or custodian and appoint ALBANK as
successor trustee or custodian; (ii) perform its
duties as trustee or custodian in a prudent and
diligent manner consistent with its past
practices; and (iii) promptly provide ALBANK with
copies of any correspondence or other
documentation relating to GMB's trusteeship or
custodianship of such accounts to which ALBANK
should have access as depository. The Company
shall deliver to the grantor of each IRA and the
named fiduciary of each Keogh Plan Account such
notice of the foregoing as is required by the
documentation governing each such account and
applicable law and regulation or is otherwise
deemed prudent by GMB as trustee or custodian of
such account, after consultation with ALBANK.
(iii) On the Closing Date, the
Company shall deliver to ALBANK copies of the
Contracts (annexed to Schedule 1.5 attached
hereto, as updated) to be assumed by ALBANK,
subject to Section 2(g).
(b) Non-Assumption of Liabilities. ALBANK
shall not assume or be bound by any duties,
responsibilities, obligations or liabilities of
the Company of any kind or nature, known, unknown,
contingent or otherwise, other than those
obligations and liabilities expressly assumed by
it pursuant to Section 4(a) or Section 2(f) or
under the Servicing Purchase Agreement or those
matters specifically indemnified against by it
pursuant to Section 21(b). Without limiting the
generality of the foregoing, it is understood that
ALBANK does not assume, undertake or accept any
duties, responsibilities, obligations or
liabilities of the Company:
(i) to employees or former employees of
the Company or any of their beneficiaries, heirs
or assignees, including (A) any pension, accrued
vacation or other liabilities, (B) any liabilities
arising from the termination, pursuant to Section
9(b)(iv), by the Company of Employees (or any
liabilities from termination by the Company of any
employees of the Trust Business) and (C) any
liabilities arising by virtue of any collective
bargaining relationship or agreement or pursuant
to the National Labor Relations Act or any other
labor relations law;
(ii) to the Pension Benefit Guaranty
Corporation or any similar organization, whether
arising out of the employment by the Company of
any employees or former employees, out of the
transactions contemplated by this Agreement or
otherwise;
(iii) with respect to (A) any
income, profits, franchise or similar tax; (B) any
claims arising out of actions taken by the Company
with respect to the Deposits or Account Loans,
Overdraft Lines of Credit, Other Loans or
Servicing Business; (C) any claims for personal
injury, property damage or consequential damages
relating to the condition or operation of the Real
Property or Personal Property, or otherwise, (D)
any losses or liabilities due to or arising from
forgery or from any fraud, defalcation or any
other improper act or omission on the part of the
Company, (E) any liability or obligation of the
Company arising out of any threatened or pending
litigation or (F) the Company's operation of the
Trust Business; or
(iv) under any statute, rule or
regulation, including, but not limited to,
antitrust, bank secrecy, civil rights, health,
safety, labor, discrimination and environmental
laws, rules and regulations.
5. CONSIDERATION AND SETTLEMENT.
(a) As consideration for the assumption by
ALBANK of the Liabilities pursuant to Section 4(a)
and for the purchase by ALBANK of the Assets
pursuant to Section 2(a), the Company and ALBANK
shall make payments to each other, in accordance
with the procedures set forth in Section 5(b), as
follows:
(i) ALBANK shall pay to AVC or GMB, as
AVC may designate:
(A) an amount (the "Account Loan
Amount") equal to the book value as of the
Pre-closing Close of Business of the Account Loans
which are being transferred to ALBANK hereunder,
as carried under generally accepted accounting
principles on the books and records of the Company
maintained for financial accounting purposes;
(B) an amount (the "Overdraft
Lines of Credit Amount") equal to the book value
as of the Pre-closing Close of Business of the
Overdraft Lines of Credit which are being
transferred to ALBANK hereunder, as carried under
generally accepted accounting principles on the
books and records of the Company maintained for
financial accounting purposes;
(C) an amount (the "Other Loan
Amount") equal to the book value as of the
Pre-closing Close of Business of the Other Loans
which are being transferred to ALBANK hereunder,
as carried under generally accepted accounting
principles on the books and records of the Company
maintained for financial accounting purposes,
reduced by the ALLL Amount;
(D) an amount (the "Personal
Property Amount") equal to the net book value as
of the Pre-closing Close of Business of the
Personal Property and Safe Deposit Boxes which are
being transferred to ALBANK hereunder, as carried
under generally accepted accounting principles on
the books and records of the Company maintained
for financial accounting purposes;
(E) an amount (the "Real Property
Amount") equal to the net book value as of the
Pre-closing Close of Business of the Real Property
Assets that are being transferred hereunder, as
carried under generally accepted accounting
principles on the books and records of the Company
maintained for financial accounting purposes;
(F) an amount (the "Premium
Amount") equal to seven and one-half percent
(7-1/2%) of the average daily amount of the
Deposit Liabilities measured at the close of
business of each Business Day during a period (the
"Deposit Measuring Period") commencing ten (10)
Business Days prior to the Closing Date and ending
ten (10) Business Days after the Closing Date (or
commencing and ending as set forth in Section
7(d)), less two and one-half percent (2-1/2%) of
the average daily amount of Nontransferable
Custodial Accounts that are Assumed Custodial
Deposits measured at the close of business of each
Business Day during the Deposit Measuring Period;
(G) an amount (the "Prepaid
Expense Amount") equal to the book value as of the
Pre-closing Close of Business of the Prepaid
Expenses, as carried under generally accepted
accounting principles on the books and records of
the Company maintained for financial reporting
purposes;
(H) an amount (the "Cash on Hand
Amount") equal to the Cash on Hand as of the
Pre-closing Close of Business;
(I) an amount (the "OREO Amount")
equal to (i) $930,000 ($800,000 for Rivermill and
$130,000 for Sequoia) for the OREO and (ii) the
purchase price agreed on pursuant to Section 2(j)
for any Additional OREO;
(J) an amount (the "Servicing
Business Amount") equal to $25,000 for the
Servicing Business (if the Servicing Purchase
Agreement has not been terminated, as provided for
therein); and
(K) an amount (the "Late Fee
Amount") equal to the lesser of $25,000 or
thirty-two percent (32%) of the Late Fee
Receivable as of the Pre-closing Close of
Business, as certified to ALBANK on the Closing
Date.
(ii) The Company shall pay to ALBANK an
amount (the "Deposit Liabilities Amount") equal to
the Deposit Liabilities as of the Pre-closing
Close of Business.
(b) The Company and ALBANK shall make
payments of the amounts set forth in Section 5(a)
as follows:
(i) On or before the Closing Date,
ALBANK and the Company shall agree in writing upon
estimates of the Account Loan Amount, the
Overdraft Lines of Credit Amount, the Other Loan
Amount, the Personal Property Amount, the Real
Property Amount, the Prepaid Expense Amount, the
Cash on Hand Amount and the Deposit Liabilities
Amount in each case as of 12:01 a.m. on the
Business Day immediately prior to the Closing
Date, and a good faith estimate of the Premium
Amount. All calculations made for purposes of
this Section 5(b) shall be made on the assumption
(which is consistent with ALBANK's practice) that
interest on the Deposit Liabilities assumed by
ALBANK pursuant to Section 4(a) begins to accrue
on the day of deposit and does not accrue on the
day of withdrawal.
(ii) On the Closing Date, ALBANK shall
transfer to an account of AVC or GMB, as AVC may
designate, in accordance with wire transfer
instructions provided to ALBANK an amount (the
"Estimated Amount") equal to the sum of the
Account Loan Amount, the Overdraft Lines of Credit
Amount, the Other Loan Amount, the Personal
Property Amount, the Real Property Amount, the
Premium Amount, the Prepaid Expense Amount and the
Cash on Hand Amount, in each case as estimated by
ALBANK and the Company pursuant to Section 5(b)(i)
above, the OREO Amount as set forth in Section
5(a)(i)(I) above, the Servicing Business Amount as
set forth in Section 5(a)(i)(J) above and the Late
Fee Amount as set forth in Section 5(a)(i)(K)
above, less the Deposit Liabilities Amount
estimated by ALBANK and the Company pursuant to
Section 5(b)(i) above, provided, however, that if
the Estimated Amount as calculated in accordance
with the preceding clauses of this Section
5(b)(ii) shall be a negative number, AVC or GMB
shall transfer to an account of ALBANK, in
accordance with wire transfer instructions
provided by ALBANK, an amount equal to the
Estimated Amount multiplied by negative one
(-1.0).
(iii) Within ten (10) Business Days
after the Deposit Measuring Period has ended, AFC
shall deliver to ALBANK a written report
certified, to his best knowledge and belief, by
its chief financial officer which shall set forth
the Company's calculation of the actual amounts of
the Deposit Liabilities Amount, the Account Loan
Amount, the Overdraft Lines of Credit Amount, the
Other Loan Amount, the Personal Property Amount,
the Real Property Amount, the Premium Amount, the
Proration Charges, the Prepaid Expense Amount and
the Cash on Hand Amount, in each case as of the
Pre-closing Close of Business, except the Premium
Amount, which shall be calculated for the Deposit
Measuring Period. Within seven (7) Business Days
after the Deposit Measuring Period has ended,
ALBANK shall deliver to AFC a written report
certified, to his best knowledge and belief, by
its chief financial officer which shall set forth
ALBANK's calculation of the actual amount of the
Deposit Liabilities during the post-Closing part
of the Deposit Measuring Period.
(iv) Each of ALBANK and the Company may
examine, and shall have a period of ten (10)
Business Days (the "Review Period") after receipt
of the reports delivered by the other party
pursuant to Section 5(b)(iii) above in which to
examine, such report or have such report examined
by ALBANK's or the Company's respective
independent certified public accountants, make
inquiries of such other party or have such
accountants make inquiries of such other party
concerning the information set forth therein and
examine the work papers upon which such other
party's calculation of the amounts set forth in
such report is based or have such work papers
examined by such accountants, and ALBANK and the
Company agree to cooperate with each other and the
respective independent certified public
accountants in such efforts.
(v) In the event that ALBANK and the
Company have reached agreement at the end of the
Review Period on the sum of the actual amounts as
of the Pre-closing Close of Business of the
Account Loan Amount, the Overdraft Lines of Credit
Amount, the Other Loan Amount, the Personal
Property Amount, the Real Property Amount, the
Premium Amount, the Proration Charges, the Prepaid
Expense Amount, the Cash on Hand Amount, the
Servicing Business Amount, the Late Fee Amount and
the OREO Amount less the actual amount as of the
Pre-closing Close of Business of the Deposit
Liabilities Amount (the "Actual Amount"), ALBANK
shall transfer to AVC or GMB, as AVC may
designate, by wire transfer the amount by which
the Actual Amount exceeds the Estimated Amount,
together with interest thereon at the Overnight
(uncollateralized) Federal Funds Rate from the
Closing Date to the date of payment, or, if the
Estimated Amount is greater than the Actual
Amount, AVC or GMB shall transfer to ALBANK's
Federal Reserve account in New York City by wire
transfer the amount by which the Estimated Amount
exceeds the Actual Amount, together with interest
thereon at the Overnight (uncollateralized)
Federal Funds Rate from the Closing Date to the
date of payment in either case, without regard to
whether the Actual Amount is a positive or
negative number.
(vi) In the event that ALBANK and the
Company are unable to reach agreement on the
Actual Amount by the end of the Review Period, the
calculation of the Actual Amount shall be
submitted to a nationally recognized accounting
firm mutually selected by ALBANK and the Company
(the "Accountants"), and the calculation by the
Accountants of the Actual Amount shall be
conclusive and binding upon ALBANK and the Company
for purposes of this Section 5; the Company and
ALBANK agree to cooperate with the Accountants and
to make available to the Accountants all
information reasonably necessary to permit the
Accountants to calculate the Actual Amount and to
share equally the cost incurred by having the
Accountants make such calculation; within two
Business Days following receipt by ALBANK and the
Company of the written report by the Accountants
of their calculation of the Actual Amount, ALBANK
shall transfer to AVC or GMB, as AVC may
designate, by wire transfer the amount by which
the Actual Amount as calculated by the Accountants
exceeds the Estimated Amount, together with
interest thereon at the Overnight
(uncollateralized) Federal Funds Rate from the
Closing Date to the date of payment, or, if the
Estimated Amount is greater than the Actual
Amount, AVC or GMB shall transfer to ALBANK'S
Federal Reserve account in New York City by wire
transfer the amount by which the Estimated Amount
exceeds the Actual Amount, together with interest
thereon at the Overnight (uncollateralized)
Federal Funds Rate from the Closing Date to the
date of payment in either case, without regard to
whether the Actual Amount is a positive or a
negative number.
(vii) As soon as practicable after
the date that is 360 days after the Closing Date,
ALBANK shall calculate the amount of
Nontransferable Custodial Accounts that are
Assumed Custodial Deposits that have been renewed
under the terms of the agreements governing such
Deposits at any time after the date that all
regulatory approvals for the transactions
contemplated herein have been obtained (the
"Renewed Account Amount"). Promptly thereafter,
ALBANK shall remit to AVC or GMB, as AVC may
designate, an amount (the "Premium Adjustment
Amount") equal to seven and one-half percent
(7-1/2%) of the Renewed Account Amount minus five
percent (5%) of the average daily amount of
Nontransferable Custodial Accounts that are
Assumed Custodial Deposits measured at the close
of business of each Business Day during the
Deposit Measuring Period, provided, however, that
if the Premium Adjustment Amount as calculated in
accordance with this Section 5(b)(vii) is a
negative number, neither party shall have any
obligation to remit additional funds to the other
party pursuant to this Section 5(b)(vii).
6. APPROVALS.
Each of the Company and ALBANK will use
their or its best efforts to obtain all regulatory
and other approvals necessary for such party to
consummate the transactions contemplated by this
Agreement. Each party also shall be responsible
for preparing the financial information required
for the applications and other regulatory reports
necessary to obtain any governmental approval of
the contemplated transactions and shall prepare
any other application or regulatory report which
may be separately necessary for such party to
prepare in order to obtain any governmental
approval. Each party will cooperate with the
other in providing all necessary information for
the applications and other regulatory reports.
Each party will permit the other to review any
applications before submitting them to the
regulatory authorities excluding any confidential
parts or portions of such applications. Promptly
following the filing of any application or report
related to the transactions contemplated hereby
with the appropriate regulatory agency, each party
will provide the other with a copy of such
application or report (excluding any confidential
portions thereof). Each of the Company and ALBANK
agrees to use their or its best efforts to submit
the applications to appropriate regulatory
agencies as soon after the date hereof as is
practicable. Each of the Company and ALBANK will
bear its own costs and fees associated with the
preparation and filing of such applications. The
covenants in this Section 6 with respect to
regulatory applications and reports shall apply
equally to any required amendments or supplements
to any such application or report.
7. AGREEMENTS OF THE COMPANY.
(a) Access to Records and Information.
Between the date of this Agreement and the Closing
Date, the Company shall afford to ALBANK and its
authorized agents and representatives, upon
reasonable prior notice, reasonable access during
normal business hours to each of the Branches and
to records and other information within the
Company's possession relating to the Branches, the
Assets to be purchased and the Liabilities to be
assumed by ALBANK pursuant to the terms of this
Agreement, including, specifically, for the
purpose of due diligence on Loans and other
Assets. The Company shall cause its personnel to
provide assistance to ALBANK's authorized agents
and representatives in their investigation of
matters relating to the Branches, the Assets and
the Liabilities and in ALBANK's preparations for
the consummation of the transactions contemplated
by this Agreement, and to afford such agents and
representatives full access to each of the
Branches during non-business hours (whether on
weekends, holidays or otherwise) as may reasonably
be requested by ALBANK prior to the Closing Date,
including, specifically, for the purpose of due
diligence on Loans and other Assets; provided,
however, that ALBANK's investigation and
preparations shall be conducted in a manner which
does not unreasonably interfere with the Company's
normal operations and customer and employee
relations. Notwithstanding anything to the
contrary in this Section 7(a), the Company need
not incur any material out-of-pocket costs or
expenses in connection with this undertaking.
(b) Further Assurances. The Company agrees
to use its best efforts to take, or cause to be
taken, all reasonable action and to do, or cause
to be done, all things necessary, proper or
advisable under applicable laws and regulations,
to satisfy the conditions to Closing contained
herein and to consummate and make effective the
transactions contemplated by this Agreement,
subject to the satisfaction of the conditions to
the obligations of the Company set forth in
Sections 17 and 18. On and after the Closing
Date, the Company shall (i) give such further
assurances to ALBANK and shall execute,
acknowledge and deliver all such bills of sale,
deeds, acknowledgments and other instruments and
take such further actions as may be necessary and
appropriate to vest effectively in ALBANK full
legal and equitable title in and to the Assets,
and (ii) use reasonable efforts to assist ALBANK
in the orderly transition of the operations of the
Branches, Liabilities and Assets being acquired or
assumed by ALBANK.
(c) Consents. The Company will use
reasonable efforts, to the extent permitted by the
relevant Contracts and applicable law, to obtain
on substantially the same terms and conditions as
exist on the date hereof all non-governmental
consents necessary to consummate the transactions
contemplated hereunder or which if not obtained
could constitute a material breach or default
under any provision hereof or under any material
Contract to be assigned to ALBANK hereunder. If
the Company is not able to obtain a required
consent under any material Contract, the Company
will cooperate with ALBANK to obtain for ALBANK
the benefits under such Contract, including
enforcement of any and all rights of the Company
against the other party or parties thereto.
Between the date hereof and the Closing Date, the
Company shall advise ALBANK of its efforts to
obtain all necessary third party consents on no
less frequent than a monthly basis.
(d) Notice. Not later than thirty (30) days
prior to the Closing Date, the Company at its own
expense shall notify all persons who are
depositors of the Branches (including persons
having Assumed Custodial Deposits) of the proposed
transfer of their deposit accounts to ALBANK,
which notice shall specify certain penalty-free
withdrawal rights as provided in Title 8, Chapter
55, Section 1011 of the Vermont Statutes
Annotated, provided that (i) the Company and
ALBANK shall agree on the timing and text of such
notice prior to its release; and (ii) if ALBANK
and the Company agree that the notice should be
sent fewer than thirty (30) days prior to the
Closing Date, the pre-Closing portion of the
Deposit Measuring Period shall be decreased, and
the post-Closing portion of the Deposit Measuring
Period shall be extended, by the same number of
days by which the 30-day notice period is
decreased, and provided further that the Company
shall give the notice required by Section 14(c)(i)
promptly after the Closing Date.
(e) Non-Competition Agreement. For the
period commencing on the Closing Date and ending
on the third anniversary of the Closing Date, the
Company will not (i) solicit Deposits or other
banking business (exclusive of Trust Business but
including Individual Retirement Account or Keogh
Plan business) from residents of the State of
Vermont or from persons who were Deposit or Loan
customers (including customers who had Custodial
Accounts) of any of the Branches as of the
Pre-closing Close of Business (collectively,
"Banking Customers"); (ii) purchase or open a new
branch (or ATM) for the purpose of gathering
insured Deposits or originating loans in the State
of Vermont; or (iii) solicit, either directly or
through third parties such as mortgage brokers,
loans secured by real property located in the
State of Vermont, provided, however, that nothing
in this Section 7(e) shall (x) prohibit the
Company from engaging in mass media advertising or
solicitation involving radio or television
communications receivable in the State of Vermont
if such communications are not structured so as to
be primarily receivable in the State of Vermont
and are not targeted primarily at customers
residing therein, (y) prevent either of AFC's New
York-located subsidiary banks after the Closing
Date (I) from soliciting loan or deposit business
from persons or entities residing or located in
the State of Vermont (other than Banking
Customers) that were loan or deposit customers of
such bank prior to the date hereof or were
solicited by such bank regarding such products
prior to the date hereof or (II) from providing
loan or deposit products to persons or entities
residing or located in the State of Vermont (other
than Banking Customers) if such banks are
initially approached by such persons or entities
regarding such products, or (z) prevent the
Licensed Lender from engaging in appropriate and
ordinary course of business workout activities
with respect to any other real estate owned or
loans acquired by such Licensed Lender from GMB on
or prior to the Closing Date. After the Closing,
the Company shall not use or permit any successor
to use the name "Green Mountain Bank," "First Twin
State Bank," "Proctor Bank," "United Vermont
Bancorporation," or any name of a predecessor bank
or predecessor bank holding company to any of the
foregoing or any similar name in the State of
Vermont and shall discontinue the use of the name
"Green Mountain Bank" in all other respects,
provided, however, that if the Company shall have
entered into any Trust Transfer Transaction but
shall not have consummated the same as of the
Closing Date, the Company may continue to use any
of the foregoing names in connection with the
Trust Business until such consummation, unless
such consummation fails to occur within ninety
(90) days after the Closing Date, after which
period the Company shall immediately cease the use
of any of the foregoing names; and provided,
further, that nothing in this Agreement or this
Section 7(e) shall preclude or prohibit the
Company from using any of the foregoing names in
connection with the winding up of the affairs of
GMB or AVC and the filing of all documents and the
making of any and all publication notices or legal
announcements as may be required under law or
agreement in connection with such winding up.
Nothing in this Section 7(e) shall prevent the
Company from forwarding to all depositors at the
Branches a notice of the transactions contemplated
by this Agreement in accordance with the terms of
Sections 7(d) and 14(c)(i) and from publishing or
forwarding to all such depositors such other
communications as may be required by law,
regulation or any regulatory authority. The text
of any such other communication, other than
routine account statements or similar routine
account mailings, shall be approved in advance by
ALBANK, which approval shall not be unreasonably
withheld.
(f) Conduct of Business Prior to Closing.
Except as required by law, regulation or any
regulatory authority, or as provided herein,
between the date hereof and the Closing Date, the
Company shall conduct the business of each of the
Branches only in the ordinary course and
substantially in the same manner as heretofore
conducted, provided that nothing in this Section
7(f) shall preclude the Company from negotiating
and consummating a Trust Transfer Transaction, as
described in Section 2(h). Specifically and
without limiting the general prohibition in the
foregoing sentence, the Company shall not, without
the prior written consent of ALBANK, which consent
shall not be unreasonably withheld:
(i) cause the Branches to engage or
participate in any material transaction or incur
or sustain any material obligation except in the
ordinary course of business;
(ii) cause the Branches to receive from
or to transfer to the Company's other operations
or branches any Assets or records related to the
Branches or Assets, except upon the unsolicited
request of a depositor in the ordinary course of
business;
(iii) cause the Branches to transfer
to the Company's other operations or branches any
Deposits or records related thereto, except upon
the unsolicited request of a depositor in the
ordinary course of business and any Deposits of
the Company's employees;
(iv) undertake any actions which are
inconsistent with a program to use all reasonable
efforts to maintain good relations with Employees,
unless such actions are required or permitted
under this Agreement;
(v) make, renegotiate, renew, increase,
extend or purchase any loan, lease (credit
equivalent) or other extension of credit, or make
any commitment in respect of any of the foregoing,
except, in the case of GMB, loans, leases and
other extensions of credit (A) in an amount not
exceeding $203,150, in the case of loans which are
for the sole purpose of acquiring or refinancing
one- to four-family owner-occupied residences
(provided, however that GMB may not make,
renegotiate, renew, increase, extend or purchase
any loan that is underwritten based on either no
or limited verification of income or otherwise
without full documentation customary for such a
loan), and (B) in the case of commercial mortgage
loans or commercial and industrial loans: (x) in
an amount not exceeding $300,000, with no
additional approval required, provided that each
such loan is made in accordance with GMB's
established lending policies and procedures as in
effect on the date hereof, and (y) in an amount
exceeding $300,000, with the ratification of
ALBANK, which shall be deemed given if, within ten
(10) business days after the day that (i) ALBANK
receives from GMB a request in writing,
accompanied by a written summary of the proposed
loan, that ALBANK provide such ratification, (ii)
GMB makes available for ALBANK at GMB's offices a
financial analysis of the proposed loan and
borrower prepared by GMB and (iii) GMB extends to
ALBANK a full opportunity to examine the credit
files of GMB with respect to such proposed loan,
ALBANK shall not have responded in writing to such
request (it being understood that, in determining
whether any such loan (a "New Loan") complies with
the maximum dollar amounts set out in this clause
(B), the amount of all then outstanding loans,
leases and other extensions of credit to a single
obligor (within the meaning of Title 8, Chapter
57, Section 1206 of the Vermont Statutes
Annotated) then on the books of GMB shall be
aggregated with the amount of such New Loan (such
sum the "Aggregate Credit Outstanding Amount"));
provided however, that the approval procedure
specified in subclause (B)(y) shall not be
required for (I) a New Loan in an amount less than
$300,000, notwithstanding that the New Loan would
result in an Aggregate Credit Outstanding Amount
of greater than $300,000, if (a) the customer
requires the New Loan to satisfy an immediate and
time-sensitive credit need; and (b) no existing
loan, lease or other extension of credit to the
GMB customer is delinquent in payment of principal
or interest or in default with respect to any
other provision; or (II) a New Loan in an amount
of $100,000 or less, notwithstanding that the New
Loan would result in an Aggregate Credit
Outstanding Amount greater than $300,000, if the
New Loan is rated 1, 2 or 3 under GMB's credit
scoring policy; provided, further that (x)
subclauses (I) and (II) of the preceding proviso
shall apply with respect to only one New Loan per
GMB customer; (y) each such New Loan shall comply
in all respects with GMB's lending policies and
procedures, and each and every representation and
warranty contained in Sections 12(e)(i), (iv) and
(v) shall be true with respect to each New Loan;
and (z) GMB shall provide notice in writing to
ALBANK of any New Loan within two (2) business
days after transferring funds in accordance
therewith;
(vi) increase or agree to increase the
salary, remuneration or compensation of any
Employee other than in accordance with GMB's
customary policies and/or bank-wide changes;
provided, however, the Company may, at its option
(and without in any way assuming an obligation to
do so), (A) make payments to or for Employees in
lieu of or as partial compensation for savings,
incentive or other employee benefits and (B) pay
incentive compensation to Employees for purposes
of retaining their service through the Closing
Date;
(vii) invest in any fixed assets or
leasehold improvements related to the Purchased
Branches, except for commitments made on or before
the date of this Agreement as set forth in
Schedule 7(f)(vii).1, items contained in the 1996
GMB capital expenditure budget on the date hereof
as set forth in Schedule 7(f)(vii).2, replacements
of furniture, furnishings and equipment, and
normal maintenance and refurbishing purchased or
made in the ordinary course of the business of the
Purchased Branches;
(viii) create or suffer to exist any
material Encumbrance on any of the Assets, or
otherwise enter into any material transaction or
make any material commitment relating to any of
the Assets;
(ix) transfer, assign or otherwise
dispose of, or enter into any contract, agreement,
or understanding to transfer, assign or otherwise
dispose of, any of the Assets;
(x) enter into any commitment,
agreement, understanding, or other arrangement to
relocate, terminate the operations of or dispose
of any of the Branches or ATM's relating to the
Branches other than pursuant to the terms of this
Agreement;
(xi) enter into any new line of business
outside of the business of banking affecting the
Branches, or, in any Branch, enter into any new
line of banking business, including but not
limited to the Trust Business or any fiduciary
activities, not previously engaged in at such
Branch;
(xii) change its accounting methods,
policies, or procedures in effect as of December
1, 1995, except as required or permitted (in the
sense that required changes may be adopted in
advance) by changes in generally accepted
accounting procedures;
(xiii) except as provided under
Section 9(b) of this Agreement, enter into, modify
or renew any individual employment, severance or
other benefit agreement with any Employee (an
"Employee Agreement"), terminate the employment of
any Employee, or establish, adopt, enter into or
amend any health or welfare, collective
bargaining, bonus, profit sharing, thrift,
compensation, stock option, restricted stock,
pension, retirement, deferred compensation,
employment, termination, severance or other
benefit plan, agreement, trust fund, policy or
arrangement covering any two or more Employees (an
"Employee Plan");
(xiv) undertake, enter into or
renew, amend or terminate, or give notice of a
proposed renewal, amendment or termination of any
commitment with respect to (a) any Lease; (b) any
other lease, contract or agreement involving the
Branches other than in the ordinary course of
business consistent with past practice; and (c)
regardless of whether consistent with past
practice, any other lease, contract, agreement or
commitment involving the Branches extending beyond
the Closing Date, provided that ALBANK will not
withhold its consent to any lease, contract,
agreement or commitment relating to the Real
Property of the Rutland Branch if such cannot
reasonably be expected to have an adverse effect
on the Assets or Liabilities, the ability of the
parties to consummate the transactions provided
for herein or the timing of such consummation;
(xv) commit any act or omission which
constitutes a material breach or default by GMB
under any regulatory agreement or under any
material contract or material license to which GMB
is a party or by which it is bound which affects
the Branches or operations thereof;
(xvi) waive any material right,
whether in equity or at law, that it has with
respect to any Loan, provided that this clause
(xvi) shall not prevent the Company from agreeing
in its reasonable judgment to alter the terms of
any Loan it is renegotiating if the outstanding
amount of such Loan is below the relevant
threshold amounts set forth in clause (v) above;
(xvii) take any action that is
intended or may reasonably be expected to result
in any of the Company's representations and
warranties set forth in this Agreement being or
becoming untrue;
(xviii) make any investment or
commitment to invest in real estate or in any real
estate development project affecting the Purchased
Branches;
(xix) make less stringent than as in
effect on the date of this Agreement GMB's
operational policies, activities or practices
(including practices with respect to customer
service charges, credit underwriting policies or
standards and policies or practices with respect
to lending, charge-off or classification of loans,
reserves and provisions for loan losses, the
placement of loans in non-accrual status, and
liability management); or
(xx) solicit or accept Deposits at a
rate of interest that exceeds the average
effective yields on insured deposits of comparable
maturity in GMB's normal market area or, in any
case, at a rate of interest inconsistent with
GMB's rate-setting practices within the last year,
or make any payment in respect of Deposits other
than in accordance with the terms of the
applicable deposit agreements.
(g) Items in the Company's Possession. The
Company will cooperate with ALBANK and take all
reasonable steps requested by ALBANK to ensure
that from and after the Closing Date each Payment
Item and Deposit Item which is coded for
presentment to the Company or to any bank for the
account of the Company is available for delivery
to ALBANK or its messenger in a timely fashion
consistent with the terms of this Agreement and
any applicable clearing house rule or agreement.
ALBANK shall reimburse the Company for all
reasonable expenses incurred from and after the
Closing Date by the Company pursuant to the
Company's efforts to ensure that such items are so
delivered within such time period.
(h) Electronic Funds Transfer Transactions.
The Company shall promptly remit to ALBANK
electronic funds transfer deposits made after the
Closing with respect to accounts allocated to the
Branches which are Deposit Liabilities assumed by
ALBANK at the Closing. Upon the expiration of
ninety (90) days after the Closing, the Company
may, at its option, cease honoring electronic
funds transfer deposits with respect to Deposit
Liabilities assumed by ALBANK.
(i) Insurance. Schedule 7(i) sets forth all
of the policies relating to insurance maintained
by the Company with respect to the Branches,
including, without limitation, the Real Property,
the Personal Property, the Loans and the Servicing
Business (or any comparable policies entered into
as a replacement therefor). Until the Closing,
the Company shall maintain in full force and
effect all current insurance policies set forth on
Schedule 7(i).
(j) Compliance with Law/Maintenance of
Property. The Company shall comply with all
applicable laws, regulations and rulings affecting
or applicable to the Branches or this Agreement
and the consummation of the transactions
contemplated hereby, and shall maintain the
Personal Property and the Fee Branches, and to the
extent tenant is required to do so under any
applicable Lease, the Leased Branches, and any
shrubbery or landscaping appurtenant to the
Branches, in the condition existing on the date
hereof, reasonable wear and tear excepted, and in
any case consistent with standards of management
and care that the Company would exercise were it
to continue to operate the Branches for its own
account.
(k) Tapes and Trial Balances and Loan Data.
(i) Within ten (10) days of the date
hereof, the Company shall provide ALBANK with a
trial balance tape with corresponding paper trial
balance with respect to each of the Deposit
Liabilities which ALBANK will be assuming. In
addition, the Company shall provide ALBANK with a
trial balance tape with respect to each of the
Deposit Liabilities which ALBANK will be assuming
(A) on a weekly basis, commencing with the week
ending four weeks prior to the anticipated Closing
Date; and (B) as of the close of business on each
Business Day during a period commencing ten (10)
Business Days prior to the anticipated Closing
Date and ending on the Closing Date.
(ii) Within ten (10) days of the date
hereof, the Company shall provide ALBANK with
outstanding balances for the Loans set forth on
Schedules 1.1, 1.2, 1.3, 1.4, 1.11, 1.13 and 8(h)
and shall update such schedules on a weekly basis
commencing with the week ending four weeks prior
to the anticipated Closing Date.
(l) Communications with Customers. After
receipt of all required regulatory approvals, the
Company shall permit ALBANK to communicate with,
and to deliver information, brochures, bulletins,
press releases and other communications reasonably
acceptable to the Company to, depositors,
borrowers and other customers of the Branches
concerning the business and operations of ALBANK
and the transactions contemplated by this
Agreement.
(m) Training of Employees. On and after
delivery by ALBANK of the initial list of
Designated Employees under Section 9(b), the
Company shall permit ALBANK, at the request of
ALBANK and upon reasonable notice, to train any
and all Designated Employees at reasonable times
and for reasonable periods of time, shall excuse
such Designated Employees from their duties during
such periods of time for purposes of training, and
shall be responsible for paying, and shall
continue to pay, the salaries and benefits of such
Designated Employees for such periods.
(n) Environmental Audit. The Company shall,
if reasonably requested by ALBANK, conduct an
environmental audit prior to foreclosure on any
real property securing any Loan if the Company has
knowledge that Hazardous Material was or is
present, manufactured, generated, used, recycled,
reclaimed, released, stored, treated or disposed
of at, in or from such property, and provide the
results of such audit to, and consult with, ALBANK
regarding the significance of such audit prior to
foreclosure on any such property.
8. AGREEMENTS OF ALBANK.
(a) Performance of Liabilities. From and
after the Closing Date, and subject to the
Company's compliance with Sections 7(g) and (h) in
the case of items referred to in Sections 7(g) and
(h), ALBANK shall pay, to the extent of sufficient
available funds on deposit, all properly drawn
Payment Items timely presented to it by mail, over
its counters or through clearings by depositors
whose deposits or accounts on which such Payment
Items are drawn are Deposit Liabilities, whether
drawn on GMB's forms (for ninety (90) days after
the Closing Date) or on those provided by ALBANK.
ALBANK shall fully perform, pay and discharge all
of the Contract Liabilities subject to Section
4(a). ALBANK shall, in all other respects,
discharge, in the usual course of the banking
business, the duties and obligations of the
Company with respect to balances due and owing to
the depositors whose Deposits are assumed by
ALBANK. From and after the Closing Date, ALBANK
agrees to issue all monthly statements to
depositors as may be required by applicable
deposit contracts. From and after the Closing
Date, ALBANK agrees to file all required
information returns including Forms 1099 with the
Internal Revenue Service with respect to Deposits
assumed by ALBANK under this Agreement; provided
that, with respect to the year in which the
Closing Date occurs, the Company shall file all
such required returns with respect to such
Deposits for the period prior to the Closing Date,
and ALBANK shall file such returns only with
respect to the period beginning with the Closing
Date. From and after the Closing Date, ALBANK
agrees to perform all obligations, including
fiduciary obligations, incurred by it as a matter
of law or agreement as successor trustee or
successor custodian to GMB with respect to all
Transferable Custodial Accounts that are Assumed
Custodial Deposits.
