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Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
December 16, 1997
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(Date of earliest event reported)
Hudson Chartered Bancorp, Inc.
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(Exact name of registrant as specified in its charter)
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<CAPTION>
New York 0-17848 14-1668718
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<S> <C> <C>
(State or other jurisdiction of (Commission File (I.R.S. Employer
incorporation or organization) Number) Identification No.)
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P.O. Box 310, Route 55
Lagrangeville, New York 12540
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(Address of principal executive offices)
(914) 471-1711
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(Registrant's telephone number
including area code)
N/A
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(Former Name or Former
Address, if changed since
last report)
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<PAGE>
ITEM 5. OTHER EVENTS
On December 16, 1997, Hudson Chartered Bancorp, Inc. ("Hudson
Chartered"), Progressive Bank, Inc. ("Progressive"), First National Bank of the
Hudson Valley ("Hudson Valley") and Pawling Savings Bank ("Pawling") entered
into an Agreement and Plan of Reorganization (the "Reorganization Agreement").
Hudson Chartered and Progressive also entered into a Plan of Merger (the "Plan
of Merger") and two separate Stock Option Agreements (the "Option Agreements").
Hudson Valley and Pawling also entered into an Agreement and Plan of Merger (the
"Merger Agreement," and together with the Reorganization Agreement, the Plan of
Merger and the Option Agreements, the "Transaction Documents").
The Reorganization Agreement provides that Progressive will be merged
with and into Hudson Chartered (the "Merger") under the name of "Premier
National Bancorp, Inc." (the "Continuing Corporation"). Pursuant to the
Transaction Documents, each outstanding share of Progressive common stock
(subject to certain exceptions) will be converted into the right to receive 1.82
shares of common stock of the Continuing Corporation and cash in lieu of
fractional share interests, and each share of Hudson Chartered common stock
shall remain outstanding shares of the Continuing Corporation. The consummation
of the Merger requires the satisfaction of certain conditions, including the
approval of the Reorganization Agreement and the Merger by the respective
shareholders of Hudson Chartered and Progressive, and the receipt of certain
regulatory approvals.
The first Stock Option Agreement grants the Company an option (the
"Progressive Option") to purchase up to 19.9% (subject to adjustment described
therein) of Progressive's outstanding shares of common stock at a purchase price
of $36.63 per share (the "Progressive Option Agreement"). The second Stock
Option Agreement grants Progressive an option (the "Hudson Chartered Option") to
purchase up to 19.9% (subject to adjustment described therein) of Hudson
Chartered's outstanding shares of common stock at a purchase price of $21.75 per
share (the "Hudson Chartered Option Agreement," and together with the
Progressive Option Agreement, the "Option Agreements"). The Hudson Chartered
Option and the Progressive Option are only exercisable upon certain events, as
specified in the respective Option Agreements, none of which has occurred as of
December 16, 1997.
For additional information regarding certain of the terms of the Merger
and the Transaction Documents, reference is made to the joint press release of
Hudson Chartered and Progressive dated December 16, 1997, filed as Exhibit 99.3
hereto and incorporated herein by reference. The foregoing description of the
Transaction Documents is qualified in its entirety by the terms of the
Transaction Documents, filed as Exhibits 2.1, 2.2, 2.3, 99.1 and 99.2.
Additional information regarding Progressive is contained in Progressive's
filings with the Securities and Exchange Commission under the Securities
Exchange Act of 1934 (Commission File No. 0-15025). Certain additional
information relating to Hudson Chartered, Progressive, and the Continuing
Corporation, provided to financial analysts on December 16, 1997, is filed as
Exhibit 99.4 hereto and is incorporated herein by reference.
2
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The information included in certain of the exhibits hereto and
incorporated herein by reference contains certain forward-looking statements
with respect to the financial condition, results of operations and business of
the Continuing Corporation following the consummation of the Merger, including
statements relating to the cost savings and revenue enhancements that are
expected to be realized from the Merger and the expected impact of the Merger on
financial performance. These forward-looking statements involve certain risks
and uncertainties. Factors that may cause actual results to differ materially
from those contemplated by such forward-looking statements include, among
others, the following possibilities: (1) expected cost savings from the Merger
cannot be fully realized or cannot be realized as quickly as anticipated; (2)
the deposit attrition, customer loss, or revenue loss following the Merger is
greater than expected; (3) competitive pressure in the banking industry
increases significantly; (4) costs or difficulties related to the integration of
the businesses of Hudson Chartered and Progressive are greater than expected;
(5) changes in the interest rate environment reduce margins; (6) general
economic conditions, either nationally or regionally, are less favorable than
expected, resulting in, among other things, a deterioration in credit quality;
(7) changes occur in the regulatory environment; (8) changes occur in the
business conditions and inflation; and (9) changes occur in the securities
markets.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(c) Exhibits.
The exhibits listed in the Exhibit Index are filed herewith.
3
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SIGNATURES
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 thereunto duly authorized.
Hudson Chartered Bancorp, Inc.
By: /s/ T. Jefferson Cunningham III
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T. Jefferson Cunningham III
Chairman and
Chief Executive Officer
4
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EXHIBIT INDEX
<TABLE>
<S> <C> <C>
Location in
Sequentially Numbered
Copy
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2.1. Agreement and Plan of Reorganization, dated as of December 16, 7
1997, by and among Hudson Chartered, First National Bank of the
Hudson Valley, Progressive and Pawling Savings Bank.
2.2. Plan of Merger, dated as of December 16, 1997, by and between 82
Hudson Chartered and Progressive.
2.3. Agreement and Plan of Merger, dated as of December 16, 1997, by 93
and between First National Bank of the Hudson Valley and Pawling
Savings Bank.
99.1. Stock Option Agreement, dated as of December 16, 1997, by and 101
between Hudson Chartered (as the issuer) and Progressive (as the
grantee).
99.2. Stock Option Agreement, dated December 16, 1997, by and between 111
Progressive (as the issuer) and Hudson Chartered (as the
grantee).
99.3. Joint Press Release dated December 16, 1997. 121
99.4. Information provided to Financial Analysts on December 16, 1997. 124
5
</TABLE>
Exhibit 2.1
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (this "Reorganization
Agreement"), dated as of December 16, 1997, is by and among HUDSON CHARTERED
BANCORP, INC., a New York corporation ("Hudson Chartered"), FIRST NATIONAL BANK
OF THE HUDSON VALLEY, a national banking association ("Hudson Valley"),
PROGRESSIVE BANK, INC., a New York corporation ("Progressive"), and PAWLING
SAVINGS BANK, a New York state-chartered stock savings bank ("Pawling").
WITNESSETH
WHEREAS, the parties hereto desire to combine their respective
businesses; and
WHEREAS, the Board of Directors of Progressive and Hudson Chartered have
determined that the combination of the respective businesses and operations of
Progressive and Hudson Chartered through a merger of equals would be in the best
long term interests of the respective shareholders of Progressive and Hudson
Chartered; and
WHEREAS, in furtherance of the combination of their respective
businesses, the parties hereto desire that Progressive shall be merged (the
"Merger") with and into Hudson Chartered under the name of "Premier National
Bancorp, Inc." (the corporation surviving the Merger is referred to herein as
the "Continuing Corporation"), all the issued and outstanding shares of common
stock of Progressive (other than shares held by dissenting shareholders, to the
extent applicable) shall be converted into and exchanged for shares of common
stock of the Continuing Corporation, and all the issued and outstanding shares
of capital stock of Hudson Chartered shall continue to be issued and outstanding
shares of capital stock of the Continuing Corporation, all pursuant to a Plan of
Merger (the "Plan of Merger"), substantially in the form attached as Annex A
hereto and the provisions of which are herein incorporated by reference; and
WHEREAS, in furtherance of the combination of their respective
businesses, the parties hereto desire that, contemporaneously with the Merger,
Pawling, a wholly owned subsidiary of Progressive, shall be merged (the "Bank
Merger") with and into Hudson Valley, a wholly owned subsidiary of Hudson
Chartered, under the charter of Hudson Valley and the name of "Premier National
Bank" (the bank surviving the Bank Merger is referred to herein as the
<PAGE>
"Continuing Bank"), pursuant to an Agreement and Plan of Merger (the "Bank
Merger Agreement"), substantially in the form attached as Annex B hereto; and
WHEREAS, the parties hereto desire to provide for certain undertakings,
conditions, representations, warranties and covenants in connection with the
transactions contemplated hereby;
NOW, THEREFORE, in consideration of the premises and of the mutual
representations, warranties and covenants herein contained and intending to be
legally bound hereby, the parties hereto do hereby agree as follows:
ARTICLE 1.
CERTAIN DEFINED TERMS
1.1. "Bank Holding Company Act" shall mean the Bank Holding Company Act
of 1956, as amended.
1.2. "Banking Department" shall mean the New York State Banking
Department.
1.3. "Closing Date" shall have the meaning specified in Section 4.9
hereof.
1.4. "Code" shall mean the Internal Revenue Code of 1986, as amended.
1.5. "Commission" shall mean the Securities and Exchange Commission.
1.6. "Continuing Corporation Common Stock" shall mean Hudson Chartered
Common Stock from and after the Effective Date.
1.7. "Effective Date" shall have the meaning specified in Section 4.9
hereof.
1.8. "Environmental Laws" shall mean all applicable federal, state and
local laws and regulations, including the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, that relate to pollution or
protection of human health or the environment (including, without limitation,
ambient air, surface water, ground water, land surface or subsurface strata).
This definition includes, without limitation, laws and regulations relating to
emissions, discharges, releases or threatened releases of Materials of
Environmental Concern, or otherwise relating to
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the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Materials of Environmental Concern.
1.9. "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
1.10. "ERISA Affiliate" shall mean any trade or business, whether or not
incorporated, that, together with Progressive or Hudson Chartered, as the case
may be, would be deemed a "single employer" under Section 414 of the Code.
1.11. "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
1.12. "FDIA" shall mean the Federal Deposit Insurance Act, as amended.
1.13. "FDIC" shall mean the Federal Deposit Insurance Corporation.
1.14. "Federal Reserve Board" shall mean the Board of Governors of the
Federal Reserve System.
1.15. "FRBNY" shall mean the Federal Reserve Bank of New York.
1.16. "Hudson Chartered Common Stock" shall have the meaning set forth in
Section 3.1 hereof.
1.17. "Hudson Chartered DRP" shall mean Hudson Chartered's Dividend
Reinvestment and Stock Purchase Plan.
1.18. "Hudson Chartered Financial Statements" shall mean (i) the
consolidated balance sheets of Hudson Chartered as of September 30, 1997 and as
of December 31, 1996 and 1995 and the related consolidated statements of income,
cash flows and changes in stockholders' equity (including related notes, if any)
for the nine months ended September 30, 1997 and for each of the three years
ended December 31, 1996, 1995 and 1994 as filed by Hudson Chartered in SEC
Documents and (ii) the consolidated balance sheets of Hudson Chartered and
related consolidated statements of income, cash flows and changes in
shareholders' equity (including related notes, if any) as filed by Hudson
Chartered in SEC Documents with respect to periods ended subsequent to September
30, 1997.
1.19. "Hudson Chartered Option Agreement" shall mean the Stock Option
Agreement dated of even date herewith
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<PAGE>
between Hudson Chartered, as issuer, and Progressive, as grantee, with regard to
Hudson Chartered Common Stock.
1.20. "Hudson Chartered Plan" shall mean each bonus, deferred
compensation, incentive compensation, stock purchase, stock option, severance
pay, medical, life or other insurance, profit-sharing, or pension plan, program,
agreement or arrangement, and each other employee benefit plan, program,
agreement or arrangement, sponsored, maintained or contributed to or required to
be contributed to by Hudson Chartered or by an ERISA Affiliate for the benefit
of any employee or director or former employee or former director of Hudson
Chartered or any ERISA Affiliate of Hudson Chartered.
1.21. "Hudson Chartered Preferred Stock" shall have the meaning set forth
in Section 3.1 hereof.
1.22. "Hudson Chartered Stock-Based Compensation Plans" shall mean the
Hudson Chartered Bancorp, Inc. 1995 Incentive Stock Plan (and its predecessors,
the Community Bancorp, Inc. 1988 Non-Qualified Stock Option Plan and the
Community Bancorp, Inc. Incentive Stock Option Plan), the Fishkill National
Corporation Incentive Stock Option Plan, and such other stock-based compensation
plans as may be Previously Disclosed.
1.23. "Hudson Chartered Subsidiary" shall have the meaning set forth in
Section 3.3 hereof.
1.24. "Intellectual Property" means domestic and foreign letters patent,
patents, patent applications, patent licenses, software licensed or owned,
know-how, know-how licenses, trade names, common law and other trademarks,
service marks, licenses of trademarks, trade names and/or service marks,
trademark registrations and applications, service mark registrations and
applications and copyright registrations and applications.
1.25. "Materials of Environmental Concern" shall mean pollutants,
contaminants, wastes, toxic substances, petroleum and petroleum products and any
other materials regulated under Environmental Laws.
1.26. "OCC" shall mean the Office of the Comptroller of the Currency.
1.27. "Previously Disclosed" shall mean disclosed prior to the execution
hereof in (i) an SEC Document filed with the Commission after December 31, 1996
and before the
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<PAGE>
date hereof, or (ii) a letter dated as of the date hereof from the party making
such disclosure and delivered to the other party. Any information disclosed by
one party to the other hereunder for any purpose hereunder shall be deemed to be
disclosed for all purposes hereunder. The inclusion of any matter in information
Previously Disclosed shall not be deemed an admission or otherwise to imply that
any such matter is material for purposes of this Agreement.
1.28. "Progressive Common Stock" shall have the meaning set forth in
Section 2.1 hereof.
1.29. "Progressive Financial Statements" shall mean (i) the consolidated
balance sheets of Progressive as of September 30, 1997 and as of December 31,
1996 and 1995 and the related consolidated statements of income, cash flows and
changes in stockholders' equity (including related notes, if any) for the nine
months ended September 30, 1997 and for each of the three years ended December
31, 1996, 1995 and 1994 as filed by Progressive in SEC Documents and (ii) the
consolidated balance sheets of Progressive and related consolidated statements
of income, cash flows and changes in stockholders' equity (including related
notes, if any) as filed by Progressive in SEC Documents with respect to periods
ended subsequent to September 30, 1997.
1.30. "Progressive Option Agreement" shall mean the Stock Option
Agreement dated as of even date herewith between Progressive, as issuer, and
Hudson Chartered, as grantee, with regard to Progressive Common Stock.
1.31. "Progressive Plan" shall mean each bonus, deferred compensation,
incentive compensation, stock purchase, stock option, severance pay, medical,
life or other insurance, profit-sharing, or pension plan, program, agreement or
arrangement, and each other employee benefit plan, program, agreement or
arrangement, sponsored, maintained or contributed to or required to be
contributed to by Progressive or by an ERISA Affiliate for the benefit of any
employee or director or former employee or former director of Progressive or any
ERISA Affiliate of Progressive.
1.32. "Progressive Rights Agreement" shall mean the Shareholder Rights
Agreement dated as of October 15, 1997 by and between Progressive and Registrar
and Transfer Company, as rights agent, which provides that each share of
Progressive Common Stock outstanding on October 15, 1997, and each share of
Progressive Common Stock subsequently issued, has associated with it such rights
to acquire such shares of
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<PAGE>
Progressive Series A Preferred Stock and such rights to acquire such shares of
Progressive Common Stock as are specified therein.
1.33. "Progressive Series A Preferred Stock" shall mean the Series A
Junior Participating Preferred Stock, par value $1.00 per share, of Progressive.
1.34. "Progressive Stock-Based Compensation Plans" shall mean the
Progressive Bank, Inc. 1997 Employee Stock Option Plan, the Progressive Bank,
Inc. 1993 Non-Qualified Stock Option Plan--Directors, the Progressive Bank, Inc.
Amended and Restated Incentive Stock Option Plan, the Progressive Bank, Inc.
Non-Qualified Stock Option Plan for Directors, and such other stock-based
compensation plans as may be Previously Disclosed.
1.35. "Proxy Statement" shall mean the joint proxy statement/prospectus
(or similar documents) together with any supplements thereto sent to the
shareholders of Progressive and Hudson Chartered to solicit their votes in
connection with this Reorganization Agreement, the Plan of Merger and related
matters.
1.36. "Registration Statement" shall mean the registration statement with
respect to the Continuing Corporation Common Stock to be issued in connection
with the Merger as declared effective by the Commission under the Securities
Act.
1.37. "REO" shall mean real property assets acquired as a result of
foreclosure, deed in lieu of foreclosure, or any other method in satisfaction of
indebtedness.
1.38. "Rights" shall mean warrants, options, rights, convertible
securities and other arrangements or commitments which obligate an entity to
issue or dispose of any of its capital stock.
1.39. "SEC Documents" shall mean all reports and registration statements
filed, or required to be filed, by a party hereto pursuant to the Securities
Laws.
1.40. "Securities Act" shall mean the Securities Act of 1933, as amended.
1.41. "Securities Laws" shall mean the Securities Act; the Exchange Act;
the Investment Company Act of 1940, as amended; the Investment Advisers Act of
1940, as amended; the
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<PAGE>
Trust Indenture Act of 1939, as amended; and the rules and regulations of the
Commission promulgated thereunder.
Other terms used herein are defined in the preamble, recitals or other
sections of this Reorganization Agreement.