(b) Further Assurances. ALBANK agrees to
use its best efforts to take, or cause to be
taken, all reasonable action and to do, or cause
to be done, all things necessary, proper or
advisable under applicable laws and regulations,
to satisfy the conditions to Closing contained
herein and to consummate and make effective the
transactions contemplated by this Agreement,
subject to the satisfaction of the conditions to
the obligations of ALBANK set forth in Sections 16
and 18. On and after the Closing Date, ALBANK
shall give such further assurances to the Company
and shall execute, acknowledge and deliver all
such acknowledgments and other instruments and
take such further actions as may be necessary and
appropriate effectively to relieve and discharge
the Company from any obligations remaining under
the Liabilities assumed by ALBANK.
(c) Compliance with Law. ALBANK shall
comply with all applicable laws, regulations and
rulings in connection with this Agreement and the
consummation of the transactions contemplated
hereby.
(d) Change of Name, Notice. From and after
the Closing Date, ALBANK, at its own expense,
shall promptly change the name on all documents
and facilities relating to the Branches to
ALBANK's name. ALBANK, at its own expense, shall,
within ninety (90) days after the Closing Date,
notify all persons who are customers and
depositors of any of the Branches of such change,
which notification shall comply with applicable
OTS regulations. Nothing in this Section 8(d)
shall require ALBANK to undertake to rewrite
outstanding loans or other documents assumed by or
assigned to ALBANK on the Closing Date except in
the ordinary course of business. For the period
commencing on the Closing Date and ending on
January 15, 1999, ALBANK shall not use, and ALBANK
shall use reasonable efforts to ensure that any
successor shall not use during such period, the
name "Green Mountain Bank," "Proctor Bank," "First
Twinstate Bank," "United Vermont Bancorporation,"
or any name of a predecessor bank or predecessor
bank holding company to any of the foregoing or
any similar name, in the State of Vermont.
(e) Conversion of Draft Accounts. Promptly
following the Closing, but in no event later than
thirty (30) days thereafter, ALBANK shall mail to
each depositor in respect of a checking account,
NOW account, money market account or other account
which permits deposits to be transferred to third
parties by means of drafts drawn on such account
(collectively, "Draft Accounts") which are part of
the Deposit Liabilities assumed by ALBANK (i) a
letter notifying such depositor of the transfer of
his or her Draft Account hereunder and requesting
that such depositor cease writing drafts on GMB's
forms against such Draft Account immediately upon
receipt of such letter, and (ii) drafts of ALBANK
in respect of such Draft Accounts, together with
all other information and documents required by
applicable law and regulation. For a period of
ninety (90) days following the Closing Date, the
Company shall honor Payment Items drawn on Draft
Accounts which are part of the Deposit Liabilities
and, on a daily or less frequent basis determined
by the Company, ALBANK shall reimburse the Company
in immediately available funds for the amount of
such Payment Items. Upon the expiration of such
ninety (90) day period, the Company may, at its
option, cease honoring its Payment Items drawn
against such Draft Accounts.
(f) Electronic Funds Transfer Transactions.
Promptly after the Closing, ALBANK shall obtain
all consents necessary to enable electronic funds
transfer deposits with respect to the Deposit
Liabilities to be made directly to ALBANK.
(g) Obligations to Reimburse the Company.
Subject to the provisions of Sections 14(a) and
(e) hereof, ALBANK shall promptly reimburse the
Company in cash or other immediately available
funds as to (i) any Payment Items which are paid
or discharged by the Company after the Closing
Date, (ii) any Deposit Items which are returned to
the Company after the Closing Date, and (iii)
charges, fees and expenses reasonably incurred by
the Company after the Closing Date in connection
with any Payment Items or Deposit Items referred
to in clauses (i) and (ii) of this Section 8(g).
(h) Obligation with Respect to Certain
Troubled Debt Restructures. With respect to any
troubled debt restructured loan listed on Schedule
8(h) hereto (each a "TDR Loan"), ALBANK agrees to
remit to AVC or its designee 75% of any amount in
excess of the book value of such TDR Loan on GMB's
books as of the Pre-closing Close of Business
which ALBANK collects from the related borrower in
connection with amounts owed by such borrower as
evidenced on the related loan documentation and
summarized on Schedule 8(h). ALBANK will conduct
its servicing of TDR Loans and its dealing with
the related borrowers in substantially the same
way it conducts such activities with respect to
any other such loan it owns, and will have no
obligation to act otherwise, subject to the
repurchase right extended by it to the Company
pursuant to the following sentence. If (i) the
borrower on any TDR Loan is in default thereunder
or (ii) ALBANK proposes to restructure any TDR
Loan, ALBANK, (y) before (in the case of (i)
above) initiating any action in the nature of
foreclosure with respect to such loan (including
any acceleration of the borrower's repayment
obligations thereunder), but at or shortly before
the time it normally would initiate any such
action, or (z) before (in the case of (ii) above)
effecting any such restructure, shall advise the
Company of any such proposed action or
restructure, whereupon the Company will have the
option, exercisable by notice to ALBANK within ten
(10) days of the Company's receipt of such advice
from ALBANK, to repurchase such TDR Loan from
ALBANK for an amount equal to the value of the
loan on the books of ALBANK immediately after the
Closing Date less any principal payments received
between the Closing Date and the date of
repurchase less a proportional amount of the
specific ALLL allocation assigned to such loan on
Schedule A-1 to Exhibit A hereto as of the
Pre-closing Close of Business. It is understood
that any amount paid by ALBANK to the Company
under this Section 8(h) will be net of ALBANK's
third party expenses with respect to the TDR
Loans.
(i) Restricted Information. For the period
commencing on the Closing Date and ending on the
third anniversary of the Closing Date, (i) ALBANK
shall not use to its own advantage, and shall
ensure that none of its affiliates shall use to
its advantage, any non-public information relating
to the Company obtained by ALBANK directly or
indirectly from the Company or its current or
former employees that does not reasonably relate
to the Assets being acquired or the Liabilities
being assumed by ALBANK under this Agreement
("Restricted Information"), whether such
Restricted Information may have been or may be
obtained by ALBANK, its affiliates,
representatives, or agents or employees of any of
the foregoing (collectively, the "ALBANK Group")
in the course of negotiations or investigations
leading to execution of this Agreement or
consummation of the transactions provided for
herein or may be obtained by any of the ALBANK
Group after such consummation from former
employees of the Company, and (ii) ALBANK will not
solicit any trust business from Trust Customers of
GMB as of the date hereof and as of the Closing
Date whose trust accounts are not being
transferred to ALBANK hereunder; provided,
however, that such agreement not to solicit shall
apply if and only if, and only to the extent that,
such customers may have been or may be
specifically identified by ALBANK or its
affiliates as Trust Customers as a result of
information obtained by any one or more of the
ALBANK Group from the Company or its employees in
the course of negotiations or investigations
leading to execution of this Agreement or
consummation of the transactions provided for
herein or after consummation hereof from former
employees of the Company. From the date hereof
until three years after the Closing Date, the
Company shall use best efforts to ensure that no
list identifying persons as Trust Customers is
made available to ALBANK. Nothing in this Section
8(i) shall prevent ALBANK from, without
limitation, (i) acting as trustee or custodian
under Custodial Accounts transferred to ALBANK
hereunder, (ii) providing fiduciary services in
connection with its securities and insurance
subsidiaries, or (iii) soliciting trust business
from Banking Customers or any other persons unless
such persons have been specifically identified by
ALBANK or its affiliates as Trust Customers as a
result of information obtained in the manner
described in the last clause of the second
preceding sentence.
9. AGREEMENTS OF THE COMPANY AND ALBANK WITH
RESPECT TO EMPLOYEES.
(a) Employee Obligations.
(i) ALBANK shall have no obligation
under this Agreement to, or arising from
employment by the Company of, the Employees or any
employees employed by the Company in connection
with the Trust Business. After the Closing Date,
the Company may continue to employ or subsequently
employ Employees who do not accept employment with
ALBANK. All Employees will have their earned
compensation paid in full by the Company through
the Pre-closing Close of Business, including any
amounts due for accrued but unused vacation and
other leave, and accrued but unpaid commissions or
bonuses.
(ii) ALBANK may at its sole discretion
offer employment to any Employee in good standing
as of the Closing Date. Salaries, benefits and
continued employment of any such Employee hired by
ALBANK after the Closing Date shall be within
ALBANK's discretion and nothing contained herein
is to be construed as an employment contract for
any such Employee.
(b) Employee Procedures.
(i) With respect to all Employees, as
soon as reasonably practicable after the date
hereof, and with the prior consent of the Chief
Executive Officer, President or Director of Human
Resources of GMB (which consent shall not
unreasonably be withheld) ALBANK shall be given
access to such Employees for the purpose of
conducting interviews. Promptly after such
interviews, ALBANK will provide to the Company a
confidential list designating those Employees to
whom ALBANK intends to offer employment at the
Closing Date (the "Designated Employees") and the
position to be offered to each. Thereafter,
ALBANK may supplement or amend such list of
Designated Employees from time to time. After its
receipt of the initial list, the Company may, at
its option, approach any or all Employees other
than the Designated Employees to discuss
opportunities for such employees to transfer to
other positions with the Company or an affiliate
as of the Closing Date.
(ii) Notwithstanding anything herein to
the contrary, ALBANK shall have no obligation to
offer employment to any of the Employees (other
than the Designated Employees) who are employed by
the Company on the Closing Date.
(iii) ALBANK and the Company shall
coordinate all communications of employment offers
by ALBANK to the Designated Employees.
(iv) Immediately prior to the Closing
Date, the Company shall terminate all Employees
other than any such Employees the Company intends
to employ elsewhere, and ALBANK shall offer
employment to each of the Designated Employees.
The Company shall be responsible for any severance
payments due to Employees that the Company
terminates pursuant to the foregoing sentence.
During the period extending from the date hereof
until the date that ALBANK delivers to the Company
its initial list of Designated Employees in
accordance with Section 9(b)(i), the Company will
not terminate any Employee other than for cause,
and during the period extending from the date of
delivery of such initial list until the Closing
Date, the Company will not terminate any
Designated Employee with or without cause unless
ALBANK shall have consented to such termination;
provided, however, that the foregoing clause shall
not prohibit the Company from placing any Employee
on paid or unpaid suspension or leave of absence
under appropriate circumstances. ALBANK's offers
of employment to Designated Employees shall be on
an "at-will" basis, and ALBANK shall have no
obligation to continue employment of any
Designated Employee and may at its option
terminate employment at any time.
(v) Except with the prior written
consent of ALBANK, the Company shall not actively
solicit any of the Transferred Employees (as
defined in Section 9(c) below) as prospective
employees of the Company for a period of one (1)
year after the Closing Date.
(c) Employee Benefits.
(i) All Employees who are offered
employment by ALBANK and who accept such
employment ("Transferred Employees") will:
(A) On and as of the Closing Date,
be immediately eligible to participate in employee
health, life, and other welfare benefit programs
enjoyed by ALBANK's employees of current service
and age in comparable positions; provided,
however, that ALBANK will have no liability for
any claims made under the Company's long-term
disability, worker's compensation, health, life
and benefit programs on or before the Closing
Date;
(B) On and as of the Closing Date,
be credited for past years of service with the
Company or its affiliates for the determination of
vacation and leave benefits under ALBANK's
policies;
(C) On the first of the month
following one year after the Closing Date, and
upon reaching age 21 (or upon any earlier date
pursuant to the terms of relevant plan documents),
be eligible to participate in ALBANK's Incentive
Savings and Employee Stock Ownership Plans;
(D) If a Transferred Employee
meets the eligibility requirements of The
Retirement Plan of Albany Savings Bank, F.S.B. in
RSI Retirement Trust ("ALBANK's Pension Plan")
(age 21 and one year of service) on the Closing
Date, such employee will be eligible to enroll in
ALBANK's Pension Plan on the first available
enrollment date; provided that prior years of
service at the Company will be counted for pension
eligibility purposes only; and provided further
that credited service with ALBANK for purposes of
vesting and benefit accrual under ALBANK's Pension
Plan will be calculated commencing on the Closing
Date. If a Transferred Employee does not meet the
eligibility requirements of ALBANK's Pension Plan
on the Closing Date, the employee shall be
required to do so before being enrolled in such
plan. Such employees' years of service with the
Company shall be carried forward (for pension
eligibility purposes only), and, except as
otherwise provided pursuant to the terms of
ALBANK's Pension Plan, their credited service with
ALBANK for purposes of vesting and benefit accrual
under ALBANK's Pension Plan shall commence upon
their enrollment into ALBANK's Pension Plan.
Transferred Employees in both categories shall be
required to accrue five years of service at ALBANK
(not counting years of service with the Company)
in order to collect a vested or pension benefit
from ALBANK's Pension Plan.
(ii) ALBANK shall in a timely fashion
take such action, if any, as is necessary,
including the adoption of appropriate amendments
to its employee benefits plans and the obtaining
of appropriate approvals for such amendments, to
effectuate the terms of the above provisions.
(iii) With respect to Transferred
Employees, and except as otherwise provided
herein, ALBANK shall be responsible for: (A)
salaries, wages and other remuneration relating to
services performed from and after the Closing
Date; and (B) all other employment costs incurred
as a result of events occurring from and after the
Closing Date.
(iv) Notwithstanding anything herein to
the contrary, to the extent required by the
Consolidated Omnibus Budget Reconciliation Act of
1985, as amended, any employee of the Company
terminated by the Company as a result of this
transaction shall be entitled to receive the
required notices and subsequent coverage, if
elected, from the Company.
10. COMPUTER SERVICES.
From and after the date hereof, the
Company shall meet with ALBANK on a regular basis
to discuss and plan for the conversion of GMB data
processing and related electronic informational
systems to those used by ALBANK (the "Systems
Conversion"). Each of ALBANK and the Company
shall use its and their best efforts to complete
the Systems Conversion as of the Closing Date.
Each party shall be responsible for its own costs
and expenses associated with the Systems
Conversion.
11. THE CLOSING.
The consummation of the transactions
provided for herein (the "Closing") shall take
place as of 12:01 A.M. on a date (the "Closing
Date") to be determined by agreement of the
Company and ALBANK, provided that, unless the
parties agree otherwise in writing, such date
shall be not more than ten (10) days after the
first date (the "Satisfaction Date") on which all
required regulatory approvals of the transactions
contemplated hereby have been received and all
applicable waiting periods with respect thereto
have expired, and provided further that the
Closing Date shall be a Business Day.
Notwithstanding the foregoing sentence, if, as of
the Satisfaction Date, the Company shall have
entered into but not consummated a definitive
agreement or agreements for one or more Trust
Transfer Transactions pursuant to which all or
substantially all the Trust Business is to be
acquired and/or assumed by one or more
Counterparties, and if, as of the Satisfaction
Date, it appears reasonably likely that the
Company will be able to consummate such Trust
Transfer Transaction or transactions within thirty
(30) days of the Satisfaction Date, then, at the
request of the Company, the Closing Date hereunder
shall be postponed to a date not more than thirty
(30) days after the Satisfaction Date, in order
that the Closing hereunder may occur at or about
the same time as the consummation of such Trust
Transfer Transaction or transactions. The Closing
will be effected on the basis of the state of
facts relating to the Assets and the Liabilities
existing as of the Pre-closing Close of Business.
Prior to the Closing, there shall be a pre-closing
meeting. The Closing and pre-closing meeting
shall take place at the offices of Cleary,
Gottlieb, Steen & Hamilton located at One Liberty
Plaza, New York, New York 10006, provided that the
Closing and pre-closing meeting may take place at
such other place as the parties may agree.
12. REPRESENTATIONS AND WARRANTIES OF THE
COMPANY.
Each of AFC, AVC and GMB hereby
represents and warrants to ALBANK as of the date
of this Agreement and as of the Closing Date as
follows:
(a) Corporate Organization, Powers and
Authority; Records.
(i) AFC is a business corporation, duly
organized, validly existing and in good standing
under the laws of the State of New York. AVC is a
business corporation, duly organized, validly
existing and in good standing under the laws of
the State of Vermont. GMB is a banking
corporation, duly organized, validly existing and
in good standing under the laws of the State of
Vermont. Each of AFC, AVC and GMB has the
corporate power and authority to own its
properties, to effect this transaction and carry
on its business as currently conducted.
(ii) The deposit accounts of GMB are
insured by the FDIC through the BIF, to the
fullest extent permitted by law, and all premiums
and assessments required in connection therewith
have been paid by GMB.
(iii) GMB has the corporate power
and authority to own or lease all of its
properties and assets and to carry on its business
as it is now being conducted and is duly licensed
or qualified to do business in each jurisdiction
in which the nature of the business conducted by
it or the character or the location of the
properties and assets owned or leased by it makes
such licensing or qualification necessary, except
where the failure to be so licensed or qualified,
either individually or in the aggregate, would not
have a Material Adverse Effect on GMB. As used in
this Agreement, the term "Material Adverse Effect"
when used for any party hereto means any change or
effect that is or, in the reasonable judgment of
the parties hereto, would be, materially adverse
to the business, operations, properties, assets,
liabilities, result of operations or financial
condition of such party and its subsidiaries taken
as a whole, and, for GMB, of the Branches,
individually or taken as a whole, exclusive in any
such case, of the Trust Business.
(iv) Except as set forth on Schedule
12(a)(iv) hereto, (i) each of AFC, AVC and GMB has
full corporate power and authority to execute and
deliver this Agreement and the Servicing Purchase
Agreement and to consummate the transactions
contemplated hereby and thereby; (ii) the
execution and delivery of this Agreement and the
Servicing Purchase Agreement and the consummation
of the transactions contemplated hereby and
thereby have been duly and validly approved by the
Board of Directors of each of AFC, AVC and GMB and
the shareholders of AVC and GMB; (iii) no other
corporate proceedings on the part of AFC, AVC and
GMB are necessary to approve this Agreement and
the Servicing Purchase Agreement and to consummate
the transactions contemplated hereby and thereby;
and (iv) each of this Agreement and the Servicing
Purchase Agreement has been duly and validly
executed and delivered by AFC, AVC and GMB and
constitutes a valid and binding obligation of AFC,
AVC and GMB, enforceable against AFC, AVC and GMB
in accordance with its terms, subject to
applicable bankruptcy, insolvency, and similar
laws affecting creditors' rights generally and the
rights of creditors of insured depository
institutions, and subject to general principles of
equity, whether applied in a court of law or a
court of equity.
(v) With respect to account records
reflecting GMB's fixed assets, furniture, fixtures
and equipment, the books and records of GMB have
been, and are being, maintained in accordance with
applicable legal and accounting requirements,
reflect only actual transactions and reflect all
of its assets, liabilities and accruals and all of
its items of income and expense in accordance with
generally accepted accounting principles
consistently applied. All accounting ledgers and
other books and records of GMB are located at the
principal office of GMB in Rutland, Vermont, or
the principal office of AFC in Glens Falls, New
York, and are true, complete and correct in all
material respects, and present fairly the
financial condition, results of operations and
changes in financial position of GMB as of the
date and for the period indicated.
(b) No Violation. Neither the execution and
delivery of this Agreement or the Servicing
Purchase Agreement by AFC, AVC and GMB, nor the
consummation by AFC, AVC and GMB of the
transactions contemplated hereby and thereby, nor
compliance by AFC, AVC and GMB with any of the
terms or provisions hereof and thereof, will (i)
violate, conflict with or result in a breach of
any provision of the Charter, Articles of
Incorporation or Bylaws of AFC, AVC or GMB, or
(ii) assuming that the consents and approvals
referred to in Section 12(c) are duly obtained,
(A) violate any statute, code, ordinance, rule,
regulation, judgment, order, writ, decree or
injunction applicable to AFC, AVC or GMB, or any
of its properties or assets, or (B) violate,
conflict with, result in a breach of any
provisions of or the loss of any benefit under,
constitute a default (or an event, which, with
notice or lapse of time, or both, would constitute
a default) under, result in the termination of or
a right of termination or cancellation under,
accelerate the performance required by, or result
in the creation of any lien, pledge, security
interest, charge or other encumbrance upon any of
the respective properties or assets of AFC, AVC or
GMB under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture,
deed of trust, license, lease, agreement or other
instrument or obligation to which AFC, AVC or GMB
is a party, or by which they or any of their
respective properties or assets may be bound or
affected, except (in the case of this subclause
(b)(ii)(B)) for such violations, conflicts,
breaches or defaults which, either individually or
in the aggregate, would not have a Material
Adverse Effect on AFC, AVC or GMB.
(c) Consents and Approvals. Except as set
forth on Schedule 12(c) hereto and except for the
filing of applications and notices with, and the
obtaining of consents and approvals of, as
applicable, federal and state bank regulatory
authorities, and the consent or approval of the
lessors to the Company's assignment of the Leases
to ALBANK, as appropriate, none of AFC, AVC and
GMB is required to obtain the consent or approval
of, or give notice to, any third party in
connection with the execution and delivery by AFC,
AVC and GMB of this Agreement or the Servicing
Purchase Agreement and the consummation of the
transactions contemplated hereby and thereby.
(d) Title to Real and Personal Property;
Encumbrances; and Leases.
(i) Except as set forth on Schedule
12(d)(i) hereto, the Company has good and
marketable fee title to all the Real Property and
all Personal Property owned by it which is being
purchased by ALBANK hereunder and owns such
property free and clear of any and all
Encumbrances, except Permitted Encumbrances and
Permitted Exceptions.
(ii) Except as set forth on Schedule
12(d)(ii) hereto, none of AFC, AVC or GMB has
received any notice of violation of any applicable
zoning or environmental regulation, ordinance or
other law, order, regulation or requirement
relating to (A) the operations conducted from or
at the Branches or (B) the Real Property (a
"Violation") and the Company's has no knowledge of
any such Violation of a material nature. The
Company shall give ALBANK notice of any such
Violation that it receives prior to Closing (a
"Violation Notice"), and the provisions of Section
15(d) shall apply thereto. Except as set forth on
Schedule 12(d)(ii) hereto, all buildings and
structures constituting the Purchased Branches or
the OREO conform in all material respects with all
applicable ordinances, codes and regulations, or
are not required to conform due to grandfathering
clauses contained in such ordinances, codes or
regulations, and all permits, licenses, approvals
and other authorizations, required by any
governmental authority or third party have been
obtained and are in full force and effect. The
Company has the right under all applicable laws
and Leases to use all of the Real Property Assets
for the use for which they are currently being
used, and there is no condemnation proceeding
pending or, to the knowledge of the Company,
threatened, which would preclude or impair the use
of the Purchased Branches as currently being used
in the conduct of the banking business of GMB or
the use of the OREO properties in the manner in
which each is currently being used. For purposes
of this Agreement, "to the knowledge of the
Company" or words of substantially identical
import shall mean any fact, condition or
circumstance actually known by an officer of the
Company in the reasonable exercise of such
officer's duties.
(iii) Annexed to Schedule 1.9 are
true and complete copies of all of the Leases, and
GMB is the tenant with respect to each such Lease.
Each of the Leases and each of the Premises Leases
is valid and binding on GMB and, to the Company's
knowledge, valid and binding on and enforceable
against all other respective parties to the Leases
and the Premises Leases in accordance with their
respective terms (subject to bankruptcy,
insolvency, reorganization, moratorium and similar
laws affecting the rights and remedies of
creditors generally and general principles of
equity). There are not, under the Leases or the
Premises Leases, any existing breaches, defaults,
events of default by GMB, or events which with
notice and/or lapse of time would constitute a
breach, default or event of default by GMB, nor
has the Company received notice of, or made a
claim with respect to, any breach or default by
any other party to the Leases or the Premises
Leases. GMB enjoys quiet and peaceful possession
of all such leased properties occupied by it as
lessee. All rent on the Leases and the Premises
Leases has been paid through the current month.
(iv) The Real Property and Personal
Property which are being purchased by ALBANK
hereunder are in such maintenance, repair and
operating condition, ordinary wear and tear
excepted, as is consistent with customary prior
business practice at the Branches, are adequate
for the purposes for which they are now being or
are anticipated to be used, and are free from any
material defects.
(e) Loan Portfolio.
(i) Except as set forth on Schedule
12(e)(i) hereto, to the knowledge of the Company,
(a) each of the Loans was validly and legally made
and constitutes a valid and binding agreement of
the borrower enforceable in accordance with its
terms (A) subject to bankruptcy, insolvency,
reorganization, moratorium and similar laws
affecting the rights and remedies of creditors
generally, (B) subject to general principles of
equity, and (C) provided that certain remedies,
waivers and other provisions of the loan documents
may not be enforceable, but such unenforceability
will not render the loan documents invalid as a
whole or preclude the judicial enforcement of the
obligation of the borrower to repay the principal
thereon as provided in the note, the foreclosure
of any mortgage or the enforcement of any security
agreement; (b) any mortgage or security agreement
relating to each Loan is properly secured and
recorded or perfected and represents a valid
mortgage or security interest on properties
described therein; and (c) no amount owed under
any Loan is subject to any meritorious defenses
which may be asserted against GMB. GMB has not
entered into any agreement which, to the Company's
knowledge, will result in a future waiver or
negation of any material rights or remedies
currently available against the borrower or
guarantor, if any, on any such Loan. No claim,
counterclaim, set-off right or other similar right
has been asserted, and no grounds for any
meritorious claim, counterclaim, set-off right or
other similar right exists, with respect to any
Loan which could impair the collectibility
thereof. For purposes of this Section 12(e), a
claim, counterclaim, set-off right or other
similar right or defense is "meritorious" if it
survives a motion for summary judgment.
(ii) Except as set forth on Schedule
12(e)(ii) hereto, each mortgage securing a Loan
has been and is evidenced by documentation of the
types customarily employed by GMB, which are
consistent in all material respects with federal
and state banking practices and prudent banking
standards, and complete copies thereof have been
maintained by GMB in accordance with such
standards and practices. GMB has duly performed
in all material respects all of its obligations
under such documentation to the extent that such
obligations to perform have accrued.
(iii) Except as set forth on
Schedule 12(e)(iii) hereto, GMB owns and holds the
entire mortgage or security interest in any
properties securing any of the Loans free and
clear of all prior liens, claims, equities,
options, security interests, charges, encumbrances
or restrictions of any kind or nature, and no
person other than the borrowers has any prior
mortgage or security interest therein. With
respect to any Small Business Administration
("SBA")-guaranteed loan in GMB's portfolio, the
SBA guarantee is in full force and effect and the
Company has not received any notice of any matter
pending or threatened which would adversely affect
such guarantee and, to the knowledge of the
Company, there are no facts or circumstances which
would provide a basis for any such matter in the
future.
(iv) Except as disclosed on Schedule
12(e)(iv) hereto, to the Company's knowledge, all
of the Loans currently held by GMB were solicited,
originated and exist in material compliance with
all applicable loan policies and procedures of GMB
and comply in all material respects with all
applicable federal and state laws, rules and
regulations, including, but not limited to,
applicable usury statutes, the Truth in Lending
Act, the Equal Credit Opportunity Act, the Real
Estate Settlement Procedures Act, the Flood
Disaster Protection Act, and other applicable
consumer protection statutes and the regulations
thereunder. Schedule 12(e)(iv) separately lists
all Loans identified to date as involving Auto
Loan Pricing Exceptions.
(v) Except as set forth on Schedule
12(e)(v) hereto, GMB is not a party to any written
or oral loan agreement, note or borrowing
arrangement with respect to a Loan under the terms
of which the obligor is over 30 days delinquent in
payment of principal or interest or in default of
any other provision.
(vi) Schedule 12(e)(vi) hereto sets
forth all loan commitments (including
participation commitments) of GMB outstanding as
of the date of this Agreement (to be updated as of
the Pre-closing Close of Business), identifying
each commitment by loan type.
(vii) With respect to Loans having
an aggregate outstanding principal amount of less
than $10,000 or, in the case of credit lines or
commitments to lend, having authorized credit of
less than $10,000, in each case as of the date
hereof (the "Small Loans"), only a material breach
of any representation or warranty made by the
Company in this Section 12(e) shall be deemed to
be a breach of such representation or warranty for
purposes of Section 14(j), Section 16(b) or
Section 21 hereof.
(viii) As of the date hereof the Late
Fee Receivable has been, and as of the Pre-closing
Close of Business the Late Fee Receivable will
have been, booked in accordance with GMB's normal
operating procedures as in effect during the two
fiscal quarters preceding the date hereof.
(f) Absence of Certain Changes or Events.
Except as may be set forth on Schedule 12(f)
hereto:
(i) to the knowledge of the Company,
since June 30, 1995 there has been no occurrence
and no condition has arisen having a Material
Adverse Effect on GMB;
(ii) since January 1, 1992, GMB has
carried on its business only in the ordinary
course, in compliance in all material respects
with applicable law and consistent with prior and
prudent banking and business practice;
(iii) GMB has not entered into any
agreement, contract, commitment or transaction
relating to or affecting the Branches, except for
those in the ordinary course of business (none of
which, individually or in the aggregate, has, or
could reasonably be expected to have, a Material
Adverse Effect on the operation of the Branches);
(iv) GMB has not suffered any strike,
work stoppage, slowdown, or other labor
disturbance at the Branches;
(v) since June 30, 1995 there has not
been any change in any of the accounting methods
or practices or the loan policies, procedures or
practices of GMB at the Branches or any change in
the value at which assets at the Branches are
carried on the consolidated or unconsolidated
balance sheets of GMB and the Company other than
changes that are reflected in their respective
profit and loss statements;
(vi) since June 30, 1995, GMB has not
received any notice or indication of the intention
of any person or entity to terminate any material
agreement with GMB affecting the Branches or any
notice or indication from any material depositor,
customer or supplier of GMB of any intention to
cease doing business with, materially change the
price or other terms on which business is
transacted with or materially reduce the business
transacted with GMB at the Branches; and
(vii) since June 30, 1995, all
suspense accounts of GMB with respect to the
Branches have been reconciled not less often than
monthly, and no differences over $500 exist.
(g) Legal Proceedings.
(i) Except as set forth on Schedule
12(g) hereto, the Company is not a party to any,
and there are no pending or, to the Company's
knowledge, threatened, legal, administrative,
arbitral or other proceedings, claims, actions or
governmental or regulatory investigations of any
nature against or affecting AVC or GMB or
challenging the validity or propriety of this
Agreement or the Servicing Purchase Agreement or
the transactions contemplated hereby and thereby,
and there is no reasonable basis for any such
proceeding, claim, action or governmental or
regulatory investigation. There is no injunction,
order, judgment, decree, or regulatory restriction
imposed upon the Company or the assets of the
Company which, either individually or in the
aggregate, has had, or could reasonably be
expected to have, a Material Adverse Effect on AVC
or GMB or to affect in a materially adverse manner
the ability of any of AFC, AVC or GMB to fulfill
its obligations under this Agreement or the
Servicing Purchase Agreement. To the knowledge of
the Company, there are no facts, circumstances or
conditions affecting the Branches which would
indicate or suggest the possibility of any
unrecognized future loss caused by defalcation,
embezzlement or other employee malfeasance or by
payments made or accepted in violation of any law
or regulation.
(ii) With respect to the lawsuits listed
on Schedule 12(g) on the date hereof, ALBANK shall
have the option, to be exercised, if at all, prior
to the Closing, to remove the related Loan from
the relevant Loan Schedule.
(h) Taxes and Tax Returns. Except as set
forth on Schedule 12(h) hereto, each of AFC, AVC
and GMB has, to the best of its knowledge, duly
filed in correct form all federal, state, county
and local information returns and tax returns
required to be filed by it on or prior to the date
hereof (all such returns being accurate and
complete) and has duly paid or made provisions for
the payment of all Taxes (as hereafter defined)
and other governmental charges which have been
incurred or are due or claimed to be due from it
by federal, state, county or local taxing
authorities on or prior to the date hereof
(including without limitation, if and to the
extent applicable, those due in respect of its
properties, income, business, capital stock,
deposits, franchises, licenses, sales and
payrolls, and any business profits, business
enterprise or other tax), other than Taxes or
other charges that are not yet delinquent or are
being contested in good faith and have not been
finally determined or that are not, individually
or in the aggregate, material in amount, provided,
however, that the Company agrees to pay and
indemnify ALBANK with respect to any Taxes
referred to in this Section 12(h) for which ALBANK
receives any tax bill regardless of whether the
amount is material or otherwise.
As used in this Section 12(h), the term
"Taxes" means all federal, state, county, local
and foreign income, excise, gross receipts, ad
valorem, profits, gains, property, sales,
transfer, use, payroll, employment, severance,
withholding, duties, intangibles, franchise and
other taxes, charges, levies or like assessments,
together with all penalties and additions to tax
and interest thereon.
(i) Officers and Employees. Schedule 12(i)
hereto sets forth a true, complete and correct
list of the name and address of each Employee, the
position of each such Employee, the current salary
or wage of each such Employee and a description of
each Employee Plan or Employee Agreement which
affects each such Employee.
(j) Other Statements and Reports. Except as
set forth on Schedule 12(j).1 hereto, AVC and GMB
have timely filed all material reports,
registrations and statements, together with any
amendments required to be made with respect
thereto, that they were required to file since
January 1, 1995 with (i) the Board of Governors of
the Federal Reserve System (the "Federal Reserve
Board"), (ii) the FDIC, (iii) the Vermont
Department of Banking, Insurance and Securities
and any other state banking commissions or any
other state regulatory authority (each a "State
Regulator") and (iv) any self-regulatory
organization or other regulatory agency and all
other material reports and statements required to
be filed by them since January 1, 1995, including
without limitation, any report or statement
required to be filed pursuant to the laws, rules
or regulations of the United States, the Federal
Reserve Board, the FDIC, any State Regulator or
any self-regulatory organization, and have paid
all fees and assessments due and payable in
connection therewith. Except as set forth on
Schedule 12(j).2 hereto, there is no material
unresolved violation, criticism or exception by
any regulatory agency with respect to any report
or statement relating to any examination of GMB.
(k) Agreements with Regulatory Agencies.
Except as set forth on Schedule 12(k) hereto, GMB
is not now subject to any cease-and-desist or
other order issued by, and is not now a party to
any written agreement, consent agreement or
memorandum of understanding with, and is not now a
party to any commitment letter or similar
understanding to, and is not now subject to any
order or directive by, and is not now a recipient
of any extraordinary supervisory letter from, and
is not now subject to any board resolution adopted
at the request of, any regulatory agency that
restricts the conduct of its business or that in
any manner relates to its management or its
business, nor has GMB been advised by any
regulatory agency that it is considering issuing
or requesting any such regulatory agreement.
(l) Environmental Matters. Except as set
forth on Schedule 12(l) hereto:
(i) To the knowledge of the Company,
the Purchased Branches, the OREO and the Loan
Properties (as hereinafter defined) are, and have
been, in material 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.