ARTICLE 2.
REPRESENTATIONS AND WARRANTIES OF PROGRESSIVE AND PAWLING
Progressive and Pawling hereby represent and warrant to Hudson Chartered
and Hudson Valley as follows:
2.1. Capital Structure of Progressive
(a) The authorized capital stock of Progressive consists of (i)
15,000,000 shares of common stock, par value $1.00 per share ("Progressive
Common Stock"), of which 3,831,809 shares are issued and outstanding and 596,190
shares are held in treasury; and (ii) 5,000,000 shares of Preferred Stock, $1.00
par value per share, none of which have been issued or are outstanding. All
outstanding shares of Progressive Common Stock have been duly authorized and
validly issued, and are fully paid and nonassessable. None of the shares of
Progressive's capital stock has been issued in violation of the preemptive
rights of any person.
(b) Except for options granted under the Progressive Stock-Based
Compensation Plans with respect to 299,255 shares of Progressive Common Stock,
the Progressive Option Agreement, and Rights outstanding under the Progressive
Rights Agreement, there are no Rights authorized, issued or outstanding with
respect to the capital stock of Progressive and no written or oral plans,
understandings, commitments or contracts to which Progressive or, to
Progressive's knowledge, any of its affiliates is subject with respect to the
issuance, voting or sale of issued or unissued shares of Progressive's capital
stock.
2.2. Organization, Standing and Authority of Progressive
Progressive is a duly organized corporation, validly existing and in good
standing under the laws of the State of New York. Progressive (i) has full
corporate power and authority to carry on its business as now conducted and (ii)
is duly qualified to do business in the states of the United States and foreign
jurisdictions where its ownership or leasing of property or the conduct of its
business requires such qualification and where failure to so qualify would have
a material adverse effect on the financial
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<PAGE>
condition, results of operations or business of Progressive on a consolidated
basis. Progressive has all federal, state, local and foreign governmental
authorizations and licenses necessary for it to own and lease its properties and
assets and to carry on its business as it is now being conducted. Progressive
has delivered to Hudson Chartered true, complete and correct copies of its
certificate of incorporation and by-laws, each as in effect on the date of this
Agreement. Progressive is registered as a bank holding company under the Bank
Holding Company Act.
2.3. Pawling
Progressive does not own, directly or indirectly, 5% or more of the
outstanding capital stock or other voting securities of any corporation, bank or
other organization except Pawling. The outstanding shares of capital stock of
Pawling have been duly authorized and are validly issued, and are fully paid and
nonassessable and all such shares are directly owned by Progressive free and
clear of all liens, claims and encumbrances, subject to the liquidation account
established and maintained by Pawling in connection with its conversion from
mutual to stock form (the "Liquidation Account"). No Rights are authorized,
issued or outstanding with respect to the capital stock of Pawling and there are
no agreements, understandings or commitments relating to the right of
Progressive to vote or to dispose of said shares. None of the shares of capital
stock of Pawling has been issued in violation of the preemptive rights of any
person. The Liquidation Account has been established and maintained in
accordance with all applicable laws and regulations.
2.4. Organization, Standing and Authority of Pawling
Pawling is a duly organized New York state-chartered stock savings bank,
validly existing and in good standing under applicable laws. There are no other
Progressive subsidiaries. Pawling (i) has full corporate power and authority to
own, lease and operate its properties and to carry on its business as now
conducted, and (ii) is duly qualified to do business in the states of the United
States and foreign jurisdictions where its ownership or leasing of property or
the conduct of its business requires such qualification and where failure to so
qualify would have a material adverse effect on the financial condition, results
of operations or business of Progressive on a consolidated basis. Pawling has
all federal, state, local and foreign governmental authorizations and licenses
necessary for it to own or lease its properties and assets and to carry on its
business as it is now being conducted. Pawling has delivered
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<PAGE>
to Hudson Chartered true, complete and correct copies of its articles of
association and by-laws, each as in effect on the date of this Agreement.
2.5. Authorized and Effective Agreement
(a) Progressive has all requisite corporate power and authority to enter
into, adopt and perform all of its obligations under this Reorganization
Agreement, the Plan of Merger and the Progressive Option Agreement. The
execution, adoption and delivery of this Reorganization Agreement, the Plan of
Merger and the Progressive Option Agreement and the consummation of the
transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary corporate action in respect thereof on the part of
Progressive (including the unanimous approval of its Board of Directors), except
that the affirmative vote of the holders of the outstanding shares of
Progressive Common Stock entitled to vote thereon is required to adopt the Plan
of Merger pursuant to the New York Business Corporation Law, as amended, and
Progressive's Certificate of Incorporation and Bylaws.
(b) Pawling has all requisite corporate power and authority to enter into
and perform all of its obligations under this Reorganization Agreement and the
Bank Merger Agreement, and the execution and delivery of this Reorganization
Agreement and the Bank Merger Agreement and the consummation of the transactions
contemplated hereby and thereby have been duly and validly authorized by all
necessary corporate action in respect thereof on the part of Pawling.
(c) This Reorganization Agreement and the Plan of Merger constitute
legal, valid and binding obligations of Progressive and this Reorganization
Agreement and the Bank Merger Agreement constitute legal, valid and binding
obligations of Pawling, in each case enforceable against it in accordance with
their respective terms, subject as to enforceability, to bankruptcy, insolvency
and other laws of general applicability relating to or affecting creditors'
rights and to general equity principles.
(d) Except as Previously Disclosed, neither the execution, adoption and
delivery of this Reorganization Agreement, the Plan of Merger or the Progressive
Option Agreement, in the case of Progressive, or this Reorganization Agreement
or the Bank Merger Agreement, in the case of Pawling, nor consummation of the
transactions contemplated hereby or thereby, nor compliance by Progressive or
Pawling
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with any of the provisions hereof or thereof shall (i) conflict with or result
in a breach of any provision of the certificate of incorporation, articles of
association or by-laws of Progressive or Pawling, (ii) constitute or result in a
breach of any term, condition or provision of, or constitute a default under, or
give rise to any right of termination, cancellation or acceleration with respect
to, or result in the creation of any lien, charge or encumbrance upon any
property or asset of Progressive or Pawling pursuant to, any note, bond,
mortgage, indenture, license, agreement or other instrument or obligation, in
each case in an amount greater than $100,000 or requiring an annual payment
greater than $100,000, or (iii) subject to the receipt of all required
regulatory approvals, violate any order, writ, injunction, decree, statute, rule
or regulation applicable to Progressive or Pawling.
(e) Except for consents and approvals of or filings with the Federal
Reserve Board, the OCC, the FDIC, the Commission, the Banking Department and the
New York Department of State, and except as Previously Disclosed, no consents or
approvals of or filings or registrations with any public body or authority are
necessary, and no consents or approvals of any third parties are necessary, in
connection with the execution and delivery of this Agreement and the Bank Merger
Agreement by Progressive and Pawling or the consummation by Progressive or
Pawling of the transactions contemplated hereby, thereby or by the Plan of
Merger.
2.6. SEC Documents; Regulatory Filings
Progressive has filed all SEC Documents required by the Securities Laws
and such SEC Documents complied in all material respects with the Securities
Laws. Each of Progressive and Pawling has filed all reports required by statute
or regulation to be filed with any federal or state bank regulatory agency, and
such reports were prepared in accordance with the applicable statutes,
regulations and instructions in all material respects.
2.7. Financial Statements; Books and Records; Minute Books
The Progressive Financial Statements fairly present the consolidated
financial position of Progressive as of the dates indicated and the consolidated
results of operations, changes in stockholders' equity and cash flows of
Progressive for the periods then ended in conformity with generally accepted
accounting principles applicable to financial institutions applied on a
consistent basis except (i) as disclosed therein, (ii) for the omission of notes
to
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unaudited statements, (iii) for normally recurring year-end adjustments in the
case of interim financial statements, and (iv) as Previously Disclosed. The
books and records of Progressive and Pawling fairly reflect the transactions to
which it is a party or by which its properties are subject or bound. Such books
and records have been properly kept and maintained and are in compliance in all
material respects with all applicable legal and accounting requirements. The
minute books of Progressive and Pawling contain accurate records of all
corporate actions of their respective shareholders and Boards of Directors
(including committees of their Boards of Directors).
2.8. Material Adverse Change
Progressive has not, on a consolidated basis, suffered any material
adverse change in its business, financial condition or results of operations
since December 31, 1996 to the date hereof.
2.9. Absence of Undisclosed Liabilities
Neither Progressive nor Pawling has any liability (contingent or
otherwise) that is material to Progressive on a consolidated basis, or that,
when combined with all similar liabilities, would be material to Progressive on
a consolidated basis, except as disclosed in the Progressive Financial
Statements and except for liabilities incurred in the ordinary course of
business consistent with past practice since the date of the most recent
Progressive Financial Statements.
2.10. Properties
Except as Previously Disclosed, Progressive and Pawling have good title
free and clear of all liens, encumbrances, charges, defaults or equitable
interests to all of the properties and assets, real and personal, reflected on
the Progressive Financial Statements as of September 30, 1997 or acquired after
such date, except (i) liens for current taxes not yet due and payable, (ii)
pledges to secure deposits and other liens incurred in the ordinary course of
banking business, (iii) such imperfections of title, easements and encumbrances,
if any, as are customary under local practice or are not material in character,
amount or extent and (iv) dispositions and encumbrances for adequate
consideration in the ordinary course of business. Progressive or Pawling, as
lessee, has the right under valid and subsisting leases of properties used by
Progressive and Pawling in the conduct of their banking business to occupy
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and use all such properties as presently occupied and used by them. Each of the
real properties used by Progressive and Pawling has been maintained in all
material respects in good condition and is suitable for its current use by
Progressive and Pawling. Each of such properties conforms in all material
respects to currently applicable ordinances, regulations and zoning requirements
and, if required, is occupied pursuant to a certificate of occupancy authorizing
its current use. Except as Previously Disclosed, since September 30, 1997, none
of such properties which are material to the operation of Progressive and
Pawling has been damaged by fire, storm or other identifiable event or other act
of God, except to the extent that any property owned or leased by Progressive or
Pawling, if so damaged, is insured to the extent necessary to satisfactorily
repair the damaged premises.
2.11. Loans
(a) Except as Previously Disclosed, to the best knowledge of Progressive
and Pawling, each loan reflected as an asset in the Progressive Financial
Statements (i) is evidenced by notes, agreements or other evidences of
indebtedness which are true, genuine and what they purport to be, (ii) to the
extent secured, has been secured by valid liens and security interests which
have been perfected, and (iii) is the legal, valid and binding obligation of the
obligor named therein, enforceable in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent conveyance and other laws of general
applicability relating to or affecting creditors' rights and to general equity
principles. All loans and extensions of credit made by Pawling that are subject
to Regulation O of the Federal Reserve Board comply therewith.
(b) The classification on the books and records of Progressive and
Pawling of loans as nonaccrual, troubled debt restructuring, in-substance
foreclosure or other real estate owned, or other similar classification,
complies in all material respects with generally accepted accounting principles
and applicable regulatory accounting policy.
2.12. Allowance for Loan Losses
The allowance for loan losses reflected on the Progressive Financial
Statements as of September 30, 1997 and any Progressive Financial Statements
referred to in Section 1.29(ii) hereof, as of their respective dates, is
adequate in all material respects under the requirements of generally accepted
and regulatory accounting principles to provide for reasonably anticipated
losses on outstanding loans.
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2.13. Tax Matters
(a) Progressive and Pawling, and each of their respective predecessors,
have timely filed federal income tax returns for each year through December 31,
1996 and have timely filed, or caused to be filed, all other federal, state,
local and foreign tax returns (including, without limitation, estimated tax
returns, withholding tax returns and FICA and FUTA returns) required to be filed
with respect to Progressive or Pawling. Progressive has made available to Hudson
Chartered true and complete copies of its federal and state income tax returns
for the past five years, and true and complete copies of all correspondence from
governmental authorities, and responses of Progressive or Pawling thereto,
relating to such federal and state income tax returns or any other federal,
state, local or other tax filings within the past five years. All taxes due in
respect of the periods covered by such tax returns have been paid or adequate
reserves have been established for the payment of such taxes and, as of the
Closing Date, all taxes due in respect of any subsequent periods ending on or
prior to the Closing Date will have been paid or adequate reserves will have
been established for the payment thereof. Except as Previously Disclosed, no
audit examination or deficiency or refund litigation with respect to such
returns is pending. Neither Progressive nor Pawling will have any material
liability for any such taxes in excess of the amounts so paid or reserves or
accruals so established.
(b) All federal, state and local (and, if applicable, foreign) tax
returns filed by Progressive and Pawling are complete and accurate in all
material respects. Neither Progressive nor Pawling is delinquent in the payment
of any tax, assessment or governmental charge, and none of them has requested
any extension of time within which to file any tax returns in respect of any
fiscal year or portion thereof which have not since been filed. No deficiencies
for any tax, assessment or governmental charge have been proposed, asserted or
assessed (tentatively or otherwise) against Progressive or Pawling which have
not been settled and paid. Except as Previously Disclosed, there are currently
no agreements in effect with respect to Progressive or Pawling to extend the
period of limitations for the assessment or collection of any tax.
(c) Progressive and Pawling have timely filed all information returns
required under Sections 6041-6050N of the
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Code and any comparable state and local laws, and have timely complied in all
respects with the requirements of Section 3406 of the Code and the regulations
thereunder and any comparable state and local laws and regulations.
(d) Except as Previously Disclosed, termination of the employment of any
employees of Progressive or Pawling following consummation of the transactions
contemplated hereby will not cause Progressive or Pawling to make or to be
required to make any "excess parachute payment" as that term is defined in
Section 280G of the Code.
2.14. Employee Benefit Plans; ERISA
(a) Progressive has Previously Disclosed each material Progressive Plan.
(b) With respect to each material Progressive Plan, Progressive has made
available to Hudson Chartered true and complete copies of each of the following
documents: (1) the Progressive Plan and related documents (including all
amendments thereto); (2) the most recent annual reports, financial statements,
and actuarial reports, if any; (3) the most recent summary plan description,
together with each summary of material modifications, required under ERISA with
respect to such Progressive Plan; and (4) the most recent determination letter
received from the Internal Revenue Service with respect to each Progressive Plan
that is intended to be qualified under the Code.
(c) Except as Previously Disclosed, no liability under Title IV of ERISA
has been incurred by Progressive or any ERISA Affiliate of Progressive since the
effective date of ERISA that has not been satisfied in full, and no condition
exists that presents a material risk to Progressive or any ERISA Affiliate of
Progressive of incurring a liability under such Title, other than liability for
premium payments to the Pension Benefit Guaranty Corporation, which premiums
have been or will be paid when due.
(d) Neither Progressive nor any ERISA Affiliate of Progressive, nor any
of the Progressive Plans, nor any trust created thereunder, nor, to the best
knowledge of Progressive, any trustee or administrator thereof has engaged in a
prohibited transaction (within the meaning of Section 406 of ERISA and Section
4975 of the Code) in connection with which Progressive or any ERISA Affiliate of
Progressive could, either directly or indirectly, incur a material liability or
cost.
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(e) Except as Previously Disclosed, full payment has been made, or will
be made in accordance with Section 404(a)(6) of the Code, of all amounts that
Progressive or any ERISA Affiliate of Progressive is required to pay under
Section 412 of the Code or under the terms of the Progressive Plans.
(f) Except as Previously Disclosed, as of the Closing Date, the then fair
market value of the assets held under each Progressive Plan that is subject to
Title IV of ERISA will be sufficient so as to permit a "standard termination" of
each such Progressive Plan under Section 4042(b) of ERISA without the need to
make any additional contributions to such Progressive Plans. No reportable event
under Section 4043 of ERISA has occurred with respect to any Progressive Plan on
or before the Closing Date other than any reportable event occurring by reason
of the transactions contemplated by this Agreement or a reportable event for
which the requirement of notice to the Pension Benefit Guaranty Corporation has
been waived.
(g) Except as Previously Disclosed, none of the Progressive Plans is a
"multiemployer pension plan," as such term is defined in Section 3(37) of ERISA,
a "multiple employer welfare arrangement," as such term is defined in Section
3(40) of ERISA, or a single employer plan that has two or more contributing
sponsors, at least two of whom are not under common control, within the meaning
of Section 4063(a) of ERISA.
(h) Except as Previously Disclosed, a favorable determination letter has
been issued by the Internal Revenue Service with respect to each Progressive
Plan that is intended to be "qualified" within the meaning of Section 401(a) of
the Code to the effect that such plan is so qualified and each such Progressive
Plan satisfies the requirements of Section 401(a) of the Code in all material
respects. Each Progressive Plan that is intended to satisfy the requirements of
Section 125 or 501(c)(9) of the Code satisfies such requirements in all material
respects. Each Progressive Plan has been operated and administered in all
material respects in accordance with its terms and applicable laws, including
but not limited to ERISA and the Code.
(i) Except as Previously Disclosed, there are no actions, suits or claims
pending, or, to the knowledge of Progressive, threatened or anticipated (other
than routine claims for benefits) against any Progressive Plan, the assets of
any Progressive Plan or against Progressive or any ERISA Affiliate of
Progressive with respect to any Progressive
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Plan. There is no judgment, decree, injunction, rule or order of any court,
governmental body, commission, agency or arbitrator outstanding against or in
favor of any Progressive Plan or any fiduciary thereof (other than rules of
general applicability). There are no pending or threatened audits, examinations
or investigations by any governmental body, commission or agency involving any
Progressive Plan.