(ii) There is no suit, claim, action or
proceeding pending or, to the knowledge of the
Company, threatened, before any governmental
entity or other forum in which the Company has
been or, with respect to threatened proceedings,
may be, named as a defendant (A) for alleged
noncompliance (including by any predecessor), with
any environmental law, rule, regulation, standard
or requirement or (B) relating to the release into
or presence in the Environment (as hereinafter
defined) of any Hazardous Materials (as
hereinafter defined) or Oil (as hereinafter
defined) at any Purchased Branch or OREO.
(iii) There is no suit, claim,
action or proceeding pending or, to the knowledge
of the Company, threatened, before any
governmental entity or other forum in which the
Company has been or, with respect to threatened
proceedings, may be, named as a defendant (A) for
alleged noncompliance (including by any
predecessor) with any environmental law, rule,
regulation, standard or requirement or (B)
relating to the release into or presence in the
Environment of any Hazardous Material or Oil
whether or not occurring at any Loan Property.
(iv) To the knowledge of the Company,
there are no facts or circumstances which would
provide a reasonable basis for any suit, claim,
action or proceeding as described in Sections
12(l)(ii) and 12(l)(iii).
(v) To the knowledge of the Company,
during the period of GMB's ownership or operation
of the Purchased Branches and the OREO, there has
been no release of Hazardous Material or Oil in,
on, under or affecting such property. To the
knowledge of the Company, during the period of
GMB's holding of a security interest in a Loan
Property, there has been no release of Hazardous
Material or Oil in, on, under or affecting such
Loan Property. To the knowledge of the Company,
prior to the period of GMB's ownership or
operation of the Purchased Branches or the OREO or
GMB's holding of a security interest in a Loan
Property, there was no release of Hazardous
Material or Oil in, on, under or affecting the
Purchased Branches, the OREO or Loan Property.
During the period of GMB's ownership or operation
of the Purchased Branches or the OREO or GMB's
holding of a security interest in a Loan Property,
there has not been any presence of Hazardous
Material or Oil discovered in, on, under or
affecting the Purchased Branches or the OREO or,
to the knowledge of the Company, such Loan
Property, and, to the knowledge of the Company,
prior to the period of GMB's ownership or
operation of the Purchased Branches or the OREO or
GMB's holding of a security interest in a Loan
Property, there was not any presence of Hazardous
Material or Oil discovered in, on, under or
affecting the Purchased Branches or the OREO or
such Loan Property.
(vi) GMB does not participate in the
management of a Loan Property within the meaning
of 40 C.F.R. Section 300.1100(c).
(vii) The following definitions
apply for purposes of this Agreement: (A) "Loan
Property" means any property securing a loan
subject to this transaction, or, where required by
the context, GMB is deemed to be the owner or
operator of such property; (B) "Hazardous
Material" means any pollutant, contaminant, or
hazardous material as defined in or pursuant to
the Comprehensive Environmental Response,
Compensation, and Liability Act, the Resource
Conservation and Recovery Act of 1976, or any
other federal, state, county or local
environmental law, regulation, or requirement, all
as may be amended from time to time, except for
those types and quantities of such substances that
typically are present in office or residential
environments; (C) "Oil" means any insoluble or
partially soluble oil of any kind or origin or in
any form, as defined in or pursuant to any
federal, state, or local environmental law,
regulation, or requirement, all as may be amended
from time to time; and (D) "Environment" means any
soil, surface waters, groundwaters, stream
sediments, surface or subsurface strats, and
ambient air, and any other environmental medium.
(m) Insurance. All of the policies relating
to insurance maintained by the Company with
respect to the Branches, including, without
limitation, the Real Property, the Personal
Property, the Loans and the Servicing Business (or
any comparable policies entered into as a
replacement therefor) set forth on Schedule 7(i)
are in full force and effect and the Company has
not received any notice of cancellation with
respect thereto.
(n) Transactions with Certain Persons. None
of the Loans to be acquired in this transaction
was extended to any officer, director or
greater-than-5% stockholder of the Company or any
affiliates (as defined in Rule 144(a)(1) under the
Securities Act of 1933) of any such officer,
director or stockholder (individually, an
"Interested Person"), other than loans made in the
ordinary course of business on terms substantially
the same as those prevailing at the time for
comparable transactions with other, unaffiliated
persons, and which did not and do not involve any
unusual risk (including of non-collectibility) or
other features unfavorable to GMB. Schedule 12(n)
hereto contains a full description of any
outstanding Loan or Loans by GMB to an Interested
Person which, either individually or in the
aggregate, have current outstanding balances of
$10,000 or more (including in the outstanding
balance all amounts which GMB is obligated to
advance but not including loans secured by cash
collateral).
(o) Disclosure. All material facts relating
to the business, operations, properties, assets,
liabilities, results of operations and financial
condition of GMB affecting the Branches have been
disclosed to ALBANK in this Agreement and the
Servicing Purchase Agreement and the Schedules and
Exhibits furnished hereto and thereto. No
representation or warranty contained in this
Agreement or the Servicing Purchase Agreement, and
no statement contained in any certificate, list or
other writing furnished to ALBANK pursuant to the
provisions hereof or thereof, to the knowledge of
the Company, contains any untrue statement of a
material fact or omits to state a material fact
necessary in order to make the statements herein
or therein, in light of the circumstances in which
they are made, not misleading. No information
material to the Agreement or the Servicing
Purchase Agreement and which is necessary to make
the representations and warranties contained
herein and therein not misleading, to the
knowledge of the Company, has been withheld from,
or has not been delivered in writing to, ALBANK.
The information furnished or to be furnished by
the Company to ALBANK pursuant to Section 6 to
complete and file regulatory applications and for
the purpose of obtaining regulatory approvals is
or will be true and complete as of the date so
furnished.
(p) Brokers or Finders. Except for Bank
Analysis Center, Inc., the Company has not
employed or agreed to retain any broker or finder
in connection with the transactions contemplated
by this Agreement and the Servicing Purchase
Agreement, and the Company agrees to indemnify
ALBANK against any claim arising out of such
employment of or agreement to retain any such
broker or finder by the Company.
(q) No Foreign Person. The Company
represents and warrants to ALBANK that each of
AFC, AVC and GMB is not a "foreign person," as
defined in Section 1445(f)(3) of the Code and is a
"United States person," as defined in Section
7701(a)(30) of the Code. In confirmation of the
foregoing, the Company shall deliver to ALBANK at
the Closing a Certification of Nonforeign Status
substantially in the form of Exhibit G.
(r) Reaffirmance of Representations and
Warranties. The Company repeats and reaffirms,
as if set forth herein, each and every
representation and warranty with respect to the
Servicing Business made by the Company in the
Servicing Purchase Agreement.
13. REPRESENTATIONS AND WARRANTIES OF ALBANK.
ALBANK hereby represents and warrants to
each of AFC, AVC and GMB as of the date of this
Agreement and as of the Closing Date as follows:
(a) Corporate Organization; Powers and
Authority.
(i) ALBANK is a federal savings bank,
duly organized, validly existing and in good
standing under the laws of the United States of
America. ALBANK has the corporate power and
authority to own its properties, to effect this
transaction and to carry on its business as
currently conducted.
(ii) The deposit accounts of ALBANK are
insured by the FDIC, to the fullest extent
permitted by law, and all premiums and assessments
required in connection therewith have been paid by
ALBANK.
(iii) ALBANK has the corporate power
and authority to own or lease all of its
properties and assets and to carry on its business
as it is now being conducted and is duly licensed
or qualified to do business in each jurisdiction
in which the nature of the business conducted by
it or the character or the location of the
properties and assets owned or leased by it makes
such licensing or qualification necessary, except
where the failure to be so licensed or qualified,
either individually or in the aggregate, would not
have a Material Adverse Effect on ALBANK.
(iv) ALBANK has full corporate power and
authority to execute and deliver this Agreement
and the Servicing Purchase Agreement and to
consummate the transactions contemplated hereby
and thereby. The execution and delivery of this
Agreement and the Servicing Purchase Agreement and
the consummation of the transactions contemplated
hereby and thereby have been duly and validly
approved by the Board of Directors of ALBANK and
ALBANK Financial Corporation. No other corporate
proceedings are necessary to approve this
Agreement and the Servicing Purchase Agreement and
to consummate the transactions contemplated hereby
and thereby. Each of this Agreement and the
Servicing Purchase Agreement has been duly and
validly executed and delivered by ALBANK and
constitutes a valid and binding obligation of
ALBANK, enforceable against ALBANK in accordance
with its terms, subject to applicable bankruptcy,
insolvency, and similar laws affecting creditors'
rights generally and the rights of creditors of
insured depository institutions, and subject to
general principles of equity, whether applied in a
court of law or a court of equity.
(b) No Violation. Neither the execution and
delivery of this Agreement or the Servicing
Purchase Agreement by ALBANK, nor the consummation
by ALBANK of the transactions contemplated hereby
and thereby, nor compliance by ALBANK with any of
the terms or provisions hereof and thereof, will
(i) violate, conflict with or result in a breach
of any provision of the Charter or Bylaws of
ALBANK, or (ii) assuming that the consents and
approvals referred to in Section 13(c) are duly
obtained (A) violate any statute, code, ordinance,
rule, regulation, judgment, order, writ, decree or
injunction applicable to ALBANK, or any of its
properties or assets, or (B) violate, conflict
with, result in a breach of any provisions of or
the loss of any benefit under, constitute a
default (or an event, which, with notice or lapse
of time, or both, would constitute a default)
under, result in the termination of or a right of
termination or cancellation under, accelerate the
performance required by, or result in the creation
of any lien, pledge, security interest, charge or
other encumbrance upon any of the properties or
assets of ALBANK under, any of the terms,
conditions or provisions of any note, bond,
mortgage, indenture, deed of trust, license,
lease, agreement or other instrument or obligation
to which ALBANK is a party, or by which it or any
of its properties or assets may be bound or
affected, except (in the case of this clause
(b)(ii)(B)) for such violations, conflicts,
breaches or defaults which, either individually or
in the aggregate, would not have a Material
Adverse Effect on ALBANK.
(c) Consents and Approvals. Except for the
filing of applications and notices with, and the
consents and approvals of, as applicable, federal
and state bank regulatory authorities, including
the OTS and, if necessary, the Vermont Department
of Banking, Insurance and Securities, ALBANK is
not required to obtain the consent or approval of,
or give notice to, any third party in connection
with the execution and delivery by ALBANK of this
Agreement or the Servicing Purchase Agreement and
the consummation of the transactions contemplated
hereby and thereby.
(d) Legal Proceedings. ALBANK is not a
party to any, and there are no pending or, to
ALBANK's knowledge, threatened, legal,
administrative, arbitral or other proceedings,
claims, actions or governmental or regulatory
investigations of any nature against or affecting
ALBANK challenging the validity or propriety of
this Agreement or the Servicing Purchase Agreement
or the transactions contemplated hereby or
thereby, and there is no reasonable basis for any
such proceeding, claim, action or governmental or
regulatory investigation against ALBANK. There is
no injunction, order, judgment, decree, or
regulatory restriction imposed upon ALBANK or the
assets of ALBANK which, either individually or in
the aggregate, materially adversely affects, or
could reasonably be expected to materially
adversely affect the ability of ALBANK to fulfill
its obligations under this Agreement or the
Servicing Purchase Agreement. For purposes of
this Agreement, "to ALBANK's knowledge" or words
of substantially identical import shall mean any
fact, condition or circumstance actually known by
an officer of ALBANK in the reasonable exercise of
such officer's duties.
(e) Agreements with Regulatory Agencies.
ALBANK is not subject to any cease-and-desist or
other order issued by, nor is it a party to any
written agreement, consent agreement or memorandum
of understanding with, nor is it a party to any
commitment letter or similar understanding to, nor
subject to any order or directive by, nor a
recipient of any extraordinary supervisory letter
from, nor has it adopted any board resolution at
the request of any regulatory agency that
restricts the conduct of its business or that in
any manner relates to its management or its
business, such that the ability of ALBANK to
fulfill its obligations under this Agreement or
the Servicing Purchase Agreement could be
materially adversely affected, nor has ALBANK been
advised by any regulatory agency that it is
considering issuing or requesting any such
regulatory agreement.
(f) Disclosure. All facts which could
materially adversely affect the ability of ALBANK
to consummate the transaction provided for herein
have been disclosed to the Company. No
information material to the Agreement or the
Servicing Purchase Agreement and which is
necessary to make the representations and
warranties contained herein and therein not
misleading, to the knowledge of ALBANK, has been
withheld from, or has not been delivered in
writing to, the Company. Any information
furnished or to be furnished by ALBANK to the
Company pursuant to Section 6 to complete and file
any regulatory applications and for the purpose of
obtaining regulatory approvals is or will be true
and complete as of the date so furnished.
(g) Brokers or Finders. Except for
Northeast Capital & Advisory, Inc., ALBANK hereby
represents and warrants to the Company that it has
not employed or agreed to retain any broker or
finder in connection with the transactions
contemplated by this Agreement and the Servicing
Purchase Agreement, and ALBANK agrees to indemnify
the Company against any claim arising out of any
such employment of or agreement to retain any such
broker or finder by ALBANK.
14. OTHER PROVISIONS.
(a) Returned Items. Any items, other than
those issued by a federal, state or local
government or related entity, that were credited
for deposit to an account at the Branches prior to
the Closing Date and are returned unpaid within
ninety (90) days and any checks issued by a
federal, state or local government or any related
entity that were credited for deposit to an
account at the Branches prior to the Closing Date
and are returned unpaid within one year after the
Closing Date ("Returned Items"), will be handled
in the following manner:
(i) If ALBANK's bank account is charged
for the Returned Item, ALBANK will attempt to
obtain reimbursement from the account to which or
from the party to whom the Returned Item was
credited. If there are sufficient funds in the
account to which such Returned Item was credited
or any other accounts on deposit at the Branches
or at any other branch office of ALBANK standing
in the name of the party liable for such item,
ALBANK will, to the extent legally permissible,
debit any or all of such accounts an amount equal
in the aggregate to the Returned Item. If those
accounts do not contain funds sufficient to
reimburse ALBANK fully (for reasons other than
ALBANK's breach of Section 14(b) of this
Agreement), or ALBANK is otherwise unable to debit
such accounts, the Company will, upon notice from
ALBANK, immediately report to ALBANK the amount of
the Returned Item and ALBANK will assign the Item
to the Company for collection;
(ii) If the Company's bank account is
charged for the Returned Item and if there are
sufficient funds in the account to which such
Returned Item was credited or any other accounts
on deposit at the Branches or at any other branch
office of ALBANK standing in the name of the party
liable for such item, ALBANK will, to the extent
legally permissible, debit any or all of such
accounts an amount equal in the aggregate to such
Returned Item and shall repay that amount to the
Company. If there are not sufficient funds in the
accounts (for reasons other than ALBANK's breach
of Section 14(b) of this Agreement), ALBANK shall
have no obligation to repay the Company unless and
until ALBANK obtains reimbursement from the party
liable for such Returned Item.
(b) Holds. Holds that have been placed by
the Company on particular accounts or on
individual checks, drafts or other instruments
before the Closing Date will be continued by
ALBANK under the same terms after the Closing
Date. All such holds will be reflected on the
trial balance tape delivered to ALBANK on the
Closing Date.
(c) Notices to Depositors.
(i) Promptly after the Closing Date,
the Company, at its own expense, will mail to all
holders of Deposit Liabilities transferred
pursuant to this Agreement who have statement
accounts closing statements advising them that:
(A) their balance (indicated on the statement) has
been transferred to ALBANK as of the Closing Date,
and (B) they should check the balances indicated
and address any questions to ALBANK for
resolution, provided that ALBANK shall have given
its prior consent to the text of such release,
such consent not to be unreasonably withheld.
(ii) ALBANK, with the Company's prior
written consent (which shall not be unreasonably
withheld), may, at its own expense, following
receipt of all required regulatory approvals for
the transactions contemplated herein, communicate
with, and deliver information, brochures,
bulletins, press releases and other communications
to, depositors and borrowers of the Branches
concerning the transactions contemplated by this
Agreement and concerning the business and
operations of ALBANK. The Company, if so
requested by ALBANK, shall on behalf of ALBANK,
and at ALBANK's expense, furnish such information
and communications to depositors and borrowers in
as reasonable a manner as practicable.
(d) ATM Cards. The Company will provide
ALBANK with a list of ATM card holders no later
than forty-five (45) days prior to the Closing
Date.
(e) Reimbursements. For a period of one
hundred and eighty (180) days after the Closing
Date the Company will promptly reimburse ALBANK
for (i) any amount ALBANK refunds to customers of
the Branches in interest adjustments after the
Closing Date arising out of errors occurring prior
to the Closing Date, and (ii) any amount which
ALBANK is required to refund to customers of the
Branches after the Closing Date as a result of the
cancellation of services formerly provided by the
Company, in accordance with a schedule of service
charges, for which such customers had prepaid the
Company prior to the Closing Date, provided ALBANK
does not offer those services as of the Closing
Date.
(f) Withholding.
(i) The Company shall deliver to ALBANK
(A) prior to the Closing Date a list of all "B"
(TIN certifications do not match) and "C"
(underreporting/IRS imposed withholding) notices
from the IRS imposing withholding restrictions and
(B) for a period of one hundred twenty (120) days
after the Closing Date, all notices received by
the Company from the IRS releasing withholding
restrictions on Deposit Liabilities transferred to
ALBANK pursuant to this Agreement.
(ii) Any amounts required by any
governmental agency to be withheld from any of the
Deposit Liabilities (the "Withholding
Obligations") will be handled in the following
manner:
(A) Any Withholding Obligations
required to be remitted to the appropriate
governmental agency prior to the Closing Date will
be withheld and remitted by the Company, and any
other sums withheld by the Company pursuant to
Withholding Obligations prior to the Closing Date
also shall be remitted by the Company to the
appropriate governmental agency on or prior to the
time they are due.
(B) Any Withholding Obligations
required to be remitted to the appropriate
governmental agency on or after the Closing Date
with respect to Withholding Obligations on or
after the Closing Date and not withheld by the
Company as set forth in Section 14(f)(ii)(A) will
be remitted by ALBANK.
(C) Any penalties described on "B"
notices from the IRS or any similar penalties that
relate to Deposit Liabilities opened by the
Company prior to the Closing Date will be paid by
the Company promptly upon receipt of the notice.
(g) Taxpayer Information. The Company shall
deliver to ALBANK within three (3) Business Days
after the Closing Date (i) all TIN certifications
(or record of appropriate exemption) for all
holders of Deposit Liabilities acquired by ALBANK
pursuant to this Agreement in the Company's
possession; and (ii) all other information in the
Company's possession or reasonably available to
the Company required by applicable law to be
provided to the IRS with respect to the Assets and
Deposit Liabilities transferred pursuant to this
Agreement and the holders thereof, except for such
information which the Company will report on
pursuant to this Agreement. The Company believes
that it has obtained and has in its possession a
TIN certification (or record of appropriate
exemption) for all Deposit Liabilities as of the
date hereof, and agrees to obtain prior to the
Closing Date such a TIN certification (or record
of appropriate exemption) for all Deposit
Liabilities that will be assumed by ALBANK.
Promptly after the Closing Date, the Company shall
furnish ALBANK with a list of any holder as to
which the Company did not obtain a TIN
certification.
(h) Allocation of Purchase Price. The
purchase price will be allocated among the assets
acquired in the manner prescribed by Section 1060
of the Code. ALBANK and the Company will complete
IRS Form 8594 in a manner consistent with such
allocation and the parties will agree to said
allocation. If necessary, ALBANK will select an
independent consulting or accounting firm to
perform a review and analysis of the transactions
described in this Agreement, the Deposit
Liabilities assumed by ALBANK hereunder, other
tangible and intangible assets and liabilities,
and the consideration paid therefor. This review
and analysis shall be based upon records,
accounting data and other information provided by
ALBANK and the Company and shall utilize
industry-standard methodologies. The cost of this
analysis will be the sole responsibility of
ALBANK.
(i) Public Disclosure; Confidentiality.
Prior to the Closing Date, neither ALBANK nor the
Company will issue any press release or make any
public disclosure, including public announcements
or question and answer sessions with
representatives of the media or investment
analysts, about the transactions contemplated
hereby, except after consulting with and obtaining
the approval of the other party, which approval
shall not be unreasonably withheld. Each party
agrees to forward copies of any and all proposed
public disclosures, whether written or oral, to
the other party for review. Before and after the
Closing Date, each of ALBANK and the Company will
hold all non-public information relating to the
other party received by it from the other party,
directly or through agents or representatives,
under this Agreement or in the course of any
discussions or negotiations leading to this
Agreement in confidence in the same manner as it
would protect non-public information regarding
itself, unless and until such information shall
otherwise have become publicly known or public
disclosure of such information is required by law,
regulation, or judicial or administrative process,
provided, however, that any non-public information
relating to the Assets being acquired and
Liabilities being assumed by ALBANK hereunder
shall be deemed the proprietary information of
ALBANK on and after the Closing Date and from and
after such date ALBANK shall be permitted to treat
such information as it chooses in its sole
discretion and the Company shall treat such
information as non-public information subject to
the confidentiality requirements of this Section
14(i).
(j) Advice of Changes. Prior to the Closing
Date, each party will promptly advise the other of
(i) any change or the occurrence or non-occurrence
of any event having a Material Adverse Effect (in
the case of AFC, AVC or GMB) or materially
adversely affecting the ability of such party to
consummate the transactions provided for herein or
which would be reasonably likely to cause any
representation or warranty contained in this
Agreement to be untrue or inaccurate in any
material respect (in the case of each party
hereto) and (ii) any material failure of such
party to comply with or satisfy any covenant,
condition or agreement to be complied with or
satisfied by it under this Agreement prior to the
Closing Date, if such failure is not or cannot be
cured within thirty (30) days of discovery. From
time to time prior to the Closing Date, each party
will promptly supplement or amend any schedule
delivered in connection with the execution of this
Agreement 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 such schedule or which is
necessary to correct any information in such
schedule which has been rendered inaccurate
thereby. Neither the delivery of any such notice
nor any supplement or amendment to such schedule
shall limit or otherwise affect the remedies
available hereunder to the party receiving such
notice, supplement or amendment nor have any
effect for the purposes of determining
satisfaction of the conditions set forth in this
Agreement, provided, however, that in the event of
any such notice by the Company relating to its
representations and warranties in Section 12(e) or
in Section 12(1) (in the latter case, as such
relate to Loan Properties only) or any such
supplement or amendment by the Company to a
Schedule referred to in Section 12(e) or Schedule
12(l) (in the latter case, as such relates to the
Loan Properties only), (i) if the notice,
supplement or amendment discloses a breach of any
such representation or warranty relating to any
Loan other than a Small Loan, the sole right and
remedy of ALBANK for such misrepresentation or
breach shall be to remove from the relevant Loan
Schedule such Loan, and (ii) if the notice,
supplement or amendment discloses a breach of any
such representation or warranty relating to Small
Loans, ALBANK and the Company shall in good faith
negotiate an upward adjustment to the ALLL Amount;
and provided, further, that if the party receiving
any such notice, supplement or amendment elects to
proceed with the Closing, despite the failure of
the party giving such notice, supplement or
amendment to cure, remedy or correct any failure
of a condition or agreement or any breach of a
representation or warranty within the appropriate
time period, then, except as otherwise set forth
in Section 21(c)(v) with respect to the Company's
indemnification relating to the Auto Loan Pricing
Exceptions, the receiving party shall be deemed to
have waived, as of the Closing Date, any claim
that such party may otherwise have had against the
other party for any damages, satisfaction,
compensation, specific performance or other
remedy, at law or in equity, arising out of or
relating to any such failure or breach. If,
between the date hereof and the Closing, ALBANK
becomes aware of and brings to the Company's
attention a matter which, if discovered by the
Company, would, pursuant to this Section 14(j), be
required to be set forth in a notice to ALBANK or
a supplement or amendment to one of the Company's
schedules, then such matter shall be deemed to
have been the subject of such a notice, supplement
or amendment by the Company for purposes of this
Section 14(j).
(k) References to Servicing Purchase
Agreement. Whenever the words "the transactions
contemplated by this Agreement" or "the
transactions provided for in this Agreement" or
words of similar import are used, such words shall
include the purchase and sale of the Servicing
Business pursuant to the Servicing Purchase
Agreement, and whenever the words "the business of
GMB" or "the business of the Company" or words of
similar import are used, such words shall include
the Servicing Business, whether or not in either
case the Servicing Purchase Agreement or the
Servicing Business is specifically referred to,
unless and until the Servicing Purchase Agreement
may be terminated.
15. AGREEMENTS WITH RESPECT TO REAL PROPERTY.
(a) Title.
(i) ALBANK shall, promptly after the
execution of this Agreement, cause title to the
Real Property to be examined by ALBANK's title
insurer (the "Title Company"), and shall cause a
copy of the report of the Title Company to be
delivered to the Company promptly after receipt
thereof. In addition, the Company shall deliver
to ALBANK, within forty-five (45) days after the
date hereof, a survey of reasonably recent date in
respect of each of the Fee Branches and OREO
property locations. Not later than fifteen (15)
days after ALBANK receives the report of the Title
Company, ALBANK shall give notice to the Company
specifying which exceptions to title must be
removed in order for the Company to be able to
deliver title to the Real Property Assets in
accordance with the terms of this Agreement. Any
defect or Encumbrance not mentioned in such notice
shall be deemed waived by ALBANK, except defects
or Encumbrances which arise subsequent to the
issuance of such title report and prior to the
Closing and as to which ALBANK has not agreed to
accept title pursuant to the terms of this
Agreement. ALBANK shall give notice to the
Company of such additional exceptions within ten
(10) days after receipt of notice thereof from the
Title Company. All defects or Encumbrances
affecting title to the Real Property Assets other
than the Permitted Exceptions and which are
contained in such notice(s) are hereinafter
referred to as "Title Objections." Nothing
contained in this Section 15(a), including
ALBANK's acceptance of the report of the Title
Company described above, shall in any manner limit
or be deemed to waive any of the representations
and warranties of the Company or ALBANK's closing
conditions contained elsewhere in this Agreement.
(ii) Except as provided in this Section
15(a)(ii) and Section 15(a)(iii) below, the
Company shall have no obligation either to (A)
bring any action or proceeding or (B) incur any
expense or liability to remedy any Title
Objection; except that, subject to the provisions
of Section 15(d), the Company shall cause to be
removed of record at or prior to the Closing Title
Objections which can be removed by payment of a
liquidated sum ("Liquidated Title Objections").
If the Company shall be unable to deliver title
free of Title Objections other than Liquidated
Title Objections, the Company shall so notify
ALBANK and ALBANK shall have the right either (A)
to accept such title as the Company is able to
convey without reduction of the Real Property
Amount or (B) to terminate this Agreement solely
with respect to the portion of the Real Property
Assets affected by such Title Objections, in which
case the provisions of Section 15(d)(iii) shall
apply. In the event that the Company is unable to
deliver title free of Liquidated Title Objections,
the provisions of Section 15(d) shall apply.
(iii) The Company shall have the
right (but, except as provided in Section
15(a)(ii), not the obligation) to seek to remedy
any Title Objections. If the Company fails to
remedy such Title Objections prior to the Closing
Date, the provisions of the preceding Section
15(a)(ii) shall be applicable and the Company
shall promptly notify ALBANK of such failure to
remedy.
(iv) If, on the Closing Date, any Title
Objections exist, the Company may use any portion
of the Real Property Amount to cause removal or
discharge of same, provided that the Company
shall, at the Closing either (A) deliver to ALBANK
such instrument(s) (duly executed, acknowledged
and in proper form for record) as the Title
Company shall require in order to effect such
removal or discharge, together with moneys
sufficient to pay the cost of recording or filing
such instrument(s), or (B) deposit with the Title
Company in escrow sufficient moneys, acceptable to
and required by the Title Company, to ensure the
removal or discharge of all Title Objections and
the issuance in ALBANK's favor of policies of
title insurance in respect of all of the Real
Property Assets free of Title Objections.
(b) Loss or Damage. In the event of any
loss or damage to the Improvements or Leased
Branches by casualty or otherwise, this Agreement
shall continue in full force and effect, except as
provided below. The Company shall, promptly upon
the occurrence of such loss or damage, notify
ALBANK thereof and seek to prevent further
physical deterioration of the Improvements or
Leased Branches and to keep the Branch or Branches
in question open for business to the extent
practicable. In the event of any material loss or
damage to the Improvements or Leased Branches,
ALBANK shall have the right to (i) terminate this
Agreement solely with respect to the portion of
the Real Property Assets affected by such damage
or loss, in which event the provisions of Section
15(d)(iii) shall apply, or (ii) acquire the Real
Property Assets in accordance with the terms of
this Agreement, with an abatement of the Real
Property Amount in an amount equal to the amount
of any deductible under the Company's casualty
insurance policy(ies) affecting the Branch(es) in
question, in which event the Company shall (x)
deliver to ALBANK at the Closing all insurance
proceeds which the Company has received on account
of such loss or damage, (y) assign to ALBANK all
of the Company's right, title and interest in, to
and under all insurance policies applicable to
such loss or damage, and (z) deliver to ALBANK
after the Closing any insurance proceeds which the
Company receives after the Closing on account of
such loss or damage. Notwithstanding the
foregoing, in respect of the Leased Branches, if
as a result of such loss or damage the Company
shall have the right to terminate the applicable
Lease, the Company shall so notify ALBANK and
shall, upon ALBANK's written request, exercise
such right to terminate, in which case this
Agreement shall terminate with respect to the
affected Leased Branch and the provisions of
Section 15(d)(iii) shall apply. The Company shall
cooperate with ALBANK after the Closing in order
that ALBANK shall be able to collect upon
applicable insurance. Promptly after the
execution of this Agreement, the Company shall
cause ALBANK to be added as a loss payee to the
Company's casualty insurance policy(ies) with
respect to the Branches and any loss thereunder
shall be settled jointly between ALBANK and the
Company to the extent that ALBANK has not
terminated this Agreement with respect to such
Real Property Asset.
(c) Environmental Assessment. ALBANK shall
have thirty (30) days from the date hereof (the
"Inspection Period") to obtain and deliver to the
Company, at ALBANK's sole cost and expense, an
environmental assessment (the "Environmental
Assessment") performed by an expert selected by
ALBANK to determine the existence of any Hazardous
Materials or Oil in, on or under the Purchased
Branches or the OREO. In the event that the
Environmental Assessment discloses conditions
which constitute violations of Environmental Laws,
the provisions of Section 15(d) shall apply. The
Company hereby grants ALBANK and its agents and
representatives the right to enter the Purchased
Branches and OREO during the Inspection Period
during normal business hours and upon reasonable
notice to the Company to make such inspections and
analyses as are necessary for the performance of
the Environmental Assessment. In performing the
Environmental Assessment, ALBANK shall not
unreasonably interfere with the Company's normal
operations and customer and employee relations.
ALBANK acknowledges that all reports and other
documents obtained through such investigations
will remain the property of the Company prior to
the Closing Date and will not be disseminated by
ALBANK to any other individual or entity prior to
the Closing Date. In the event the transactions
contemplated hereby do not close, ALBANK will
return to the Company any documents delivered by
the Company to ALBANK under this Section 15(c)
together with (at no cost to the Company) copies
of all reports, studies, analyses and other
written work product resulting from ALBANK's (or
its agents' or contractors') investigations of the
Branches under this Section 15(c). Further, in
the event the transaction contemplated hereby does
not close, ALBANK shall, at its sole cost, restore
the Purchased Branches to their condition
immediately prior to any testing or other
activities undertaken by ALBANK.
(d) Price Abatement/Termination.
(i) In the event that (A) ALBANK gives
notice to the Company of one or more Liquidated
Title Objections which the Company is required to
cure pursuant to Section 15(a)(ii) (each a "Title
Condition"), (B) the Company receives one or more
Violation Notices other than with respect to
Environmental Violations (each a "Violations
Condition") or (C) ALBANK delivers to the Company
a copy of the Environmental Assessment, together
with a notice specifying wherein the Environmental
Assessment discloses one or more conditions which
constitute an Environmental Violation (each, an
"Environmental Condition" and, together with any
Title Condition and Violations Condition,
collectively, "Abatement Conditions"), the Company
and ALBANK shall negotiate in good faith to agree
upon the estimated cost of curing such Abatement
Conditions (the "Cost of Cure"). If the Company
and ALBANK cannot agree upon the Cost of Cure
within ten (10) days after notice of an Abatement
Condition (the "Abatement Condition Date"), the
Company and ALBANK shall each obtain a
documentation of the Cost of Cure from an expert
selected by such party, which determination shall
be rendered in writing and delivered to the other
party as soon as possible after the Abatement
Condition Date. If the Company's expert's
determination of the Cost of Cure and ALBANK's
expert's determination of the Cost of Cure do not
agree, then each of the Company and ALBANK shall
instruct its expert to attempt to agree with the
other party's expert upon a determination of the
Cost of Cure within ten (10) days after such
instruction, which agreed-upon determination shall
be binding on the parties hereto. If ALBANK's
expert and the Company's expert are unable to so
agree, ALBANK's expert and the Company's expert
shall select a third expert to determine the Cost
of Cure within ten (10) days after such selection,
and the determination of the Cost of Cure
promulgated by such expert shall be binding upon
the parties hereto.
(ii) If the Aggregate Cost of Cure for
all Abatement Conditions (the "Aggregate Cost of
Cure"), as determined in accordance with Section
15(d)(i) above, is less than or equal to $500,000,
this Agreement shall remain in full force and
effect and the Company, at the Company's election,
shall either (A) cause any or all such Abatement
Conditions to be cured or (B) deliver the Real
Property Assets to ALBANK subject to such
Abatement Condition(s), with an abatement of the
Real Property Amount in an amount equal to the
Cost of Cure, less such portion of such Cost of
Cure allocable to Abatement Condition(s) cured by
the Company prior to the Closing. If the
Aggregate Cost of Cure exceeds $500,000, the
Company, at the Company's election, shall either
(i) cause any or all of such Abatement
Condition(s) to be cured or (ii) deliver the Real
Property Assets to ALBANK, subject to any or all
of such Abatement Condition(s), with an abatement
of the Real Property Amount in an amount equal to
$500,000, less such portion of the Cost of Cure
allocable to Abatement Condition(s) cured by the
Company prior to the Closing, provided, however,
that if the Aggregate Cost of Cure exceeds
$500,000 and the Company elects not to cure the
Abatement Condition(s), ALBANK shall have the
right to terminate this Agreement and, upon such
termination, neither the Company nor ALBANK shall
have any further rights, liability or obligations
hereunder.
(iii) In the event that ALBANK,
pursuant to Sections 15(a)(ii), 15(b) or
16(g)(ii)(9) exercises its right to terminate this
Agreement with respect to a portion of the Real
Property Assets (the "Excluded Property"), the
terms of this Agreement relating thereto
(including without limitation the provisions
hereof providing for the purchase of Personal
Property related to the Excluded Property) also
shall be terminated and this Agreement shall
remain in full force and effect with respect to
the Real Property Assets other than the Excluded
Property; provided, however, that in the event
that the Excluded Property includes any two (2) of
the Purchased Branches, ALBANK may elect to
terminate this Agreement and, upon such
termination, neither the Company nor ALBANK shall
have any further rights, liability or obligations
hereunder. In such event, and unless this
Agreement is terminated in its entirety pursuant
to the immediately preceding sentence, at the
Closing, the Company shall not transfer to ALBANK
any of the Company's right, title or interest in
or to the Excluded Property and the Real Property
Amount, or the OREO Amount, as appropriate, shall
be reduced by the amount applicable to the
Excluded Property.
16. CONDITIONS TO OBLIGATIONS OF ALBANK.
The obligations of ALBANK hereunder are
subject to the satisfaction or waiver, on or
before the Closing Date, of the following
conditions; provided, however, that any waiver by
ALBANK of any one or more of the following
conditions shall not constitute a waiver of any
other condition nor shall such waiver, unless
specifically so provided, constitute a continuing
waiver:
(a) Performance. Each of the acts and
undertakings of the Company to be performed at or
before the Closing pursuant to this Agreement
shall have been duly performed in all material
respects.
(b) Representations and Warranties. The
representations and warranties of the Company
contained in Section 12 shall be true and complete
in all material respects as of the Closing Date
with the same effect as though made as of the
Closing Date. All Schedules hereto shall, to the
extent necessary, be updated and corrected (i)
within ten days of the date hereof as of the date
hereof and (ii) on the Closing Date as of the
Pre-Closing Close of Business.
(c) Authorization. This Agreement and the
Servicing Purchase Agreement and the transactions
contemplated hereby and thereby shall have been
duly authorized by all necessary corporate action
on the part of the Company.
(d) Absence of Litigation. No action, suit
or proceeding shall have been instituted or, to
the knowledge of the Company, threatened, on or
before the Closing Date in which one or more
governmental or non-governmental third parties
seeks to restrain or prohibit the transactions
contemplated hereby or which ALBANK determines in
good faith, based upon the advice of counsel, is
reasonably likely to have a Material Adverse
Effect on GMB or to result in imposition upon
ALBANK of a substantial monetary liability,
penalty, fine, assessment or charge as a result of
the parties' consummation of the transactions
provided for herein, including ALBANK's
acquisition and subsequent ownership of the Assets
and assumption of the Liabilities.
(e) No Material Adverse Change. No material
adverse change shall have occurred affecting the
Assets, Liabilities or any of the Branches or the
ability to conduct banking operations at any of
the Purchased Branches.
(f) Systems Conversion Complete. ALBANK
shall be satisfied that the Systems Conversion
shall be completed as of the opening of business
on the first Business Day after the Closing Date.
(g) Documents. The form and substance of
all documents to be delivered to ALBANK hereunder
that are not in the form of exhibits hereto or to
the Servicing Purchase Agreement shall have been
approved by ALBANK and its counsel, such approval
not to be unreasonably withheld. ALBANK shall
have received the following documents from the
Company, duly executed, and where appropriate
acknowledged, by AFC or AFC's counsel, as the case
may be:
(i) the documents and instruments
contemplated by the Servicing Purchase Agreement,
if the Servicing Purchase Agreement has not been
terminated, as provided for therein;
(ii) with respect to the Real Property,
the following documents:
(1) In respect of each of the Fee
Branches and OREO a limited warranty deed with
covenant against grantor's acts, duly executed,
acknowledged and in proper form for recording,
pursuant to which the Company shall convey to
ALBANK title to the applicable Fee Branch and OREO
in accordance with the provisions of this
Agreement;
(2) In respect of each of the
Leased Branches, (a) Assignment and Assumption of
Lease in the form of Exhibit H annexed hereto and
made a part hereof, duly executed, acknowledged
and in proper form for record, pursuant to which
the Company shall transfer to ALBANK all of the
Company's right, title and interest in, to and
under the applicable Lease (collectively, the
"Assignments") and (b) Estoppel Certificates
referred to in Section 16(g)(ii)(9);
(3) Certification of Nonforeign
Status referred to in Section 12(q);
(4) Such instruments and moneys,
if any, as shall be required to be delivered to
ALBANK pursuant to any other provisions of this
Agreement;
(5) All written warranties or
guaranties in the Company's possession with
respect to the Improvements as well as any plans
and specifications and licenses and permits in the
Company's possession with respect to the Purchased
Branches;
(6) The Company's duplicate
original of each of the Leases;
(7) Originals or photocopies of
certificates of occupancy in respect of all of the
Improvements as constituted on the Closing Date,
provided, however, that to the extent new or
amended certificates are deemed to be necessary by
ALBANK, the Company will use its best efforts to
assist ALBANK in obtaining such new or amended
certificates; provided further that the obtaining
of any such new or amended certificates shall not
be a condition precedent to ALBANK's obligations
under this Agreement;
(8) Policies of title insurance
issued by the Title Company insuring ALBANK, free
of Title Objections, as fee owner of the Real
Property and of the Improvements;
(9) An Estoppel Certificate from
each Landlord in substantially the form of Exhibit
I annexed hereto and made a part hereof (modified
and expanded, as necessary, to evidence Landlord's
consent to the assumption by ALBANK of the Proctor
Branch Lease under the particular circumstances of
such Lease), duly executed and acknowledged by
such Landlord; provided, however, that if the
condition set forth in this subparagraph (9) has
not been materially satisfied, ALBANK shall have
the right to terminate this Agreement solely with
respect to the portion of the Real Property Assets
affected, in which case the provisions of Section
15(d)(iii) shall apply;
(10) all security deposits and
advance payments of rent under the Premises
Leases; and
(11) the certificate contemplated
by Section 5(a)(i)(K); and
(iii) the Bill of Sale, with an inventory of
the Personal Property as of the Pre-closing Close
of Business;
(iv) a certificate of AFC's chief financial
officer stating the amount of Cash on Hand as of
the Pre-closing Close of Business;
(v) the Sale and Assignment Agreement;
(vi) such other bills of sale, assignments, and
other instruments and documents as counsel for
ALBANK may reasonably require as necessary for
transferring, assigning and conveying to ALBANK
good, marketable and insurable title to the Assets
to be transferred to ALBANK pursuant to this
Agreement, all in form and substance reasonably
satisfactory to counsel for ALBANK;
(vii) the charter and by-laws of GMB certified
by the secretary of GMB;
(viii) resolutions of the board of directors of
each of AFC, AVC and GMB certified by the
secretary of each respective entity, authorizing
the execution and delivery of this Agreement and
the Servicing Purchase Agreement and the other
documents and instruments contemplated hereby and
thereby, and the consummation of the transactions
contemplated hereby and thereby;
(ix) a certificate signed by an executive officer
of each of AFC, AVC and GMB stating that the
conditions set forth in subsections (a), (d) and
(e) of this Section 16 have been fulfilled;
(x) an opinion, dated the Closing Date, of
counsel to AFC, in a form acceptable to ALBANK and
customary for transactions of this type and an
opinion of Vermont counsel to AFC, dated the
Closing Date, in a form acceptable to ALBANK and
customary for transactions of this type;
(xi) the following documents and instruments:
(1) the books and records of the
Company referred to in the first sentence of
Section 2(e);
(2) the original executed
promissory notes or other evidences of
indebtedness relating to the Loans as of the
Pre-closing Close of Business, duly endorsed in
favor of ALBANK, together with the other documents
referred to in Sections 3(d), (e) and (f);
(3) the signature cards, orders,
contracts, deposit slips, canceled checks,
withdrawal orders and statements in the Company's
possession referred to in Section 4(a)(i);
(4) originals, if available, or
copies of the Contracts listed on Schedule 1.5 to
be assumed by ALBANK; and
(5) such other documents and
instruments as ALBANK may reasonably request.
17. CONDITIONS TO OBLIGATIONS OF THE COMPANY.
The obligations of the Company hereunder
are subject to the satisfaction or waiver on or
before the Closing Date of the following
conditions; provided, however, that any waiver by
the Company of any one or more of the following
conditions shall not constitute a waiver of any
other condition nor shall such waiver, unless
specifically so provided, constitute a continuing
waiver:
(a) Performance. Each of the acts and
undertakings of ALBANK to be performed at or
before the Closing pursuant to this Agreement
shall have been duly performed in all material
respects.
(b) Representations and Warranties. The
representations and warranties of ALBANK contained
in Section 13 shall be true and complete in all
material respects as of the Closing Date with the
same effect as though made as of the Closing Date.
(c) Authorization. This Agreement and the
Servicing Purchase Agreement and the transactions
contemplated hereby and thereby shall have been
duly authorized by all necessary corporate action
on the part of ALBANK.
(d) Absence of Litigation. No action, suit
or proceeding shall have been instituted or, to
the knowledge of ALBANK, threatened on or before
the Closing Date in which one or more governmental
or non-governmental third parties seeks to
restrain or prohibit the transactions contemplated
hereby or which the Company determines in good
faith, based upon the advice of counsel, is
reasonably likely to materially adversely affect
the ability of ALBANK to consummate the
transactions contemplated hereby or to result in
imposition on the Company of a substantial
monetary liability, fine, assessment or charge as
a result of the parties' consummation of the
transactions provided for herein.
(e) Documents. The form and substance of
all documents to be delivered to the Company
hereunder that are not in the form of exhibits
hereto or to the Servicing Purchase Agreement
shall have been approved by the Company and its
counsel, such approval not to be unreasonably
withheld. The Company shall have received the
following documents from ALBANK, duly executed,
and where appropriate acknowledged, by ALBANK or
ALBANK's counsel, as the case may be:
(i) the Assumption Agreement;
(ii) the Assignments pursuant to which
ALBANK shall assume all of the Company's
obligations as tenant under the Leases;
(iii) the federal charter and
by-laws of ALBANK certified by the secretary of
ALBANK;
(iv) resolutions of ALBANK's board of
directors, certified by ALBANK's secretary,
authorizing the execution and delivery of this
Agreement and the Servicing Purchase Agreement,
and the other documents and instruments
contemplated hereby and thereby, and the
consummation of the transactions contemplated
hereby and thereby;
(v) such check(s) as may be required by
the Title Company in payment of Vermont State real
estate transfer tax payable with respect to the
transactions contemplated by this Agreement;
(vi) a certificate signed by an
executive officer of ALBANK stating that the
conditions set forth in subsections (a), (b) and
(d) of this Section 17 have been fulfilled;
(vii) an opinion, dated the Closing
Date, of counsel to ALBANK, in a form acceptable
to the Company and customary for transactions of
this type; and
(viii) such other documents and
instruments as the Company may reasonably request.
18. CONDITIONS TO OBLIGATIONS OF BOTH PARTIES.
The obligations of both parties to this
Agreement are subject to fulfillment at or prior
to the Closing of each of the following
conditions, which may not be waived:
(a) Approval of Regulatory Authorities. All
necessary approvals, authorizations and consents
of all federal and state regulatory authorities
required to consummate the transactions
contemplated hereby shall have been obtained and
shall remain in full force and effect and all
statutory waiting periods in respect thereof shall
have expired or been terminated; provided,
however, that the condition set forth in this
Section 18(a) to ALBANK's obligation to effect the
transactions contemplated hereby shall not be met
if any such approval, authorization or consent is,
in the reasonable judgment of ALBANK, subject to
any condition or requirement that ALBANK deems to
be materially adverse or materially burdensome or
to substantially deprive ALBANK of the benefits
which it anticipates to receive in the
transaction. ALBANK agrees that the proviso of
the foregoing sentence will not apply to an order
by the Department of Justice or OTS as a result of
a competitive analysis under the Bank Merger Act
requiring ALBANK to divest branches or deposits in
order to be permitted to consummate the
transactions contemplated hereby, provided,
however, that, for purposes of calculating the
Estimated Amount and Final Amount under Section 5,
the parties hereto will proceed as though no such
divestiture had occurred or was to occur. Any
amounts received from any third party in
connection with the divestiture to such third
party before the Closing Date of any assets and/or
liabilities of the Branches that would otherwise
have been Assets or Liabilities transferred to
ALBANK hereunder shall be receivable by (and if
paid to the Company, immediately payable by it to)
ALBANK, and for purposes of calculating the
Estimated Amount and Final Amount, the quantity
and type of such divested assets and liabilities
will be considered the type of Assets and
Liabilities subject to this Agreement at Closing
hereunder. No order, injunction or decree issued
by any court or agency of competent jurisdiction
or other legal restraint or prohibition preventing
the consummation of the transactions contemplated
by this Agreement shall be in effect and no
proceeding initiated by any regulatory authority
seeking an injunction shall be pending. No
statute, rule, regulation, order, injunction or
decree shall have been enacted, entered,
promulgated or enforced by any regulatory
authority which prohibits, restricts or makes
illegal consummation of the transactions
contemplated by this Agreement (or that, in the
reasonable judgment of ALBANK, would substantially
deprive ALBANK of the benefits which it
anticipates to receive in the transactions).
(b) Closing under Servicing Purchase
Agreement. If ALBANK has not terminated the
Servicing Purchase Agreement pursuant to its
terms, the Closing under the Servicing Purchase
Agreement shall have occurred simultaneously with
the Closing hereunder.
19. TERMINATION.
(a) This Agreement shall terminate and be of
no further force or effect, and neither party will
have any obligation whatsoever to the other
hereunder, upon the occurrence of any of the
following:
(i) the expiration of thirty (30) days
after the OTS or any other governmental agency has
denied or finally refused to grant the approvals
or consents required to be obtained pursuant to
this Agreement, unless within said thirty (30)-day
period the parties agree in writing to subject or
resubmit an application to, or appeal the decision
of, the regulatory authority which denied or
finally refused to grant approval thereof;
(ii) mutual agreement of the parties
hereto;
(iii) written notice of termination
hereof given by ALBANK to AFC or by AFC to ALBANK,
if the Closing shall not have taken place by a
date that is nine months from the date hereof
other than by reason of a matter solely within the
control of the party asserting such termination;
(iv) written notice by ALBANK or AFC
given to the other party after entry of a
restraining order or injunction restraining or
prohibiting the sale or purchase of the Assets and
the lapse of any period within which such order or
injunction may be appealed; or
(v) written notice by ALBANK of
termination pursuant to Section 15(d)(iii).
(b) If prior to the Closing there shall have
been a material failure of condition, a material
breach of any representation or warranty contained
herein or a material default in the timely
performance of any of its agreements or
obligations contained herein by any party (the
"breaching party"), then any other party may give
the breaching party written notice thereof.
Subject to the provisions set forth elsewhere in
this Agreement specifically limiting the remedies
available to a party under certain circumstances,
including, without limitation, Sections 14(j),
15(a)(ii), 15(b) and 15(d), if such failure,
breach or default is not cured by the breaching
party within thirty (30) Business Days after the
date the breaching party receives such notice,
then, without prejudice to any other rights or
remedies which it may have, the party giving such
notice may, prior to the Closing, forthwith
terminate this Agreement by a second written
notice to the breaching party, provided that no
party may terminate this Agreement with respect to
a failure, breach or default related solely to the
Servicing Purchase Agreement or Servicing
Business. Notwithstanding anything to the
contrary herein contained, no party hereto shall
have the right to terminate this Agreement on
account of its own breach or any immaterial breach
by another party hereto.
20. EFFECT ON THIRD PARTIES.
Nothing in this Agreement, whether
express or implied, is intended to confer any
rights or remedies under or by reason of this
Agreement on any persons other than the parties
hereto and their respective successors and
assigns, nor is anything in this Agreement
intended to relieve or discharge the obligation or
liability of any third persons to any party to
this Agreement, nor shall any provision give any
third persons any right of subrogation or action
over or against any party to this Agreement. Each
party hereto intends that this Agreement shall not
benefit or create any right or cause of action in
or on behalf of any person other than the parties
hereto.
21. SURVIVAL OF REPRESENTATIONS, INDEMNIFICATION
AGREEMENTS AND CERTAIN OTHER MATTERS.
(a) Survival. All representations and
warranties contained in or made pursuant to this
Agreement (including in or pursuant to any exhibit
hereto or any agreement, certificate, document or
statement delivered pursuant hereto or thereto)
shall survive the Closing hereunder and under the
Servicing Purchase Agreement for the period set
forth in Section 21(f)(i), provided that those
certain representations and warranties contained
in the Servicing Purchase Agreement, whether or
not reaffirmed and repeated herein, shall not
survive such Closing, and provided further that
any representation or warranty contained herein,
to the extent it refers or relates, expressly or
by implication, to the Servicing Purchase
Agreement or the Servicing Business shall not be
deemed, solely with respect to the purchase and
sale of the Servicing Business pursuant to the
Servicing Purchase Agreement or to the Servicing
Business, to survive the Closing hereunder and
under the Servicing Purchase Agreement or to
survive termination of the Servicing Purchase
Agreement.
(b) Indemnification by ALBANK. ALBANK
hereby agrees to indemnify and hold harmless AFC,
AVC and GMB and their directors, officers,
employees and affiliates from, and to reimburse
AFC, AVC and GMB and their directors, officers,
employees and affiliates for, any loss, fee, cost,
expense, damage, liability or claim (including,
without limitation, any and all fees, costs and
expenses whatsoever reasonably incurred by the
foregoing and their counsel in investigating,
preparing for, defending against, or providing
evidence, producing documents or taking any other
action in respect of any threatened or asserted
claim) arising out of, based upon or resulting
from (i) ALBANK's breach of or failure to perform
any of its covenants or agreements contained in or
made pursuant to this Agreement or the Servicing
Purchase Agreement; (ii) the control or operation
by ALBANK of any of the Branches after the Closing
Date; or (iii) any inaccuracy in or any breach of
any representation or warranty of ALBANK contained
in or made pursuant to this Agreement or the
Servicing Purchase Agreement.
(c) Indemnification by the Company. AFC,
AVC and GMB jointly and severally agree to
indemnify and hold harmless ALBANK and its
directors, officers, employees and affiliates
from, and to reimburse ALBANK and its directors,
officers, employees and affiliates for, any loss,
fee, cost, expense, damage, liability or claim
(including, without limitation, any and all fees,
costs and expenses whatsoever reasonably incurred
by the foregoing and their counsel in
investigating, preparing for, defending against,
or providing evidence, producing documents or
taking any other action in respect of any
threatened or asserted claim) arising out of,
based upon, or resulting from (i) AFC's, AVC's or
GMB's breach of or failure to perform any of its
or their covenants or agreements contained in or
made pursuant to this Agreement or the Servicing
Purchase Agreement; (ii) the control or operation
by AFC, AVC or GMB of any of the Branches or the
OREO prior to the Closing Date; (iii) any
inaccuracy in or any breach of any representation
or warranty of the Company contained in or made
pursuant to this Agreement or the Servicing
Purchase Agreement; (iv) the control or operation
by GMB of the Trust Business prior to the
consummation of any Trust Transfer Transaction; or
(v) the Auto Loan Pricing Exceptions.
(d) Procedures. A party seeking
indemnification pursuant to this Section 21 (an
"Indemnified Party") shall give prompt notice to
the party from whom such indemnification is sought
(the "Indemnifying Party") of the assertion of any
claim, or the commencement of any action or
proceedings, in respect of which indemnity may be
sought hereunder. The Indemnified Party shall
assist the Indemnifying Party in the defense of
any such action or proceeding. The Indemnifying
Party shall have the right to, and shall at the
request of the Indemnifying Party, assume the
defense of any such action or proceeding at its
own expense. In any such action or proceeding,
the Indemnified Party shall have the right to
retain its own counsel, but the fees and expenses
of such counsel shall be at its own expense
unless:
(i) the Indemnifying Party and the
Indemnified Party shall have mutually agreed to
the retention of such counsel; or
(ii) the named parties to any such suit,
action or proceeding (including any impleaded
parties) include both the Indemnifying Party and
the Indemnified Party and, in the reasonable
judgment of the Indemnified Party, representation
of both parties by the same counsel would be
inappropriate due to actual or potential differing
interests between them.
(e) Settlement. The Indemnified Party shall
not be liable under this Section 21 for any
settlement effected without its consent of any
claim, litigation or proceeding in respect of
which indemnity may be sought hereunder, provided,
however, that the Indemnified Party shall not
unreasonably withhold its consent to any such
proposed settlement. An Indemnified Party shall,
subject to its reasonable business needs, use
reasonable efforts to minimize the indemnification
sought from the Indemnifying Party hereunder, and
to avoid furthering the consequences of the error,
omission, misrepresentation or other breach of the
Indemnifying Party. Notwithstanding the
foregoing, no investigation by an Indemnified
Party at or prior to the Closing Date shall
relieve an Indemnifying Party of any liability
hereunder, unless the Indemnified Party seeks
indemnity in respect of a representation or
warranty which it actually had reason to believe
to be incorrect as a result of its investigation
prior to the Closing Date and the Indemnified
Party failed to bring such belief to the attention
of the Indemnifying Party prior to the Closing
Date.
(f) Limitations. The obligation of the
parties to indemnify other parties pursuant to
this Section 21 shall survive the Closing;
provided, however, the time within which ALBANK or
the Company may make a claim against the other
thereunder (a "Claim") and the amount for which
such indemnification shall be made shall be
subject to the limitations set forth below in
Sections 21(f)(i) and 21(f)(ii).
(i) In the event a Claim is made
pursuant to Section 21(b)(i) or Section 21(c)(i)
relating to breach of or failure to perform
covenants or agreements, such Claim shall be made
on or before a date that is 13 months after the
later of (A) the date that the breaching party is
required to perform under such covenant or
agreement, (B) the date that such covenant or
agreement by its terms expires, or (C) the Closing
Date, or be thereafter barred, except for a Claim
with respect to Section 14(i), which shall be made
by a date that is three years after the Closing
Date, or be thereafter barred. In the event that
a Claim is made pursuant to Section 21(b)(ii) or
Section 21(c)(ii), such Claim shall be made on or
before a date that is three years after the
Closing Date, or be thereafter barred. In the
event a Claim is made pursuant to Section
21(b)(iii) or Section 21(c)(iii), such Claim shall
be made on or before a date that is 13 months
after the Closing Date, or be thereafter barred,
except that any such Claim regarding any alleged
inaccuracy in or breach of any representation or
warranty contained in the Servicing Purchase
Agreement or any representation or warranty
contained herein that refers or relates to the
Servicing Purchase Agreement or the Servicing
Business shall be made on or before the Closing
Date, or be thereafter barred. A Claim may be
made pursuant to Sections 21(c)(iv) or 21(c)(v) at
any time after the Closing.
(ii) (A) No indemnification shall be
made to ALBANK under Section 21(c)(iii) with
respect to Claims arising under this Agreement
until the aggregate amount of all such Claims
arising with respect to this Agreement shall
exceed Five Thousand Dollars ($5,000.00), in which
event ALBANK shall be indemnified and held
harmless for the aggregate amount of such
indemnifiable losses and expenses in excess of
such Five Thousand Dollars ($5,000.00) and then
only for individual items of such losses and
expenses which exceed One Hundred Dollars
($100.00) or related losses and expenses involving
a lesser amount individually but in the aggregate
involving an amount in excess of One Hundred
Dollars ($100.00).
(B) No indemnification shall be
made to AFC under Section 21(b)(iii) with respect
to Claims arising under this Agreement until the
aggregate amount of all such Claims arising with
respect to this Agreement shall exceed Five
Thousand Dollars ($5,000.00), in which event AFC
shall be indemnified and held harmless for the
aggregate amount of such indemnifiable losses and
expenses in excess of such Five Thousand Dollars
($5,000.00) and then only for individual items of
such losses and expenses which exceed One Hundred
Dollars ($100.00) or related losses and expenses
involving a lesser amount individually but in the
aggregate involving an amount in excess of One
Hundred Dollars ($100.00).
22. MISCELLANEOUS.
(a) Expenses. Except as is otherwise
specifically provided in this Agreement or the
Servicing Purchase Agreement, whether the Closing
takes place or whether this Agreement is
terminated, each party shall pay its own costs and
expenses in connection with this Agreement and the
transactions contemplated hereby, including, but
not limited to, all regulatory fees, attorneys'
fees and accounting fees.
(b) Notices. All notices, demands and other
communications hereunder shall be in writing and
shall be deemed to have been duly given if
delivered in person (provided a receipt evidencing
such delivery is obtained) or by United States
mail, certified or registered, with return receipt
requested, as follows:
(i) if to the Company, to:
Arrow Financial Corporation
250 Glen Street
Glens Falls, New York 12801
Attention: Michael F.
Massiano, Chairman
with a copy to:
Thomas B. Kinsock, Esq.
Gallop, Johnson & Neuman, L.C.
101 South Hanley, 1600
St. Louis, Missouri 63105
(ii) if to ALBANK, to:
ALBANK, a Federal Savings Bank
10 North Pearl Street
Albany, New York 12207-2774
Attention: Herbert G.
Chorbajian
Chairman, President
and Chief Executive Officer
with a copy to:
ALBANK, a Federal Savings Bank
10 North Pearl Street
Albany, New York 12207-2774
Attention: Freling H. Smith,
Esq.
Senior Vice
President and General Counsel
and
Robert L. Tortoriello, Esq.
Cleary, Gottlieb, Steen & Hamilton
One Liberty Plaza
New York, New York 10006-1470
The persons or addresses to which mailings or
deliveries shall be made may be changed from time
to time by notice given pursuant to the provisions
of this Section 22(b). Any notice, demand or
other communications given pursuant to the
provisions of this Section 22(b) shall be deemed
to have been given on the date actually received.
(c) Successors and Assigns. All terms and
provisions of this Agreement shall be binding upon
and shall inure to the benefit of the parties
hereto and their respective transferees,
successors and assigns; provided, however, that
this Agreement and all rights, privileges, duties
and obligations of the parties hereto may not be
assigned or delegated by either party hereto
without the prior written consent of the other
party.
(d) Counterparts. This Agreement may be
executed in one or more counterparts, all of which
taken together shall constitute one instrument.
(e) Governing Law. This Agreement is made
and entered into in the State of New York, and to
the extent that federal law does not control, the
laws of that state shall govern the validity and
interpretation hereof and the performance of the
parties hereto of their respective duties and
obligations hereunder.
(f) Captions. The captions contained in
this Agreement are for convenience of reference
only, do not form a part of this Agreement and are
not to be deemed full or accurate descriptions of
the contents of any paragraph or subparagraph.
(g) Entire Agreement; Modifications;
Waivers. This Agreement and the exhibits and
schedules hereto and the Servicing Purchase
Agreement and the exhibits and schedules thereto
constitute the entire agreement between the
parties hereto pertaining to the subject matter
hereof and supersede all prior and contemporaneous
agreements, understandings, negotiations and
discussions of the parties in connection therewith
not referred to herein. No supplement or
modification, and no termination, except as
permitted by Section 19 of this Agreement, shall
be binding unless executed in writing by both
parties, and no waiver of any provision of, breach
of or default under this Agreement shall be
considered binding unless executed in writing by
the party granting such waiver. No waiver of any
provision of this Agreement shall be deemed or
shall constitute a waiver of any other provision
hereof nor shall any such waiver constitute a
continuing waiver.
(h) Survival. All obligations of the
parties that by their terms are to be performed
after, or otherwise survive, the consummation of
the transactions contemplated herein shall survive
the Closing.
IN WITNESS WHEREOF, the parties hereto have
duly executed and delivered this Agreement as of
the day and year first above written.
ARROW FINANCIAL
CORPORATION
ATTEST: By /s/ Michael F. Massiano
Name: Michael F. Massiano
Title: Chairman &
President
___________________________________
Name: John C. VanLeeuwen
Title: Senior Vice President/Credit Administration
ARROW VERMONT
CORPORATION
ATTEST: By /s/ Michael F. Massiano
Name: Michael F. Massiano
Title: Chairman &
President
___________________________________
Name: John C. VanLeeuwen
Title: Senior Vice President/Credit Administration
GREEN MOUNTAIN
BANK
ATTEST: By /s/ John J. Murphy
Name: John J. Murphy
Title: Treasurer
___________________________________
Name: John C. VanLeeuwen
Title: Senior Vice President/Credit Administration
ALBANK, FSB
ATTEST: By /s/ Herbert G. Chorbajian
Name: Herbert G.Chorbajian
Title: Chairman, President
and Chief Executive Officer
___________________________________
Name: Freling H. Smith
Title: Senior Vice President
EXHIBIT 2.2
CONFORMED COPY
EXHIBIT F
SERVICING PURCHASE AGREEMENT
This Servicing Purchase Agreement, dated
February 26, 1996 (this "Agreement") by and between
Arrow Financial Corporation ("AFC"), a New York
business corporation having its principal office at 250
Glen Street, Glens Falls, New York, Arrow Vermont
Corporation ("AVC"), a Vermont business corporation
having its principal office at 80 West Street, Rutland,
Vermont, and Green Mountain Bank ("GMB"), a
Vermont-chartered banking corporation having its principal
office at 80 West Street, Rutland, Vermont (sometimes
collectively referred to as the "Company") and ALBANK,
fsb ("ALBANK"), a federally chartered stock savings
bank having its principal office at 10 North Pearl
Street, Albany, New York,
W I T N E S S E T H:
THAT WHEREAS, AFC is a bank holding company
which owns all of the capital stock of AVC, which in
turn owns all of the capital stock of GMB, a Vermont
banking corporation conducting business in the State of
Vermont; and
WHEREAS, ALBANK is a federal savings bank
conducting business in the states of New York,
Massachusetts and Vermont; and
WHEREAS, the Company operates six branch
offices in Vermont, some of which ALBANK desires to
acquire, and in connection therewith ALBANK desires to
acquire certain assets and assume certain liabilities
of the Company, and the Company desires to transfer to
ALBANK said assets and liabilities, all as more
particularly described in a Purchase and Assumption
Agreement (the "Purchase and Assumption Agreement") of
even date herewith between AFC, AVC and GMB and ALBANK;
and
WHEREAS, in connection with the transaction
described in the foregoing clause, the Company wishes
to sell the Servicing Business, as defined below, to
ALBANK, and ALBANK wishes to purchase the Servicing
Business from the Company;
NOW, THEREFORE, in consideration of the
premises and the mutual covenants and conditions
contained herein, the Company and ALBANK agree as
follows:
ARTICLE I
DEFINITIONS
Whenever used herein, the following words and
phrases, unless the context otherwise requires, shall
have the following meanings:
"Act" shall mean the Cranston-Gonzalez
National Affordable Housing Act of 1990, as amended
from time to time.
"Advances" shall mean amounts that have been
advanced by GMB in connection with servicing the
Serviced Loans (including, without limitation,
principal, interest, taxes and insurance premiums) and
which have been paid by GMB as the servicer of the
Serviced Loans.
"Agency" shall mean the Federal Home Loan
Mortgage Corporation, Federal National Mortgage
Association, Federal Housing Administration, Government
National Mortgage Association, Department of Housing
and Urban Development, Veteran's Administration, Small
Business Administration, Vermont Housing Finance Agency
or other state agency, as applicable.
"Assignment of Mortgage" shall mean an
assignment of the Mortgage, notice of transfer or
equivalent instrument in recordable form, sufficient
under the laws of the jurisdiction wherein the related
Mortgaged Property is located to reflect the sale of
the Mortgage to an Investor.
"Business Day" shall mean any day other than
(i) a Saturday or Sunday, or (ii) a day on which
banking and savings and loan institutions in the states
of Vermont and New York are authorized or obligated by
law or executive order to be closed.
"Closing Date" shall mean the date on which
the Servicing Business is transferred to ALBANK, which
shall be the date on which the closing occurs under the
Purchase and Assumption Agreement.
"Custodial Agreement" shall mean the
agreement or agreements, if any, governing the
retention of the originals of any Mortgage Note,
Mortgage, Assignment of Mortgage and other Mortgage
Loan Documents
"Custodian" shall mean the Person performing
the custodial responsibilities under any Custodial
Agreement.
"Escrow Account" shall mean an account
maintained for the deposit of Escrow Payments received
in respect of one or more Serviced Loans.
"Escrow Payments" shall mean with respect to
any Serviced Loan, payments in respect of ground rents,
taxes, assessments, water rates, sewer rents, municipal
charges, mortgage insurance premiums, fire and hazard
insurance premiums, condominium charges, buydown funds,
optional insurance funds, flood insurance and any other
payments required to be escrowed by the Mortgagor with
the mortgagee pursuant to the requirements of the
Mortgage or any other document.
"Investor" shall mean any owner, purchaser or
beneficiary of a Serviced Loan (including a trustee)
and/or any proceeds thereof, or of an interest in such
Serviced Loan.
"MI Policy" shall mean a policy or
certificate of primary mortgage guaranty insurance.
"Monthly Payment" shall mean the scheduled
monthly payment of principal and interest on a Serviced
Loan.
"Mortgage" shall mean the mortgage, deed of
trust or other instrument securing a Mortgage Note,
which creates a first lien on an unsubordinated estate
in fee simple or a leasehold estate in real property
securing the Mortgage Note.
"Mortgage Loan" shall mean any mortgage loan
serviced by GMB which is designated on Exhibit 1.1 as a
Mortgage Loan with respect to which the Servicing
Rights are transferred to ALBANK pursuant to this
Agreement. Each Mortgage Loan includes without
limitation the Servicing File, the Monthly Payments,
principal prepayments, liquidation proceeds,
condemnation proceeds, insurance proceeds, REO
disposition proceeds and all other rights, benefits,
proceeds and obligations arising from or in connection
with the servicing of such Mortgage Loan on and after
the Closing Date.
"Mortgage Note" shall mean the note or other
evidence of the indebtedness of a Mortgagor secured by
a Mortgage.
"Mortgaged Property" shall mean the real
property or leasehold estate securing repayment of the
debt evidenced by a Mortgage Note.
"Mortgagor" shall mean the obligor on a
Mortgage Note.
"Person" shall mean any individual,
corporation, partnership, joint venture, association,
joint-stock company, trust, unincorporated
organization, government or any agency or political
subdivision thereof.
"Prior Servicer" shall mean any servicer of a
Serviced Loan other than GMB.
"Purchase Price" shall mean the amount set
forth in Section 4.3.
"Serviced Loans" shall mean the Mortgage
Loans. Serviced Loans as of the date hereof are listed
on Exhibit 1.1 hereto (and are to be updated as of the
close of business on the Business Day immediately
preceding the Closing Date).
"Serviced Loan Documents" shall mean the
documents pertaining to any Serviced Loan, including
without limitation, originals held by the Company and
originals held by a Custodian or other Person and true
and correct copies of originals not held by the Company
of the Mortgage Note, the Mortgage, the Assignment of
Mortgage and all other assignments (including
assignments or other transfer agreements by Prior
Servicers or the originator of the Serviced Loans), the
title insurance policy and any MI Policy, if
applicable.
"Serviced Loan Schedule" shall mean the
information set forth on Exhibit 1.1 with respect to
the Serviced Loans.
"Servicing Agreements" shall mean those
agreements listed on Exhibit 1.2 hereto between GMB or
its affiliates or the predecessors thereof and the
Investors setting forth the rights and obligations of
GMB with respect to servicing the Serviced Loans, true
and complete copies of which are annexed to Exhibit 1.2
hereto. Servicing Agreements shall also include any
official guidelines, rules, and similar requirements
promulgated by an Agency applicable to the servicing of
the Serviced Loans.
"Servicing Business" shall mean (i) all of
the rights and obligations of GMB under each of the
Servicing Agreements, including the Servicing Rights;
(ii) the Servicing Files; and (iii) the Serviced Loan
Suspense Amount.
"Servicing Fee" shall mean the compensation
which ALBANK shall be entitled to receive pursuant to
the Servicing Agreements from payments made on the
Serviced Loans for its performance of servicing.