(j) Except as Previously Disclosed, the consummation of the transactions
contemplated by this Agreement will not (i) entitle any current or former
employee or director of Progressive or any ERISA Affiliate of Progressive to
severance pay, unemployment compensation or any similar payment, or (ii)
accelerate the time of payment or vesting, or increase the amount, of any
compensation due to any such current or former employee or director, or (iii)
renew or extend the term of any agreement regarding compensation for any such
current or former employee or director.
2.15. Labor Matters
With respect to their employees, neither Progressive nor Pawling is a
party to any labor agreement with any labor organization, group or association
and each of Progressive and Pawling is in material compliance with all
applicable laws respecting employment practices, terms and conditions of
employment and wages and hours and has not engaged in any unfair labor practice.
Progressive and Pawling have not experienced any attempt by organized labor or
its representatives to make Progressive or Pawling conform to demands of
organized labor relating to their employees or to enter into a binding agreement
with organized labor that would cover the employees of Progressive or Pawling.
To the knowledge of Progressive and Pawling, there is no unfair labor practice
charge or other complaint by any employee or former employee of Progressive or
Pawling against any of them pending before any governmental agency arising out
of Progressive's or Pawling's activities; there is no labor strike or labor
disturbance pending or, to the knowledge of Progressive and Pawling, threatened
against any of them; and neither Progressive nor Pawling has experienced a work
stoppage or other labor difficulty since January 1, 1997.
2.16. Certain Contracts
(a) Except as Previously Disclosed, neither Progressive nor Pawling is a
party to, or is bound by, (i) any material agreement, arrangement or commitment
involving annual payments in excess of $100,000, whether or not made in the
ordinary course of business, (ii) any
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agreement, indenture or other instrument relating to the borrowing of money by
Progressive or Pawling or the guarantee by Progressive or Pawling of any such
obligation, (iii) any agreement, arrangement or commitment relating to the
employment of a consultant or the employment, election, retention in office or
severance of any present or former director or officer, (iv) any agreement to
make loans or for the provision, purchase or sale of goods, services or property
between Progressive or Pawling and any director or executive officer of
Progressive or Pawling, or any member of the immediate family or affiliate of
any of the foregoing, or (v) any agreement between Progressive or Pawling and
any five percent or more shareholder of Progressive, in each case other than
transactions entered into in the ordinary course of the banking business of
Pawling consistent with past practice.
(b) Neither Progressive nor Pawling, nor to the knowledge of Progressive
or Pawling, the other party thereto, is in default under any material agreement,
commitment, arrangement, lease, insurance policy or other instrument whether
entered into in the ordinary course of business or otherwise and whether written
or oral, and there has not occurred any event that, with the lapse of time or
giving of notice or both, would constitute such a default, other than defaults
of loan agreements by borrowers from Pawling in the ordinary course of its
banking business.
(c) Since September 30, 1997, neither Progressive nor Pawling has
incurred or paid any obligation or liability that would be material to
Progressive, except obligations incurred or paid in connection with transactions
in the ordinary course of business of Pawling consistent with its past practice
and except as Previously Disclosed. Except as Previously Disclosed, from
September 30, 1997 to the date hereof, neither Progressive nor Pawling has taken
any action that, if taken after the date hereof, would breach any of the
covenants contained in Section 4.7(b) hereof.
(d) Except as Previously Disclosed, neither Progressive nor Pawling has,
during the period since December 31, 1995, controlled expenses through
elimination of employee benefits, deferral of routine maintenance of real
property or leased premises, elimination of reserves where the liability related
to such reserve has remained, reduction of capital improvements from previous
levels, failure to depreciate capital assets in accordance with past practice or
eliminate capital assets which are no longer used in the business of either
Progressive or Pawling, capitalized loan production expenses other than in
accordance with FAS 91 or extraordinary reduction or deferral of ordinary or
necessary expenses.
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2.17. Real Estate Owned
(a) Except for liens, security interests, claims, charges, or such other
encumbrances as have been appropriately reserved for in the Progressive
Financial Statements or are not material and are in the process of being
cleared, title to the REO is good and marketable, and there are no adverse
claims or encumbrances on the REO.
(b) All title, hazard and other insurance claims and mortgage guaranty
claims with respect to the REO have been timely filed and neither Progressive
nor Pawling has received any notice of denial of any such claim.
(c) Progressive and Pawling are in possession of all of the REO or, if
any of the REO remains occupied by the mortgagor, eviction or summary
proceedings have been commenced or rental arrangements providing for market
rental rates have been agreed upon and Progressive and/or Pawling are diligently
pursuing such eviction or summary proceedings or such rental arrangements.
(d) Except as Previously Disclosed, no legal proceeding or quasi-legal
proceeding is pending or, to the knowledge of Progressive and Pawling,
threatened concerning any REO or any servicing activity or omission to provide a
servicing activity with respect to any of the REO.
2.18. Legal Proceedings
Except as Previously Disclosed, there are no actions, suits or
proceedings instituted, pending or, to the knowledge of Progressive, threatened
against Progressive or Pawling or against any asset, interest or right of
Progressive or Pawling that might have a material adverse effect on the
financial condition, results of operations or business of Progressive on a
consolidated basis. To the knowledge of Progressive, there are no actual or
threatened actions, suits or proceedings which present a claim to restrain or
prohibit the transactions contemplated herein. There are no actions, suits or
proceedings instituted, pending or, to the knowledge of Progressive, threatened
against any present or former director or officer of Progressive that might give
rise to a claim for indemnification, and, to the knowledge of Progressive, there
is no reasonable basis for any such action, suit or proceeding.
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2.19. Compliance with Laws
Progressive and Pawling are in compliance in all material respects with
all statutes and regulations applicable to the conduct of their business, and
neither Progressive nor Pawling has received notification from any agency or
department of federal, state or local government (i) asserting a material
violation of any such statute or regulation, (ii) threatening to revoke any
license, franchise, permit or government authorization or (iii) restricting or
in any way limiting its operations. Neither Progressive nor Pawling is subject
to any regulatory or supervisory cease and desist order, agreement, directive,
memorandum of understanding or commitment, and neither of them has received any
communication requesting that they enter into any of the foregoing. Without
limiting the generality of the foregoing, Pawling has timely filed all currency
transaction reports required to be filed and taken all other actions required
under the Currency and Foreign Transactions Reporting Act, codified at 31 U.S.C.
ss. 5301 et seq., and its implementing regulations.
2.20. Brokers and Finders
Except for Progressive's engagement of and agreement to pay Sandler
O'Neill & Partners, L.P. a fee or commission as Previously Disclosed, neither
Progressive nor Pawling, nor any of their respective officers, directors or
employees, has employed any broker, finder or financial advisor or incurred any
liability for any fees or commissions in connection with the transactions
contemplated herein, the Bank Merger Agreement or the Plan of Merger.
2.21. Insurance
Progressive and Pawling currently maintain insurance in amounts
reasonably necessary for their operations and, to the best knowledge of
Progressive, similar in scope and coverage to that maintained by other entities
similarly situated. Neither Progressive nor Pawling has received any advance
notice of a material premium increase or cancellation with respect to any of its
insurance policies or bonds, and within the last three years, neither
Progressive nor Pawling has been refused any insurance coverage sought or
applied for, and Progressive has no reason to believe that existing insurance
coverage cannot be renewed as and when the same shall expire, upon terms and
conditions as favorable as those presently in effect, other than possible
increases in premiums or unavailability in coverage that have not resulted
from any extraordinary loss experience of Progressive or Pawling.
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2.22. Repurchase Agreements
With respect to all agreements pursuant to which Progressive or Pawling
has purchased securities subject to an agreement to resell, if any, Progressive
or Pawling, as the case may be, has a valid, perfected first lien or security
interest in the government securities or other collateral securing the
repurchase agreement, and the value of such collateral equals or exceeds the
amount of the debt secured thereby.
2.23. Deposit Insurance
The deposits of Pawling are insured by the FDIC in accordance with the
FDIA, and Pawling has paid all assessments and filed all reports required by the
FDIA.
2.24. Environmental Matters
(a) Except for any violation, liability or noncompliance which does not
have a material adverse effect on Progressive or Pawling: (i) neither
Progressive nor Pawling has violated during the last five years or is in
violation of or is liable under any federal, state or local environmental law;
(ii) none of the properties owned or leased by either Progressive or Pawling
(including, without limitation, soils and surface and ground waters) are
contaminated with any hazardous substance; (iii) neither Progressive nor Pawling
is liable for any off-site contamination; and (iv) each of Progressive and
Pawling is, and during the last five years has been, in compliance with, all of
its respective permits, licenses and other authorizations issued under any
environmental laws. For purposes of the foregoing, all references to
"properties" include, without limitation, any owned real property or leased real
property.
(b) Neither Progressive nor Pawling has received any written notice of
any legal, administrative, arbitral or other proceeding, claim or action and, to
the knowledge of Progressive and Pawling, there is no governmental investigation
of any nature ongoing, in each case that could reasonably be expected to result
in the imposition, on Progressive or Pawling of any liability arising under any
local, state or federal environmental statute, regulation or ordinance
including, without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act of
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1980, as amended, which liability would have a material adverse effect on
Progressive or Pawling; to the best knowledge of Progressive and Pawling, there
are no facts or circumstances which could reasonably be expected to form the
basis for any such proceeding, claim, action or governmental investigation that
would impose any such liability; and neither Progressive nor Pawling is subject
to any agreement, order, judgment, decree or memorandum by or with any court,
governmental authority, regulatory agency or third party imposing any such
liability.
2.25. Certain Information
When the Registration Statement or any post-effective amendment thereto
shall become effective, and at all times subsequent to such effectiveness up to
and including the time of the later of the Progressive and Hudson Chartered
shareholders' meetings to vote upon the Merger, such Registration Statement and
all amendments or supplements thereto, with respect to all information set forth
therein furnished by Progressive relating to Progressive and Pawling, (i) shall
comply in all material respects with the applicable provisions of the Securities
Laws, and (ii) shall not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements contained therein not misleading.
2.26. Administration of Trust Accounts
Pawling has properly administered, in all respects material and which
could reasonably be expected to be material to the business, operations or
financial condition of Progressive and Pawling, taken as a whole, all accounts
for which it acts as a fiduciary, including but not limited to accounts for
which it serves as a trustee, agent, custodian, personal representative,
guardian, conservator or investment advisor, in accordance with the terms of the
governing documents and applicable state and federal law and regulation and
common law. Neither Progressive, Pawling, nor any director, officer or employee
of Progressive or Pawling has committed any breach of trust with respect to any
such fiduciary account which is material to or could reasonably be expected to
be material to the business, operations or financial condition of Progressive
and Pawling, taken as a whole, and the accountings for each such fiduciary
account are true and correct in all material respects and accurately reflect the
assets of such fiduciary account in all material respects.
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2.27. Information in Applications
All information concerning Progressive and Pawling, and their respective
officers, directors and shareholders, included (or submitted for inclusion) in
the applications described in Section 4.3 hereof shall be true, correct and
complete in all material respects.
2.28. Pooling of Interests
Progressive knows of no reason (after consultation with its independent
accountants) which would reasonably cause it to believe that the Merger will not
qualify as a pooling of interests for financial accounting purposes.
2.29. Derivative Transactions
Except as Previously Disclosed, as of the date hereof, neither
Progressive nor Pawling has engaged in transactions in or involving forwards,
futures, options on futures, swaps or other derivative instruments since
December 31, 1996.
2.30. Intellectual Property
Progressive and Pawling own the entire right, title and interest in and
to, or have valid licenses with respect to, all the Intellectual Property
necessary in all material respects to conduct their business and operations as
presently conducted, except where the failure to do so would not, individually
or in the aggregate, have a material adverse effect on the financial condition,
results of operations or business of Progressive on a consolidated basis. None
of such Intellectual Property is subject to any outstanding order, decree,
judgment, stipulation, settlement, lien, charge, encumbrance or attachment,
which order, decree, judgment, stipulation, settlement, lien, charge,
encumbrance or attachment would have a material adverse effect on the financial
condition, results of operations or business of Progressive on a consolidated
basis.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF HUDSON CHARTERED
AND HUDSON VALLEY
Hudson Chartered and Hudson Valley hereby represent and warrant to
Progressive and Pawling as follows:
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3.1. Capital Structure of Hudson Chartered
(a) The authorized capital stock of Hudson Chartered consists of (i)
20,000,000 shares of common stock, par value $0.80 per share ("Hudson Chartered
Common Stock"), of which 7,076,263 shares are issued and outstanding and 85,015
shares are held in treasury; and (ii) 5,000,000 shares of preferred stock, par
value $0.01 per share ("Hudson Chartered Preferred Stock"), none of which are
currently outstanding. All outstanding shares of Hudson Chartered Common Stock
have been duly authorized and validly issued, and are fully paid and
nonassessable. None of the shares of Hudson Chartered's capital stock has been
issued in violation of the preemptive rights of any person.
(b) Except for options granted under the Hudson Chartered Stock-Based
Compensation Plans with respect to 462,247 shares of Hudson Chartered Common
Stock, and the Hudson Chartered Option Agreement, there are no Rights
authorized, issued or outstanding with respect to the capital stock of Hudson
Chartered and no written or oral plans, understandings, commitments or contracts
to which Hudson Chartered or, to Hudson Chartered's knowledge, any of its
affiliates is subject with respect to the issuance, voting or sale of issued or
unissued shares of Hudson Chartered's capital stock.
3.2. Organization, Standing and Authority of Hudson Chartered
Hudson Chartered is a duly organized corporation, validly existing and in
good standing under the laws of the State of New York. Hudson Chartered (i) has
full corporate power and authority to carry on its business as now conducted and
(ii) is duly qualified to do business in the states of the United States and
foreign jurisdictions where its ownership or leasing of property or the conduct
of its business requires such qualification and where failure to so qualify
would have a material adverse effect on the financial condition, results of
operations or business of Hudson Chartered on a consolidated basis. Hudson
Chartered has all federal, state, local and foreign governmental authorizations
and licenses necessary for it to own and lease its properties and assets and to
carry on its business as it is now being conducted. Hudson Chartered has
delivered to Progressive true, complete and correct copies of its certificate of
incorporation and by-laws, each as in effect on the date of this Agreement.
Hudson Chartered is registered as a bank holding company under the Bank Holding
Company Act.
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3.3. Ownership of the Hudson Chartered Subsidiaries; Capital Structure of the
Hudson Chartered Subsidiaries
Hudson Chartered does not own, directly or indirectly, 5% or more of the
outstanding capital stock or other voting securities of any corporation, bank or
other organization except Hudson Valley, Hudson Chartered Realty Corporation
(collectively the "Hudson Chartered Subsidiaries" and each individually a
"Hudson Chartered Subsidiary"). The outstanding shares of capital stock of each
Hudson Chartered Subsidiary have been duly authorized and are validly issued,
and are fully paid and (subject to 12 U.S.C. ss. 55) nonassessable and, except
as Previously Disclosed, all such shares are directly or indirectly owned by
Hudson Chartered free and clear of all liens, claims and encumbrances. No Rights
are authorized, issued or outstanding with respect to the capital stock of any
Hudson Chartered Subsidiary and there are no agreements, understandings or
commitments relating to the right of Hudson Chartered to vote or to dispose of
said shares. None of the shares of capital stock of any Hudson Chartered
Subsidiary has been issued in violation of the preemptive rights of any person.
3.4. Organization, Standing and Authority of the Hudson Chartered Subsidiaries
Hudson Valley is a duly organized national banking association, validly
existing and in good standing under applicable laws. Each other Hudson Chartered
Subsidiary is a duly organized corporation, validly existing and in good
standing under applicable laws. Each Hudson Chartered Subsidiary (i) has full
corporate power and authority to own, lease and operate its properties and to
carry on its business as now conducted, and (ii) is duly qualified to do
business in the states of the United States and foreign jurisdictions where its
ownership or leasing of property or the conduct of its business requires such
qualification and where failure to so qualify would have a material adverse
effect on the financial condition, results of operations or business of Hudson
Chartered on a consolidated basis. Each Hudson Chartered Subsidiary has all
federal, state, local and foreign governmental authorizations and licenses
necessary for it to own or lease its properties and assets and to carry on its
business as it is now being conducted. Hudson Valley has delivered to
Progressive true, complete and correct copies of its articles of association and
by-laws, each as in effect on the date of this Agreement.
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3.5. Authorized and Effective Agreement
(a) Hudson Chartered has all requisite corporate power and authority to
enter into, adopt and perform all of its obligations under this Reorganization
Agreement, the Plan of Merger and the Hudson Chartered Option Agreement. The
execution, adoption and delivery of this Reorganization Agreement, the Plan of
Merger and the Hudson Chartered Option Agreement and the consummation of the
transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary corporate action in respect thereof on the part of
Hudson Chartered (including the unanimous approval of its Board of Directors),
except that the affirmative vote of the holders of the outstanding shares of
Hudson Chartered Common Stock entitled to vote thereon is required to adopt the
Plan of Merger pursuant to the New York Business Corporation Law, as amended,
and Hudson Chartered's Certificate of Incorporation and Bylaws.