"Servicing File" shall mean the documents,
including the Serviced Loan Documents and any
applicable Custodial Agreement, files and other items
which pertain to a particular Serviced Loan including,
but not limited to, the computer files, data disks,
books, records, data tapes, notes and all additional
documents generated as a result of or utilized in
originating and/or servicing each Serviced Loan.
"Serviced Loan Suspense Amount" shall mean,
at any given time, the total amount of funds held by
GMB with respect to Serviced Loans on behalf of the
Investors, including, without limitation, total Escrow
Payments, impound and suspense balances, buydown funds,
loss draft balances, unearned fees, and principal and
interest payments not yet paid to such Investors,
including, where applicable, interest income on account
balances less the amount of GMB's outstanding Advances
reimbursable under the Servicing Agreements and not yet
reimbursed.
"Servicing Rights" shall mean, in accordance
with the Servicing Agreements, (a) all rights to
service the Serviced Loans; (b) all rights to receive
Servicing Fees, additional servicing compensation
(including without limitation any late fees, assumption
fees, penalties or similar payments with respect to the
Serviced Loans, and principal and interest and income
on Escrow Accounts or other receipts on or with respect
to the Serviced Loans), reimbursements or
indemnification for servicing the Serviced Loans, and
any payments received in respect of the foregoing and
proceeds thereof; (c) the right to collect, hold and
disburse Escrow Payments or other similar payments with
respect to the Serviced Loans and any amounts actually
collected with respect thereto, and to receive interest
income on such amounts to the extent permitted by
applicable law; (d) all accounts and other rights to
payment related to any of the Serviced Loans; and
(e) possession and use of any and all Servicing Files
pertaining to the Serviced Loans or pertaining to the
past, present or prospective servicing of the Serviced
Loans.
ARTICLE II
CONVEYANCE FROM THE COMPANY TO ALBANK
ASSUMPTION OF SERVICING BY ALBANK
Section 2.1 Purchase and Sale of Servicing
Business
ALBANK hereby agrees to purchase from GMB,
and GMB agrees to sell, assign, transfer, convey and
deliver to ALBANK, the Servicing Business, subject to
the terms and conditions of this Agreement and the
Purchase and Assumption Agreement.
Section 2.2 Conveyance of Servicing
Business; Delivery of Servicing Files; Payment of
Serviced Loan Suspense Amount; Payment of Purchase
Price
On the Closing Date (i) GMB shall sell,
transfer, assign, set over and convey to ALBANK all of
its right, title and interest in, under and to the
Servicing Agreements and ALBANK shall assume the duties
and obligations of GMB thereunder; (ii) GMB shall
transfer to ALBANK the Servicing Files in its
possession and the originals of the Servicing
Agreements; (iii) GMB shall transfer to ALBANK in
immediately available funds by wire transfer, the
Serviced Loan Suspense Amount as of the close of
business on the Business Day immediately preceding the
Closing; and (iv) ALBANK shall transfer to GMB or its
designee, by wire transfer in immediately available
funds, the Purchase Price. On the Closing Date, GMB
shall discontinue its servicing activities under the
Servicing Agreements, and ALBANK shall begin servicing
the Serviced Loans.
Section 2.3 Record Title
On the Closing Date, record title to each
Mortgage and the related Mortgage Note (i) then in the
name of an Investor, Custodian or trustee, shall remain
in the name of such Investor, Custodian or trustee; and
(ii) then in the name of AFC, AVC or GMB, or their
predecessors, shall be transferred by AFC, AVC or GMB,
as appropriate, to ALBANK or its designee. The Company
shall bear the cost and expense of preparing, and
ALBANK of recording, any Assignments of Mortgages and
endorsements of Mortgage Notes for any transfers of
record title required under subsection (ii) above with
respect to Serviced Loans.
ARTICLE III
COVENANTS AND AGREEMENTS
Section 3.1 Company Covenants
(a) Notice, Approvals, Consents and Filings.
Prior to the Closing Date, the Company shall, at its
own expense, in accordance with the relevant provisions
of the Act, mail or cause to be mailed to the Mortgagor
of each Serviced Loan a letter (in form and substance
mutually acceptable to ALBANK and the Company) advising
the Mortgagor of the transfer of the servicing thereof
and the Escrow Account therefor, if any, to ALBANK.
The Company shall transmit to the applicable taxing
authorities and insurance agencies (including MI Policy
insurers) notification of the transfer of the servicing
of the Serviced Loans to ALBANK and instructions to
deliver all notices, statements and tax bills, as the
case may be, to ALBANK from and after the Closing Date.
In addition, prior to the Closing Date, the Company
shall, at its own expense, obtain all approvals and
consents, give or cause to be given notice, and make or
cause to be made all filings required to be given by it
under applicable law, regulations or order, the
Servicing Agreements or otherwise with respect to the
transfer of the Servicing Business pursuant to this
Agreement and shall pay (i) all of the costs, if any,
incurred to give such notices, secure such approvals
and consents and make such filings, and (ii) any
transfer fees. Without limiting the generality of the
foregoing, the Company shall be responsible for giving
any notices and obtaining any consents required under
the Servicing Agreements unless the assignee or
transferee of servicing is specifically required to
give such notice or obtain such consent under the terms
of such agreement. Copies of all such notices,
approvals, consents and filings shall be delivered by
the Company to ALBANK on or prior to the Closing Date.
(b) Delivery of Servicing Files and Records.
At least two (2) Business Days prior to the Closing
Date, the Company shall forward, or cause to be
forwarded, to ALBANK all Servicing Files and certified
true copies of any other documents in the Company's
possession relating to each Serviced Loan.
(c) Suspense Amount Reconciliation. Within
three (3) Business Days after the Closing Date, the
Company shall provide ALBANK with an accounting
statement of the calculation of the Serviced Loan
Suspense Amount sufficient to enable ALBANK to
reconcile the amount of each payment, account and
balance constituting such Amount to the account of each
Serviced Loan. On or prior to the tenth (10th)
Business Day after ALBANK receives the accounting
statement, (x) the Company and ALBANK shall resolve any
discrepancies between the Company's accounting
statement and ALBANK's reconciliation with respect
thereto and (y) the Company or ALBANK, as the case may
be, shall transfer to the other, in immediately
available funds by wire transfer, any amounts to which
the other party is entitled.
(d) Mortgage Payments Received After Closing
Date. The Company shall forward to ALBANK the amount
of any and all payments (including but not limited to
any and all Monthly Payments, Escrow Payments and
principal prepayments) received by it after the Closing
Date with respect to the Serviced Loans. The Company
shall notify ALBANK of the particulars of the payment,
which notification shall set forth sufficient
information to permit appropriate processing of the
payment by ALBANK.
(e) Misapplied Payments. The party
receiving notice of a misapplied payment occurring
prior to the Closing Date and discovered after the
Closing Date shall immediately notify the other party
and shall accompany such notification with the original
of the applicable canceled check or similar supporting
documentation (unless the other party is the party that
has access to such documentation). All parties shall
cooperate in correcting misapplication errors.
(f) Books and Records. On or before the
Closing Date, the Company shall maintain its books,
records and accounts with respect to the Servicing
Business and the Serviced Loans in accordance with the
Servicing Agreements and in all material respects in
accordance with generally accepted accounting
principles.
(g) Reconciliation. The Company shall, on
or before the Closing Date, reconcile all balances and
accounts and in connection therewith make any monetary
adjustments reasonably and timely required by ALBANK in
accordance with applicable law the necessity of which
is demonstrated to ALBANK's and the Company's mutual
reasonable satisfaction. On or prior to the tenth
(10th) Business Day after the Closing Date, the Company
and ALBANK shall resolve any disputes regarding Closing
Date accounts, balances, interest rate adjustments and
the funding of accounts.
(h) IRS Forms. The Company and ALBANK shall
cooperate to see that all IRS Forms 1098 or 1099 and
IRS Forms W-9 which are required by the IRS to be filed
as a result of events occurring on or before the
Closing Date are filed not later than the date on which
such forms are required by law to be filed in relation
to the servicing and ownership of the Serviced Loans.
The Company shall provide copies of such forms in its
possession to ALBANK upon request.
(i) Payment of Taxes and Premiums. The
Company shall pay all real estate taxes, hazard and
flood insurance and MI premiums which are due and
payable (the due date being, for purposes of this
clause, the earlier to occur of the first discount date
or the delinquency date) on or prior to thirty (30)
days after the Closing Date to the extent the Company
has received the related bill five (5) Business Days
prior to the Closing Date. The Company shall indemnify
ALBANK against any tax penalties incurred in respect of
the Serviced Loans and the servicing thereof prior to
the date which is thirty (30) days following the
Closing Date. Notwithstanding the above, the Company
shall not be liable for the payment of taxes or
penalties assessed thereon in the event the related tax
bill was not released by the relevant taxing authority
five (5) Business Days prior to the Closing Date,
provided that the Company has timely delivered to
ALBANK any such tax bill in its possession.
3.2 ALBANK Covenants
(a) Notices, Approvals, Consents and
Filings. Prior to the Closing Date, ALBANK shall, at
its own expense, obtain all approvals and consents,
give or cause to be given all notices, and make or
cause to be made all filings specifically required to
be obtained, given or made by ALBANK as transferee
under applicable law, regulations or order with respect
to the transfer of the Mortgage Servicing Business from
the Company pursuant to this Agreement and shall pay
all of the costs, if any, incurred to give such
notices, secure such approvals and consents and make
such filings. Copies of all such notices, approvals,
consents and filings shall be delivered by ALBANK to
the Company on or prior to the Closing Date.
ARTICLE IV
CERTAIN RIGHTS OF ALBANK; PURCHASE PRICE
Section 4.1 ALBANK's Right to Conduct Due
Diligence
Between the date hereof and the Closing Date,
ALBANK will be entitled to conduct due diligence with
respect to the Servicing Business. During the conduct
of ALBANK's due diligence, the Company shall cooperate
with ALBANK, including, without limitation, by
providing ALBANK with access to servicing records, loan
files and other Company books and records and to the
Company's officers and employees.
Section 4.2 ALBANK's Right to Terminate
ALBANK shall, at its sole discretion and
election, have the right to terminate this Agreement,
for any or no reason, by written notice to the Company
on or before a date (the "Notice Date") that is two (2)
Business Days prior to the date on which notices are
first required to be mailed to Mortgagors pursuant to
the Act or to the Investors pursuant to any notice
requirements under the Servicing Agreements with
respect to the transfer of servicing hereunder,
provided that ALBANK shall in no event be required to
give notice to the Company of its election to terminate
more than thirty (30) days prior to the anticipated
Closing Date under this Agreement and the Purchase and
Assumption Agreement, and provided further that the
Company and ALBANK shall cooperate to determine the
Notice Date as it relates to the Act, the Servicing
Agreements and the anticipated Closing Date under this
Agreement and the Purchase and Assumption Agreement.
If ALBANK delivers a notice to the Company pursuant to
this Section 4.2, this Agreement shall terminate
pursuant to Section 5.4(c) hereof.
Section 4.3 Purchase Price
The Purchase Price with respect to the
Servicing Business transferred hereunder shall be an
amount equal to $25,000, which shall be paid by ALBANK
at the Closing in accordance with the Purchase and
Assumption Agreement.
ARTICLE V
REPRESENTATIONS, WARRANTIES AND AGREEMENTS
Section 5.1 Representations and Warranties
of the Company
As a condition to the consummation of the
transactions contemplated hereby, the Company makes the
following representations and warranties to ALBANK as
of the date hereof and as of the Closing Date:
(a) Ownership. To the knowledge of the
Company, GMB is the sole owner and holder of the
Servicing Rights with respect to the Serviced Loans.
Its Servicing Rights under the Servicing Agreements
have not been assigned or pledged. Subject to
obtaining all required regulatory approvals and the
giving of all notices required under law and
regulation, GMB has full right and authority to
transfer and sell to ALBANK the Servicing Rights,
Servicing Files, the Servicing Agreements, and all
rights arising thereunder, free and clear of any
encumbrance, equity interest, lien, pledge, charge,
claim or security interest.
(b) No Untrue Information. Neither this
Agreement (insofar as it pertains to the Company) nor
any statement, report or other document which is within
the control of the Company, furnished or to be
furnished pursuant to this Agreement or in connection
with the transactions contemplated hereby, contains any
untrue statement of fact or omits to state a fact
necessary to make the statement contained therein not
misleading.
(c) All Obligations; No Default. All
contractual obligations of the Company with respect to
its servicing of the Serviced Loans are set forth in
the Servicing Agreements. To the knowledge of the
Company, no event has occurred and is continuing which,
but for the passage of time or the giving of notice or
both, would constitute any event of default or a basis
for termination for cause under any Servicing
Agreement.
(d) Compliance with Law. The Company has
complied in all material respects with all requirements
of federal, state or local law applicable to its
servicing of the Serviced Loans under the Servicing
Agreements.
(e) Reaffirmance of Representations and
Warranties. The Company repeats and reaffirms, as if
set forth herein, each and every representation and
warranty in the Purchase and Assumption Agreement to
the extent it refers or relates, expressly or by
implication, to the Servicing Purchase Agreement or the
Servicing Business.
ARTICLE VI
CLOSING CONDITIONS AND TERMINATION
Section 6.1 ALBANK's Conditions
ALBANK's obligation to consummate its purchase
of the Servicing Business on the Closing Date is
subject to the satisfaction or waiver by ALBANK of the
following conditions:
(a) The Company shall have performed in all
material respects all of its covenants and agreements
contained herein which are required to be performed by
it on or prior to the Closing Date.
(b) ALBANK shall have approved of and received
all documentation and other agreements which may be
required to effectuate the transfer of the Servicing
Business by the Company to ALBANK.
(c) Written approval of the transfer of the
Servicing Business to ALBANK hereunder shall have been
received from any party from whom approval is required
under applicable law or the Servicing Agreements,
including consent to assignment and assumption of the
Servicing Agreements.
(d) All representations and warranties of the
Company contained in this Agreement shall be true and
correct in all material respects as of the Closing
Date.
Section 6.2 The Company's Conditions
The Company's obligation to consummate the sale
of the Servicing Business hereunder is subject to the
satisfaction or waiver by the Company of the following
conditions:
(a) ALBANK shall have performed in all
material respects all of its covenants and agreements
contained herein which are required to be performed by
it on or prior to the Closing Date.
(b) The Company shall have approved of and
received all documentation and other agreements which
may be required to effectuate the transfer of the
Servicing Business by the Company to ALBANK.
Section 6.3 Conditions of Both Parties
The obligations of each party to consummate the
sale of the Servicing Business on the Closing Date
shall be subject to the satisfaction, on the Closing
Date, of the condition, which condition may not be
waived, that AFC, AVC, GMB and ALBANK, simultaneously
with the consummation of the transactions contemplated
by this Agreement, shall have consummated the
transactions contemplated by the Purchase and
Assumption Agreement.
Section 6.4 Termination
(a) In the event that the Purchase and
Assumption Agreement shall be terminated prior to the
consummation of the transactions contemplated thereby,
this Agreement shall automatically be deemed
terminated, whereupon this Agreement shall be null,
void and of no effect and the Company and ALBANK shall
have no further rights, obligations or liabilities
hereunder.
(b) Either the Company or ALBANK shall, at
such party's election, have the right to terminate this
Agreement prior to the consummation of the transactions
contemplated hereby if any of the conditions applicable
to its obligations hereunder shall not have been
satisfied on or prior to the Closing Date. Upon
termination, this Agreement shall be deemed terminated
and shall be null, void and of no effect, and the
Company and ALBANK shall have no further rights,
obligations or liabilities hereunder.
(c) This Agreement shall terminate at such
time as ALBANK delivers to the Company a notice of its
intention not to purchase the Servicing Business
pursuant to Section 4.2 hereof. Upon termination, this
Agreement shall be deemed terminated and shall be null,
void and of no effect, and the Company and ALBANK shall
have no further rights, obligations or liabilities
hereunder.
ARTICLE VII
MISCELLANEOUS PROVISIONS
Section 7.1 Survival
It is understood and agreed that the
representations and warranties set forth in this
Agreement shall expire upon the Closing hereunder or
the termination hereof. Each of the covenants and
agreements hereunder shall survive the Closing for that
period set forth in Section 21(f)(i) of the Purchase
and Assumption Agreement within which any claim for
alleged nonperformance of such covenant or agreement
must be brought or be forever barred, provided that the
covenants and agreements hereunder shall expire upon
termination hereof.
Section 7.2 Costs and Expenses
Except as is otherwise specifically provided in
this Agreement, whether the Closing takes place or
whether this Agreement is terminated, each party shall
pay its own costs and expenses in connection with this
Agreement and the transactions contemplated hereby,
including, but not limited to, all regulatory fees,
attorneys fees and accounting fees. In addition to the
other costs expressly assumed by the Company hereunder,
the Company shall pay any costs and expenses associated
with delivery of the Servicing Files and Servicing
Agreements to ALBANK.
Section 7.3 Cooperation
To the extent reasonably possible, the parties
hereto shall cooperate with and assist each other, as
requested, in carrying out the purposes of this
Agreement, and they shall comply with all material laws
and regulations governing the Servicing Business.
Section 7.4 Notices
All notices, demands and other communications
hereunder shall be in writing and shall be deemed to
have been duly given if delivered in person (provided a
receipt evidencing such delivery is obtained) or by
United States mail, certified or registered, with
return receipt requested, as follows:
(i) if to the Company, to:
Arrow Financial Corporation
250 Glen Street
Glens Falls, New York 12801
Attention: Michael F. Massiano,
Chairman
with a copy to:
Thomas B. Kinsock, Esq.
Gallop, Johnson & Neuman, L.C.
101 South Hanley, Suite 1600
St. Louis, Missouri 63105
(ii) if to ALBANK, to:
ALBANK, a Federal Savings Bank
10 North Pearl Street
Albany, New York 12207-2774
Attention: Herbert G. Chorbajian
Chairman, President and Chief
Executive Officer
with a copy to:
ALBANK, a Federal Savings Bank
10 North Pearl Street
Albany, New York 12207-2774
Attention: Freling H. Smith, Esq.
Senior Vice President and
General Counsel
The persons or addresses to which mailings or
deliveries shall be made may be changed from time to
time by notice given pursuant to the provisions of this
Section 7.4. Any notice, demand or other communication
given pursuant to the provisions of this Section 7.4
shall be deemed to have been given on the date actually
received. The exercise by a party of any right or
option granted to it in this Agreement shall be
effected by notice pursuant to this Section 7.4.
Section 7.5 Successors and Assigns
All terms and provisions of this Agreement
shall be binding upon and shall inure to the benefit of
the parties hereto and their respective transferees,
successors and assigns; provided, however, that this
Agreement and all rights, privileges, duties and
obligations of the parties hereto may not be assigned
or delegated by any party hereto without the prior
written consent of the other parties.
Section 7.6 Counterparts
This Agreement may be executed in one or more
counterparts, all of which taken together shall
constitute one instrument.
Section 7.7 Governing Law
This Agreement is made and entered into in the
State of New York and, to the extent that federal law
does not control, the laws of that state shall govern
the validity and interpretation hereof and the
performance of the parties hereto of their respective
duties and obligations hereunder. This Agreement shall
be construed without regard to any presumption or rule
requiring construction against the party that caused
this Agreement to be drafted.
Section 7.8 Captions
The captions contained in this Agreement are
for convenience of reference only, do not form a part
of this Agreement and are not to be deemed full or
accurate descriptions of the contents of any paragraph
or subparagraph.
Section 7.9 Entire Agreement, Modifications,
Waivers
This Agreement, the Exhibits hereto, and the
Purchase and Assumption Agreement and the Exhibits and
Schedules thereto constitute the entire agreement
between the parties hereto pertaining to the subject
matter hereof and supersede all prior and
contemporaneous agreements, understandings,
negotiations and discussions of the parties in
connection therewith not referred to herein. Except as
is otherwise expressly provided in this Agreement, no
supplement, modification or termination of this
Agreement shall be binding unless executed in writing
by both parties, and no waiver or any provision of,
breach of or default under this Agreement shall be
considered binding unless executed in writing by the
party granting such waiver. No waiver of any provision
of this Agreement shall be deemed to, or shall,
constitute a waiver of any other provision hereof nor
shall any such waiver constitute a continuing waiver.
Section 7.10 Further Assurances
The Company and ALBANK each agree to execute
and/or deliver to the other such reasonable and
appropriate additional documents, instruments or
agreements as may be necessary or appropriate to
effectuate the purposes of this Agreement. Without
limiting the generality of the foregoing, after the
Closing, the Company agrees to deliver to ALBANK
promptly any Servicing File, any document or other item
from a Servicing File, any Servicing Agreement or any
other document necessary to the conduct of the
Servicing Business that the Company was required to
transfer on the Closing Date but that ALBANK notifies
the Company was not among the documents so transferred.
Section 7.11 Intention of the Parties
It is the intention of the parties that the
Company is selling, and ALBANK is purchasing only the
Servicing Business. Accordingly, the parties hereby
acknowledge that the Investors are the sole and
absolute owners of their respective Serviced Loans, and
ALBANK is acting as an independent contractor with
respect to its duties hereunder. Nothing in this
Agreement or any document or instrument executed or
delivered in connection herewith is intended to be, nor
shall it be construed to be the formation of a
partnership or joint venture between any of the parties
to this Agreement.
Section 7.12 Exhibits
The exhibits to this Agreement are hereby
incorporated and made a part hereof and are an integral
part of this Agreement.
IN WITNESS WHEREOF, each of ALBANK, AFC, AVC
and GMB have caused their names to be signed hereto by
their respective officers thereunto duly authorized as
of the date first above written.
ARROW FINANCIAL
CORPORATION
ATTEST: By /s/ Michael F. Massiano
Name: Michael F. Massiano
Title: Chairman &
President
___________________________________
Name: John C. VanLeeuwen
Title: Senior Vice President/Credit Administration
ARROW VERMONT
CORPORATION
ATTEST: By /s/ Michael F. Massiano
Name: Michael F. Massiano
Title: Chairman &
President
___________________________________
Name: John C. VanLeeuwen
Title: Senior Vice President/Credit Administration
GREEN MOUNTAIN
BANK
ATTEST: By /s/ John J. Murphy
Name: John J. Murphy
Title: Treasurer
___________________________________
Name: John C. VanLeeuwen
Title: Senior Vice President/Credit Administration
ALBANK, FSB
ATTEST: By /s/ Herbert G. Chorbajian
Name: Herbert G.Chorbajian
Title: Chairman, President
and Chief Executive Officer
___________________________________
Name: Freling H. Smith
Title: Senior Vice President
EXHIBIT 2.3
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this
"Agreement") made as of this 27th day of February,
1996, between Arrow Financial Corporation ("AFC"),
a New York business corporation having its
principal office at 250 Glen Street, Glens Falls,
New York, Arrow Vermont Corporation ("AVC"), a
Vermont business corporation having its principal
office at 80 West Street, Rutland, Vermont, and
Green Mountain Bank ("GMB"), a Vermont-chartered
banking corporation with its principal offices at
80 West Street, Rutland, Vermont (the foregoing
entities sometimes collectively referred to as the
"Seller"), and Vermont National Bank ("Buyer"), a
national banking association having its principal
office at 100 Main Street, Brattleboro, Vermont.
WHEREAS, AFC is a bank holding company which
owns all of the capital stock of AVC, which in turn
owns all of the capital stock of GMB;
WHEREAS, the Seller intends to organize a
trust subsidiary as a wholly owned direct or
indirect subsidiary of AFC in accordance with
Chapter 62 of Title 8 of the Vermont Statutes (the
"Trust Subsidiary"), and to sell, transfer and
convey substantially all of the trust business of
GMB as presently conducted thereby, including,
without limitation, substantially all of the
assets, rights, liabilities, interests,
appointments and responsibilities of GMB in its
fiduciary, custodial or agency capacity associated
therewith (the "Business"), to the Trust
Subsidiary, all as authorized and provided for in
said Chapter 62; and
WHEREAS, it is the parties' intention that the
Seller sell, transfer and convey the Business to
Buyer by means of a sale and transfer by the Seller
of all of the issued and outstanding capital stock
of the Trust Subsidiary to Buyer;
NOW, THEREFORE, in consideration for the
mutual covenants contained herein, and other good
and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the
parties agree as follows:
ARTICLE 1
ESTABLISHMENT OF TRUST SUBSIDIARY
1.01 Organization of Trust Subsidiary.
Promptly following the date of this
Agreement, the Seller shall take or cause to be
taken all necessary and appropriate actions to (i)
duly incorporate and organize the Trust Subsidiary
as a wholly owned direct or indirect subsidiary of
AFC in accordance with Chapter 62 of Title 8 of the
Vermont Statutes ("Chapter 62") and all other
applicable laws and regulations, (ii) cause the
directors and stockholder(s) of the Trust
Subsidiary to take all necessary and appropriate
corporate actions to approve and adopt this
Agreement and the transactions contemplated hereby
and (iii) cause the Trust Subsidiary to execute and
deliver an appropriate instrument of accession to
this Agreement, whereupon the Trust Subsidiary
shall become a party to and be bound by this
Agreement. The legal name of the Trust Subsidiary
shall be mutually agreed upon by the parties. On
and as of the date the Trust Subsidiary becomes a
party to this Agreement, the Seller will be deemed
to have represented and warranted, for all purposes
of this Agreement, to Buyer as follows:
(a) The Trust Subsidiary is a trust
company duly organized, validly existing and in
good standing under the laws of the jurisdiction of
its organization, all of the outstanding capital
stock of which is owned directly or indirectly by
AFC free and clear of any lien, charge or other
encumbrance. Since the date of its incorporation,
the Trust Subsidiary has not engaged in any
activities other than in connection with or as
contemplated by this Agreement.
(b) The Trust Subsidiary has the
corporate power and authority to enter into this
Agreement and to carry out its obligations
hereunder. The execution, delivery and performance
of this Agreement by the Trust Subsidiary and its
consummation of the transactions contemplated
hereby have been duly and validly authorized by all
necessary corporate action in respect thereof on
the part of the Trust Subsidiary. This Agreement
is a valid and binding obligation of the Trust
Subsidiary, enforceable in accordance with its
terms.
(c) The authorized capital stock of the
Trust Subsidiary consists solely of a specified
number of shares of common stock, with a specified
par value per share (which specific number of
shares and per share par value will be stated and
confirmed on the Closing Date in a certificate to
be executed and delivered by Seller), all of which
are duly issued and validly outstanding, fully paid
and nonassessable . The Trust Subsidiary is not
bound by any outstanding subscriptions, options,
warrants, calls commitments or agreements of any
character calling for the Trust Subsidiary to
issue, deliver or sell any equity security of the
Trust Subsidiary or any securities convertible
into, exchangeable for or representing the right to
subscribe for, purchase or otherwise receive any
such equity security or obligating the Trust
Subsidiary to grant, extend or enter into any such
subscriptions, options, warrants, calls,
commitments or agreements. There are no
outstanding contractual obligations of the Trust
Subsidiary to repurchase, redeem or otherwise
acquire any shares of its capital stock.
(d) Immediately prior to the Closing
(as defined in Section 1.02), the Trust Subsidiary
will have and own no assets other than the
Purchased Assets (as defined in Section 2.01), an
amount in cash or immediately available funds equal
to the Minimum Capitalization Amount (as defined in
Section 3.02) and such rights as are otherwise
possessed by the Trust Subsidiary as a result of
this Agreement, and will have and be subject to no
liabilities other than the Assumed Liabilities (as
defined in Section 2.03) and such liabilities and
obligations as are otherwise incurred by the Trust
Subsidiary as a result of this Agreement.
1.02 Transfer of the Business to Trust
Subsidiary.
Following the lawful incorporation and
organization of the Trust Subsidiary, as
contemplated by Section 1.01 above, and immediately
prior to the sale and transfer of all of the issued
and outstanding shares of the capital stock of the
Trust Subsidiary from Seller to Buyer as provided
for in Article 3 below (the completion of such sale
and transfer being referred to as the "Closing" and
the date on which the Closing occurs being referred
to as the "Closing Date"), the Seller shall take or
cause to be taken all necessary and appropriate
actions to sell, transfer and convey all of the
Business from GMB to the Trust Subsidiary in
accordance with all applicable requirements of
Chapter 62 and all other applicable laws and
regulations and all as further set forth in Article
2 of this Agreement (the completion of the transfer
of the Business from GMB to the Trust Subsidiary as
provided for in Article 2 of this Agreement being
referred to as the "Asset Closing"). The Asset
Closing shall be a condition to, and shall be
completed on the same day as and immediately prior
to, the Closing.
ARTICLE 2
TRANSFER OF THE BUSINESS FROM GMB TO TRUST
SUBSIDIARY
2.01 Purchase and Sale.
Subject to the terms, provisions and
conditions set forth herein, the Seller hereby
agrees to sell, assign, transfer and convey to the
Trust Subsidiary, and the Seller shall cause the
Trust Subsidiary to purchase, acquire and accept
from the Seller, the Business, including all of the
assets of every kind and description used by the
Seller in the Business, but excluding the Retained
Business Assets (as such term is defined in Section
2.02 below). The assets to be purchased hereunder
(the "Purchased Assets") shall include all assets
owned by GMB and held by it solely as a part of the
Business as of the date hereof and all assets
acquired by GMB in the ordinary course of the
Business prior to the Asset Closing, but excluding
assets disposed of in the ordinary course of the
Business prior to the Asset Closing or retained by
GMB pursuant to Section 2.02 below, and shall
specifically include, without limitation:
(a) Any and all fixtures, machinery,
installations, equipment, furniture, supplies and
other tangible personal property owned by GMB and
used solely in conjunction with the operations of
the Business and separable from the Seller's other
businesses, all as described on Schedule 2.01(a)
hereto (the "Personal Property");
(b) All of the Seller's title to,
interest in and rights under the leases of personal
property used solely in the Business and described
on Schedule 2.01(b) hereto (the "Personal Property
Leases");
(c) Except as otherwise set forth in
Section 2.02 hereof, all rights and interest of
GMB, including without limitation any rights for
which consents, filings or other actions may be
required, in and to its contracts with customers
relating to the Business, including without
limitation, any and all rights of every kind and
description in connection with any and all
fiduciary, custodial and agency contracts,
including appointments under wills, trust
instruments or other agreements and agreements for
GMB to provide trust correspondent computer
processing services to other institutions, in all
cases entered into or accepted by GMB in a
fiduciary, custodial or agency capacity with such
customers ("Customers") in the ordinary course of
the Business, all as set forth on Schedule 2.01(c)
attached hereto (such contracts, wills, instruments
and other agreements to be referred to collectively
hereafter as the "Trust Agreements");
(d) (i) Copies of the Seller's
accounting books, records, ledgers, client lists
and will files relating to the Business and copies
of all documents and records relating to the
Purchased Assets and the Business, in each case in
each such form in which the same currently is being
maintained by GMB, including where applicable in
the form of databases or other computer records,
and in each case in such other form or format as
may be reasonably requested by Buyer and that can
be accommodated without material incremental
expense to Seller, and (ii) originals of the Trust
Agreements and the Contracts (as such term is
defined in Section 2.01(i) below) (all such books,
records, files, data and documents included within
clauses (i) and (ii) hereof being referred to as
the "Business Documents");
(e) All rights of the Seller which by
their terms are transferable and which arise under
or pursuant to warranties, representations,
indemnifications, contribution agreements,
reimbursement agreements, or guarantees in favor of
the Seller made by or for the benefit of Customers,
predecessors in interest, suppliers, vendors, or
affiliates of any of the foregoing, and which
relate to the Purchased Assets or the Assumed
Liabilities (as such term is defined in Section
2.03 below) with respect to the period following
the Asset Closing, but excluding those rights which
constitute Retained Business Assets;
(f) All rights to insurance proceeds
which may become payable under insurance policies
held by the Seller covering any claims against the
Trust Subsidiary and/or Buyer for which the Trust
Subsidiary and/or Buyer is entitled to indemnity by
the Seller hereunder or covering any claims by
Buyer or the Trust Subsidiary relating to matters
occurring after the Asset Closing;
(g) All of GMB's interest in the funds,
cash, securities, instruments and other property of
any type or description held by GMB as agent,
custodian or fiduciary pursuant to the Trust
Agreements, together with records to support the
calculation of such amounts and other records
relating thereto, except the following: (i) cash
held in the Business which is subject to
escheatment as of the date on which the Asset
Closing is completed and (ii) cash covering
outstanding checks relating to the Business and on
accounts maintained in the name of Seller;
provided, however, that within six months after the
Closing, the Seller shall transfer to the Trust
Subsidiary any such cash covering checks which have
not been presented within six months of issuance;
(h) All of the Seller's title to,
interest in and rights under the computer software
and programs and other intellectual property, both
tangible and intangible, licensed to the Seller and
used solely in conjunction with the operation of
the Business, all as described on Schedule 2.01(h)
hereto (the "Software Contracts");
(i) All of the Seller's title to,
interest in and rights under the miscellaneous
contracts of the Seller relating solely to the
Business and listed on Schedule 2.01(i) hereto (the
"Miscellaneous Contracts" and together with the
Personal Property Leases and the Software
Contracts, the "Contracts"); and
(j) All prepaid Customer fees and
expenses allocable to the period from and after the
Asset Closing, all as described on Schedule 2.01(j)
hereto.
2.02 Retained Assets.
Notwithstanding any of the foregoing, the
Seller is not transferring to the Trust Subsidiary
and neither the Trust Subsidiary nor Buyer is
acquiring from Seller under this Agreement, and the
term "Purchased Assets" shall not include:
(a) any of the following assets related
to the Business (the "Retained Business Assets"):
(i) All Individual Retirement
Accounts and Keogh Accounts, as to which, as of the
Asset Closing, (1) GMB is serving either as trustee
or custodian, and (2) all of the funds associated
therewith are then invested in one or more
certificates of deposit or deposit accounts
maintained by GMB (collectively, the "Trusteed
Deposit Accounts"), as listed on Schedule
2.02(a)(i) hereto, together with all rights and
interest of GMB under the agreements or contracts
with Customers relating to such Trusteed Deposit
Accounts and all assets contained in such Trusteed
Deposit Accounts;
(ii) Any cash held by GMB as of the
Asset Closing, whether previously generated by or
used in connection with the Business, except for
cash covering outstanding checks as of the Asset
Closing as described in Section 2.01(g) (ii) above,
which shall be retained only to the extent and for
the time provided in Section 2.01(g) (ii);
(iii) Any accounts receivable
relating to the Business and allocable to the
period prior to the Asset Closing;
(iv) Any of the Seller's trade
names, or any stationery, office supplies, business
forms, manuals or similar property bearing the
Seller's trademarks, trade names, service marks,
logos or similar corporate identification, unless
such trademarks, trade names, service marks, logos
or similar corporate identification have been
redacted therefrom (there being no obligation on
the part of the Seller to effect any such
redaction);
(v) Any fixed assets used by the
Seller exclusively in the Business which are
damaged or inoperative and any right to any
proceeds of insurance received with respect to any
such damaged or inoperative assets;
(vi) Any income tax refunds or
claims therefor relating to the Business which the
Seller may be entitled to receive from any federal,
state, or local authorities;
(vii) Any assets of the Seller
not used solely in the Business;
(viii) Any insurance policies of
the Seller relating to or covering the Business and
rights to any proceeds thereunder, except as set
forth in Section 2.01(f);
(ix) Any rights of the Seller under
any of the Trust Agreements or Contracts or with
respect to any of the Purchased Assets to fees,
indemnification or reimbursements, or any other
claims or rights of the Seller thereunder or with
respect thereto, in each case relating to the
conduct of the Business prior to the Asset Closing;
(x) Any rights to any security
deposits or other amounts deposited by Seller with
any state or other jurisdiction or regulatory
authority in connection with the qualification,
certification, licensing or permitting of the
Seller in connection with the conduct of the
Business; and
(xi) Subject to Section 8.01(h)
below, all rights and interests of GMB in and to
any Trust Agreement that is expressly excluded from
GMB's transfer of the Business to the Trust
Subsidiary, and which is therefore excluded from
the Asset Closing, as a result of or pursuant to
any order, request or directive of the Vermont
Department of Banking, Insurance and Securities
(the "Vermont Department") or of any court or other
governmental agency or authority of competent
jurisdiction (all such Trust Agreements, if any,
being referred to in this Agreement as the
"Retained Trust Agreements").