(b) Hudson Valley has all requisite corporate power and authority to
enter into and perform all of its obligations under this Reorganization
Agreement and the Bank Merger Agreement and the execution and delivery of this
Reorganization Agreement and the Bank Merger Agreement and the consummation of
the transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary corporate action in respect thereof on the part of
Hudson Valley.
(c) This Reorganization Agreement and the Plan of Merger constitute
legal, valid and binding obligations of Hudson Chartered and this Reorganization
Agreement and the Bank Merger Agreement constitute legal, valid and binding
obligations of Hudson Valley, in each case enforceable against it in accordance
with their respective terms, subject as to enforceability, to bankruptcy,
insolvency and other laws of general applicability relating to or affecting
creditors' rights and to general equity principles.
(d) Except as Previously Disclosed, neither the execution, adoption and
delivery of this Reorganization Agreement, the Plan of Merger or the Hudson
Chartered Option Agreement, in the case of Hudson Chartered, or this
Reorganization Agreement or the Bank Merger Agreement, in the case of Hudson
Valley, nor consummation of the transactions contemplated hereby or thereby, nor
compliance by Hudson Chartered or Hudson Valley with any of the provisions
hereof or thereof shall (i) conflict with or result in a breach of any provision
of the certificate of incorporation, articles of association or by-laws of
Hudson Chartered or any Hudson
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Chartered Subsidiary, (ii) constitute or result in a breach of any term,
condition or provision of, or constitute a default under, or give rise to any
right of termination, cancellation or acceleration with respect to, or result in
the creation of any lien, charge or encumbrance upon any property or asset of
Hudson Chartered or any Hudson Chartered Subsidiary pursuant to, any note, bond,
mortgage, indenture, license, agreement or other instrument or obligation, in
each case in an amount greater than $100,000 or requiring an annual payment
greater than $100,000, or (iii) subject to the receipt of all required
regulatory approvals, violate any order, writ, injunction, decree, statute, rule
or regulation applicable to Hudson Chartered or any Hudson Chartered Subsidiary.
(e) Except for consents and approvals of or filings with the Federal
Reserve Board, the OCC, the FDIC, the Commission, the Banking Department, the
New York Department of State and any appropriate state securities authorities,
and except as Previously Disclosed, no consents or approvals of or filings or
registrations with any public body or authority are necessary, and no consents
or approvals of any third parties are necessary, in connection with the
execution and delivery of this Agreement and the Bank Merger Agreement by Hudson
Chartered and Hudson Valley or the consummation by Hudson Chartered or Hudson
Valley of the transactions contemplated hereby, thereby or by the Plan of
Merger.
3.6. SEC Documents; Regulatory Filings
Hudson Chartered has filed all SEC Documents required by the Securities
Laws and such SEC Documents complied in all material respects with the
Securities Laws. Each of Hudson Chartered and Hudson Valley has filed all
reports required by statute or regulation to be filed with any federal or state
bank regulatory agency, and such reports were prepared in accordance with the
applicable statutes, regulations and instructions in all material respects.
3.7. Financial Statements; Books and Records; Minute Books
The Hudson Chartered Financial Statements fairly present the consolidated
financial position of Hudson Chartered as of the dates indicated and the
consolidated results of operations, changes in stockholders' equity and cash
flows of Hudson Chartered for the periods then ended in conformity with
generally accepted accounting principles applicable to financial institutions
applied on a consistent basis except (i) as disclosed therein, (ii) for the
omission of notes to unaudited statements, and (iii) for normally
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recurring year-end adjustments in the case of interim financial statements. The
books and records of Hudson Chartered and each Hudson Chartered Subsidiary
fairly reflect the transactions to which it is a party or by which its
properties are subject or bound. Such books and records have been properly kept
and maintained and are in compliance in all material respects with all
applicable legal and accounting requirements. The minute books of Hudson
Chartered and each Hudson Chartered Subsidiary contain accurate records of all
corporate actions of their respective shareholders and Boards of Directors
(including committees of their Boards of Directors).
3.8. Material Adverse Change
Hudson Chartered has not, on a consolidated basis, suffered any material
adverse change in its business, financial condition or results of operations
since December 31, 1996 to the date hereof.
3.9. Absence of Undisclosed Liabilities
Neither Hudson Chartered nor any Hudson Chartered Subsidiary has any
liability (contingent or otherwise) that is material to Hudson Chartered on a
consolidated basis, or that, when combined with all similar liabilities, would
be material to Hudson Chartered on a consolidated basis, except as disclosed in
the Hudson Chartered Financial Statements and except for liabilities incurred in
the ordinary course of business consistent with past practice since the date of
the most recent Hudson Chartered Financial Statements.
3.10. Properties
Hudson Chartered and the Hudson Chartered Subsidiaries have good title
free and clear of all liens, encumbrances, charges, defaults or equitable
interests to all of the properties and assets, real and personal, reflected on
the Hudson Chartered Financial Statements as of September 30, 1997 or acquired
after such date, except (i) liens for current taxes not yet due and payable,
(ii) pledges to secure deposits and other liens incurred in the ordinary course
of banking business, (iii) such imperfections of title, easements and
encumbrances, if any, as are customary under local practice or are not material
in character, amount or extent and (iv) dispositions and encumbrances for
adequate consideration in the ordinary course of business. Hudson Chartered or
one of the Hudson Chartered Subsidiaries, as lessee, has the right under valid
and subsisting leases of properties used by Hudson Chartered and the Hudson
Chartered
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Subsidiaries in the conduct of its banking business to occupy and use all such
properties as presently occupied and used by it. Each of the real properties
used by Hudson Chartered and the Hudson Chartered Subsidiaries has been
maintained in all material respects in good condition and is suitable for its
current use by Hudson Chartered and the Hudson Chartered Subsidiaries. Each of
such properties conforms in all material respects to currently applicable
ordinances, regulations and zoning requirements and, if required, is occupied
pursuant to a certificate of occupancy authorizing its current use. Since
September 30, 1997, none of such properties which are material to the operation
of Hudson Chartered and the Hudson Chartered Subsidiaries has been damaged by
fire, storm or other identifiable event or other act of God, except to the
extent that any property owned or leased by Hudson Chartered or one of the
Hudson Chartered Subsidiaries, if so damaged, is insured to the extent necessary
to satisfactorily repair the damaged premises.
3.11. Loans
(a) Except as Previously Disclosed, to the best knowledge of Hudson
Chartered and Hudson Valley, each loan reflected as an asset in the Hudson
Chartered Financial Statements (i) is evidenced by notes, agreements or other
evidences of indebtedness which are true, genuine and what they purport to be,
(ii) to the extent secured, has been secured by valid liens and security
interests which have been perfected, and (iii) is the legal, valid and binding
obligation of the obligor named therein, enforceable in accordance with its
terms, subject to bankruptcy, insolvency, fraudulent conveyance and other laws
of general applicability relating to or affecting creditors' rights and to
general equity principles. All loans and extensions of credit made by Hudson
Valley that are subject to Regulation O of the Federal Reserve Board comply
therewith.
(b) The classification on the books and records of Hudson Chartered and
each Hudson Chartered Subsidiary of loans as nonaccrual, troubled debt
restructuring, in-substance foreclosure or other real estate owned, or other
similar classification, complies in all material respects with generally
accepted accounting principles and applicable regulatory accounting policy.
3.12. Allowance for Loan Losses
The allowance for loan losses reflected on the Hudson Chartered Financial
Statements as of September 30, 1997 and any Hudson Chartered Financial
Statements referred to in
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Section 1.18(ii) hereof, as of their respective dates, is adequate in all
material respects under the requirements of generally accepted and regulatory
accounting principles to provide for reasonably anticipated losses on
outstanding loans.
3.13. Tax Matters
(a) Hudson Chartered and each Hudson Chartered Subsidiary, and each of
their respective predecessors, have timely filed federal income tax returns for
each year through December 31, 1996 and have timely filed, or caused to be
filed, all other federal, state, local and foreign tax returns (including,
without limitation, estimated tax returns, withholding tax returns and FICA and
FUTA returns) required to be filed with respect to Hudson Chartered or such
Hudson Chartered Subsidiary. Hudson Chartered has made available to Progressive
true and complete copies of its federal and state income tax returns for the
past five years, and true and complete copies of all correspondence from
governmental authorities, and responses of Hudson Chartered or any Hudson
Chartered Subsidiary thereto, relating to such federal and state income tax
returns or any other federal, state, local or other tax filings within the past
five years. All taxes due in respect of the periods covered by such tax returns
have been paid or adequate reserves have been established for the payment of
such taxes and, as of the Closing Date, all taxes due in respect of any
subsequent periods ending on or prior to the Closing Date will have been paid or
adequate reserves will have been established for the payment thereof. Except as
Previously Disclosed, no audit examination or deficiency or refund litigation
with respect to such returns is pending. Neither Hudson Chartered nor any Hudson
Chartered Subsidiary will have any material liability for any such taxes in
excess of the amounts so paid or reserves or accruals so established.
(b) All federal, state and local (and, if applicable, foreign) tax
returns filed by Hudson Chartered and each Hudson Chartered Subsidiary are
complete and accurate in all material respects. Neither Hudson Chartered nor any
Hudson Chartered Subsidiary is delinquent in the payment of any tax, assessment
or governmental charge, and, except as Previously Disclosed, none of them has
requested any extension of time within which to file any tax returns in respect
of any fiscal year or portion thereof which have not since been filed. No
deficiencies for any tax, assessment or governmental charge have been proposed,
asserted or assessed (tentatively or otherwise) against Hudson Chartered or any
Hudson Chartered Subsidiary which have not been settled and paid. Except as
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Previously Disclosed, there are currently no agreements in effect with respect
to Hudson Chartered or any Hudson Chartered Subsidiary to extend the period of
limitations for the assessment or collection of any tax.
(c) Hudson Chartered and each Hudson Chartered Subsidiary have timely
filed all information returns required under Sections 6041-6050N of the Code and
any comparable state and local laws, and have timely complied in all respects
with the requirements of Section 3406 of the Code and the regulations thereunder
and any comparable state and local laws and regulations.
(d) Termination of the employment of any employees of Hudson Chartered or
any Hudson Chartered Subsidiary following consummation of the transactions
contemplated hereby will not cause Hudson Chartered or any Hudson Chartered
Subsidiary to make or to be required to make any "excess parachute payment" as
that term is defined in Section 280G of the Code.
3.14. Employee Benefit Plans; ERISA
(a) Hudson Chartered has Previously Disclosed each material Hudson
Chartered Plan.
(b) With respect to each material Hudson Chartered Plan, Hudson Chartered
has made available to Progressive true and complete copies of each of the
following documents: (1) the Hudson Chartered Plan and related documents
(including all amendments thereto); (2) the most recent annual reports,
financial statements, and actuarial reports, if any; (3) the most recent summary
plan description, together with each summary of material modifications, required
under ERISA with respect to such Hudson Chartered Plan; and (4) the most recent
determination letter received from the Internal Revenue Service with respect to
each Hudson Chartered Plan that is intended to be qualified under the Code.
(c) No liability under Title IV of ERISA has been incurred by Hudson
Chartered or any ERISA Affiliate of Hudson Chartered since the effective date of
ERISA that has not been satisfied in full, and no condition exists that presents
a material risk to Hudson Chartered or any ERISA Affiliate of Hudson Chartered
of incurring a liability under such Title. None of the Hudson Chartered Plans is
subject to Title IV of ERISA.
(d) Neither Hudson Chartered nor any ERISA Affiliate of Hudson Chartered,
nor any of the Hudson Chartered Plans,
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nor any trust created thereunder, nor, to the best knowledge of Hudson
Chartered, any trustee or administrator thereof has engaged in a prohibited
transaction (within the meaning of Section 406 of ERISA and Section 4975 of the
Code) in connection with which Hudson Chartered or any ERISA Affiliate of Hudson
Chartered could, either directly or indirectly, incur a material liability or
cost.
(e) Full payment has been made, or will be made in accordance with
Section 404(a)(6) of the Code, of all amounts that Hudson Chartered or any ERISA
Affiliate of Hudson Chartered is required to pay under Section 412 of the Code
or under the terms of the Hudson Chartered Plans.
(f) Except as Previously Disclosed, none of the Hudson Chartered Plans is
a "multiemployer pension plan," as such term is defined in Section 3(37) of
ERISA, a "multiple employer welfare arrangement," as such term is defined in
Section 3(40) of ERISA, or a single employer plan that has two or more
contributing sponsors, at least two of whom are not under common control, within
the meaning of Section 4063(a) of ERISA.
(g) A favorable determination letter has been issued by the Internal
Revenue Service with respect to each Hudson Chartered Plan that is intended to
be "qualified" within the meaning of Section 401(a) of the Code to the effect
that such plan is so qualified and each such Hudson Chartered Plan satisfies the
requirements of Section 401(a) of the Code in all material respects. Each Hudson
Chartered Plan that is intended to satisfy the requirements of Section 125 or
501(c)(9) of the Code satisfies such requirements in all material respects. Each
Hudson Chartered Plan has been operated and administered in all material
respects in accordance with its terms and applicable laws, including but not
limited to ERISA and the Code.
(h) There are no actions, suits or claims pending, or, to the knowledge
of Hudson Chartered, threatened or anticipated (other than routine claims for
benefits) against any Hudson Chartered Plan, the assets of any Hudson Chartered
Plan or against Hudson Chartered or any ERISA Affiliate of Hudson Chartered with
respect to any Hudson Chartered Plan. There is no judgment, decree, injunction,
rule or order of any court, governmental body, commission, agency or arbitrator
outstanding against or in favor of any Hudson Chartered Plan or any fiduciary
thereof (other than rules of general applicability). There are no pending or
threatened audits, examinations or investigations by any governmental
body, commission or agency involving any Hudson Chartered Plan.
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(i) Except as Previously Disclosed, the consummation of the transactions
contemplated by this Agreement will not (i) entitle any current or former
employee or director of Hudson Chartered or any ERISA Affiliate of Hudson
Chartered to severance pay, unemployment compensation or any similar payment, or
(ii) accelerate the time of payment or vesting, or increase the amount, of any
compensation due to any such current or former employee or director, or (iii)
renew or extend the term of any agreement regarding compensation for any such
current or former employee or director.
3.15. Labor Matters
With respect to their employees, neither Hudson Chartered nor any Hudson
Chartered Subsidiary is a party to any labor agreement with any labor
organization, group or association, and each of Hudson Chartered and the Hudson
Chartered Subsidiaries is in material compliance with all applicable laws
respecting employment practices, terms and conditions of employment and wages
and hours and has not engaged in any unfair labor practice. Hudson Chartered and
the Hudson Chartered Subsidiaries have not experienced any attempt by organized
labor or its representatives to make Hudson Chartered or any Hudson Chartered
Subsidiary conform to demands of organized labor relating to their employees or
to enter into a binding agreement with organized labor that would cover the
employees of Hudson Chartered or any Hudson Chartered Subsidiary. To the
knowledge of Hudson Chartered and the Hudson Chartered Subsidiaries, there is no
unfair labor practice charge or other complaint by any employee or former
employee of Hudson Chartered or any Hudson Chartered Subsidiary against any of
them pending before any governmental agency arising out of Hudson Chartered's or
such Hudson Chartered Subsidiary's activities; there is no labor strike or labor
disturbance pending or, to the knowledge of Hudson Chartered and the Hudson
Chartered Subsidiaries, threatened against any of them; and neither Hudson
Chartered nor any Hudson Chartered Subsidiary has experienced a work stoppage or
other labor difficulty since January 1, 1997.
3.16. Certain Contracts
(a) Except as Previously Disclosed, neither Hudson Chartered nor any
Hudson Chartered Subsidiary is a party to, or is bound by, (i) any material
agreement, arrangement or commitment involving annual payments in excess of
$100,000, whether or not made in the ordinary course of business, (ii)
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any agreement, indenture or other instrument relating to the borrowing of money
by Hudson Chartered or any Hudson Chartered Subsidiary or the guarantee by
Hudson Chartered or any Hudson Chartered Subsidiary of any such obligation,
(iii) any agreement, arrangement or commitment relating to the employment of a
consultant or the employment, election, retention in office or severance of any
present or former director or officer, (iv) any agreement to make loans or for
the provision, purchase or sale of goods, services or property between Hudson
Chartered or any Hudson Chartered Subsidiary and any director or executive
officer of Hudson Chartered or any Hudson Chartered Subsidiary, or any member of
the immediate family or affiliate of any of the foregoing, or (v) any agreement
between Hudson Chartered or any Hudson Chartered Subsidiary and any five percent
or more shareholder of Hudson Chartered, in each case other than transactions
entered into in the ordinary course of the banking business of Hudson Valley
consistent with past practice.
(b) Neither Hudson Chartered nor any Hudson Chartered Subsidiary, nor to
the knowledge of Hudson Chartered or such Hudson Chartered Subsidiary, the other
party thereto, is in default under any material agreement, commitment,
arrangement, lease, insurance policy or other instrument whether entered into in
the ordinary course of business or otherwise and whether written or oral, and
there has not occurred any event that, with the lapse of time or giving of
notice or both, would constitute such a default, other than defaults of loan
agreements by borrowers from Hudson Valley in the ordinary course of its banking
business.
(c) Since September 30, 1997, neither Hudson Chartered nor any Hudson
Chartered Subsidiary has incurred or paid any obligation or liability that would
be material to Hudson Chartered, except obligations incurred or paid in
connection with transactions in the ordinary course of business of Hudson Valley
consistent with its past practice and except as Previously Disclosed. Except as
Previously Disclosed, from September 30, 1997 to the date hereof, neither Hudson
Chartered nor any Hudson Chartered Subsidiary has taken any action that, if
taken after the date hereof, would breach any of the covenants contained in
Section 4.8(b) hereof.
(d) Except as Previously Disclosed, neither Hudson Chartered nor any
Hudson Chartered Subsidiary has, during the period since December 31, 1995,
controlled expenses through elimination of employee benefits, deferral of
routine maintenance of real property or leased premises, elimination of reserves
where the liability related to such reserve has
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remained, reduction of capital improvements from previous levels, failure to
depreciate capital assets in accordance with past practice or eliminate capital
assets which are no longer used in the business of either of Hudson Chartered or
any Hudson Chartered Subsidiary, capitalized loan production expenses other than
in accordance with FAS 91 or extraordinary reduction or deferral of ordinary or
necessary expenses.
3.17. Real Estate Owned
(a) Except for liens, security interests, claims, charges, or such other
encumbrances as have been appropriately reserved for in the Hudson Chartered
Financial Statements or are not material and are in the process of being
cleared, title to the REO is good and marketable, and there are no adverse
claims or encumbrances on the REO.
(b) All title, hazard and other insurance claims and mortgage guaranty
claims with respect to the REO have been timely filed and neither Hudson
Chartered nor any Hudson Chartered Subsidiary has received any notice of denial
of any such claim.
(c) Except as Previously Disclosed, Hudson Chartered and each Hudson
Chartered Subsidiary are in possession of all of the REO or, if any of the REO
remains occupied by the mortgagor, eviction or summary proceedings have been
commenced or rental arrangements providing for market rental rates have been
agreed upon and Hudson Chartered and/or each Hudson Chartered Subsidiary are
diligently pursuing such eviction or summary proceedings or such rental
arrangements.
(d) Except as Previously Disclosed, no legal proceeding or quasi-legal
proceeding is pending or, to the knowledge of Hudson Chartered and each Hudson
Chartered Subsidiary, threatened concerning any REO or any servicing activity or
omission to provide a servicing activity with respect to any of the REO.
3.18. Legal Proceedings
Except as Previously Disclosed, there are no actions, suits or
proceedings instituted, pending or, to the knowledge of Hudson Chartered,
threatened against Hudson Chartered or any Hudson Chartered Subsidiary or
against any asset, interest or right of Hudson Chartered or any Hudson Chartered
Subsidiary that might have a material adverse effect on the financial condition,
results of operations or business of Hudson Chartered on a consolidated basis.
To the knowledge
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of Hudson Chartered, there are no actual or threatened actions, suits or
proceedings which present a claim to restrain or prohibit the transactions
contemplated herein. There are no actions, suits or proceedings instituted,
pending or, to the knowledge of Hudson Chartered, threatened against any present
or former director or officer of Hudson Chartered that might give rise to a
claim for indemnification, and, to the knowledge of Hudson Chartered, there is
no reasonable basis for any such action, suit or proceeding.
3.19. Compliance with Laws
Hudson Chartered and the Hudson Chartered Subsidiaries are in compliance
in all material respects with all statutes and regulations applicable to the
conduct of their business, and except as Previously Disclosed, neither Hudson
Chartered nor any Hudson Chartered Subsidiary has received notification from any
agency or department of federal, state or local government (i) asserting a
material violation of any such statute or regulation, (ii) threatening to revoke
any license, franchise, permit or government authorization or (iii) restricting
or in any way limiting its operations. Except as Previously Disclosed, neither
Hudson Chartered nor any Hudson Chartered Subsidiary is subject to any
regulatory or supervisory cease and desist order, agreement, directive,
memorandum of understanding or commitment, and neither of them has received any
communication requesting that they enter into any of the foregoing. Without
limiting the generality of the foregoing, Hudson Valley has timely filed all
currency transaction reports required to be filed and taken all other actions
required under the Currency and Foreign Transactions Reporting Act, codified at
31 U.S.C. ss. 5301 et seq., and its implementing regulations.
3.20. Brokers and Finders
Except for Hudson Chartered's engagement of and agreement to pay Keefe
Bruyette & Woods, Inc. a fee or commission as Previously Disclosed, neither
Hudson Chartered nor any Hudson Chartered Subsidiary, nor any of their
respective officers, directors or employees, has employed any broker, finder or
financial advisor or incurred any liability for any fees or commissions in
connection with the transactions contemplated herein, the Bank Merger Agreement
or the Plan of Merger.
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3.21. Insurance
Hudson Chartered and each Hudson Chartered Subsidiary currently maintain
insurance in amounts reasonably necessary for their operations and, to the best
knowledge of Hudson Chartered, similar in scope and coverage to that maintained
by other entities similarly situated. Neither Hudson Chartered nor any Hudson
Chartered Subsidiary has received any advance notice of a material premium
increase or cancellation with respect to any of its insurance policies or bonds,
and within the last three years, neither Hudson Chartered nor any Hudson
Chartered Subsidiary has been refused any insurance coverage sought or applied
for, and Hudson Chartered has no reason to believe that existing insurance
coverage cannot be renewed as and when the same shall expire, upon terms and
conditions as favorable as those presently in effect, other than possible
increases in premiums or unavailability in coverage that have not resulted from
any extraordinary loss experience of Hudson Chartered or any Hudson Chartered
Subsidiary.
3.22. Repurchase Agreements
With respect to all agreements pursuant to which Hudson Chartered or any
Hudson Chartered Subsidiary has purchased securities subject to an agreement to
resell, if any, Hudson Chartered or such Hudson Chartered Subsidiary, as the
case may be, has a valid, perfected first lien or security interest in the
government securities or other collateral securing the repurchase agreement, and
the value of such collateral equals or exceeds the amount of the debt secured
thereby.
3.23. Deposit Insurance; Federal Reserve Membership
The deposits of Hudson Valley are insured by the FDIC in accordance with
the FDIA, and Hudson Valley has paid all assessments and filed all reports
required by the FDIA. Hudson Valley is a member of the Federal Reserve System
and has subscribed and paid for the requisite number of shares of capital stock
of the FRBNY.
3.24. Environmental Matters
(a) Except for any violation, liability or noncompliance which does not
have a material adverse effect on Hudson Chartered or any Hudson Chartered
Subsidiary: (i) neither Hudson Chartered nor any Hudson Chartered Subsidiary has
violated during the last five years or is in violation of or is liable under any
federal, state or local
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environmental law; (ii) none of the properties owned or leased by either Hudson
Chartered or any Hudson Chartered Subsidiary (including, without limitation,
soils and surface and ground waters) are contaminated with any hazardous
substance; (iii) neither Hudson Chartered nor any Hudson Chartered Subsidiary is
liable for any off-site contamination; and (iv) each of Hudson Chartered and the
Hudson Chartered Subsidiaries is, and during the last five years has been, in
compliance with, all of its respective permits, licenses and other
authorizations issued under any environmental laws. For purposes of the
foregoing, all references to "properties" include, without limitation, any owned
real property or leased real property.
(b) Neither Hudson Chartered nor any Hudson Chartered Subsidiary has
received any written notice of any legal, administrative, arbitral or other
proceeding, claim or action and, to the knowledge of Hudson Chartered and the
Hudson Chartered Subsidiaries, there is no governmental investigation of any
nature ongoing, in each case that could reasonably be expected to result in the
imposition, on Hudson Chartered or any Hudson Chartered Subsidiary of any
liability arising under any local, state or federal environmental statute,
regulation or ordinance including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended,
which liability would have a material adverse effect on Hudson Chartered or any
Hudson Chartered Subsidiary; to the best knowledge of Hudson Chartered and the
Hudson Chartered Subsidiaries, there are no facts or circumstances which could
reasonably be expected to form the basis for any such proceeding, claim, action
or governmental investigation that would impose any such liability; and neither
Hudson Chartered nor any Hudson Chartered Subsidiary is subject to any
agreement, order, judgment, decree or memorandum by or with any court,
governmental authority, regulatory agency or third party imposing any such
liability.
3.25. Certain Information
When the Registration Statement or any post-effective amendment thereto
shall become effective, and at all times subsequent to such effectiveness up to
and including the time of the later of the Progressive and Hudson Chartered
shareholders' meetings to vote upon the Merger, such Registration Statement and
all amendments or supplements thereto, with respect to all information set forth
therein furnished by Hudson Chartered relating to Hudson Chartered and the
Hudson Chartered Subsidiaries, (i) shall comply in all material respects with
the applicable provisions of the
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Securities Laws, and (ii) shall not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements contained therein not misleading.
3.26. Administration of Trust Accounts
Hudson Valley has properly administered, in all respects material and
which could reasonably be expected to be material to the business, operations or
financial condition of Hudson Chartered and Hudson Valley, taken as a whole, all
accounts for which it acts as a fiduciary, including but not limited to accounts
for which it serves as a trustee, agent, custodian, personal representative,
guardian, conservator or investment advisor, in accordance with the terms of the
governing documents and applicable state and federal law and regulation and
common law. Neither Hudson Chartered, Hudson Valley, nor any director, officer
or employee of Hudson Chartered or Hudson Valley has committed any breach of
trust with respect to any such fiduciary account which is material to or could
reasonably be expected to be material to the business, operations or financial
condition of Hudson Chartered and Hudson Valley, taken as a whole, and the
accountings for each such fiduciary account are true and correct in all material
respects and accurately reflect the assets of such fiduciary account in all
material respects.
3.27. Information in Applications
All information concerning Hudson Chartered and the Hudson Chartered
Subsidiaries, and their respective officers, directors and shareholders,
included (or submitted for inclusion) in the applications described in Section
4.3 hereof shall be true, correct and complete in all material respects.
3.28. Pooling of Interests
Hudson Chartered knows of no reason (after consultation with its
independent accountants) which would reasonably cause it to believe that the
Merger will not qualify as a pooling of interests for financial accounting
purposes.
3.29. Derivative Transactions
Except as Previously Disclosed, as of the date hereof, neither Hudson
Chartered nor any Hudson Chartered Subsidiary has engaged in transactions in or
involving forwards,
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futures, options on futures, swaps or other derivative instruments since
December 31, 1996.
3.30. Intellectual Property
Hudson Chartered and the Hudson Chartered Subsidiaries own the entire
right, title and interest in and to, or have valid licenses with respect to, all
the Intellectual Property necessary in all material respects to conduct their
business and operations as presently conducted, except where the failure to do
so would not, individually or in the aggregate, have a material adverse effect
on the financial condition, results of operations or business of Hudson
Chartered on a consolidated basis. None of such Intellectual Property is subject
to any outstanding order, decree, judgment, stipulation, settlement, lien,
charge, encumbrance or attachment, which order, decree, judgment, stipulation,
settlement, lien, charge, encumbrance or attachment would have a material
adverse effect on the financial condition, results of operations or business of
Hudson Chartered on a consolidated basis.
ARTICLE 4.
COVENANTS
4.1. Shareholders' Meetings
Hudson Chartered and Progressive shall submit this Reorganization
Agreement, the Plan of Merger and such related matters as the parties shall
reasonably and in good faith agree (including amendments to their respective
certificates of incorporation) to their respective shareholders for approval at
an annual or a special meeting to be held as soon as practicable. Except to the
extent legally required for the discharge by the boards of directors of their
fiduciary duties as determined by such boards of directors after consultation
with such board's counsel, the boards of directors of Progressive and Hudson
Chartered shall recommend at the respective shareholders' meetings that the
shareholders vote in favor of and approve the Merger and adopt the Plan of
Merger.
4.2. Proxy Statement; Registration Statement
As promptly as practicable after the date hereof, Hudson Chartered and
Progressive shall cooperate in the preparation of the Registration Statement,
which shall include the Proxy Statement to be mailed to the shareholders of
Hudson Chartered and Progressive in connection with the
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Merger. Hudson Chartered will advise Progressive, promptly after it receives
notice thereof, of the time when the Registration Statement or any
post-effective amendment thereto has become effective or any supplement or
amendment has been filed, of the issuance of any stop order, of the suspension
of qualification of the Continuing Corporation Common Stock issuable in
connection with the Merger for offering or sale in any jurisdiction, or the
initiation or threat of any proceeding for any such purpose, or of any request
by the Commission for the amendment or supplement of the Registration Statement
or for additional information. The parties hereto shall exercise reasonable
efforts in good faith to file or cause to be filed, on or before the Effective
Date, a post-effective amendment to the Registration Statement either with
respect to the sale of the shares of Continuing Corporation Common Stock
provided for in paragraph 8 of Article V of the Plan of Merger to the holders of
stock options issued by Progressive or for the resale of such shares by such
optionees, and the Continuing Corporation shall continue to make applicable
filings thereafter as may be necessary to permit the continued exercise of
options and the sale of such shares. The Continuing Corporation shall take all
actions necessary to register or qualify the shares of Continuing Corporation
Common Stock to be issued in the Merger and pursuant to such options pursuant to
all applicable state "blue sky" or securities laws and shall maintain such
registrations or qualifications in effect for all purposes hereof for so long as
such options remain outstanding.
4.3. Applications
The parties hereto shall use their best efforts to submit or cause to be
submitted, as promptly as practicable after the date hereof, any requisite
applications or notices for prior approval of the transactions contemplated
herein and in the Plan of Merger, or requests for waivers thereof, to any state
or federal government agency, department or body the approval of which is
required for consummation of the Merger and the Bank Merger. At a reasonable
time prior to the making of any such filings with any regulatory authority or
any third persons, Hudson Chartered and Progressive shall submit to each other
the materials to be filed, mailed or released. Any such materials must be
acceptable to both Hudson Chartered and Progressive prior to the filings with
any regulatory authorities or any third persons, except to the extent that
Hudson Chartered or Progressive is legally required to proceed prior to
obtaining the acceptance of the other. Each party agrees to consult with the
other with respect to obtaining all necessary approvals and consents and
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each will keep the other apprised of the status of matters relating to such
approvals and consents.
4.4. Best Efforts
Hudson Chartered, Hudson Valley, Progressive and Pawling each shall use
its best efforts in good faith to (i) furnish such information as may be
necessary or desirable in connection with the preparation of the documents
referred to in Sections 4.2 and 4.3 above, and (ii) take or cause to be taken
all action necessary or desirable on its part so as to permit consummation of
the Merger and the Bank Merger at the earliest possible date, including, without
limitation, (1) obtaining the consent or approval of each individual,
partnership, corporation, association or other business or professional entity
whose consent or approval is necessary or desirable for consummation of the
transactions contemplated hereby, and (2) requesting the delivery of appropriate
opinions, consents and letters from its counsel and independent auditors. No
party hereto shall take, or cause or to the best of its ability permit to be
taken, any action that would adversely affect the qualification of the Merger
for pooling of interests accounting treatment or as a reorganization within the
meaning of Section 368(a) of the Code; provided that nothing herein contained
shall preclude Hudson Chartered from exercising its rights under the Progressive
Option Agreement or Progressive from exercising its rights under the Hudson
Chartered Option Agreement. In the event that any party hereto has taken any
action, whether before, on or after the date hereof, that would adversely affect
such qualification, each party shall take such action as any other party may
reasonably request to cure such effect to the extent curable without a material
adverse effect on the financial condition, results of operations or business of
either Hudson Chartered or Progressive on a consolidated basis.
4.5. Investigation and Confidentiality
(a) Hudson Chartered and Progressive each will keep the other advised of
all material developments relevant to its business and to consummation of the
transactions contemplated herein. Hudson Chartered and Progressive each may make
or cause to be made such investigation of the financial and legal condition of
the other as such party reasonably deems necessary or advisable in connection
with the transactions contemplated herein and in the Plan of Merger and the Bank
Merger Agreement, provided, however, that such investigation shall be reasonably
related to such transactions and shall not interfere unnecessarily with
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normal operations. Hudson Chartered and Progressive agree to furnish the other
and the other's advisors with such financial data and other information with
respect to its business and properties as such other party shall from time to
time reasonably request. No investigation pursuant to this Section 4.5 shall
affect or be deemed to modify any representation or warranty made by, or the
conditions to the obligations to consummate the Merger and the Bank Merger of,
any party hereto.
(b) Each party hereto shall, and shall cause its directors, officers,
attorneys and advisors to, maintain the confidentiality of all information
obtained in such investigation which is not otherwise publicly disclosed by the
other parties, said undertaking with respect to confidentiality to survive any
termination of this Agreement pursuant to Section 6.1 hereof. Each party hereto
shall hold all information furnished by any other party or such other party's
subsidiaries or representatives pursuant hereto in confidence to the extent
required by, and in accordance with, the provisions of the confidentiality
agreement dated October 23, 1997 by and between Hudson Chartered and Progressive
(the "Confidentiality Agreement"). In the event of termination of this Agreement
each party shall return to the furnishing party or destroy and certify the
destruction of all information previously furnished in connection with the
transactions contemplated by this Agreement.
(c) Progressive shall give prompt notice to Hudson Chartered, and Hudson
Chartered shall give prompt notice to Progressive, of (i) the occurrence, or
failure to occur, of any material event which occurrence or failure would be
likely to cause any representation or warranty contained in this Agreement to be
untrue or inaccurate in any material respect any time from the date hereof to
the Closing Date and (ii) any material failure of Progressive or Hudson
Chartered, as the case may be, to comply with or satisfy any covenant, condition
or agreement to be complied with or satisfied by it hereunder, and each party
shall use all reasonable efforts to remedy such failure.