(b) Any assets of GMB not related to or
used in connection with the Business (the
"Retained Nonbusiness Assets" and together with the
Related Business Assets, the "Retained Assets").
2.03 Assumed Liabilities.
At the Asset Closing, the Trust Subsidiary
shall assume and agree to pay, perform and
discharge those liabilities and obligations of GMB
which relate to the Business as set forth below
(the "Assumed Liabilities"), and from and after the
Asset Closing, the Trust Subsidiary and any
successor thereto shall pay, perform and discharge
the Assumed Liabilities as they become due. The
Trust Subsidiary's administration of the various
accounts assigned to it by the Seller hereunder
will be in accordance with the respective Trust
Agreements and applicable law pertaining to the
performance of such responsibilities in accordance
with sound fiduciary, custodial and agency
practices. The Assumed Liabilities shall consist
only of the following:
(a) All liabilities and obligations
under each of the Trust Agreements, in each case
arising after the Asset Closing;
(b) All other liabilities and
obligations relating to the Contracts and the
Purchased Assets and arising after the Asset
Closing or otherwise relating to or arising out of
the operation of the Business from and after the
Asset Closing, including liabilities and
obligations arising under applicable law and
regulation.
2.04 Retained Liabilities.
Notwithstanding anything to the contrary set
forth in this Agreement, the Trust Subsidiary will
not assume, pay or discharge, and Buyer will not
assume, pay or discharge, by virtue of the terms of
this Agreement or otherwise, any debts,
liabilities, obligations, contracts, loans,
commitments, or undertakings of the Seller, whether
fixed, liquidated, contingent or otherwise, and
whether related to the Business or otherwise,
except, with respect to the Trust Subsidiary, for
those Assumed Liabilities expressly described or
referred to in Section 2.03. All liabilities,
debts, obligations, contracts, loans, commitments
or undertakings of Seller not so assumed by the
Trust Subsidiary shall be retained by the Seller
and shall be hereinafter referred to as the
"Retained Liabilities" and shall include, without
limitation, the following:
(a) All liabilities of the Seller
arising solely out of or relating solely to the
Retained Assets at any time;
(b) All liabilities of Seller incurred
in connection with the Purchased Assets and
relating to the period prior to the Asset Closing;
(c) All liabilities of the Seller for
federal, state or foreign income, sales, use,
payroll, excise or franchise taxes relating to or
arising out of the operation of the Business for
the period prior to the Asset Closing;
(d) All liabilities of the Seller for
all environmental, ecological, accident, health or
other claims pertaining to or arising out of the
operation of the Business or the Purchased Assets
and relating to the period prior to the Asset
Closing;
(e) All liabilities of the Seller to all
of the Employees (as such term is defined in
Section 4.08 below), including the Transferred
Employees (as such term is defined in Section 7.04
below), arising at any time, including, without
limitation, any liabilities or indebtedness of the
Seller in respect of any wages, back pay or other
payroll-related items or taxes, any liabilities of
the Seller in connection with employee benefits or
arising under any Employee Contract or Employee
Plan (as such terms are defined in Section 4.08
below) or any liabilities of the Seller resulting
from any termination-related or discrimination
claims of any Employee whether or not arising under
any Employee Plan.
(f) All liabilities of the Seller
relating to the period prior to the Asset Closing
and arising out of or in connection with the
Seller's services, actions, omissions or
warranties, including, without limitation, any
violation, breach, or default by the Seller under
or in respect of any Trust Agreement or any
Contract;
(g) All liabilities (contingent or
otherwise) with respect to trust accounts which
have been terminated prior to the Asset Closing;
(h) All liabilities and obligations
arising under the Trusteed Deposit Accounts;
(i) All liabilities of the Seller
arising in connection with its business and
operations unrelated to the Business;
(j) Any liability or obligation incurred
by the Seller in connection with the negotiation,
execution or performance of this Agreement
including, without limitation, all legal,
accounting, brokers', finders' and other
professional fees and expenses;
(k) All liabilities and obligations
incurred in taking or failing to take the steps
necessary to accomplish the appointment of the
Trust Subsidiary as successor under the Trust
Agreements, including without limitation, in the
making or failing to make of any filings or notices
or in obtaining or failing to obtain any consents,
permits or approvals required for the completion of
the Asset Closing; and
(l) Any liability, obligation, penalty,
termination fee or other cost or expense arising
out of the assertion by any party to a Trust
Agreement that the transfer to the Trust Subsidiary
of the Seller's rights and interests thereunder
pursuant to the terms of this Agreement constitutes
a breach or default by the Seller under such Trust
Agreement.
2.05 Updated Schedules.
The Seller shall update all of the Schedules
referred to in this Article 2 and Section 4.04(c)
below and attached to this Agreement to the extent
necessary to reflect any changes in the information
disclosable therein occurring prior to the Asset
Closing or, with respect to Schedule 4.04(c), the
Closing as a result of (i) the conduct of the
Business by Seller as permitted to be conducted by
Seller under this Agreement, (ii) the retention by
Seller of any Retained Trust Agreements, (iii)
changes in the list of Defaulted Trust Agreements
(as such term is defined in Section 4.04(c) below)
as is set forth in Schedule 4.04(c) or (iv) any
other changes in any such Schedules as may be
agreed upon in writing by the parties hereto. The
Seller shall deliver to Buyer such updated
Schedules (the "Updated Schedules") on or prior to
the Asset Closing or, with respect to any update of
Schedule 4.04(c), the Closing, subject in all cases
to further non-material adjustments on or prior to
the fifth business day after the Closing Date (the
"Adjustment Date"), and any such Updated Schedule
as adjusted shall be deemed to be the definitive
Schedule with regard to the information contained
therein for all purposes of this Agreement,
including, without limitation, the specification of
the assets and accounts intended to be transferred
from the Seller to the Trust Subsidiary under the
terms of this Article 2. Seller's obligation to
prepare and deliver to Buyer the Updated Schedules,
and its preparation and delivery thereof to Buyer,
does not affect or otherwise cause a waiver of any
of the conditions to Buyer's obligations under this
Agreement, including without limitation the
conditions contained in Section 8.01(h) and 10.02
below.
2.06 Asset Closing; Consideration.
(a) The Asset Closing shall occur
immediately prior to the Closing on the Closing
Date.
(b) In consideration of the transfer of
the Business by the Seller to the Trust Subsidiary
hereunder, the Trust Subsidiary agrees to assume
the Assumed Liabilities.
2.07 Bank Sale Transactions.
(a) Nothing in this Agreement shall
preclude the Seller from negotiating and entering
into an agreement or agreements with one or more
parties unaffiliated with the Seller or the Buyer
(any such unaffiliated party, a "Counterparty")
involving (i) the sale by the Seller to the
Counterparty of any assets of AVC or GMB other than
the Purchased Assets or any Retained Trust
Agreements (including any sale to a Counterparty of
any of the Retained Business Assets other than
Retained Trust Agreements) and/or the assumption by
the Counterparty from the Seller of any liabilities
of AVC or GMB other than the Assumed Liabilities or
(ii) the sale to the Counterparty of all or
substantially all the stock of GMB or AVC or (iii)
a merger or consolidation of GMB or AVC with or
into the Counterparty or an affiliate thereof (any
such transaction, a "Bank Sale Transaction");
provided, however, that (x) the Seller shall not
enter into an agreement for any such Bank Sale
Transaction or consummate any such Bank Sale
Transaction if doing so would in any way adversely
affect the ability of the parties to this Agreement
to consummate the transactions provided for herein
under the terms and conditions provided for herein
in a timely manner, or would otherwise in any way
decrease the likelihood that the transactions
provided for herein will be completed in accordance
with the terms and conditions of this Agreement;
(y) on and after consummation of any such Bank Sale
Transaction, all the obligations, covenants,
agreements, representations, warranties and
indemnifications incurred or given by the Seller
and its affiliates in and under this Agreement
shall continue to be the obligations, covenants,
agreements, representations, warranties and
indemnifications of AFC and its continuing
subsidiaries and affiliates, regardless of whether
the Counterparty in such Bank Sale Transaction
succeeds, as a matter of law or contract, to any of
the foregoing upon consummation of such
transaction; and (z) on and after consummation of
any such Bank Sale Transaction, all the rights
obtained by the Buyer and its affiliates in and
under this Agreement as against the Seller and its
affiliates shall continue to be rights possessed by
the Buyer and its affiliates as against AFC and its
continuing subsidiaries and affiliates, regardless
of whether such rights also may then be asserted by
the Buyer and its affiliates, as a matter of law or
contract, against the Counterparty in such Bank
Sale Transaction. It is expressly understood and
agreed by the parties hereto that the Seller is
presently contemplating entering into a Bank Sale
Transaction on or about the date of this Agreement
involving certain of the Retained Assets and
Retained Liabilities (specifically including,
without limitation, the Trusteed Deposit Accounts),
and that the Seller may desire to consummate such
Bank Sale Transaction at or around the time of the
Closing under this Agreement, to the extent
provided in Section 3.03(b) below.
(b) Seller shall include in the
definitive agreement for any Bank Sale Transaction
(the "Bank Sale Agreement") a provision under which
each Counterparty thereto (A) agrees, from the
execution of such Bank Sale Agreement until the
date that is three years after the last principal
transaction provided for therein, not to use to its
own advantage, and to ensure that none of its
affiliates uses to its advantage, any non-public
information relating to Seller, specifically
including GMB, obtained by such Counterparty
directly or indirectly from Seller or its current
or former employees that does not reasonably relate
to the business or assets being acquired by such
Counterparty in the Bank Sale Transaction
("Counterparty Restricted Information"), whether
such Counterparty Restricted Information may have
been or may be obtained by the Counterparty, its
affiliates, representatives, or agents, or
employees of any of the foregoing (collectively,
the "Counterparty Group"), in the course of
negotiations or investigations leading to execution
or consummation of the Bank Sale Agreement or may
be obtained by any of the Counterparty Group after
such consummation from former employees of Seller,
which provisions shall specifically reference,
without limiting the generality of the foregoing,
that information related to the Business is
Counterparty Restricted Information, and shall
further specifically reference as a prohibited
usage of Counterparty Restricted Information
thereunder, any solicitation by such Counterparty
or its affiliates of any Business from the
Customers, to the extent that such Customers may
have been or may be specifically identified by the
Counterparty or its affiliates as a result of
information obtained by any one or more of the
Counterparty Group from Seller or its employees in
the course of negotiation or investigations leading
to execution or consummation of the Bank Sale
Agreement or after consummation thereof from former
employees of Seller, and (B) agrees to return to
Seller all such Counterparty Restricted Information
taking the form of documents, books, records or
tapes and to destroy any electronic records in its
possession containing such Counterparty Restricted
Information.
(c) Without limiting the foregoing, and
for a period of three years after the Closing Date
hereunder, Seller will not disclose or make
available to any Counterparty in any Bank Sale
Transaction (except for any required disclosure
under regulatory applications) any of the nonpublic
information directly or indirectly related to any
of the Business being acquired or assumed by Buyer
hereunder, except for any such information (non-customer
specific, in any event) which is also
directly related to the business being acquired by
the Counterparty or Counterparties under the Bank
Sale Agreement and is necessary to be disclosed to
the Counterparty or Counterparties thereunder,
provided that Seller will in no event disclose
during such period to any Counterparty in any Bank
Sale Transaction or any person proposed to be a
Counterparty in any such transaction the identity
of the Customers.
ARTICLE 3
PURCHASE AND SALE OF TRUST SUBSIDIARY STOCK
3.01 Purchase by Buyer.
Upon the terms and subject to the conditions
set forth in this Agreement, Buyer agrees to
purchase or cause an affiliate of Buyer to purchase
all of the shares of the capital stock of the Trust
Subsidiary issued and outstanding on the Closing
Date (the "Stock") from Seller, and Seller agrees
to sell or cause to be sold all of the Stock to
Buyer.
3.02 Purchase Price.
On the Closing Date, Buyer shall pay to AVC or
GMB, as AVC may designate, in cash, an amount equal
to Three Million Two Hundred Thirty Thousand and
00/100 Dollars ($3,230,000.00) plus the "Minimum
Capitalization Amount" (as defined below) (such
amount being referred to herein as the "Base
Purchase Price"). The total purchase price to be
paid by Buyer for its acquisition of the Stock
shall be subject to adjustment as provided for in
Section 3.05 below. The "Minimum Capitalization
Amount" is the minimum amount of capital, if any,
required to be maintained in the Trust Subsidiary
as of the Closing by any and all bank regulatory
authorities having jurisdiction over the Trust
Subsidiary and actually maintained therein at such
time in the form of liquid funds held in a separate
deposit account of a bank located in the United
States under the name and only the name of the
Trust Subsidiary or such other form or manner as
may be directed at such time by Buyer.
3.03 Closing Date.
(a) The purchase and sale of the Stock
hereunder shall occur at the offices of Sullivan &
Worcester LLP, One Post Office Square, Boston,
Massachusetts, or at such other place as shall be
mutually agreeable to the parties, on a date to be
mutually agreed upon by Buyer and AFC, which date
shall be within five (5) business days after the
day on which the last of the conditions precedent
set forth in Articles 8, 9 and 10 hereof has been
satisfied or properly waived (the "Satisfaction
Date"), subject to Section 3.03(b) below.
(b) If, as of the Satisfaction Date
under Section 3.03 (a) above, the Seller shall have
entered into but not consummated a definitive
agreement or agreements for one or more Bank Sale
Transactions pursuant to which all or substantially
all the capital stock of GMB or AFC or all or
substantially all the Retained Assets and Retained
Liabilities (excluding the building presently
serving as GMB's main office and any Retained Trust
Agreements) are to be acquired and/or assumed by a
Counterparty or pursuant to which GMB or AFC is to
merge with a Counterparty, and if, as of the
Satisfaction Date, it appears to the reasonable
satisfaction of Buyer that the Seller will be able
to consummate such Bank Sale Transaction within 30
days of such Satisfaction Date, then, at the
request of the Seller, the Closing Date hereunder
shall be postponed to a date not more than 30 days
after the Satisfaction Date, and in any case to a
date not later than the Termination Date (as such
term is defined in Section 11.01 (d) below) in
order that the Closing hereunder may occur at or
about the same time that such Bank Sale Transaction
is consummated.
(c) On the Closing Date, the following
actions shall be taken:
(i) Buyer shall pay the Base Purchase
Price to AVC or GMB, as AVC may designate, by wire
transfer of immediately available federal funds to
such bank account in the United States of America
as such payee shall designate at least two (2)
business days prior to the Closing Date;
(ii) Seller shall deliver or cause to be
delivered one or more certificates for the Stock to
Buyer or an affiliate of Buyer designated thereby,
duly endorsed in blank or with stock powers duly
endorsed in blank, together with such other
documents as Buyer may reasonably request to
evidence the transfer to Buyer or such affiliate of
good and valid title in and to the Stock, free and
clear of any lien, security interest, pledge,
charge, encumbrance, restriction, right, option to
purchase, call or commitment of any kind or nature;
(iii) Buyer shall reimburse the
Seller for all sales taxes, if any, payable by
Seller or the Trust Subsidiary with respect to any
of the Personal Property transferred by GMB to the
Trust Subsidiary as part of the Asset Closing, and
all other sales, transfer and other taxes, if any,
payable in connection with the Asset Closing shall
be borne by Seller;
(iv) Each party shall take such other
actions, and shall execute and deliver such other
instruments, certificates or other documents, as
shall be required under Articles 8, 9 and 10
hereof, including without limitation as shall be
necessary or appropriate to evidence the completion
of the Asset Closing;
(v) Seller shall deliver a calculation
of Annual Revenue (as such term is defined in
Section 3.05 below) as of the last day of the month
immediately preceding the month in which the
Closing occurs, which calculation shall be for the
parties general information only and shall not be
determinative in any way with respect to the
calculation to be undertaken in accordance with
Section 3.04; and
(vi) To the extent reasonably requested
by Buyer prior to the Closing Date, Seller shall
deliver or cause to be delivered the Business
Documents to such location(s) at which Buyer shall
conduct its Trust Services business on and after
the Closing Date.
3.04 Proration; Allocation.
(a) On or prior to the Asset Closing,
subject to further non-material adjustments on or
prior to the Adjustment Date, Seller shall deliver
to Buyer (i) a Schedule 3.04(a)(i) which shall
accurately reflect with respect to the Trust
Agreements (A) all fees and reimbursements for
expenses paid by Customers to the Seller prior to
the Asset Closing relating to services to be
rendered to such Customers under the Trust
Agreements ("Trust Services") following the Asset
Closing and (B) all fees and reimbursements for
expenses which relate to Trust Services rendered
prior to the Asset Closing for which payment is to
be received from Customers following the Asset
Closing and (ii) a Schedule 3.04(a)(ii) which shall
accurately reflect with respect to all other fees
and expenses relating to the Business (A) all fees,
disbursements and expenses paid to or by the Seller
prior to the Asset Closing relating to services
(including, without limitation, services provided
under any of the Contracts), other than Trust
Services, to be rendered to or by Seller relating
to the Business ("Business Services") following the
Asset Closing and (B) all fees, disbursements and
expenses which relate to Business Services rendered
by or to the Seller prior to the Asset Closing for
which payment is to be received or made following
the Asset Closing. All such fees, disbursements
and expenses for both Trust Services and Business
Services shall be prorated as of the Asset Closing
to allocate the same to the periods of service to
which they relate. Seller shall pay to Buyer an
amount equal to the total of all such fees,
disbursements and expenses (i) paid to the Seller
prior to the Asset Closing but allocable to Trust
Services or Business Services to be provided during
the period following the Asset Closing and (ii) to
be paid following the Asset Closing but allocable
to Business Services provided to Seller during the
period prior to the Asset Closing. Buyer shall pay
to Seller an amount equal to the total of all such
fees, disbursements and expenses (i) paid following
the Asset Closing but allocable to Trust Services
or Business Services provided by Seller during the
period prior to the Asset Closing and (ii) paid by
Seller prior to the Asset Closing but allocable to
Business Services to be provided to the Trust
Subsidiary during the period following the Asset
Closing. The payments of such amounts shall be
made in cash by cashier's check or wire transfer of
immediately available funds on the Adjustment Date.
A single net payment may be made by the Seller or
Buyer as appropriate at such time.
(b) To the extent any additional
adjustment or payment of the prorated amounts
contemplated by Section 3.04(a) above is required
after the Adjustment Date, the parties shall make
any such further adjustments promptly and in good
faith.
(c) The aggregate amount of (i) the
Assumed Liabilities plus (ii) the sum of (A) the
amount paid by Buyer on the Closing Date and (B)
the amount of the Supplemental Payment, if any,
paid by Buyer in accordance with Section 3.05(a)
below shall be allocated among the Purchased Assets
in accordance with a schedule to be mutually agreed
upon by Seller and Buyer and to be made a part of
this Agreement not less than ten (10) days
following the parties' final determination of the
amount of such Supplemental Payment, if any, in
accordance with Sections 3.05(a)-(c) below.
3.05 Supplemental Payment; Adjustment
Payments.
(a) As promptly as practicable following
the ninetieth day after the Closing Date or, if
such ninetieth day is not the last day of a
calendar month, the first month-end day following
such ninetieth day (such ninetieth or other month-end day being
referred to as the "Measurement
Date"), the Base Purchase Price may be increased in
accordance with this Section 3.05 by a supplemental
payment (the "Supplemental Payment"). The
Supplemental Payment shall equal $570,000 if the
Annual Revenue (as such term is defined below)
attributable to (i) all of the Trust Agreements
that have been effectively transferred and assigned
by Seller to the Trust Subsidiary as part of the
Asset Closing or have been otherwise effectively
transferred and assigned by Seller to the Trust
Subsidiary or Buyer as of the Measurement Date (and
any immediate successor agreements or arrangements
thereto) and (ii) any agreements or contracts that
would have constituted Trust Agreements if they had
been in effect between the Seller and the other
party thereto on the Closing Date and that have
been entered into by Buyer with any Prospective
Retail Trust Customer, as such term is defined
further below in this Section 3.05(a), or any
Prospective Computer Processing Customer, as such
term is defined further below in Section 3.05(e),
at any time after the Closing Date up to and
through the Measurement Date, and all of which are
in full force and effect as of the Measurement
Date, all determined as of the Measurement Date, is
equal to or greater than $1,600,000. Buyer shall
reduce the Supplemental Payment by an amount equal
to $2.50 for each $1.00 that such Annual Revenue is
less than $1,600,000; provided, however, that the
Supplemental Payment may not in any case be less
than $0; and provided further, however, that if and
to the extent that such Annual Revenue as of the
Measurement Date is less than $1,600,000 as a
result of either (i) Buyer's modification of the
fee structure for Trust Services as in effect for
GMB at the time of Closing or (ii) changes
implemented by Buyer to the structure of the trust
accounts included in the Purchased Assets, then the
Supplemental Payment shall be reduced by only $1.00
for each $1.00 by which such Annual Revenue is less
than $1,600,000 as a result of the foregoing. As
soon as reasonably practicable following the
Measurement Date, Buyer will deliver to Seller its
calculation of Annual Revenue as of the Measurement
Date and a copy of the Fee Projection Report (as
such term is defined below), together with copies
of any reports of new or closed accounts as
required by 12 C.F.R. Section 9.7 (a)(2) (exclusive of
any account activity not included as part of the
Business as acquired by Buyer) covering the period
beginning with the Closing Date and ending on the
Measurement Date, together with a schedule listing
any changes implemented by Buyer during such period
in the fee structure for Trust Services as compared
to the fee structure in effect at Closing
(collectively, the "Supplemental Payment
Documents"). The term "Annual Revenue" means, with
respect to any date, the sum of (i) annualized
gross trust correspondent computer processing fees
("Computer Processing Fees"), (ii) annualized
preparation fees for various trust related tax
services ("Tax Services Fees"), (iii) annualized
administrative fees for estate administration
("Administration Fees"), and (iv) the annualized
gross sum of all other fees received for all other
Trust Services ("Other Fees"), each of the
foregoing fees as determined in accordance with the
following sentence. For purposes of calculating
Annual Revenue as of any date: (i) Computer
Processing Fees shall equal the contractual gross
monthly fee assessed for the services covered
thereby for all customers receiving such services
on such date, as annualized on a prospective basis
commencing with the first day of the first calendar
month beginning after such date; (ii) Tax Services
Fees shall equal [$88,500] (which represents the
sum of such fees billed during the 1995 calendar
year); (iii) Administration Fees shall equal (X)
divided by (Y), where (X) equals the sum of (a) the
estimated amount of Administration Fees for those
estates under administration on such date,
determined in a manner consistent with existing GMB
revenue recognition practices, for the twelve full
calendar months commencing with the first day of
the first calendar month beginning after such date
(the "1-Year Projection") plus (b) the actual
Administration Fees received by GMB for the four
calendar years ended December 31, 1995, and where
(Y) equals five, provided that if such calculation
results in an amount that is either less than 50%
or greater than 150% of the 1-Year Projection, then
the amount for Administration Fees to be used in
calculating the Annual Revenue as of such date
shall be an amount that is mutually satisfactory to
the parties; and (iv) Other Fees shall equal (X)
minus (Y), where (X) equals the total gross income
projected for the twelve full calendar months
commencing with the first day of the first calendar
month beginning after such date, as reported on the
National Computer Services Series 11 Fee Projection
Report (the "Fee Projection Report") produced for
such period, and where (Y) equals the portion of
such total gross income included in such Fee
Projection Report attributable to any and all
accounts (the "Noticed Accounts") with respect to
which (i) if such date is prior to the Closing
Date, the Customer associated therewith has
expressed to any of the Seller, the Buyer, the
Vermont Department or any court or other
governmental agency or authority of competent
jurisdiction any opposition to or dissent against
the transfer of the Business from GMB to the Trust
Subsidiary or Seller's sale and transfer of the
Trust Subsidiary to the Buyer or otherwise notified
either Seller or Buyer of such Customer's intention
to close his or its account if the transactions
contemplated by this Agreement shall occur (which
expression of opposition or dissent or other such
notice, in the case of such expression or notice to
the Buyer, may be subject to reasonable
verification by Seller), and such opposition or
dissent or other such notice has not been expressly
withdrawn or retracted by the Customer prior to the
Closing Date or (ii) if such date is after the
Closing Date, either Seller or Buyer has received
notice (which, in the case of Buyer's receipt of
notice, may be subject to reasonable verification
by Seller), which has not been subsequently
withdrawn or rescinded, on or prior to such date
from the account holder thereof that such holder
intends to close the account within the ensuing
twelve-month period (such income amount determined
under the immediately preceding clause (Y) to be
referred to as the "Noticed Account Total" and the
income attributable to any such Noticed Account to
be a "Noticed Account Fee"). The term "Prospective
Retail Trust Customers" means those prospective
retail trust customers of GMB, if any, as
identified on Schedule 3.05(a) attached hereto or,
subject to Buyer's review and reasonable
verification, any amended or updated version of
said Schedule 3.05(a) as may be prepared by Seller
and delivered to Buyer on or prior to the fifteenth
day prior to the Closing Date.
(b) Within ten (10) business days after
Buyer's delivery of the Supplemental Payment
Documents to Seller, Seller may dispute all or any
portion of the Supplemental Payment Documents (to
the extent that any such disputed calculation would
affect the amount of any Supplemental Payment
payable by Buyer under this Section 3.05) by giving
written notice (a "Notice of Disagreement") to
Buyer setting forth in reasonable detail the basis
for any such dispute (any such dispute being
hereinafter referred to as a "Disagreement"). The
parties shall promptly commence good faith
negotiations with a view to resolving all such
Disagreements. If the Seller does not give a
Notice of Disagreement in accordance with the
provisions of the first sentence of this Section
3.05(b) within the ten (10) business day period set
forth therein, Seller shall be deemed to have
irrevocably accepted the Supplemental Payment
Documents in the form delivered to Seller by Buyer.
(c) If Seller shall deliver a Notice of
Disagreement and Buyer shall not dispute all or any
portion of such Notice of Disagreement by giving
written notice to Seller setting forth in
reasonable detail the basis for such dispute within
five (5) business days following the delivery of
such Notice of Disagreement, Buyer shall be deemed
to have irrevocably accepted the Supplemental
Payment Documents as modified in the manner
described in the Notice of Disagreement. If Buyer
disputes all or any portion of the Notice of
Disagreement within the five (5) business day
period described in the previous sentence, and
within five (5) business days following Buyer's
delivery to Seller of the notice of such dispute
Seller and Buyer do not resolve the Disagreement,
such Disagreement shall be referred to an
Independent Accounting Firm (as such term is
defined further below) mutually selected by Seller
and Buyer for a resolution of such Disagreement in
accordance with the terms of this Agreement. If
Seller and Buyer do not immediately agree on the
selection of an Independent Accounting Firm, their
respective independent public accountants shall
immediately select such firm. The determinations
of such firm with respect to any Disagreement shall
be final and binding upon the parties and the
amount so determined shall be used to complete the
final Supplemental Payment Documents. The
Independent Accounting Firm will render its
determination as soon as practicable after referral
of the Disagreement to such firm, and each of the
parties shall cooperate with such firm and provide
such firm with reasonable access to the books,
records, personnel and representatives of it and
its subsidiaries and such other information as such
firm may require in order to render its
determination. All of the fees and expenses of any
Independent Accounting Firm retained pursuant to
this Section 3.05(c) shall be paid by Seller, if
the Independent Accounting Firm agrees with the
position asserted by Buyer; shall be paid by Buyer,
if the Independent Accounting Firm agrees with the
position asserted by Seller; or shall be split
evenly by Seller and Buyer if the Independent
Accounting Firm does not agree with either Seller
or Buyer. For purposes of this Agreement, the term
"Independent Accounting Firm" means any "Big Six"
accounting firm or its successor (other than the
respective independent public accountants of each
of Seller and Buyer).
(d) Following Buyer's delivery and
Seller's acceptance of the final calculation of the
Annual Revenue as of the Measurement Date, in
accordance with the provisions of Sections 3.05(a)-3.05(c)
above, Buyer shall promptly pay to GMB or
AVC, as directed by AVC, the Supplemental Payment,
if any, required by Section 3.05(a) above, such
payment to be made in immediately available federal
funds to such bank account in the United States of
America as the payee shall designate.
(e) As soon as practicable following the
last day of each of the first four consecutive
three-month periods immediately following the
Measurement Date (each, individually, an
"Adjustment Period" and collectively, the
"Adjustment Periods"), Buyer shall remit to AVC or
the payee designated by AVC, in immediately
available federal funds to such bank account in the
United States of America as the payee shall
designate, the amount of any Adjustment Payment (as
defined below) due to Seller for such Adjustment
Period, calculated on the basis of any Computer
Processing Fees Credit and Noticed Account Fees
Credit allocable to such Adjustment Period,
determined as provided below.
(i) If during any such Adjustment
Period, any one or more of the Prospective Computer
Processing Customers, as defined below, shall have
entered into a trust computer processing contract
or agreement with Buyer that calls for services to
be rendered by Buyer for at least one (1) year,
Buyer shall extend to Seller for such Adjustment
Period a credit (a "Computer Processing Fees
Credit") equal to (X) multiplied by (Y), where (X)
equals the total amount of annualized trust
computer processing fees receivable by Buyer from
such Prospective Computer Processing Customer or
Customers for the first twelve-month period under
the particular contract or agreement entered into
with each, and where (Y) equals (a) 2.5, if such
contract or agreement calls for services to be
rendered by Buyer for a period of at least five (5)
years; (b) 2.0, if such contract or agreement calls
for services to be rendered by Buyer for a period
of at least four (4) but less than five (5) years;
(c) 1.5, if such contract or agreement calls for
services to be rendered by Buyer for at least three
(3) but less than four (4) years; and (d) 0.5, in
the case of any other such contract or agreement.
The "Prospective Computer Processing Customers"
shall be those prospective customers of GMB as
identified on Schedule 3.05 (e) attached hereto or,
subject to Buyer's review and reasonable
verification, any amended or updated version of
said Schedule 3.05(e) as may be prepared by Seller
and delivered to Buyer on or prior to the fifteenth
day prior to the Closing Date.
(ii) For each of the Adjustment
Periods, Buyer shall extend to Seller a credit (the
"Noticed Account Fees Credit"), determined as soon
as practicable after the last day of such
Adjustment Period, which shall equal, (a) for each
of the first three Adjustment Periods, 50% of the
total gross income received by Buyer during such
Adjustment Period from all Noticed Accounts, and
(b) for the last Adjustment Period, an amount equal
to the lesser of (X) or (Y), where (X) equals 50%
of the total gross income received by Buyer during
such Adjustment Period from all Noticed Accounts,
and where (Y) equals (1) minus (2), with (1)
equaling 250% of the total amount of Noticed
Account Fees included in the Noticed Account Total
under Section 3.05(a) above attributable to Noticed
Accounts that continue to be accounts of Buyer as
of the last day of such fourth Adjustment Period
and with (2) equaling the sum of all Noticed
Account Fees Credits extended by Buyer to Seller in
the first three Adjustment Periods.
Notwithstanding anything in this Agreement
that may be to the contrary, the "Adjustment
Payment" due from Buyer to Seller for any
Adjustment Period shall be the lesser of (X) or
(Y), where (X) equals the sum of any Computer
Processing Fees Credit and any Noticed Account Fee
Credit for such Adjustment Period, and where (Y)
equals $570,000 minus the sum of (a) the
Supplemental Payment and (b) all Adjustment
Payments for prior Adjustment Periods.
(f) As soon as practicable after the
last day of each month beginning after the Closing
Date and ending at least 15 days prior to the
Measurement Date, Buyer shall provide to Seller a
copy of the Fee Projection Report as of such month
end for the Trust Agreements transferred to and
still held by Buyer as of such month end, together
with a list of any and all accounts that become
Noticed Accounts during such month. During the
period extending from the Measurement Date until
the last day of the final Adjustment Period, but
only for so long during such period as the
obligation of Buyer to pay any Adjustment Payment
may continue under the terms of Section 3.05(e),
Buyer will notify Seller promptly if it enters into
any trust computer processing contract or agreement
with any Prospective Computer Processing Customer.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller hereby represents and warrants to
Buyer as of the date of this Agreement and as of
the Closing Date as follows:
4.01 Corporate Organization; Powers and
Authority; Records.
(a) AFC is a business corporation, duly
organized, validly existing and in good standing
under the laws of the State of New York. AVC is a
business corporation, duly organized, validly
existing and in good standing under the laws of the
State of Vermont. Each of AFC and AVC is a bank
holding company, duly registered and in good
standing with the Board of Governors of the Federal
Reserve System (the "Federal Reserve Board") under
the Bank Holding Company Act of 1956, as amended.
GMB is a banking corporation, duly organized,
validly existing and in good standing under the
laws of the State of Vermont. GMB is an "insured
depository institution" as such term is defined in
Section 3(c) of the Federal Deposit Insurance Act,
as amended (the "FDIA"); provided, however, that if
GMB consummates one or more Bank Sale Transactions
prior to the Closing that involve the sale by GMB
to one or more third parties of all or
substantially all of the Nonbusiness Assets and the
assumption by one or more third parties from GMB of
all or substantially all of the Nonbusiness
Liabilities, GMB may cease to be an "insured
depository institution" under the FDIA or a banking
corporation under the laws of the State of Vermont,
but shall in all events remain possessed of all
required charters, authorities and licenses, state
and federal, required for the continuing operation
by it of the Business at all times prior to the
Closing. GMB has the corporate power and authority
to own or lease all of its properties, and each of
AFC, AVC and GMB has the corporate power and
authority to execute and deliver this Agreement and
to complete the transactions contemplated by this
Agreement and to carry on its business as presently
conducted.
(b) GMB is duly licensed or qualified to
do business in each jurisdiction in which the
nature of the business conducted by it or the
character or the location of the properties and
assets owned or leased by it makes such licensing
or qualification necessary, except where the
failure to be so licensed or qualified, either
individually or in the aggregate, would not have a
Material Adverse Effect on the Seller. As used in
this Agreement, the term "Material Adverse Effect"
when used for the Seller means any change or effect
that is or may reasonably be expected to be
materially adverse to the conduct, operations, or
result of operations of the Business or to the
value of the Purchased Assets or to the Seller's
ability to fulfill its obligations under this
Agreement, and when used for Buyer means any change
or effect that is or may reasonably be expected to
be materially adverse to Buyer's ability to fulfill
its obligations under this Agreement.