4.6. Press Releases
The parties hereto shall agree with each other as to the form and
substance of any press release related to this Reorganization Agreement, the
Plan of Merger and the Bank Merger Agreement or the transactions contemplated
hereby or thereby, and shall consult each other as to the form and substance of
other public disclosures related thereto, provided, however, that nothing
contained herein shall
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prohibit any party, following notification to the other parties, from making any
disclosure which its counsel deems necessary.
4.7. Covenants of Progressive and Pawling
(a) Prior to the Closing Date, and except as otherwise provided for by
this Reorganization Agreement or consented to or approved by Hudson Chartered,
Progressive and Pawling each shall use its best efforts to preserve its
properties, business and relationships with customers, employees and other
persons.
(b) Except with the prior written consent of Hudson Chartered or except
as Previously Disclosed, between the date hereof and the Effective Date,
Progressive and Pawling each shall not:
(1) carry on its business other than in the usual, regular and
ordinary course in substantially the same manner as heretofore conducted;
(2) in the case of Progressive only, declare, set aside, make or
pay any dividend or other distribution in respect of its capital stock
other than quarterly cash dividends in respective amounts not in excess
of $0.20 per share, in a manner consistent with past practice and in
accordance with applicable law, regulation and contractual and regulatory
commitments;
(3) issue any shares of its capital stock or permit any treasury
shares to become outstanding other than pursuant to the Progressive
Option Agreement or pursuant to Rights outstanding at the date hereof or
Rights issued subsequent to the date hereof as Previously Disclosed, or
incur any additional debt obligation or other obligation for borrowed
money other than in the ordinary course of business of Pawling consistent
with past practice;
(4) issue, grant or authorize any Rights other than pursuant to
the Progressive Option Agreement or as Previously Disclosed or effect any
recapitalization, reclassification, stock dividend, stock split or like
change in capitalization or redeem, repurchase or otherwise acquire any
shares of its capital stock;
(5) amend its certificate of incorporation, articles of
association or by-laws except as contemplated herein or as agreed to by
the parties hereto (and, to the extent required, disclosed in the Proxy
Statement) to
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facilitate the consummation of the transactions contemplated hereby;
impose, or suffer the imposition, on any share of stock held by
Progressive in Pawling of any lien, charge or encumbrance, or permit any
such lien, charge or encumbrance to exist;
(6) merge or consolidate with any other entity; sell, lease,
liquidate or dispose of all or any material portion of its assets or
business or any material asset; make any acquisition of all or any
substantial portion of the business or assets of any other person, firm,
association, corporation or business organization other than in
connection with the collection of any loan or credit arrangement between
it and any other person; enter into or consummate a purchase and
assumption transaction with respect to deposits and liabilities; revoke
or surrender its certificate of authority to maintain, or apply for the
relocation of, any existing branch office or apply for a certificate of
authority to establish a new branch office, except as Previously
Disclosed;
(7) fail to comply in any material respect with any laws,
regulations, ordinances or governmental actions applicable to it and to
the conduct of its business;
(8) acquire any material assets; make any capital expenditures in
excess of $250,000 in the aggregate; or modify any leases or other
contracts relating thereto that involve annual payments that exceed
$250,000 in the aggregate, except as Previously Disclosed;
(9) increase the rate of compensation of, pay or agree to pay any
bonus to, or provide any additional employee benefit or incentive to (i)
any director or any executive officer Previously Disclosed under any
circumstances, or (ii) any other officer or employee except in the
ordinary course of business in a manner consistent with the company's
established salary and bonus policies and procedures and past practice,
provided, however, that such payments may not increase severance amounts
payable under employment or severance agreements (except for any payments
made or paid pursuant to any change in control provisions contained
therein); enter into, modify or extend any employment or severance
contracts with any of its present or former directors, officers or
employees, except as Previously Disclosed; or enter into or modify
(except as may be required by applicable law) any pension, retirement,
stock option, stock purchase, stock appreciation right, savings, profit
sharing, deferred compensation, consulting, bonus, group insurance or
other employee benefit, incentive or welfare
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contract, plan or arrangement, or any trust agreement related thereto, in
respect of any of its directors, officers or other employees;
(10) change its lending, investment, asset/ liability management
or other material banking policies in any material respect except as may
be required by changes in applicable law; except as Previously Disclosed,
make any loan or extend any credit in an amount greater than $250,000,
except in the ordinary course of business consistent with its lending
policies and past practice;
(11) change its methods of accounting in effect at December 31,
1996, except as required by changes in generally accepted accounting
principles concurred in by its independent certified public accountants,
or change any of its methods of reporting income and deductions for
federal income tax purposes from those employed in the preparation of its
federal income tax returns for the year ended December 31, 1996, except
as required by changes in law;
(12) solicit or encourage inquiries or proposals with respect to
any acquisition or purchase of all or a substantial portion of the assets
of, or a substantial equity interest in, Progressive or Pawling or any
business combination with Progressive or Pawling other than as
contemplated by this Reorganization Agreement; or authorize or permit any
officer, director, agent or affiliate of it to do any of the above; or
fail to notify Hudson Chartered immediately if any such inquiries or
proposals are received by Progressive or Pawling; provided, however, that
if following the execution hereof and prior to the Closing Date any
unsolicited inquiry or proposal is received by any Progressive officer,
director, agent or affiliate and the Progressive directors determine (in
good faith after consultation with financial advisors and legal counsel)
that their fiduciary duties require them to consider such inquiry or
proposal, Progressive shall be free to deal with any such inquiry or
proposal in any manner that is deemed by Progressive's directors as being
in the best interests of Progressive's shareholders and that is not
contrary to the terms of this Agreement, the Plan of Merger or the Hudson
Chartered Option Agreement;
(13) foreclose on any commercial loan secured by real property
(other than those commercial loans in which it already has commenced
action seeking foreclosure) unless it first has obtained an environmental
audit, analysis or survey that indicates that it will not incur material
potential liability under Environmental Laws as a result of such
foreclosure;
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(14) purchase or acquire any of the outstanding shares of capital
stock of Hudson Chartered or any of the Hudson Chartered Subsidiaries
other than as contemplated by the Hudson Chartered Option Agreement; or
(15) agree to do any of the foregoing.
4.8. Covenants of Hudson Chartered and Hudson Valley
(a) Prior to the Closing Date, and except as otherwise provided for by
this Reorganization Agreement or consented to or approved by Progressive, Hudson
Chartered and Hudson Valley each shall use its best efforts to preserve its
properties, business and relationships with customers, employees and other
persons.
(b) Except with the prior written consent of Progressive or except as
Previously Disclosed, between the date hereof and the Effective Date, Hudson
Chartered and Hudson Valley each shall not:
(1) carry on its business other than in the usual, regular and
ordinary course in substantially the same manner as heretofore conducted;
(2) in the case of Hudson Chartered only, declare, set aside, make
or pay any dividend or other distribution in respect of its capital stock
other than quarterly cash dividends in respective amounts not in excess
of $0.13 per share, in a manner consistent with past practice and in
accordance with applicable law, regulation and contractual and regulatory
commitments;
(3) issue any shares of its capital stock or permit any treasury
shares to become outstanding other than pursuant to the Hudson Chartered
Option Agreement, pursuant to the Hudson Chartered DRP, or pursuant to
Rights outstanding at the date hereof or Rights issued subsequent to the
date hereof as Previously Disclosed, or incur any additional debt
obligation or other obligation for borrowed money other than in the
ordinary course of business of Hudson Valley consistent with past
practice;
(4) issue, grant or authorize any Rights other than pursuant to
the Hudson Chartered Option Agreement or as Previously Disclosed, or
effect any recapitalization, reclassification, stock dividend (other than
pursuant to the
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Hudson Chartered DRP), stock split or like change in capitalization, or
redeem, repurchase or otherwise acquire any shares of its capital stock;
(5) amend its certificate of incorporation, articles of
association or by-laws except as contemplated herein or as agreed to by
the parties hereto (and, to the extent required, disclosed in the Proxy
Statement) to facilitate the consummation of the transactions
contemplated hereby; impose, or suffer the imposition, on any share of
stock held by Hudson Chartered in Hudson Valley of any lien, charge or
encumbrance, or permit any such lien, charge or encumbrance to exist;
(6) merge or consolidate with any other entity; sell, lease,
liquidate or dispose of all or any material portion of its assets or
business or any material asset; make any acquisition of all or any
substantial portion of the business or assets of any other person, firm,
association, corporation or business organization other than in
connection with the collection of any loan or credit arrangement between
it and any other person; enter into or consummate a purchase and
assumption transaction with respect to deposits and liabilities; revoke
or surrender its certificate of authority to maintain, or apply for the
relocation of, any existing branch office or apply for a certificate of
authority to establish a new branch office;
(7) fail to comply in any material respect with any laws,
regulations, ordinances or governmental actions applicable to it and to
the conduct of its business;
(8) acquire any material assets; except as Previously Disclosed,
make any capital expenditures in excess of $250,000 in the aggregate;
modify any leases or other contracts relating thereto that involve annual
payments that exceed $250,000 in the aggregate, except as Previously
Disclosed;
(9) increase the rate of compensation of, pay or agree to pay any
bonus to, or provide any additional employee benefit or incentive to (i)
any director or any executive officer Previously Disclosed under any
circumstances, or (ii) any other officer or employee except in the
ordinary course of business in a manner consistent with the company's
established salary and bonus policies and procedures and past practice
provided, however, that such payments may not increase severance amounts
payable under employment or severance agreements (except for any payments
made or paid pursuant to any change in control provisions contained
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therein); enter into, modify or extend, or permit to be renewed, any
employment or severance contracts with any of its present or former
directors, officers or employees, except as Previously Disclosed; or
enter into or modify (except as may be required by applicable law) any
pension, retirement, stock option, stock purchase, stock appreciation
right, savings, profit sharing, deferred compensation, consulting, bonus,
group insurance or other employee benefit, incentive or welfare contract,
plan or arrangement, or any trust agreement related thereto, in respect
of any of its directors, officers or other employees;
(10) change its lending, investment, asset/ liability management
or other material banking policies in any material respect except as may
be required by changes in applicable law; make any loan or extend any
credit in an amount greater than $250,000, except in the ordinary course
of business consistent with its lending policies and past practice;
(11) change its methods of accounting in effect at December 31,
1996, except as required by changes in generally accepted accounting
principles concurred in by its independent certified public accountants,
or change any of its methods of reporting income and deductions for
federal income tax purposes from those employed in the preparation of its
federal income tax returns for the year ended December 31, 1996, except
as required by changes in law;
(12) solicit or encourage inquiries or proposals with respect to
any acquisition or purchase of all or a substantial portion of the assets
of, or a substantial equity interest in, Hudson Chartered or Hudson
Valley or any business combination with Hudson Chartered or Hudson Valley
other than as contemplated by this Reorganization Agreement; or authorize
or permit any officer, director, agent or affiliate of it to do any of
the above; or fail to notify Progressive immediately if any such
inquiries or proposals are received by Hudson Chartered or Hudson Valley;
provided, however, that if following the execution hereof and prior to
the Closing Date any unsolicited inquiry or proposal is received by any
Hudson Chartered officer, director, agent or affiliate and the Hudson
Chartered directors determine (in good faith after consultation with
financial advisors and legal counsel) that their fiduciary duties require
them to consider such inquiry or proposal, Hudson Chartered shall be free
to deal with any such inquiry or proposal in any manner that is deemed by
Hudson Chartered's directors as being in the best interests of Hudson
Chartered's shareholders and
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that is not contrary to the terms of this Agreement, the Plan of Merger
or the Progressive Option Agreement;
(13) foreclose on any commercial loan secured by real property
(other than those commercial loans in which it already has commenced
action seeking foreclosure) unless it first has obtained an environmental
audit, analysis or survey that indicates that it will not incur material
potential liability under Environmental Laws as a result of such
foreclosure;
(14) purchase or acquire any of the outstanding shares of capital
stock of Progressive or Pawling other than as contemplated by the
Progressive Option Agreement; or
(15) agree to do any of the foregoing.
4.9. Closing; Certificate of Merger; Headquarters
The transactions contemplated by this Reorganization Agreement, the Plan
of Merger and the Bank Merger Agreement shall be consummated at a closing to be
held at such location as the parties shall agree on the fifth business day
following satisfaction of the conditions to consummation of the Merger and the
Bank Merger set forth in Article 5 hereof or such other date as may be agreed
upon by the parties hereto (the "Closing Date"). In connection with such
Closing, Hudson Chartered and Progressive shall execute a certificate of merger
and shall cause such certificate to be delivered to the New York Department of
State in accordance with Section 904 of the New York Business Corporation Law.
The Merger shall be effective at the time and on the date specified in such
certificate of merger (the "Effective Date"). The Bank Merger shall be effective
as provided in the Bank Merger Agreement. At the Effective Date, the
headquarters of the Continuing Corporation and of the Continuing Bank shall be
located at the headquarters of Hudson Chartered and Hudson Valley, respectively.
4.10. Affiliates
Hudson Chartered and Progressive shall cooperate and use their best
efforts to identify those persons who may be deemed to be "affiliates" of Hudson
Chartered or Progressive within the meaning of Rule 144 or 145 promulgated by
the Commission under the Securities Act, as appropriate, or by whom the transfer
of Continuing Corporation Common Stock following consummation of the Merger may
adversely affect the accounting for the Merger as a pooling of interests.
Progressive and Hudson Chartered shall use their best efforts
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to cause each person so identified to deliver to Hudson Chartered or
Progressive, no later than 30 days prior to the Effective Date, a written
agreement providing that such person will not dispose of any Progressive Common
Stock, Hudson Chartered Common Stock or Continuing Corporation Common Stock
except in compliance with the Securities Act, the rules and regulations
promulgated thereunder and the Commission's rules relating to pooling of
interests accounting treatment. Shares of Continuing Corporation Common Stock
issued to such affiliates in exchange for Progressive Common Stock shall not be
transferable until such time as financial results covering at least 30 days of
combined operations of Progressive and Hudson Chartered have been published,
regardless of whether each such affiliate has provided the written agreement
referred to in this section.
4.11. Board of Directors
(a) From and after the Effective Date, the Board of Directors of the
Continuing Corporation shall consist of 20 persons, 10 of whom shall be persons
named by the Board of Directors of Hudson Chartered as Previously Disclosed and
10 of whom shall be persons named by the Board of Directors of Progressive as
Previously Disclosed. It is the intention of the parties that T. Jefferson
Cunningham III shall be elected Chairman of the Board and Chairman of the
Executive Committee of the Board of the Continuing Corporation. The terms of the
directors of the Continuing Corporation after the Effective Date shall be
allocated, prior to the mailing of the Proxy Statement, so that, as nearly as
practicable, the terms of the same number of persons designated as directors by
Hudson Chartered and by Progressive, respectively, will expire in each
applicable year. If prior to the Effective Date (i) any of the individuals named
by either Hudson Chartered or Progressive to serve on the Board of Directors of
the Continuing Corporation following the Effective Date becomes unable or
unwilling to serve as a director of the Continuing Corporation, or (ii) either
Hudson Chartered or Progressive determines to replace an individual named by
such party to serve on the Board of Directors of the Continuing Corporation, the
party that designated such individual may name a replacement to become a
director of the Continuing Corporation after the Effective Date. The Board of
Directors of the Continuing Bank following the Bank Merger shall be determined
in accordance with the Bank Merger Agreement.
(b) The members of the Executive Committees of the Boards of Directors of
the Continuing Corporation and of the Continuing Bank following the Effective
Date shall be as Previously Disclosed.
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(c) The persons named by Hudson Chartered and Progressive as members of
the Board of Directors of the Continuing Corporation after the Effective Date
shall be named in the Proxy Statement and the Registration Statement, subject to
receipt of the consent of such individuals to be so named.
4.12. Management; Employees; Employee Benefits
(a) From and after the Effective Date, Peter Van Kleeck shall be the
President and Chief Executive Officer of the Continuing Corporation and John C.
VanWormer shall be Executive Vice President of the Continuing Corporation. The
principal officers of the Continuing Bank from and after the Effective Date
shall be as provided in the Bank Merger Agreement. As of the Effective Date, the
Continuing Corporation shall enter into an employment agreement with each of
T. Jefferson Cunningham III and Peter Van Kleeck, on substantially the terms
Previously Disclosed or as the parties may otherwise agree. The Surviving
Corporation shall honor all Previously Disclosed employment and severance
agreements of Hudson Chartered and Progressive in accordance with their terms.
The parties hereto recognize and acknowledge that the Merger will constitute a
change in control for purposes of Progressive's severance agreements and other
benefit plans.
(b) It is the intention of the parties hereto that, as soon as
practicable after the Effective Date, all directors, officers and employees of
the Continuing Corporation and its subsidiaries will be entitled to participate
in compensation, benefit, welfare and related plans, programs or arrangements
made available to similarly situated directors, officers and employees under the
same terms and conditions, notwithstanding whether such individual was employed
by, or provided services to, Hudson Chartered and its subsidiaries or
Progressive and its subsidiaries prior to the Effective Date. The parties agree
to work together prior to the Effective Date to develop and design such plans,
programs and arrangements, and to prepare for the implementation of such plans,
programs and arrangements as soon as practicable following the Effective Date.
It is also anticipated that any such plans, programs or arrangements that are
effective after the Effective Date shall provide that, for purposes of
determining eligibility for and vesting of such employee benefits only (and not
for pension benefit or other accrual purposes except to the extent that an
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individual was covered by the applicable plan prior to the Effective Date and
accrued benefits thereunder), service with Progressive or Pawling, on the one
hand, or Hudson Chartered or Hudson Valley, on the other hand, prior to the
Effective Date shall be treated as service with an "employer" to the same extent
as if such persons had been employees of Hudson Chartered or Hudson Valley or of
Progressive or Pawling, as appropriate. The parties hereto agree that no
previously inapplicable pre-existing condition exclusions shall be applicable to
their employees and/or covered dependents with respect to the continuation of
health insurance coverage with the Continuing Corporation.
(c) After the Effective Date, as provided in the Plan of Merger, the
obligations of Progressive under the Progressive Stock-Based Compensation Plans
shall be assumed by the Continuing Corporation and administered by the
Compensation Committee of the Continuing Corporation, no further options shall
be granted under such plans, and all officers and employees of the Continuing
Corporation shall be eligible to participate in the applicable Hudson Chartered
Stock-Based Compensation Plans notwithstanding such individuals' prior
affiliation with Hudson Chartered or Progressive. For the purposes of
determining eligibility for and vesting of rights under such plans only (and not
for pension benefit or accrual purposes), service with Progressive or Pawling
prior to the Effective Date shall be treated as service with an "employer" to
the same extent as if such persons had been employees of Hudson Chartered or
Hudson Valley, as appropriate.
(d) Except as provided under Section 4.12(a) hereof, nothing herein shall
be construed as giving any employee of Hudson Chartered, Progressive or their
respective subsidiaries a right to continuing employment with the Continuing
Corporation at any of its subsidiaries after the Effective Date.
(e) The Continuing Corporation shall honor Progressive's obligations
through the Effective Date under its deferred compensation plan for directors
(as restated in November of 1997) and under its noncontributory retirement and
severance plan for directors (the "Progressive Director Retirement Plan"), to
the extent that such obligations have been properly recorded and accrued for on
Progressive's books. Service as a director of the Continuing Corporation from
and after the Effective Date by any person who was a director of Progressive
immediately prior to the Effective Date shall be treated as service with
Progressive for purposes of determining eligibility under Section 3 of the
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Progressive Director Retirement Plan and calculating benefits under Section 4 of
the Progressive Director Retirement Plan. The Continuing Corporation shall also
honor Progressive's supplemental executive retirement agreement with Peter Van
Kleeck and Hudson Chartered's supplemental executive retirement agreement with
T. Jefferson Cunningham III, and each such executive's benefits shall accrue
under the applicable agreement or under alternative arrangements agreed to by
Mr. Van Kleeck and Mr. Cunningham, respectively, until his employment with the
Continuing Corporation terminates for any reason.
(f) The parties recognize and acknowledge that the Merger constitutes a
change in control for purposes of Progressive's Executive Severance Plan and
1992 Severance Pay Plan (together, the "Severance Plans"). The parties agree
that any of their employees who are employed as of the date hereof and who incur
a qualifying termination of employment under the Severance Plans between the
date hereof and the date two years after the Effective Date shall (i) receive
severance benefits in accordance with the terms of the Severance Plans (or at
such greater severance benefit levels as the Continuing Corporation may offer),
and (ii) be entitled to exercise stock options in accordance with the terms of
the Severance Plans, subject to the terms of the plans and stock option
agreements under which the stock options were granted, including without
limitation the specified termination date of the option.
(g) After the Effective Date, the post-retirement health insurance that
is currently provided for Progressive's and Pawling's employees who are retired
as of the Effective Date shall continue for their benefit under the terms and
conditions in effect as of the date hereof.
(h) The parties hereto agree that their respective vacation, leave and
sick day policies shall continue in effect through the Effective Date, and that
the Continuing Corporation shall honor all accruals under these policies for
which a liability has been recorded on the respective books of Progressive and
Hudson Chartered through the Effective Date.
4.13. Indemnification
(a) From and after the Effective Date, the Continuing Corporation shall
indemnify, defend and hold harmless each person who is now, or who has been at
any time before the date hereof or who becomes before the Effective Date, an
officer or director of either Progressive or Hudson Chartered
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or any of their respective subsidiaries (the "Indemnified Parties") against all
losses, claims, damages, costs, expenses (including attorneys' fees),
liabilities or judgments or amounts that are paid in settlement (which
settlement shall require the prior written consent of the Continuing
Corporation, which consent shall not be unreasonably withheld) of or in
connection with any claim, action, suit, proceeding or investigation, whether
civil, criminal, or administrative (each, a "Claim"), in which an Indemnified
Party is, or is threatened to be made, a party or witness in whole or in part on
or arising in whole or in part out of the fact that such person is or was a
director or officer of either Progressive or Hudson Chartered or any of their
respective subsidiaries if such Claim pertains to any matter or fact arising,
existing or occurring before the Effective Date (including without limitation
the Merger and the other transactions contemplated hereby), regardless of
whether such Claim is asserted or claimed before, or at or after, the Effective
Date (the "Indemnified Liabilities"), to the fullest extent permitted under
applicable state or federal law in effect as of the date hereof or as amended
applicable to a time before the Effective Date and under Progressive's or Hudson
Chartered's governing corporate documents, and the Continuing Corporation shall
pay expenses in advance of the final disposition of any such action or
proceeding to each Indemnified Party to the full extent permitted by applicable
state or federal law in effect as of the date hereof or as amended applicable to
a time before the Effective Date upon receipt of any undertaking required by
applicable law. Any Indemnified Party wishing to claim indemnification under
this Section 4.13(a), upon learning of any Claim, shall notify the Continuing
Corporation (but the failure so to notify the Continuing Corporation shall not
relieve it from any liability which it may have under this Section 4.13(a),
except to the extent such failure materially prejudices the Continuing
Corporation) and shall deliver to the Continuing Corporation the undertaking, if
any, required by applicable law. The Continuing Corporation shall ensure, to the
extent permitted under applicable law, that all limitations of liability
existing in favor of the Indemnified Parties as provided in Progressive's or
Hudson Chartered's governing corporation documents, as in effect as of the date
hereof, or allowed under applicable state or federal law as in effect as of the
date hereof or as amended applicable to a time before the Effective Date, with
respect to claims or liabilities arising from facts or events existing or
occurring before the Effective Date (including without limitation, the
transactions contemplated hereby), shall survive the Merger. In the event of any
such Claim (whether arising before or after the Effective Date), (1) the
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Continuing Corporation shall have the right to assume the defense thereof (in
which event the Indemnified Parties will cooperate in the defense of any such
matter) and upon such assumption the Continuing Corporation shall not be liable
to any Indemnified Party for any legal expenses of other counsel or any other
expenses subsequently incurred by any Indemnified Party in connection with the
defense thereof, except that if the Continuing Corporation elects not to assume
such defense, or counsel for the Indemnified Parties reasonably advises the
Indemnified Parties that there are or may be (whether or not any have yet
actually arisen) issues which raise conflicts of interest between the Continuing
Corporation and the Indemnified Parties, the Indemnified Parties may retain
counsel reasonably satisfactory to them, and the Continuing Corporation shall
pay the reasonable fees and expenses of such counsel for the Indemnified
Parties, (2) the Continuing Corporation shall be obligated pursuant to this
paragraph to pay for only one firm of counsel for all Indemnified Parties whose
reasonable fees and expenses shall be paid promptly as statements are received,
(3) the Continuing Corporation shall not be liable for any settlement effected
without its prior written consent (which consent shall not be unreasonably
withheld) and (4) the Continuing Corporation shall have no obligation hereunder
to any Indemnified Party when and if a court of competent jurisdiction shall
ultimately determine, and such determination shall have become final and
nonappealable, that indemnification of such Indemnified Party in the manner
contemplated hereby is prohibited by applicable law.
(b) From and after the Effective Date, the directors, officers and
employees of Progressive and Hudson Chartered hereto or any of their respective
subsidiaries who become directors or officers of the Continuing Corporation or
any of its subsidiaries, except for the indemnification rights provided pursuant
to the Indemnification Agreements between Hudson Chartered and Progressive and
their respective directors and as set forth in paragraph (a) of this Section
4.13, shall have indemnification rights having prospective application only. The
prospective indemnification rights shall consist of such rights to which
directors and officers of the Continuing Corporation and its subsidiaries are
entitled under the provisions of the governing corporation documents of the
Continuing Corporation and its subsidiaries, as in effect from time to time
after the Effective Date, as applicable, and provisions of applicable state and
federal law as in effect from time to time after the Effective Date.
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(c) For a period of six years from and after the Effective Date, the
Continuing Corporation shall cause to be maintained in effect the current
policies of directors' and officers' liability insurance maintained by
Progressive (provided that the Continuing Corporation may substitute therefor
policies from financially capable insurers of at least the same coverage and
amounts containing terms and conditions which are substantially no less
advantageous) with respect to Claims arising from facts or events which occurred
before the Effective Date. Following consummation of the Merger, the directors
and officers of the Continuing Corporation shall be covered by the directors'
and officers' liability insurance maintained by the Continuing Corporation.
(d) The obligations of the Continuing Corporation provided under
paragraphs (a), (b) and (c) of this Section 4.13 are intended to be enforceable
against the Continuing Corporation directly by the Indemnified Parties and shall
be binding on all respective successors and permitted assigns of the Continuing
Corporation.
(e) In the event the Continuing Corporation or any of its successors or
assigns (i) consolidates with or merges into any other person and shall not be
the continuing or surviving corporation or entity of such consolidation or
merger, or (ii) transfers or conveys all or substantially all of its properties
and assets to any person, then, and in each such case, to the extent necessary,
proper provision shall be made so that the successors and assigns of the
Continuing Corporation shall assume the obligations set forth in this Section
4.13.
(f) As a condition to receiving indemnification under this Section 4.13,
the party claiming indemnification shall assign, by separate writing, to the
Continuing Corporation all right, title and interest to and in proceeds of any
insurance maintained or provided by Progressive or Hudson Chartered or any of
their respective affiliates for the benefits of the claiming party, to the
extent of indemnification actually received from the Continuing Corporation
hereunder and shall send such notices as the Continuing Corporation may
reasonably request under any applicable directors' and officers' liability or
blanket bond insurance coverage to preserve claims of which the claiming party
is aware.
(g) No person shall be entitled to indemnification under this Section
4.13 if such person is seeking indemnification based on a claim (other than a
claim arising as a supplier to, customer of or borrower from Hudson
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Chartered, Hudson Valley, Progressive or Pawling) brought by such person or by
an entity of which such person is a general partner, executive officer,
director, trustee, beneficiary or controlling person unless such person has
waived any right to participate in any damage or other award to such claiming
party or other entity in any such action, suit or proceeding.
4.14. Shares Listed
The parties hereto shall use their best efforts to cause the shares of
Continuing Corporation Common Stock to be issued in the Merger to be listed on
the American Stock Exchange, Inc., subject to official notice of issuance.
4.15. Reservation of Right to Revise Transaction
The parties hereto may hereafter agree in writing to change the method of
effecting the Merger to the extent permitted by applicable law and to the extent
they deem any such change to be desirable; provided, however, that no such
change shall materially alter the benefits of the Merger as is presently
contemplated in this Agreement and in the Plan of Merger to any of the parties
hereto or to their respective shareholders.
4.16. Dividends
After the date of this Agreement, each of the parties hereto shall
coordinate with the other the declaration of any dividends in respect of Hudson
Chartered Common Stock or Progressive Common Stock and the record dates and
payment dates relating thereto, it being the intention of the parties hereto
that holders of Hudson Chartered Common Stock and Progressive Common Stock shall
not receive two dividends, or fail to receive one dividend, for any single
calendar quarter with respect to their shares of Hudson Chartered Common Stock
and/or Progressive Common Stock and any shares of Continuing Corporation Common
Stock any such holder receives in exchange therefor in the Merger.
ARTICLE 5.
CONDITIONS PRECEDENT
5.1. Conditions Precedent - Mutual
The respective obligations of Hudson Chartered and Progressive to effect
the Merger and of Hudson Valley and Pawling to effect the Bank Merger shall be
subject to
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satisfaction or waiver of the following conditions at or prior to the Closing
Date:
(a) All corporate action necessary to authorize the execution, delivery
and performance of this Reorganization Agreement, the Plan of Merger and the
Bank Merger Agreement and consummation of the transactions contemplated hereby
and thereby shall have been duly and validly taken, and all required shareholder
approvals shall have been duly received.
(b) The parties hereto shall have received all regulatory approvals
required or mutually deemed necessary in connection with the transactions
contemplated by this Reorganization Agreement, the Plan of Merger and the Bank
Merger Agreement, all notice periods and waiting periods required after the
granting of any such approvals shall have passed and all conditions contained in
any such approval required to have been satisfied prior to consummation of such
transactions shall have been satisfied, provided, however, that no such approval
shall have imposed any condition or requirement which, in the reasonable good
faith opinion of the Boards of Directors of Hudson Chartered and Progressive (as
they shall so agree) so materially and adversely affects the anticipated
economic and business benefits to such parties of the transactions contemplated
by this Agreement as to render consummation of such transactions inadvisable.
(c) The parties hereto shall have received an opinion of Arnold & Porter
dated as of the Closing Date, satisfactory in form and substance to Hudson
Chartered and Progressive, to the effect that the Merger when consummated in
accordance with the terms hereof and the Plan of Merger, and the Bank Merger
when consummated in accordance with the terms of the Bank Merger Agreement, will
constitute reorganizations within the meaning of Section 368(a) of the Code, and
that the exchange of Progressive Common Stock to the extent exchanged for Hudson
Chartered Common Stock will not give rise to recognition of gain or loss for
federal income tax purposes to the shareholders of Progressive, except to the
extent that cash is received in lieu of fractional share interests of Hudson
Chartered Common Stock, and neither the Merger nor the Bank Merger will give
rise to recognition of gain or loss for federal income tax purposes to the
Continuing Corporation. Hudson Chartered, Hudson Valley, Progressive and Pawling
shall provide Arnold & Porter with the facts, representations and assumptions
(including without limitation the standard representations set forth in Revenue
Procedure 86-42, 1986-2 C.B. 772) on which Arnold & Porter will rely in
rendering its opinion, which facts, representations and assumptions will be
consistent with the state of facts Hudson Chartered, Hudson Valley, Progressive
and Pawling believe will exist on the Effective Date.
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(d) No event shall have occurred that shall preclude the Merger from
being accounted for as a pooling of interests, and the parties shall have
received from each of their respective independent accountants a letter to the
effect that they are not aware of any reason that would preclude the Merger from
being accounted for as a pooling of interests.
(e) The Registration Statement (including any post-effective amendment
thereto) shall be effective under the Securities Act, and no proceeding shall be
pending or threatened by the Commission to suspend the effectiveness of such
Registration Statement, and Hudson Chartered shall have received all state
securities or "Blue Sky" permits or other authorizations, or confirmations as to
the availability of an exemption from registration requirements as may be
necessary, and no proceedings shall be pending or threatened by any state "Blue
Sky" securities administrator to suspend the effectiveness of such Registration
Statement.
(f) To the extent that any lease, license, loan, financing agreement or
other contract or agreement to which any party hereto of any of its
subsidiaries, as the case may be, is a party requires the consent of or waiver
from the other party thereto as a result of the transactions contemplated by
this Agreement, such consent or waiver shall have been obtained, unless the
failure to obtain such consent or waiver would not have a material adverse
effect on the Continuing Corporation as the parties hereto shall reasonably and
in good faith agree.
(g) None of the parties hereto or to the Bank Merger Agreement shall be
subject to any order, decree or injunction of a court or agency of competent
jurisdiction, which enjoins or prohibits the consummation of the transactions
contemplated by this Reorganization Agreement, the Plan of Merger and the Bank
Merger Agreement and there shall be no action or proceeding by or before any
such court or agency that, in the judgment of Progressive or Hudson Chartered,
with the advice of its respective counsel, shall present a bona fide claim to
restrain, prohibit or invalidate the transactions contemplated hereby.
(h) The shares of Hudson Chartered Common Stock to be issued in the
Merger shall have been approved for listing on the American Stock Exchange,
Inc., subject to official notice of issuance.
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(i) The Rights issued pursuant to the Progressive Rights Agreement shall
not have become nonredeemable, exercisable, distributed or triggered pursuant to
the terms of such agreement (unless, in the case of a distribution or trigger,
the effects can be cured by Progressive).