(c) The execution and delivery of this
Agreement and the consummation of the transactions
contemplated hereby have been duly and validly
approved by the Board of Directors of each of AFC,
AVC and the GMB and no other corporate proceedings
on the part of AFC, AVC or GMB are necessary to
approve this Agreement and to consummate the
transactions contemplated hereby. This Agreement
has been duly and validly executed and delivered by
AFC, AVC and GMB and constitutes a valid and
binding obligation of AFC, AVC and GMB, enforceable
against AFC, AVC and GMB in accordance with its
terms.
(d) With respect to account records
reflecting the Business and the Purchased Assets,
the books and records of GMB have been, and are
being, maintained in accordance with applicable
legal and accounting requirements, reflect only
actual transactions and reflect all of such assets,
liabilities and accruals and all of such items of
income and expense in accordance with generally
accepted accounting principles consistently
applied. All accounting ledgers and other books
and records of GMB relating to the Business and the
Purchased Assets are located at the principal
office of GMB in Rutland, Vermont or the principal
office of AFC in Glens Falls, New York, and have
been made available to Buyer, and are true,
complete and correct in all material respects, and
present fairly the financial condition, results of
operations and changes in financial position of the
Seller with respect to the Business and the
Purchased Assets as of the dates and for the
periods indicated therein.
4.02 No Violation.
(a) Neither the execution and delivery
of this Agreement by AFC, AVC or GMB, nor the
consummation by AFC, AVC or GMB of the transactions
contemplated hereby, nor compliance by AFC, AVC or
GMB with any of the terms or provisions hereof,
will (i) violate, conflict with or result in a
breach of any provision of the Charter, Articles of
Incorporation or Bylaws of AFC, AVC or GMB, or (ii)
assuming that the consents and approvals referred
to in Section 4.03 hereof are duly obtained, (x)
violate any statute, code, ordinance, rule,
regulation, judgment, order, writ, decree or
injunction applicable to AFC, AVC or GMB, or any of
its properties or assets, or (y) violate, conflict
with, result in a breach of any provisions of or
the loss of any benefit under, constitute a default
(or an event, which, with notice or lapse of time,
or both, would constitute a default) under, result
in the termination of or a right of termination or
cancellation under, accelerate the performance
required by, or result in the creation of any lien,
pledge, security interest, charge or other
encumbrance upon any of the respective properties
or assets of AFC, AVC or GMB under, any of the
terms, conditions or provisions of any note, bond,
mortgage, indenture, deed of trust, license, lease,
agreement or other instrument or obligation to
which AFC, AVC or GMB is a party, or by which they
or any of their respective properties or assets may
be bound or affected, except (in the case of clause
(y) above) for such violations, conflicts, breaches
or defaults which, either individually or in the
aggregate, would not have a Material Adverse Effect
on the Seller.
4.03 Consents and Approvals.
Except for (i) the filing of applications and
notices with, and the obtaining of required
consents and approvals of, as applicable, federal
and state regulatory authorities, including the
Vermont Department and perhaps, depending upon the
structure of Seller's ownership of the Trust
Subsidiary prior to the Closing, the Federal
Reserve Board, (ii) the filings, approvals and
notices required by Section 1476 of Chapter 62 and
(iii) the consents or approvals of, or prior
notices to, any nongovernmental third parties
required in connection with the Seller's
assignments of its rights and interests under the
Contracts, all of which required third-party
consents, approvals and notices are disclosed in
Schedule 4.03 hereto, none of AFC, AVC or GMB is
required to obtain the consent or approval of, or
give notice to, any third party in connection with
the execution and delivery by AFC, AVC and GMB of
this Agreement and the consummation of the
transactions contemplated hereby.
4.04 Title to Personal Property;
Encumbrances; and Leases.
(a) Except as set forth on Schedule 4.04
(a) hereto, GMB has good and marketable title to
all of the Personal Property and owns such property
free and clear of any and all encumbrances, liens,
mortgages, security interests or pledges, except
such encumbrances, liens, mortgages, security
interests and pledges that do not affect the value
of such property in a materially adverse manner and
will not interfere with the use of such property as
currently used or contemplated to be used by Seller
prior to the Asset Closing or the Trust
Subsidiary's conduct of the Business after the
Asset Closing.
(b) Except as may be set forth in
Schedule 4.04 (b) hereto, none of AFC, AVC or GMB
has received any notice of violation of any
applicable zoning or environmental regulation,
ordinance or other law, order, regulation or
requirement relating to the conduct of the Business
or otherwise affecting any of the Purchased Assets
and to the Seller's knowledge, there is no such
violation of a material nature.
(c) Each of the Trust Agreements that
takes the form of an agreement or contract and each
of the Contracts is valid and binding on the Seller
and, to the Seller's knowledge, valid and binding
on and enforceable against all other respective
parties thereto in accordance with their respective
terms (subject to bankruptcy, insolvency,
reorganization, moratorium and similar laws
affecting the rights and remedies of creditors
generally and general principles of equity). Each
of the Trust Agreements constituting or containing
a currently effective appointment under will or
other instrument is valid and lawful. Except as
may be set forth in Schedule 4.04 (c) hereto, GMB
has not received notice or otherwise become aware
of, or provided notice or made a claim with respect
to, any breach or default by any other party to any
of the Trust Agreements or Contracts (all Trust
Agreements with respect to which any other parties
are in breach or default being referred to in this
Agreement as the "Defaulted Trust Agreements").
There are not under any of the Contracts, any
existing breaches, defaults or events of default by
GMB, or events which with notice and/or lapse of
time would constitute a breach, default or event of
default by GMB thereunder. GMB enjoys quiet and
peaceful possession of all properties subject to a
Personal Property Lease.
(d) To the Seller's knowledge, all of
the Personal Property is in good maintenance,
repair, and operating condition, ordinary wear and
tear excepted, and is adequate for the purposes for
which it is now being or is anticipated to be used,
and is free from any material defects.
4.05 Absence of Certain Changes or
Events.
Except as may be set forth on Schedule 4.05
hereto:
(a) to the knowledge of the Seller, no
fact or condition exists which will, or could
reasonably be expected to, result in a Material
Adverse Effect on the Seller in the future;
(b) since January 1, 1992, GMB has
carried on the Business only in the ordinary course
and consistent with prior and prudent fiduciary and
business practice;
(c) the Seller has not entered into any
agreement, contract, commitment or transaction
relating to or affecting the Business or the
Purchased Assets, except for those in the ordinary
course of business (none of which, individually or
in the aggregate, has had, or could reasonably be
expected to have, a Material Adverse Effect on the
Seller);
(d) GMB has not suffered any strike,
work stoppage, slowdown, or other labor disturbance
affecting its conduct of the Business;
(e) since September 30, 1995, there has
not been any change in any of the accounting
methods or practices or the policies, procedures or
practices of the Seller with respect to or
otherwise affecting the Business or any change in
the value at which Purchased Assets are carried on
the consolidated or consolidating balance sheets of
the Seller other than changes that are reflected in
their respective profit and loss statements;
(f) since September 30, 1995, there has
not been any notice or indication of intention
from any person or entity to terminate any material
Contract with GMB affecting the Business or any
notice or indication of intention from any
Customer(s) accounting for more than ten percent
(10%) of the Business individually or in the
aggregate or third party vendor of GMB to cease
doing business with, materially change the price or
other terms on which business is transacted with or
materially reduce the business transacted with GMB,
to the extent any such third party action would
relate to or otherwise affect the Business; and
(g) all suspense accounts of GMB
maintained in connection with the Business have
been reconciled monthly, and no differences over
$500 exist.
4.06 Legal Proceedings.
Except as set forth on Schedule 4.06 hereto,
the Seller is not a party to any, and there are no
pending or, to the Seller's knowledge, threatened,
legal, administrative, arbitral or other
proceedings, claims, actions or governmental or
regulatory investigations of any nature against or
affecting AVC or GMB or challenging the validity or
propriety of the transactions contemplated by this
Agreement, and there is no reasonable basis for any
such proceeding, claim, action or governmental or
regulatory investigation. There is no injunction,
order, judgment, decree, or regulatory restriction
imposed upon the Seller or the assets of the Seller
which, either individually or in the aggregate, has
had, or could reasonably be expected to have, a
Material Adverse Effect on the Seller. To the
knowledge of the Seller, there are no facts,
circumstances or conditions affecting the Business
which would indicate or suggest the possibility of
any unrecognized future loss caused by defalcation,
embezzlement or other employee malfeasance or by
payments made or accepted in violation of any law
or regulation.
4.07 Taxes and Tax Returns.
Each of AFC, AVC and GMB has duly filed in
correct form all federal, state, county and local
information returns and tax returns required to be
filed by it on or prior to the date hereof (all
such returns being accurate and complete) and has
duly paid or made provisions for the payment of all
Taxes (as hereafter defined) and other governmental
charges which have been incurred or are due or
claimed to be due from it by federal, state, county
or local taxing authorities on or prior to the date
hereof (including without limitation, if and to the
extent applicable, those due in respect of its
properties, income, business, capital stock,
deposits, franchises, licenses, sales and payrolls,
and any business profits, business enterprise or
other tax), other than Taxes or other charges that
are not yet delinquent or are being contested in
good faith and have not been finally determined or
that are not, individually or in the aggregate,
material in amount.
As used in this Agreement, the term "Taxes"
means all federal, state, county, local and foreign
income, excise, gross receipts, ad valorem,
profits, gains, property, sales, transfer, use,
payroll, employment, severance, withholding,
duties, intangibles, franchise and other taxes,
charges, levies or like assessments, together with
all penalties and additions to tax and interest
thereon.
4.08 Officers and Employees.
Schedule 4.08 hereto sets forth (i) a true,
complete and correct list of the name and address
of each and every officer and employee currently
employed by GMB in connection with the Business
(the "Employees"), the position of each such
Employee, and the current salary or wage of each
such Employee, (ii) a list of all individualized
employment or severance agreements, contracts or
arrangements covering any such Employee (the
"Employee Contracts"), and (iii) a list and brief
description of each pension, retirement, profit
sharing, bonus, thrift, stock option, restricted
stock, deferred compensation, severance, collective
bargaining or other plan, agreement, trust, fund,
policy or arrangement that is maintained or
contributed to, or within the past three years has
been maintained or contributed to, by the Seller
that covers or affects any two or more Employees
(the "Employee Plans").
4.09 Other Statements and Reports.
AVC and GMB have timely filed all material
reports, registrations and statements, together
with any amendments required to be made with
respect thereto, that they were required to file
since January 1, 1995 with (i) the Board of
Governors of the Federal Reserve System (the
"Federal Reserve Board"), (ii) the FDIC, (iii) the
Vermont Department of Banking, Insurance and
Securities and any other state banking commissions
or any other state regulatory authority (each a
"State Regulator") and (iv) any self-regulatory
organization or other regulatory agency and all
other material reports and statements required to
be filed by them since January 1, 1995, including
without limitation, any report or statement
required to be filed pursuant to the laws, rules or
regulations of the United States, the Federal
Reserve Board, the FDIC, any State Regulator or any
self-regulatory organization, and have paid all
fees and assessments due and payable in connection
therewith. Except as set forth on Schedule 4.09
hereto, there is no material unresolved violation,
criticism or exception pertaining in any way to the
Business or any of the Purchased Assets which has
been previously cited by any regulatory agency in
any report or statement relating to any examination
of AFC, AVC or GMB.
4.10 Agreements with Regulatory
Agencies.
None of AFC, AVC or GMB is now subject to any
cease-and-desist or other order issued by, or is
now a party to any written agreement, consent
agreement or memorandum of understanding with, or
is now a party to any commitment letter or similar
understanding to, nor now subject to any order or
directive by, nor now a recipient of any
extraordinary supervisory letter from, nor has it
adopted any board resolution that is currently in
effect at the request of, any regulatory agency
that restricts the conduct of the Business or that
in any manner relates to the Business or the
management thereof by AFC, AVC or GMB (any of the
foregoing, a "Seller Regulatory Agreement"), nor
has any of AFC, AVC or GMB been advised by any
regulatory agency that it is considering issuing or
requesting any Seller Regulatory Agreement.
4.11 Environmental Matters.
Except as set forth on Schedule 4.11 hereto:
(a) To the knowledge of the Seller, any
real property held by GMB in a fiduciary capacity
(a "Trust Property") is, and has been, in material
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.
(b) To the knowledge of the Seller,
there is no suit, claim, action or proceeding
pending or threatened, before any governmental
entity or other forum in which the Seller has been
or, with respect to threatened proceedings, may be,
named as a defendant (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) of any Hazardous Materials (as hereinafter
defined) or Oil (as hereinafter defined) occurring
at or on, or otherwise affecting, any Trust
Property.
(c) To the knowledge of the Seller,
there are no facts or circumstances which would
provide a reasonable basis for any suit, claim,
action or proceeding as described in paragraph (b)
of this Section 4.11.
(d) To the knowledge of the Seller,
during the period of GMB's ownership or operation
of any Trust Property, there has been no release of
Hazardous Material or Oil in, on, under or
affecting such property. To the knowledge of the
Seller, prior to the period of GMB's ownership or
operation of any Trust Property, there was no
release of Hazardous Material or Oil in, on, under
or affecting such property. To the knowledge of
the Seller, without any independent inquiry or
examination, both during and prior to the period of
GMB's ownership or operation of any Trust Property,
there was not nor has there been any presence of
Hazardous Material or Oil discovered in, on, under
or affecting such property.
(e) The following definitions apply for
purposes of this Section 4.11: (i) "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, the Resource Conservation and Recovery Act of
1976, Title 10, Chapter 159, Section 6602 of the
Vermont Statutes or any other federal, state, or
local environmental law, regulation, or
requirement, all as may be amended from time to
time; (ii) "Oil" means any insoluble or partially
soluble oil of any kind or origin or in any form,
as defined in or pursuant to Title 10, Chapter 59,
Section 1922 of the Vermont Statutes or any other
federal, state, or local environmental law,
regulation, or requirement, all as may be amended
from time to time; and (iii) "Environment" means
any soil, surface waters, groundwaters, stream
sediments, surface or subsurface strata, and
ambient air, and any other environmental medium.
4.12 Insurance.
All of the policies relating to insurance
maintained by the Seller with respect to the
Business and the Purchased Assets (or any
comparable policies entered into as a replacement
therefor) are in full force and effect and the
Seller has not received any notice of cancellation
with respect thereto.
4.13 Transactions with Certain Persons.
No Customer who is an officer or director of
AFC, AVC or GMB or greater-than-5% stockholder of
AFC or an affiliate (as defined in Rule 144(a)(1)
of the Securities Act) of any such officer,
director or stockholder (any such person, an
"Interested Person"), has entered into any Trust
Agreement or maintains any Customer account or
relationship with or receives any trust or
fiduciary services from GMB other than Trust
Agreements, accounts or services entered into,
maintained or provided in the ordinary course of
business on terms substantially the same as those
prevailing at the time for comparable transactions
with other, unaffiliated persons, and which did not
and do not involve any unusual risk or other
features unfavorable to GMB. Schedule 4.13 hereto
contains a full description of all outstanding
Trust Agreements with Interested Persons.
4.14 Trust Agreements.
(a) Schedule 2.01(c) attached hereto
sets forth as of the date hereof, and shall be
amended as necessary in accordance with Section
2.05 above to set forth as of the Asset Closing,
(i) a complete and correct list of all the Trust
Agreements, (ii) information as to the capacities
of GMB under each such Trust Agreement, and (iii)
current annual fees, fee schedules and fee
arrangements with Customers and arrangements
regarding payment of expenses by Customers. Except
as set forth on Schedule 2.01(c), to the Seller's
knowledge, GMB has been acting as the validly-appointed
fiduciary, custodian or agent under each
Trust Agreement for all periods during which, based
on a reasonable reading of such Trust Agreement, it
should have been acting as a validly-appointed
fiduciary, custodian or agent. The Seller believes
that each Trust Agreement is in full force and
effect on the date hereof. There are no material
oral modifications in effect with respect to any of
the Trust Agreements.
(b) GMB is not in breach or non-compliance, nor, to
the knowledge of Seller, is
GMB considered to be in breach or non-compliance by
the other party thereto, of any term of any Trust
Agreement, except in any such case for any breaches
that singly or in the aggregate would not have a
Material Adverse Effect on the Seller.
(c) Without limiting the foregoing, to
the Seller's knowledge, GMB has (i) complied with
all applicable laws and regulations in the conduct
of the Business, including, without limitation, all
laws concerning tax withholding, and has filed all
necessary returns, reports or schedules in
connection with any such withholding as required
under the Trust Agreements; (ii) prepared and filed
all income tax returns required to be prepared or
filed by it as grantor trustee or otherwise; (iii)
kept all necessary records as required by the terms
of the Trust Agreements; (iv) except for the
escheat obligations of GMB which shall have been
fulfilled as of the Asset Closing, fulfilled all of
its payment and escheat obligations; (v) paid all
liabilities required to be paid by it under the
Trust Agreements; (vi) not made any overpayments or
over-advances under the Trust Agreements; (vii) not
waived, amended or modified any provision of any
Trust Agreement except in accordance with the
provisions of such Trust Agreement and as shown in
the records maintained by the Seller that are part
of the Business Documents; (viii) no current
disputes with co-agents or others as to amounts
payable by or to any such person; and (ix) to the
extent required by law or by the applicable Trust
Agreements, taken all action to maintain for the
benefit of the holders or other beneficiaries or
obligees under the Trust Agreements all interests
in collateral granted or pledged to secure
obligations thereunder, including, without
limitation, the making of governmental or other
filings to effect, perfect or continue such
interests in such collateral, except to the extent
that GMB's failure to comply with or perform any of
the foregoing clauses (i)-(ix) would not have a
Material Adverse Effect on the Seller.
(d) As of the Asset Closing, all
requirements and conditions to the succession of
the Trust Subsidiary as successor to GMB under each
of the Trust Agreements, other than any Retained
Trust Agreements, shall have been fulfilled, and no
consents of third parties to such succession that
have not been obtained shall be required.
4.15 Disclosure.
All material facts relating to the business,
operations, properties, assets, liabilities,
results of operations and financial condition of
GMB affecting the Business have been disclosed to
Buyer in this Agreement and the Schedules furnished
hereto. No representation or warranty contained in
this Agreement, and no statement contained in any
certificate, list or other writing furnished to
Buyer pursuant to the provisions hereof, to the
knowledge of the Seller, contains any untrue
statement of a material fact or omits to state a
material fact necessary in order to make the
statements herein or therein, in light of the
circumstances in which they are made, not
misleading. No information material to the
Agreement and which is necessary to make the
representations and warranties contained herein not
misleading, to the knowledge of the Seller, has
been withheld from, or has not been delivered in
writing to, Buyer. For purposes of this Agreement,
"to the knowledge of the Seller" means any fact,
condition or circumstance actually known by any
senior officer of the Seller engaged in the
Business, including any vice president or above in
the trust department of GMB and any other senior
officer of the Seller, including any senior vice
president or above, and any fact, condition or
circumstance that should have been known by any
such senior officer in the reasonable exercise of
such officer's duties in accordance with prevailing
banking and trust practices and procedures.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to each
of AFC, AVC and GMB as follows:
5.01 Corporate Organization, Powers and
Authority.
(a) Buyer is a national banking
association, duly organized, validly existing and
in good standing under the laws of the United
States of America. Buyer is an "insured depository
institution" as such term is defined in Section
3(c) of the FDIA. Buyer has the corporate power
and authority to own or lease its properties, to
execute and deliver this Agreement and to complete
the transactions contemplated by this Agreement and
carry on its business as presently conducted.
(b) Buyer is duly licensed or qualified
to do business in each jurisdiction in which the
nature of the business conducted by it or the
character or the location of the properties and
assets owned or leased by it makes such licensing
or qualification necessary, except where the
failure to be so licensed or qualified, either
individually or in the aggregate, would not have a
Material Adverse Effect on Buyer.
(c) The execution and delivery of this
Agreement and the consummation of the transactions
contemplated hereby have been duly and validly
approved by the Board of Directors of Buyer. No
other corporate proceedings on the part of Buyer
are necessary to approve this Agreement and to
consummate the transactions contemplated hereby.
This Agreement has been duly and validly executed
and delivered by Buyer and constitutes a valid and
binding obligation of Buyer, enforceable against
Buyer in accordance with its terms.
5.02 No Violation.
(a) Neither the execution and delivery
of this Agreement by Buyer, nor the consummation by
Buyer of the transaction contemplated hereby, nor
compliance by Buyer with any of the terms or
provisions hereof, will (i) violate, conflict with
or result in a breach of any provision of the
Articles of Association or Bylaws of Buyer, or (ii)
assuming that the consents and approvals referred
to in Section 5.03 hereof are duly obtained, (x)
violate any statute, code, ordinance, rule,
regulation, judgment, order, writ, decree or
injunction applicable to Buyer, or any of its
properties or assets, or (y) violate, conflict
with, result in a breach of any provisions of or
the loss of any benefit under, constitute a default
(or an event, which, with notice or lapse of time,
or both, would constitute a default) under, result
in the termination of or a right of termination or
cancellation under, accelerate the performance
required by, or result in the creation of any lien,
pledge, security interest, charge or other
encumbrance upon any of the respective properties
or assets of Buyer under, any of the terms,
conditions or provisions of any note, bond,
mortgage, indenture, deed of trust, license, lease,
agreement or other instrument or obligation to
which Buyer is a party, or by which they or any of
their respective properties or assets may be bound
or affected, except (in the case of clause (y)
above) for such violations, conflicts, breaches or
defaults which, either individually or in the
aggregate, would not have a Material Adverse Effect
on Buyer.
5.03 Consents and Approvals.
Except for the filing of applications and
notices with, and the required consents and
approvals of, as applicable, federal and state bank
regulatory authorities, including the Vermont
Department and perhaps, depending upon the
structure of the ownership of the Trust Subsidiary
by Buyer's parent holding company, Vermont
Financial Services Corporation ("VFSC"), following
the Closing, the Federal Reserve Board, neither
Buyer nor any of its affiliates is required to
obtain the consent or approval of, or give notice
to, any third party in connection with the
execution and delivery by Buyer of this Agreement
and the consummation of the transactions
contemplated hereby.
5.04 Absence of Certain Changes or
Events.
To the knowledge of Buyer, no fact or
condition exists which will, or could reasonably be
expected to, result in a Material Adverse Effect on
Buyer in the future.
5.05 Legal Proceedings.
Buyer is not a party to any, and there are no
pending or, to Buyer's knowledge, threatened,
legal, administrative, arbitral or other
proceedings, claims, actions or governmental or
regulatory investigations of any nature against or
affecting Buyer or challenging the validity or
propriety of the transactions contemplated by this
Agreement, and there is no reasonable basis for any
other proceeding, claim, action or governmental or
regulatory investigation against Buyer. There is no
injunction, order, judgment, decree, or regulatory
restriction imposed upon Buyer or the assets of
Buyer which, either individually or in the
aggregate, has had, or could reasonably be expected
to have, a Material Adverse Effect on Buyer.
5.06 Agreements with Regulatory
Agencies.
Buyer is not subject to any cease-and-desist
or other order issued by, is not a party to any
written agreement, consent agreement or memorandum
of understanding with, is not a party to any
commitment letter or similar understanding to, is
not subject to any order or directive by, is not a
recipient of any extraordinary supervisory letter
from, and is not subject to any board resolution
adopted at the request of, any regulatory agency
that restricts the conduct of its business or that
in any manner relates to its management or its
business (any of the foregoing, a "Buyer Regulatory
Agreement"), nor has Buyer been advised by any
regulatory agency that it is considering issuing or
requesting any Buyer Regulatory Agreement.
5.07 Disclosure.
All material facts relating to the financial
condition of Buyer and its ability to consummate
the transaction provided for herein have been
disclosed to the Seller. No representation or
warranty contained in this Agreement, and no
statement contained in any certificate, list or
other writing furnished to AFC, AVC or GMB pursuant
to the provisions hereof, to the knowledge of
Buyer, contains any untrue statement of a material
fact or omits to state a material fact necessary in
order to make the statements herein or therein, in
light of the circumstances in which they are made,
not misleading. No information material to the
Agreement and which is necessary to make the
representations and warranties contained herein not
misleading, to the knowledge of Buyer, has been
withheld from, or has not been delivered in writing
to, the Seller. For purposes of this Agreement,
"to the knowledge of the Buyer" means any fact,
condition or circumstance actually known by any
senior officer of Buyer, including any vice
president or above, and any fact, condition or
circumstance that should have been known by any
such senior officer in the reasonable exercise of
such officer's duties in accordance with prevailing
banking practices and procedures.
ARTICLE 6
CONDUCT OF BUSINESS PENDING THE CLOSING
During the period from the date of this
Agreement and continuing until the Closing, and
except as expressly contemplated or permitted by
this Agreement or otherwise consented to in writing
by the party hereto whom such provision is intended
to benefit:
6.01 Conduct of the Business.
(a) The Seller (which reference, for
purposes of this Article 6, includes the Trust
Subsidiary from and after the time it is organized
and becomes a party to this Agreement) will carry
on the Business diligently and substantially in the
same manner as heretofore, and the Seller will not,
with regard to the Business, engage in any one or
more activities or transactions which shall be
outside of the usual, regular and ordinary course
of the Business as conducted as of the date hereof
except for activities or transactions expressly
contemplated by this Agreement, including any Bank
Sale Transaction as described under Section 2.07
above; and
(b) The Seller will use its best efforts
to preserve the value of the Business. The Seller
further agrees to use its best efforts to preserve
for Buyer the goodwill of the Customers and others
having relations with GMB through the conduct of
the Business, and to cooperate with and assist
Buyer in assuring the orderly transition of such
business, as will be conducted through the Trust
Subsidiary, from GMB to Buyer. Nothing in this
paragraph shall be construed as requiring Seller to
engage in any activities or efforts outside of the
ordinary course of business as presently conducted,
except as otherwise expressly provided for in this
Agreement. Without limiting the generality of the
foregoing, and except as set forth on Schedule 6.01
hereto or as otherwise expressly provided for by
this Agreement or as consented to in writing by
Buyer, the Seller shall not:
(i) amend, revise or otherwise
change the current fee schedules and arrangements
with Customers as such are disclosed in Schedule
2.01(c) of this Agreement;
(ii) enter into any new line of
business or offer any new product in connection
with its conduct of the Business;
(iii) change its methods,
policies or procedures of accounting for or
relating to or including the Business in effect at
January 1, 1995, except as required by changes in
generally accepted accounting procedures;
(iv) except as required by
applicable law or under an existing Employee
Contract or Employee Plan , (a) increase in any
manner the compensation or fringe benefits of any
Transferred Employee or pay any special benefit to
such person, other than in the ordinary course of
business in normal amounts at normal times, or (b)
enter into, modify or renew any Employee Contract
with any Transferred Employee, or establish, adopt,
enter into or amend any Employee Plan covering or
providing for any benefit to any Transferred
Employee;
(v) sell, lease, pledge, encumber,
assign or otherwise dispose of any material
Purchased Asset, Personal Property, Contract or
Trust Agreement (other than any Retained Trust
Agreement) or take any action which would have a
material adverse effect on the value of any of the
foregoing;
(vi) with respect to the Business or
any of the Purchased Assets, incur any debt,
liability or obligation (whether absolute or
contingent, whether primary or secondary or whether
directly by way of guaranty) or make any loan or
advance, other than in any case in the ordinary
course of business consistent with past practice;
(vii) undertake, enter into or
renew, amend or terminate, or give notice of a
proposed renewal, amendment or termination of any
commitment with respect to, (a) any Contract, Trust
Agreement (other than any Retained Trust Agreement)
or any of the Purchased Assets other than in the
ordinary course of business consistent with past
practice or (b) any capital improvement related to
the Business or any Purchased Asset, except as
provided in the 1996 capital budget as previously
disclosed to Buyer;
(viii) commit any act or omission
which constitutes a material breach or default by
the Seller under any Seller Regulatory Agreement,
Trust Agreement (other than any Retained Trust
Agreement) or Contract;
(ix) since September 30, 1995,
change the procedures or practices relating to the
Business other than as required by law;
(x) establish any new trust account
other than pursuant to GMB's policies and
procedures in effect on June 30, 1995, as
previously disclosed to Buyer, and in accordance
with customary terms, conditions and standards and
applicable law and consistent with prudent
fiduciary and business practices;
(xi) waive any material right,
whether in equity or at law, that it has with
respect to any Trust Agreement or Contract, except
in the ordinary course of business consistent with
prudent fiduciary and business practices;
(xii) authorize, recommend,
propose or announce an intention to authorize,
recommend or propose, or enter into an agreement
with respect to, (a) any merger, consolidation,
purchase and assumption transaction or business
combination (other than as contemplated by this
Agreement), (b) any acquisition of a material
amount of assets or securities or assumption of
liabilities or (c) any disposition of a material
amount of assets or securities, which with respect
to any of the foregoing would in any way relate to
or affect the Business or any of the Purchased
Assets or Assumed Liabilities, it being expressly
agreed by the parties hereto that any agreement
entered into by the Seller for or relating to a
Bank Sale Transaction as described in Section 2.07
above shall not be prohibited by this Section 6.01
(b) (xi); or
(xiii) take any action that is
intended or may reasonably be expected to result in
any of its representations and warranties set forth
in this Agreement being or becoming untrue.
6.02 No Solicitation.
The Seller will immediately cease and cause to
be terminated any activities, discussions or
negotiations conducted with any parties other than
Buyer with respect to the sale or transfer of all
or any portion of the Business to be sold and
transferred to the Buyer pursuant to this
Agreement, and will not solicit, initiate,
encourage, respond to or participate in any
discussions regarding any inquiry or proposal from
any third party relating to any such sale or
transfer while this Agreement is in effect.
6.03 Access to Information.
Upon reasonable notice and subject to
applicable laws relating to the provision of
information, the Seller shall afford the officers,
employees, accountants, counsel and other
representatives of Buyer, access, during normal
business hours during the period prior to the
Closing, to all of the Seller's properties, books,
contracts, commitments and records relating to the
Purchased Assets and Assumed Liabilities subject to
this Agreement and, during such period, the Seller
shall make available to Buyer (i) copies of
applicable periodic reports to senior management of
GMB involving the Business and all materials
furnished to the Board of Directors of GMB relating
to the conduct of the Business generally, and (ii)
all other information concerning the Seller's
business, properties, assets and personnel
reasonably relevant to the Business or the
completion of the transactions provided for in this
Agreement as Buyer may reasonably request. The
Seller shall not be required to provide such access
or to disclose such information where such access
or disclosure would contravene any law, rule,
regulation, order, judgment, decree or fiduciary
duty or any binding agreement entered into prior to
the date of this Agreement, but in any such case
the parties hereto will attempt in good faith to
make appropriate substitute disclosure
arrangements.
6.04 Advice of Changes.
Prior to the Closing, each of the Seller and
the Buyer will promptly advise the other of (i) any
change or the occurrence or nonoccurrence of any
event having a Material Adverse Effect on such
party or which would be reasonably likely to cause
any representation or warranty of such party
contained in this Agreement to be untrue or
inaccurate in any material respect and (ii) any
material failure of such party to comply with or
satisfy any covenant, condition or agreement to be
complied with or satisfied by it under this
Agreement if such failure is not or cannot be cured
within 30 days of discovery. From time to time
prior to the Closing, each party will promptly
supplement or amend any Schedule delivered in
connection with the execution of this Agreement 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 such
Schedule or which is necessary to correct any
information in such Schedule which has been
rendered inaccurate thereby. Neither the delivery
of any such notice nor any supplement or amendment
to such Schedule shall limit or otherwise affect
the remedies available hereunder to the party
receiving such notice, supplement or amendment nor
have any effect for the purposes of determining
satisfaction of the conditions set forth in this
Agreement; provided, however, that the election by
the party receiving any such notice, amendment or
supplement prior to the Closing relating to any
representation, warranty, agreement or covenant of
the other party to proceed with the Closing shall
constitute the irrevocable waiver by such party, as
of the Closing, of any claim that such party might
otherwise have had against the other party for any
damages, satisfaction, compensation, specific
performance or other remedy, at law or in equity,
arising out of or relating to any breach, failure
or nonfulfillment of the representation, warranty
or covenant to which such notice, amendment or
supplement relates.
6.05 Current Information.
(a) During the period from the date of
this Agreement to the Closing Date, the Seller will
cause one or more of its designated representatives
to confer on a regular and frequent basis (not less
than monthly) with representatives of Buyer to
report on the general status of the ongoing
operations of the Business and the status of the
Purchased Assets and to cooperate and communicate
fully with respect to the manner in which the
Business is proposed to be conducted before and
after the Closing, including without limitation the
type and mix of products and services, personnel
matters, accounting, and the making of any capital
improvement related to the Business or any of the
Purchased Assets.
(b) Each of the Seller and the Buyer
will promptly notify the other party of any
Material Adverse Effect on such party and of any
governmental complaints, investigations or hearings
that may relate or otherwise affect, directly or
indirectly, the Business or the transaction
contemplated by this Agreement (or communications
indicating that the same may be contemplated) or
the institution or the threatened institution of
significant litigation relating to or otherwise
affecting, directly or indirectly, the Business,
and will keep such other party reasonably informed
of such events.
6.06 Failure to Fulfill Conditions.
In the event that a party hereto determines
that a condition to its obligation to complete the
transactions contemplated by this Agreement cannot
be fulfilled and will not be waived, it will
promptly notify the other party.
ARTICLE 7
OBLIGATIONS OF PARTIES PRIOR TO AND AFTER THE
CLOSING
7.01 Regulatory and Other Approvals.
Each party (i) shall, as soon as practicable
after the date hereof, prepare and file, and shall
assist and cooperate in a timely fashion with the
other party in its preparation and filing of,
applications with the appropriate federal and/or
state regulatory authorities for all approvals
required by law or regulation to effect the
transactions contemplated by this Agreement, and
the parties hereto shall, if required, publish
appropriate notice of such applications, and (ii)
shall, as soon as practicable after the date
hereof, seek to obtain, and shall assist and
cooperate in a timely fashion with the other party
in its attempts to obtain, all other consents and
approvals necessary to effect such transactions,
including the approval or consent of
nongovernmental third parties of the assignment of
the Seller's rights and interests under the
Contracts, if and as required. The parties agree
to use their respective best efforts to cooperate
and obtain any and all such regulatory and other
approvals at the earliest practicable time, and to
satisfy any reasonable conditions imposed by the
regulators or other parties whose consent or
approval is required.
7.02 Further Assurance.
Each party will use its best efforts to
perform its obligations under this Agreement and to
take such actions as are necessary or advisable to
satisfy the conditions set forth herein. In
connection with the foregoing, to the extent any
one or more Customers shall object to the Chapter
62 proceeding relating to Seller's transfer of the
Business to the Trust Subsidiary or otherwise
object to the transfer of such Customer's account
to the Trust Subsidiary or Buyer, Seller shall use
its best efforts to persuade such Customer(s) to
withdraw such objection or, to the extent such
efforts are unsuccessful or would be inappropriate
if continued, shall use its best efforts to
transfer the trusteeship of each such Customer's
account(s) to a suitable successor trustee. Each
party hereby agrees to execute and deliver such
instruments and take such other actions as the
other party may reasonably require in order to
carry out the intent of this Agreement. In
connection with the Asset Closing, Seller agrees to
give the Trust Subsidiary such bills of sale,
assignments and other instruments of conveyance and
transfer as, in the reasonable judgment of Buyer,
shall be necessary and appropriate to vest in the
Trust Subsidiary the legal and equitable title to
the Purchased Assets, free and clear of all liens
and encumbrances. Seller further agrees to use its
best efforts to obtain all necessary and
appropriate consents from third parties to effect
the substitution of Buyer or the Trust Subsidiary
in place of GMB with respect to any fiduciary,
custodial or agency appointments of GMB included
within the Purchased Assets or otherwise relating
to the Business that have not been effectively
transferred to the Trust Subsidiary, whether in
accordance with Chapter 62 or otherwise, at any
time from and after the Closing Date; provided,
however, that Seller shall not be required to incur
substantial additional costs or expenses in
fulfillment of its obligation contained in this
sentence.
7.03 Limitations on the Seller's
Fiduciary Services Business Activities.
AFC and its subsidiaries and affiliates will
not, directly or indirectly, solicit to provide or
provide, by any means including, without
limitation, personal contact, mail or telephone,
any form or manner of Fiduciary Services (as such
term is defined below) to any of the Customers for
a period of three years after the Closing Date. As
used in this Agreement, the term "Fiduciary
Services" means services provided primarily for the
benefit of others in the capacity as investment
manager, trustee, custodian, agent, executor,
administrator, guardian of estates, assignee,
receiver or committee of estates of lunatics.
Nothing in this Section 7.03 shall prevent the
subsidiary banks or other affiliates of AFC after
the Closing from providing any services, including
without limitation Fiduciary Services, to any
person or entity if the subsidiary bank or
affiliate providing such services is initially
approached without any prior solicitation of any
kind by such person or entity regarding such
services.
7.04 Officers and Employees.
Buyer intends to offer employment, through the
Trust Subsidiary, to such number of the Employees
who meet Buyer's qualifications and remain in good
standing as Employees prior to the Closing Date, as
it requires to conduct the Business after the
Closing Date. Buyer shall provide to AFC at least
30 days prior to the Closing Date a list of the
Employees to whom Buyer intends to offer employment
after the Closing (such specified Employees being
referred to as the "Transferred Employees"), which
list may be amended from time to time by Buyer
prior to the Closing Date. Buyer shall offer to
the Transferred Employees the same benefits as are
maintained by Buyer from time to time for the
benefit of its employees similarly situated. Buyer
shall cause its employee benefit plans, programs or
arrangements, other than any employee pension plan,
to treat the prior service of each Transferred
Employee with GMB or its affiliates, to the extent
such prior service is recognized under any
comparable plan, program or arrangement of the
Seller, as service rendered to Buyer or its
affiliates, as the case may be, for purposes of
eligibility to participate, vesting and eligibility
for special benefits under each such plan, program
or arrangement of Buyer, but not for benefit
accrual attributable to any period before the
Closing Date. Buyer shall have no obligations or
liabilities whatsoever, relating to severance
benefits or otherwise, to any Employee other than
those persons who are included among the
Transferred Employees and, in any case, Buyer shall
have no obligations or liabilities to any of the
Employees, including the Transferred Employees,
with respect to or under the terms or conditions of
any Employee Contract or Employee Plan.
7.05 Systems Conversion.
From and after the date hereof, the Seller
shall meet with Buyer on a regular basis to discuss
and plan for the conversion of GMB data processing
and related electronic informational systems
relating to the Business to those used by Buyer.
Buyer shall use its best efforts to complete the
systems conversion as soon as is reasonably
practicable following the Closing Date. Until such
time as the conversion is completed, the Seller
shall assist Buyer by providing access to the
Seller's computer software and computer and data
processing services relating to or otherwise
affecting the Business. Each party shall be
responsible for its own costs and expenses
associated with the systems conversion.
7.06 Public Announcements;
Confidentiality; No Misuse of Seller Information;
Restricted Names.
(a) Except as otherwise required by law
or the rules of the NASDAQ Stock Market, the Seller
and Buyer will cooperate with each other in the
development and distribution of all news releases
and other public information disclosures with
respect to this Agreement or any of the
transactions contemplated hereby. Each of the
Buyer and the Seller will hold all non-public
information relating to the other party received by
it from the other party, directly or through agents
or representatives, under this Agreement or in the
course of any discussions and negotiations leading
to this Agreement in strictest confidence and shall
not disclose, and shall take all appropriate steps
to ensure that its employees, agents and
representatives having access to such information
do not disclose, any such information to any third
parties, to the public generally, or to any of its
own employees, agents or representatives who have
no need to know such information, unless and until
such information shall otherwise have become
publicly known; provided, however, that non-public
information relating to the Business shall be
deemed non-public information of the Buyer after
the Closing.
(b) Buyer and its affiliates will not,
directly or indirectly, solicit to provide or
provide, by any means including, without
limitation, personal contact, mail or telephone,
any form or manner of Fiduciary Services to any
customer of Seller whose account is serviced by
Buyer in accordance with the Servicing Agreement
(as such term is defined in Section 7.07 below) for
so long as such customer's account is serviced by
Buyer under the Servicing Agreement. For a period
of three years after the Closing Date, Buyer and
its affiliates will not use to its or their
advantage any Restricted Information (as such term
is defined below), including without limitation
soliciting to provide or providing any form of
Individual Retirement Accounts or Keogh Accounts to
former customers of GMB whose Trusteed Deposit
Accounts have been transferred to a Counterparty in
any Bank Sale Transaction, to the extent that Buyer
or its affiliates shall have identified such
customers by use of any such Restricted
Information. As used in this Section 7.06(b), the
term "Restricted Information" means any of the
information of or relating to GMB or its business,
operations or customers obtained by Buyer from
Seller under this Agreement or in negotiations or
investigations leading up to the parties' execution
and delivery of this Agreement and consummation of
the transactions contemplated hereby or obtained by
Buyer after Closing from former employees of
Seller, including without limitation information
relating to the Trusteed Deposit Accounts or the
loan or deposit operations or business of GMB;
provided, however, that Restricted Information
shall not in any event include any of the
following: (i) information that relates to the
Business and is necessary to Buyer after the
Closing in the continued operation and further
development of the trust, fiduciary, custodial,
agency and other business constituting the
Business; (ii) information that is or becomes
generally available to the public other than as
result of a disclosure by Buyer or any affiliate or
representative of Buyer, or (iii) information that
was previously known or available to Buyer or its
affiliates or representatives on a nonconfidential
basis prior to its disclosure to Buyer by Seller,
its affiliates or representatives. Buyer agrees to
return to Seller all of such Restricted Information
taking the form of documents, books, records or
tapes and to destroy any electronic records in its
possession containing such Restricted Information.
Nothing contained in this Section 7.06(b) or
elsewhere in this Agreement shall be deemed to
prohibit Buyer or any of its affiliates from
engaging in general marketing and/or soliciting
activities in any area of business conducted
through customary mass media sources, including
without limitation print media, television and
radio, which are not intended to specifically
target persons who are customers of Seller whose
accounts are serviced by Buyer in accordance with
the Servicing Agreement or persons who are former
GMB customers whose Trusteed Deposit Accounts have
been transferred to a Counterparty in a Bank Sale
Transaction.
(c) Nothing in this Section 7.06 shall
prevent the subsidiary banks or other affiliates of
VFSC after the Closing from providing any services,
including without limitation Fiduciary Services or
services pertaining to Individual Retirement
Accounts or Keogh Accounts, to any person or entity
if the subsidiary bank or affiliate providing such
services is initially approached without any prior
solicitation of any kind by such person or entity
regarding such services.
(d) Buyer shall not use or permit any
successor to use the names "Green Mountain Bank,"
"First Twin State Bank," "Proctor Bank" or "United
Vermont Bancorporation."
7.07 Servicing Arrangements.
On the Closing Date, AFC and Buyer shall enter
into a servicing agreement in substantially the
form included as Exhibit A hereto (the "Servicing
Agreement"), which shall provide for the continued
provision by Buyer after the Closing Date to AFC
and its affiliates of fiduciary services similar in
type and quality to the fiduciary services
currently being provided by GMB to AFC and its
affiliates.
7.08 Lease Arrangements.
On the Closing Date, the Seller and Buyer
shall enter into a lease agreement in substantially
the form included as Exhibit B hereto (the "Lease
Agreement"), pursuant to which Buyer shall lease
for the period from the Closing Date through
November 30, 1996 that space of approximately 2,083
square feet located in 80 West Street, Rutland,
Vermont currently occupied by the trust department
of GMB, at a per annum rate of Eight and 00/100
Dollars ($8.00) per square foot.
7.09 Section 338(h)(10) Election.
If Buyer so elects, as evidenced by written
notice given to AFC not later than the Closing
Date, Buyer and AFC will join in making an election
under Section 338(h)(10) of the Internal Revenue
Code of 1986, as amended (a "Section 338(h)(10)
Election"). Buyer will be responsible for
preparing and filing all documents and materials
necessary in connection with making the Section
338(h)(10) Election, and AFC agrees to cooperate
with Buyer in connection therewith (including,
without limitation, signing and returning to Buyer
after the Closing Date, completed Internal Revenue
Service Forms 8023-A and any other documents sent
to it for its signature in connection therewith (to
the extent such documents are consistent therewith)
within fifteen (15) days of its receipt of such
documents and filing any such documents with its
tax returns as necessary). The fair market value
of the Purchased Assets shall be determined in a
manner consistent with the allocation of values
contemplated by Section 3.04(c) above. Buyer and
AFC will file all tax returns in a manner
consistent with the Section 338(h)(10) Election and
the valuation of the Purchased Assets as so
determined.
7.10 Alternative Structure.
Notwithstanding anything to the contrary
contained in this Agreement, at any time prior to
the Closing Date, Buyer shall be entitled to revise
the structure of its acquisition of the Business as
contemplated by this Agreement, so long as the
transactions comprising such revised structure
shall (i) be capable of consummation in as timely a
manner as the structure contemplated herein and
(ii) not otherwise have a material adverse impact
on the Seller, including on the financial benefits
reasonably expected to be derived by the Seller
from the transactions provided for herein or the
costs likely to be incurred by Seller in effecting
such transactions. This Agreement and any related
documents shall be appropriately amended in order
to reflect any such revised structure.
ARTICLE 8
CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS
Each and every obligation of Buyer under this
Agreement to be performed on or before the Closing
Date shall be subject to the satisfaction by or on
behalf of the Seller, on or before the Closing
Date, of the following conditions, unless such
satisfaction is waived by the Buyer:
8.01 Representations and Warranties
True; Obligations Performed.
(a) The representations and warranties
made by the Seller in this Agreement, including any
that may be contained in any Schedule hereto, shall
be true at and as of the Closing Date as though
such representations and warranties were made at
and as of such time, except for any changes
consented to by Buyer or otherwise expressly
permitted in this Agreement.
(b) The Seller shall have performed and
complied with all obligations and agreements
required by this Agreement to be performed or
complied with by it prior to or at the Closing
Date.
(c) From the date of this Agreement
until the Closing Date, there shall have been no
Material Adverse Effect, not cured, on the Seller;
provided, however, that the updating of Schedule
4.04(c), as contemplated by Sections 2.05 and
4.04(c) above, to amend and revise the list of
Defaulted Trust Agreements contained in said
Schedule 4.04(c) and/or the aggregate amount of the
fees payable to Seller under the Defaulted Trust
Agreements, including any increase thereof from the
date of this Agreement up to and including the
Closing Date, shall not on their own constitute the
occurrence of a Material Adverse Effect for
purposes of this Section 8.01(c), subject in all
cases, however, to the continuing effect and
applicability of Section 8.01(h) below.
(d) On the Closing Date, no action, suit
or proceeding shall be pending or threatened
against the Seller which would reasonably be
expected to result in a Material Adverse Effect on
the Seller.
(e) Each of the Servicing Agreement and
the Lease Agreement shall have been duly executed
and delivered by Buyer and Seller and shall be in
full force and effect on the Closing Date.
(f) Buyer shall have received the
opinion of Gallop, Johnson & Neuman, L.C., counsel
to the Seller, dated the Closing Date, such opinion
to be in substantially the form attached hereto as
Exhibit C. In delivering such opinion, said
counsel may reasonably rely on the opinion of
Vermont counsel, such counsel and opinion to be
reasonably satisfactory to Buyer and its counsel,
with regard to matters of Vermont law.
(g) Each of AFC, AVC and GMB shall have
delivered to Buyer a certificate signed by its
President, Chief Financial Officer and senior
officers having responsibility for the management
and operation of the Business, dated the Closing
Date, certifying to the fulfillment of all of the
foregoing conditions.
(h) The Closing Annual Revenue (as such
term is defined below) shall be not less that
$1,500,000.00. For purposes of this Section
8.01(h), the "Closing Annual Revenue" shall equal
(i) the Annual Revenue, determined in accordance
with Section 3.05(a), as of the most recent
practicable date prior to the Closing, minus (ii)
the amount of such Annual Revenue attributable to
any and all Retained Trust Agreements, Defaulted
Trust Agreements and any other Trust Agreements
that have not been effectively transferred and
assigned by Seller to the Trust Subsidiary as part
of the Asset Closing, plus (iii) if, as of the
Closing Date, Buyer shall have received written
commitment, in form and substance satisfactory to
Buyer, from any one or more Prospective Computer
Processing Customers for such Prospective Computer
Processing Customer(s) to purchase trust
correspondent computer processing services from
Buyer after the Closing, the amount of Computer
Processing Fees that would be attributable to each
such Prospective Computer Processing Customer if a
contract for such services had been in effect
between Seller and such Prospective Computer
Processing Customer prior to the Asset Closing and
had been effectively transferred and assigned by
Seller to the Trust Subsidiary as part of the Asset
Closing (provided that the amount added under this
clause (iii) shall not exceed the Notice Account
Total, if any, deducted from gross income in
computing Annual Revenue in clause (i) above).
ARTICLE 9
CONDITIONS PRECEDENT TO THE SELLER'S OBLIGATIONS
Each and every obligation of the Seller under
this Agreement to be performed on or before the
Closing Date shall be subject to the satisfaction
by or on behalf of the Buyer, on or before the
Closing Date, of the following conditions, unless
such satisfaction is waived by the Seller:
9.01 Representations and Warranties
True; Obligations Performed.
(a) The representations and warranties
made by Buyer in this Agreement shall be true at
and as of the Closing Date as though such
representations and warranties were made at and as
of such time, except for any changes consented to
by the Seller.
(b) Buyer shall have performed and
complied with all obligations and agreements
required by this Agreement to be performed or
complied with by it prior to or at the Closing
Date.
(c) From the date of this Agreement
until the Closing Date, there shall have been no
Material Adverse Effect, not cured, on Buyer.
(d) On the Closing Date, no action, suit
or proceeding shall be pending or threatened
against Buyer which would reasonably be expected to
result in a Material Adverse Effect on Buyer.
(e) The Seller shall have received the
opinion of Sullivan & Worcester LLP, counsel to
Buyer, dated the Closing Date, such opinion to be
in substantially the form attached hereto as
Exhibit D. In delivering such opinion, said
counsel may reasonably rely on the opinion of
Vermont counsel, such counsel and opinion to be
reasonably satisfactory to the Seller and its
counsel, with regard to matters of Vermont law.
(f) Buyer shall have delivered to the
Seller a certificate of its President and Chief
Financial Officer, dated the Closing Date,
certifying to the fulfillment of all of the
foregoing conditions.
ARTICLE 10
CONDITIONS PRECEDENT TO ALL PARTIES'
OBLIGATIONS
Each and every obligation of the parties under
this Agreement to be performed on or before the
Closing Date shall be subject to the satisfaction,
on or before the Closing Date, of the following
conditions, unless such satisfaction is mutually
waived (to the extent legally permitted) by the
parties:
10.01 Approval of Regulatory
Authorities.
All necessary approvals, authorizations and
consents of all federal and state regulatory
authorities required to consummate the transactions
contemplated hereby shall have been obtained and
shall remain in full force and effect and all
statutory waiting periods in respect thereof shall
have expired or been terminated. No order,
injunction or decree issued by any court or agency
of competent jurisdiction or other legal restraint
or prohibition preventing the consummation of the
transaction contemplated by this Agreement shall be
in effect and no proceeding initiated by any
regulatory authority seeking an injunction shall be
pending. No statute, rule, regulation, order,
injunction or decree shall have been enacted,
entered, promulgated or enforced by any regulatory
or judicial authority which prohibits, restricts or
makes illegal consummation of the transaction
contemplated by this Agreement.
10.02 Completion of Asset Closing.
Subject to Buyer's rights under Section 7.10
above to revise the structure of its acquisition of
the Business as contemplated by this Agreement, the
Asset Closing shall have been completed in
accordance with the provisions of Article 2 of this
Agreement.
ARTICLE 11
TERMINATION
11.01 Methods of Termination.
This Agreement may be terminated:
(a) At any time on or prior to the
Termination Date (as such term is defined below),
if the Closing has not already then occurred, by
mutual written agreement of Buyer and the Seller;
or
(b) At any time on or prior to the
Termination Date, if the Closing has not already
then occurred, by either Buyer or the Seller in
writing, if (i) the other party has, in any
material respect, breached any covenant or
agreement contained herein or (ii) any material
representation or warranty of the other party
contained herein is or becomes inaccurate or
misleading (taking into account that Seller's
updating of the list of Defaulted Trust Agreements
contained in Schedule 4.04(c) shall not on its own
result in a breach of Seller's representation and
warranty contained in Section 4.04(c)), and in
either case if such breach or inaccuracy has not
been cured or otherwise corrected within forty-five
(45) days after the date on which written notice of
such breach or inaccuracy is given to the party
committing such breach and, in the reasonable
judgment of the party terminating this Agreement,
cannot be cured or otherwise corrected by the close
of business on the Termination Date; or
(c) At any time prior to the Termination
Date, by either Buyer or the Seller in writing, if
any of the requests or applications for prior
approval or consent referred to in Section 7.01
hereof is denied, and, to the extent applicable,
the time period for appeals and requests for
reconsideration has expired; or
(d) By either Buyer or the Seller in
writing, if the Closing has not occurred by the
close of business on September 30, 1996 (the
"Termination Date").
11.02 Procedure Upon Termination.
In the event of termination pursuant to
Section 11.01 hereof, written notice thereof shall
forthwith be given to the other party, and this
Agreement shall terminate upon receipt of such
notice, immediately unless an extension is
consented to by the party having the right to
terminate. If this Agreement is terminated as
provided herein:
(a) Each party will redeliver all
documents, work papers and other material of the
other party relating to this transaction, whether
so obtained before or after the execution hereof,
to the party furnishing the same.
(b) All information received by either
party hereto with respect to the business of the
other party (other than information which is a
matter of public knowledge or which has heretofore
been or is hereafter published in any publication
for public distribution or filed as public
information with any regulatory authority) shall
not at any time be used for business advantage by
such party or disclosed by such party to third
persons.
(c) Nothing contained in this Article 11
shall be deemed to excuse either party for a breach
of any of its obligations or agreements undertaken
or made in this Agreement.
11.03 Effect of Termination
If this Agreement shall be terminated as a
result of the Seller's breach of its covenant under
Section 6.02 or as a result of the willful breach
of this Agreement by either Buyer or the Seller,
the other party shall be entitled to be paid an
amount equal to $150,000 to compensate it for its
out-of-pocket expenses and the time and effort of
its management in working on the transaction. In
addition, if the Seller enters into an agreement
with any other party for the sale and transfer of
the Business during a 12 month period following
Buyer's termination of this Agreement due to the
Seller's committing such a breach or willful breach
as provided in the foregoing sentence, Buyer shall
be entitled to be paid an additional $200,000.
Notwithstanding the foregoing, and subject to the
last clause of Section 6.04 above, either party may
pursue any remedy at law or in equity for damages
or equitable relief if the other party shall breach
the terms of this Agreement, and the prevailing
party shall be entitled to be paid all
out-of-pocket expenses, including attorneys' fees
and court costs, in enforcing its rights hereunder.
ARTICLE 12
INDEMNIFICATION
12.01 Trust Indemnification.
(a) The Seller hereby agrees to
indemnify and hold harmless Buyer and the Trust
Subsidiary from and against any and all losses,
claims, liabilities and damages, including, without
limitation, any and all investigation, legal and
other expenses reasonably incurred by either Buyer
or the Trust Subsidiary in connection with, and any
amount paid by either Buyer or the Trust Subsidiary
in settlement of, any action, suit or proceeding
brought against the Seller or either Buyer or the
Trust Subsidiary, or any claim asserted against the
Seller or either Buyer or the Trust Subsidiary,
arising out of any act or omission of the Seller
with respect to any Trust Agreement or related to
the conduct of the Business, the ownership,
possession or use of any Purchased Asset or the
payment or performance of any Assumed Liability, in
each case where such act or omission of the Seller
occurred during the period prior to the Closing.
(b) Buyer hereby agrees to indemnify and
hold harmless the Seller from and against any and
all losses, claims, damages and liabilities,
including, without limitation, any and all
investigation, legal and other expenses reasonably
incurred by the Seller in connection with, and any
amount paid by the Seller in settlement of, any
action, suit or proceeding brought against the
Seller or either Buyer or the Trust Subsidiary,
arising out of any act or omission of Buyer or the
Trust Subsidiary with respect to any Trust
Agreement or related to the conduct of the
Business, the ownership, possession or use of the
Purchased Assets or the payment or performance of
the Assumed Liabilities, in each case where such
act or omission occurred during the period after
the Closing, but in no event shall such
indemnification relate to actions or omissions of
the Trust Subsidiary or Seller or Buyer during the
period prior to the Closing.
12.02 General Indemnification.
Except as otherwise provided in Section 12.01
hereof, each party hereto hereby agrees to
indemnify, defend, save and hold harmless the other
from and against any and all damage, liability,
loss, expense, assessment, judgment or deficiency
of any nature whatsoever (including, without
limitation, reasonable attorneys' fees and other
costs and expenses incident to any suit, action or
proceeding) incurred or sustained by such other
party which shall arise out of, result from or
constitute any breach by such party of any
representation, warranty or covenant under this
agreement or non-fulfillment by it of any
obligation under this Agreement.
12.03 Claims.
(a) In case any claim shall be made or
action brought with respect to a matter referred to
in Sections 12.01 or 12.02 hereof, the party
entitled to indemnification (the "Indemnified
Party") shall promptly notify the party liable
therefor hereunder (the "Indemnifying Party") in
writing, setting forth the particulars of such
claim or action, and the Indemnifying Party shall
assume the defense thereof, including, without
limitation, the employment of counsel mutually
satisfactory to it and the Indemnified Party. No
such claim or action shall be settled by the
Indemnifying Party without the Indemnified Party's
prior written consent, which shall not be
unreasonably withheld; provided, however, that no
consent of the Indemnified Party is required in any
case if (i) such proposed settlement involves only
the payment of money by the Indemnifying Party,
(ii) the Indemnifying Party is able to pay the
amount of such settlement and all related expenses,
and (iii) the terms of such settlement are to
remain confidential by agreement of all parties to
such action other than the Indemnified Party. If
the Indemnifying Party shall not have employed
counsel within a reasonable time after receiving
notice of commencement of any such action, or if
the Indemnified Party shall have concluded that
there may be defenses available to it which are
different from or additional to those available to
the Indemnifying Party, then the Indemnified Party
may take actions separately in its own defense and
employ separate counsel and all legal and other
expenses, including, without limitation, the
reasonable fees and expenses of such counsel,
incurred by the Indemnified Party shall be borne by
the Indemnified Party.
(b) Notwithstanding any other provisions
of this Agreement, no claim for indemnification
shall be brought pursuant to Section 12.01 hereof
more than three (3) years after the Closing Date
and no claim for indemnification shall be brought
pursuant to Section 12.02 hereof more than thirteen
(13) months after the later of the Closing Date or
the date on which any covenant or obligation in
question was required to have been performed,
except that with respect to the Seller's
representations and warranties contained in Section
4.07 above a claim for indemnification may be
brought pursuant to Section 12.02 hereof at any
time prior to the lapse of time within which
federal, state or local taxing authorities are
entitled to assert any tax liability on the part of
the Seller for tax periods ending at or prior to
the Closing Date.
(c) If an Indemnified Party receives any
payment from any third party (including any
insurer) as compensation for any claim by the
Indemnified Party after the Indemnifying Party has
made any payment under Section 12.01 or Section
12.02 above to the Indemnified Party on account of
such claim by the Indemnified Party, then the
Indemnified Party shall promptly pay the dollar
amount of all such prior indemnification payments
to the Indemnifying Party, without demand or notice
of any kind made by the Indemnifying Party, to the
extent of all such third-party payments received by
the Indemnified Party.
ARTICLE 13
MISCELLANEOUS PROVISIONS
13.01 Amendment and Modification.
The parties hereto may amend, modify and
supplement this Agreement in such manner as may be
agreed upon by them in writing. Any corporation,
bank or other entity organized by a party hereto to
facilitate the consummation of the transactions
herein contemplated shall join in this Agreement,
become a party hereto and agree to be bound by its
provisions by executing a written instrument
signifying such intent at such time as it is
legally capable of doing so, but no party shall be
relieved of any obligation hereunder by the
addition of such party.
13.02 Assignment; Parties in Interest.
This Agreement and all of the provisions
hereof shall be binding upon, and inure to the
benefit of, the parties hereto and their respective
successors and permitted assigns, but neither this
Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by either
of the parties hereto without the prior written
consent of the other. Nothing in this Agreement,
including without limitation Section 7.04 above, is
intended to confer, expressly or by implication,
upon any other person any rights or remedies under
or by reason of this Agreement.
13.03 Counterparts.
This Agreement may be executed simultaneously
in two or more counterparts, each of which shall be
deemed an original, but all of which together shall
constitute one and the same instrument.
13.04 Headings.
The headings of the Sections and Articles of
this Agreement are inserted for convenience only
and shall not constitute a part hereof.
13.05 Waiver.
Any condition to a party's obligation
hereunder may be waived by the other party.
13.06 Payment of Expenses.
Each party herein shall pay for its own
expenses and costs in connection with the carrying
out of this Agreement except as expressly provided
otherwise herein.
13.07 Governing Law, etc.
This Agreement shall be governed by the laws
of the State of Vermont. The representations,
warranties, covenants and obligations of the
parties hereunder shall survive the Closing Date,
subject to the provisions of Article 12 hereof.
13.08 Addresses for Notice, etc.
All notices, requests, demands and other
communications provided for hereunder shall be in
writing (including telecopy communication) and
mailed (by registered or certified mail) or
delivered by telecopy to the applicable party at
the address for such party indicated below or such
other address as shall be furnished in writing by
any party, and any such notice, request, demand or
other communication shall be deemed to have been
given as of the date received by the recipient
party, and copies of any such notices, requests,
demands or other communications shall be provided
as follows: (i) if to Buyer, copies to Sullivan &
Worcester LLP, One Post Office Square, Boston,
Massachusetts 02109, Telecopy No. (617) 338-2880,
Attention: Christopher Cabot, Esq. and Stephen J.
Coukos, Esq.; and (ii) if to Seller, a copy to
Gallop, Johnson & Neuman, L.C., Interco Corporate
Tower, 101 South Hanley, St. Louis, Missouri 63105,
Telecopy No. (314) 862-1219, Attention: Thomas B.
Kinsock, Esq.
[Remainder of Page Intentionally Blank]
IN WITNESS WHEREOF, each of the parties has
caused this instrument to be executed on its behalf
by its duly authorized officers and its corporate
seal to be affixed hereto, as of the first date
written above.
VERMONT NATIONAL BANK
By:________________________
John D. Hashagen,
Jr.
President
100 Main Street
Brattleboro,
Vermont 05302
Telecopy No.: 802-258-4097
ARROW FINANCIAL
CORPORATION
By:_________________________
Michael F.
Massiano
President
250 Glen Street
Glens Falls, New
York 12801
Telecopy No.: 518-745-5513
ARROW VERMONT
CORPORATION
By:_________________________
Michael F.
Massiano
President
80 West Street
Rutland, Vermont
05702
Telecopy No.:
802-775-3696
GREEN MOUNTAIN BANK
By:_________________________
John J. Murphy
Treasurer/Chief
Financial Officer
80 West Street
Rutland, Vermont
05702
Telecopy No.:
802-775-3696
CONFORMED COPY
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this
"Agreement") made as of this 27th day of February,
1996, between Arrow Financial Corporation ("AFC"),
a New York business corporation having its
principal office at 250 Glen Street, Glens Falls,
New York, Arrow Vermont Corporation ("AVC"), a
Vermont business corporation having its principal
office at 80 West Street, Rutland, Vermont, and
Green Mountain Bank ("GMB"), a Vermont-chartered
banking corporation with its principal offices at
80 West Street, Rutland, Vermont (the foregoing
entities sometimes collectively referred to as the
"Seller"), and Vermont National Bank ("Buyer"), a
national banking association having its principal
office at 100 Main Street, Brattleboro, Vermont.
WHEREAS, AFC is a bank holding company which
owns all of the capital stock of AVC, which in turn
owns all of the capital stock of GMB;
WHEREAS, the Seller intends to organize a
trust subsidiary as a wholly owned direct or
indirect subsidiary of AFC in accordance with
Chapter 62 of Title 8 of the Vermont Statutes (the
"Trust Subsidiary"), and to sell, transfer and
convey substantially all of the trust business of
GMB as presently conducted thereby, including,
without limitation, substantially all of the
assets, rights, liabilities, interests,
appointments and responsibilities of GMB in its
fiduciary, custodial or agency capacity associated
therewith (the "Business"), to the Trust
Subsidiary, all as authorized and provided for in
PAGE
said Chapter 62; and
WHEREAS, it is the parties' intention that the
Seller sell, transfer and convey the Business to
Buyer by means of a sale and transfer by the Seller
of all of the issued and outstanding capital stock
of the Trust Subsidiary to Buyer;
NOW, THEREFORE, in consideration for the
mutual covenants contained herein, and other good
and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the
parties agree as follows:
IN WITNESS WHEREOF, each of the parties has
caused this instrument to be executed on its behalf
by its duly authorized officers and its corporate
seal to be affixed hereto, as of the first date
written above.
VERMONT NATIONAL BANK
By: /s/ John D.
Hashagen, Jr.
John D. Hashagen,
Jr.
President
100 Main Street
Brattleboro,
Vermont 05302
Telecopy No.: 802-258-4097
ARROW FINANCIAL
CORPORATION
By: /s/ Michael F.
Massiano
Michael F.
Massiano
President
250 Glen Street
Glens Falls, New
York 12801
Telecopy No.: 518-745-5513
ARROW VERMONT
CORPORATION
By: /s/ Michael F.
Massiano
Michael F.
Massiano
President
80 West Street
Rutland, Vermont
05702
Telecopy No.:
802-775-3696
GREEN MOUNTAIN BANK
By: /s/ John J.
Murphy
John J. Murphy
Treasurer/Chief
Financial Officer
80 West Street
Rutland, Vermont
05702
Telecopy No.:
802-775-3696
EXHIBIT 99.1
To: All Media
Date: February 27, 1996
FOR IMMEDIATE RELEASE
Arrow Financial Corporation To Sell Remaining
Vermont Branches To Albank FSB, Vermont Trust
Operations To Vermont National Bank
Glens Falls, New York, February 27, 1996 -
Michael F. Massiano, Chairman of Arrow Financial
Corporation, Glens Falls, New York, today
announced that Arrow has signed two separate
agreements for the sale of its remaining banking
and trust operations in Vermont.
Mr. Massiano and Herbert G. Chorbajian,
President of Albank Financial Corporation, Albany,
New York, announced the signing of a definitive
agreement by Arrow and Albank for the purchase by
Albank Financial's subsidiary, Albank FSB, of the
remaining banking operations of Arrow's Vermont
subsidiary, Green Mountain Bank, headquartered in
Rutland, Vermont. The sale will involve all of
Green Mountain's deposits at its six branches in
western and southern Vermont, as well as loans and
other assets.
Also, Mr. Massiano and John D. "Rick"
Hashagen, President of Vermont National Bank,
Brattleboro, Vermont, jointly announced that Arrow
and Vermont National have signed a definitive
agreement for the purchase by Vermont National of
the trust business of Green Mountain Bank.
On June 1, 1995, Arrow announced an agreement
to sell to Mascoma Savings Bank of Lebanon, New
Hampshire, Green Mountain Bank's eight branches
located in eastern Vermont. The Mascoma sale was
completed in January, while the Albank and Vermont
National Bank transactions are anticipated to
close sometime in the third quarter. When that
occurs, Arrow will have no remaining operations in
Vermont.
Under Arrow's agreement with Albank, Green
Mountain Bank will transfer to Albank FSB all
deposits, loans and other assets of GMB's six
remaining branches, except for the building that
serves as GMB's main office in Rutland, which
Albank will not acquire, and the trust business,
which is being sold to Vermont National. In the
transaction, Albank will assume approximately $110
million in deposits, $112 million in net book
value of loans and GMB's mortgage servicing
operation for which Arrow will receive a seven and
one-half percent premium on deposits assumed by
ALBANK, or approximately $8.2 million.
page 1 of 2
Under the agreement with Vermont National
Bank, Arrow will sell the trust operations of
Green Mountain Bank for in excess of $3 million.
Some of the purchase price will be withheld by
Vermont National, to be payable later depending on
certain post-closing developments.
" Our decision to move out of Vermont was a
logical one, in light of our determination to
concentrate future growth efforts on our home area
in New York State," said Mr. Massiano. "Every
study we have conducted in the past couple of
years on long-term profitability tells us that our
efforts, and our shareholders' capital, will be
better deployed by increasing our presence in our
own region in upstate New York than by expanding
in neighboring states. The arrival of nationwide
banking actually has sent a contrary message to
community banks like ours -- concentrate on
becoming the best bank in your immediate area."
Mr. Massiano stated that Arrow intends to
proceed promptly together with Albank and Vermont
National Bank in obtaining all regulatory
approvals, and expects to close both transactions
simultaneously, in approximately six months.
In addition, Mr. Massiano announced that the
Board of Directors of Arrow has approved a stock
repurchase program. Under the program, Arrow's
management is authorized to repurchase from time
to time during the next two years, at its
discretion, up to $10 million of Arrow's
outstanding common stock in the open market or
privately negotiated transactions. Based on the
recent sales price of Arrow stock, the $10 million
repurchase amount would represent over 525,000
shares, or 9.3%, of the total number of shares
currently outstanding.
Mr. Massiano stated that the Board generally
believes that Arrow's stock represents an
attractive investment and such repurchases on an
ongoing basis would be in the long term best
interest of shareholders. He said that Arrow will
continue to have more than adequate capital for
anticipated needs.
Arrow Financial Corporation is a multi-bank
holding company headquartered in Glens Falls, New
York. Arrow's New York subsidiary banks are Glens
Falls National Bank and Trust Company and Saratoga
National Bank and Trust Company.
page 2 of 2