5.2. Conditions Precedent - Hudson Chartered and Hudson Valley
The obligations of Hudson Chartered to effect the Merger and of Hudson
Valley to effect the Bank Merger shall be subject to satisfaction of the
following additional conditions at or prior to the Closing Date unless waived by
Hudson Chartered pursuant to Section 6.4 hereof:
(a) The representations and warranties of Progressive and Pawling set
forth in Article 2 hereof shall be true and correct in all material respects as
of the date of this Reorganization Agreement and as of the Closing Date as
though made on and as of the Closing Date (or on the date when made in the case
of any representation and warranty which specifically relates to an earlier
date), except as otherwise contemplated by this Reorganization Agreement or
consented to in writing by Hudson Chartered or where the failure to be true and
correct would not have, or would not reasonably be expected to have, a material
adverse effect on Progressive and Pawling, taken as a whole;
(b) Progressive and Pawling shall have in all material respects performed
all obligations and complied with all covenants required by this Reorganization
Agreement, the Plan of Merger and the Bank Merger Agreement, except where the
failure to perform or comply would not have, or would not reasonably be expected
to have, a material adverse effect on Progressive and Pawling, taken as a whole;
(c) Hudson Chartered shall have received from KPMG Peat Marwick LLP a
letter dated not more than five days prior to (i) the effective date of the
Registration Statement and (ii) the Closing Date, with respect to certain
financial information regarding Progressive, each in form and substance which is
customary in transactions of the nature contemplated by this Agreement;
(d) Each of Progressive and Pawling shall have delivered to Hudson
Chartered a certificate, dated the Closing Date and signed by its President and
Chief Executive Officer and by its Chief Financial Officer to the effect that
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the conditions set forth in paragraphs (a), (b) and (f) of this section have
been satisfied;
(e) Hudson Chartered shall have received an opinion or opinions of
Housley Kantarian & Bronstein, P.C. and/or in-house counsel to Progressive,
dated as of the Closing Date, in the form attached as Annex 5.2(e) hereto; and
(f) Neither Progressive nor Pawling shall have experienced or suffered
any material adverse change in its business, operations, assets or condition
(financial or other) since the date hereof; provided, however, that a material
adverse change shall not be deemed to include the impact of (i) changes in
banking and similar laws of general applicability to all depository institutions
or interpretations thereof by courts or other governmental authorities, (ii)
changes in generally accepted accounting principles or regulatory accounting
requirements generally applicable to financial institutions and their holding
companies, (iii) actions or omissions of a party hereto taken with the prior
written consent of the other party, and (iv) the transaction costs associated
with the Merger and compliance by either party with the provisions of this
Agreement.
5.3. Conditions Precedent - Progressive and Pawling
The obligations of Progressive to effect the Merger and of Pawling to
effect the Bank Merger shall be subject to satisfaction of the following
additional conditions at or prior to the Closing Date unless waived by
Progressive pursuant to Section 6.4 hereof:
(a) The representations and warranties of Hudson Chartered and Hudson
Valley set forth in Article 3 hereof shall be true and correct in all material
respects as of the date of this Reorganization Agreement and as of the Closing
Date as though made on and as of the Closing Date (or on the date when made in
the case of any representation and warranty which specifically relates to an
earlier date), except as otherwise contemplated by this Reorganization Agreement
or consented to in writing by Progressive or where the failure to be true and
correct would not have, or would not reasonably be expected to have, a material
adverse effect on Hudson Chartered and the Hudson Chartered Subsidiaries, taken
as a whole;
(b) Hudson Chartered and Hudson Valley shall have in all material
respects performed all obligations and complied with all covenants required by
this Reorganization Agreement,
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the Plan of Merger and the Bank Merger Agreement, except where the failure to
perform or comply would not have, or would not reasonably be expected to have, a
material adverse effect on Hudson Chartered and the Hudson Chartered
Subsidiaries, taken as a whole;
(c) Progressive shall have received from Deloitte & Touche LLP a letter
dated not more than five days prior to (i) the effective date of the
Registration Statement and (ii) the Closing Date, with respect to certain
financial information regarding Hudson Chartered, each in form and substance
which is customary in transactions of the nature contemplated by this Agreement;
(d) Each of Hudson Chartered and Hudson Valley shall have delivered to
Progressive a certificate, dated the Closing Date and signed by its President
and Chief Executive Officer and by its Chief Financial Officer to the effect
that the conditions set forth in paragraphs (a), (b) and (f) of this section
have been satisfied;
(e) Progressive shall have received an opinion or opinions of Van DeWater
& Van DeWater and/or Arnold & Porter, dated as of the Closing Date, in the form
attached as Annex 5.3(e) hereto; and
(f) Neither Hudson Chartered nor Hudson Valley shall have experienced or
suffered any material adverse change in its business, operations, assets or
condition (financial or other) since the date hereof; provided, however, that a
material adverse change shall not be deemed to include the impact of (i) changes
in banking and similar laws of general applicability to all depository
institutions or interpretations thereof by courts or other governmental
authorities, (ii) changes in generally accepted accounting principles or
regulatory accounting requirements generally applicable to financial
institutions and their holding companies, (iii) actions or omissions of a party
hereto taken with the prior written consent of the other party, and (iv) the
transaction costs associated with the Merger and compliance by either party with
the provisions of this Agreement.
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ARTICLE 6.
TERMINATION, WAIVER AND AMENDMENT
6.1. Termination
This Reorganization Agreement, the Plan of Merger and the Bank Merger
Agreement may be terminated, either before or after approval by the shareholders
of Hudson Chartered or Progressive:
(a) At any time on or prior to the Effective Date, by the mutual consent
in writing of the parties hereto;
(b) At any time on or prior to the Closing Date, by Hudson Chartered in
writing, if Progressive or Pawling has, or by Progressive in writing, if Hudson
Chartered or Hudson Valley has, in any material respect, breached (i) any
covenant or agreement contained herein, in the Plan of Merger or in the Bank
Merger Agreement or (ii) any representation or warranty contained herein, and in
either case if such breach has not been cured by the earlier of 30 days after
the date on which written notice of such breach is given to the party committing
such breach or the Closing Date, and which breach would, in the reasonable
opinion of the non-breaching party, individually or in the aggregate, have, or
reasonably likely to have, a material adverse effect on the breaching party or
upon consummation of the transactions contemplated by this Agreement;
(c) On the Closing Date, by any party hereto in writing, if any of the
conditions precedent set forth in Article 5 hereof with respect to such party
have not been satisfied or fulfilled;
(d) At any time, by any party hereto in writing, if the governmental
applications for prior approval referred to in Section 4.3 hereof have been
denied, and the time period for appeals and requests for reconsideration has
run;
(e) At any time, by any party hereto in writing, if the shareholders of
Progressive or Hudson Chartered do not approve the transactions contemplated
herein at the annual or special meeting duly called for that purpose; or
(f) By any party hereto in writing if the Closing Date has not occurred
by the close of business on November 15, 1998.
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<PAGE>
6.2. Effect of Termination
In the event this Reorganization Agreement, the Plan of Merger or the
Bank Merger Agreement are terminated pursuant to Section 6.1 hereof, this
Agreement, the Plan of Merger and the Bank Merger Agreement shall become void
and have no effect, except that (i) the provisions relating to confidentiality
and expenses set forth in Sections 4.5, 4.6, 4.7(b)(14), 4.8(b)(14) and 7.1
hereof, respectively, shall survive any such termination and (ii) a termination
pursuant to Section 6.1(b) shall not relieve the breaching party from liability
for an uncured, intentional and willful breach of such representation, warranty,
covenant or agreement giving rise to such termination.
6.3. Survival of Representations, Warranties and Covenants
All representations, warranties and covenants in this Reorganization
Agreement, the Plan of Merger and the Bank Merger Agreement or in any instrument
delivered pursuant hereto or thereto shall expire on, and be terminated and
extinguished at, the Effective Date and from and after the Effective Date, none
of the parties hereto shall have any liability to the other on account of any
breach or failure of any of these representations, warranties or covenants;
provided, however, that the foregoing clause (i) shall not apply to agreements
or covenants of the parties that by their terms are to survive or be performed
after the Effective Date, and (ii) no such representations, warranties or
covenants shall be deemed to be terminated or extinguished so as to deprive
Hudson Chartered, Hudson Valley, Progressive or Pawling (or any director,
officer or controlling person thereof) of any defense in law or equity which
otherwise would be available against the claims of any person, including,
without limitation, any shareholder or former shareholder of either Hudson
Chartered or Progressive, the aforesaid representations, warranties and
covenants being material inducements to the consummation by Hudson Chartered,
Progressive, Hudson Valley and Pawling of the transactions contemplated herein
and in the Bank Merger Agreement.
6.4. Waiver
Except with respect to any required shareholder or regulatory approval,
Hudson Chartered and Progressive respectively, by written instrument signed by
an executive officer of such party, may at any time (whether before or after
approval of this Reorganization Agreement and the Plan of Merger by the
shareholders of Hudson Chartered and
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Progressive) extend the time for the performance of any of the obligations or
other acts of Hudson Chartered or Hudson Valley, on the one hand, or Progressive
or Pawling, on the other hand, and may waive (i) any inaccuracies of such
parties in the representations or warranties contained in this Agreement, the
Plan of Merger, the Bank Merger Agreement or any document delivered pursuant
hereto or thereto, (ii) compliance with any of the covenants, undertakings or
agreements of such parties, or satisfaction of any of the conditions precedent
to its obligations, contained herein, in the Plan of Merger or in the Bank
Merger Agreement or (iii) the performance by such parties of any of its
obligations set out herein or therein; provided, however, that no such waiver
executed after approval of this Reorganization Agreement and the Plan of Merger
by the shareholders of Hudson Chartered and/or Progressive shall alter the
number of shares of Hudson Chartered Common Stock into which each share of
Progressive Common Stock shall be converted pursuant to the Merger.
6.5. Amendment or Supplement
This Reorganization Agreement, the Plan of Merger and the Bank Merger
Agreement may be amended or supplemented at any time by mutual agreement of the
parties hereto, in the case of this Reorganization Agreement, or thereto, in the
case of the Plan of Merger and the Bank Merger Agreement, respectively. Any such
amendment or supplement must be in writing and approved by their respective
boards of directors and/or officers authorized thereby and shall be subject to
the proviso in Section 6.4 hereof.
ARTICLE 7.
MISCELLANEOUS
7.1. Expenses
Except as provided in Section 7.1(b) below, each party hereto shall bear
and pay all costs and expenses incurred by it in connection with the
transactions contemplated in this Reorganization Agreement, including fees and
expenses of its own financial consultants, accountants and counsel, except that
Hudson Chartered and Progressive each shall bear and pay 50% of all printing
costs relating to the Registration Statement and the Proxy Statement.
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<PAGE>
7.2. Entire Agreement
This Reorganization Agreement, the Plan of Merger, the Bank Merger
Agreement, the Hudson Chartered Option Agreement, the Progressive Option
Agreement and the Confidentiality Agreement contain the entire agreement between
the parties with respect to the transactions contemplated hereunder and
thereunder and supersede all prior arrangements or understandings with respect
thereto, written or oral, other than documents referred to herein or therein.
The terms and conditions of this Reorganization Agreement, the Plan of Merger
and the Bank Merger Agreement shall inure to the benefit of and be binding upon
the parties hereto and thereto and their respective successors. Nothing in this
Reorganization Agreement, the Plan of Merger or the Bank Merger Agreement,
expressed or implied, is intended to confer upon any party, other than the
parties hereto and thereto, and their respective successors, any rights,
remedies, obligations or liabilities.
7.3. No Assignment
No party hereto may assign any of its rights or obligations under this
Reorganization Agreement to any other person.
7.4. Notices
All notices or other communications which are required or permitted
hereunder shall be in writing and sufficient if delivered personally or sent by
facsimile transmission or overnight express or by registered or certified mail,
postage prepaid, addressed as follows:
If to Hudson Chartered or Hudson Valley:
Hudson Chartered Bancorp, Inc.
Route 55
LaGrangeville, New York 12540
Attention: T. Jefferson Cunningham III,
Chairman and Chief Executive Officer
Facsimile No.: (914) 471-1114
With a required copy to:
Arnold & Porter
555 12th Street, N.W.
Washington, D.C. 20004
Attention: Steven Kaplan, Esq.
Facsimile No.: (202) 942-5999
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<PAGE>
If to Progressive or Pawling:
Progressive Bank, Inc.
1301 Route 52
Fishkill, New York 12524
Attention: Peter Van Kleeck,
President and Chief Executive Officer
Facsimile No.: (914) 897-7410
With a required copy to:
Housley Kantarian & Bronstein, P.C.
1220 19th Street, N.W., Suite 700
Washington, D.C. 20036
Attention: Gary R. Bronstein, Esq.
Facsimile No.: (202) 822-0140
7.5. Captions
The captions contained in this Reorganization Agreement are for reference
purposes only and are not part of this Reorganization Agreement.
7.6. Counterparts
This Reorganization Agreement may be executed in any number of
counterparts, and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
7.7. Governing Law
THIS REORGANIZATION AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE
AND ENTIRELY TO BE PERFORMED WITHIN SUCH JURISDICTION, EXCEPT TO THE EXTENT
FEDERAL LAW MAY BE APPLICABLE.
7.8. Construction and Interpretation
Except as the context otherwise requires, all references herein to any
state or federal regulatory agency shall also be deemed to refer to any
predecessor or successor agency, and all references to state and federal
statutes or regulations also shall be deemed to refer to any successor statute
or regulation.
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<PAGE>
7.9. Severability
Whenever possible, each provision of this Agreement shall be interpreted
in such manner as to be effective and valid under applicable law, but if any
provision of this Agreement is held to be prohibited by or invalid under
applicable law, then such provision will be ineffective only to the extent of
such prohibition or invalidity, without invalidating the remainder of such
provision or other remaining provisions of the Agreement.
7.10. No Employment Solicitation
If this Agreement is terminated, the parties hereto agree that, for a
period of two years subsequent to such termination (i) none of the parties
shall, without first obtaining the prior written consent of the other, directly
or indirectly, actively solicit the employment of any current director, officer
or employee of the other party and (ii) none of the parties will actively
solicit business relationships with clients of the other party solely as a
result of review of the information contemplated in Section 4.5 herein or
otherwise.
[Remainder of page left intentionally blank; signatures appear on following
page.]
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<PAGE>
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have caused this Reorganization Agreement to be executed in counterparts
by their duly authorized officers and their corporate seal to be hereunto
affixed and attested by their officers thereunto duly authorized, all as of the
day and year first above written.
Attest HUDSON CHARTERED BANCORP, INC.
______________________ By ____________________________
Kathy D. Seaboldt T. Jefferson Cunningham III
Assistant Secretary Chairman and Chief Executive
Officer
(SEAL)
Attest FIRST NATIONAL BANK OF HUDSON VALLEY
______________________ By _____________________________
Kathy D. Seaboldt John C. VanWormer
Assistant Secretary President and Chief Executive
Officer
(SEAL)
Attest PROGRESSIVE BANK, INC.
______________________ By _____________________________
Beatrice D. Parent Peter Van Kleeck
Corporate Secretary President and Chief Executive
Officer
(SEAL)
Attest PAWLING SAVINGS BANK
______________________ By _____________________________
Beatrice D. Parent Peter Van Kleeck
Corporate Secretary President and Chief Executive
Officer
(SEAL)
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<PAGE>
ANNEX A
PLAN OF MERGER
[See Exhibit 2.2 hereto.]
<PAGE>
ANNEX B
AGREEMENT AND PLAN OF MERGER
[See Exhibit 2.3 hereto.]
<PAGE>
ANNEX 5.2(e)
FORM OF OPINION OF HOUSLEY KANTARIAN & BRONSTEIN, P.C.
AND/OR IN-HOUSE COUNSEL TO PROGRESSIVE
1. Progressive is duly incorporated, validly existing and in good standing as
a corporation under the corporate laws of the State of New York and has all
the requisite corporate power and authority to consummate the Merger.
Progressive is a bank holding company under the Bank Holding Company Act,
as amended.
2. Pawling is duly incorporated, validly existing and in good standing as a
savings bank organized and existing under the laws of the State of New
York.
3. The Reorganization Agreement and the Plan of Merger and the Merger have
been duly approved and adopted by the Board of Directors and shareholders
of Progressive and the Board of Directors of Pawling has approved and
adopted the Reorganization Agreement, all as required by law. The Bank
Merger Agreement has been duly approved and adopted by the Board of
Directors and sole shareholder of Pawling.
4. The Reorganization Agreement and the Plan of Merger have been duly executed
and delivered by Progressive and the Reorganization Agreement has been duly
executed and delivered by Pawling and (assuming due approval and execution
thereof by Hudson Chartered and Hudson Valley as applicable) constitute
valid and binding obligations of Progressive and Pawling enforceable
against Progressive and Pawling in accordance with their respective terms,
except to the extent that (1) enforceability thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance
of other laws relating to or from time to time affecting the enforcement of
creditors' rights generally or the rights of creditors of bank holding
companies, the accounts of whose subsidiaries are insured by the Federal
Deposit Insurance Corporation and (2) the availability of certain remedies
may be precluded by general principles of equity.
5. The execution, delivery and performance of the Reorganization Agreement,
the Plan of Merger and the Bank Merger Agreement do not violate the
Certificate of Incorporation, Charter or Bylaws of Progressive or Pawling.
<PAGE>
6. To our actual knowledge, all approvals required to be obtained by
Progressive or Pawling in connection with the Merger and the Bank Merger
provided for in the Reorganization Agreement, the Plan of Merger and the
Bank Merger Agreement have been obtained from the appropriate regulatory
authorities.
<PAGE>
ANNEX 5.3(e)
FORM OPINION OF VAN DEWATER & VAN DEWATER
AND/OR ARNOLD & PORTER
1. Hudson Chartered is duly incorporated, validly existing and in good
standing as a corporation under the corporate laws of the State of New York
and has all the requisite corporate power and authority to consummate the
Merger. Hudson Chartered is a bank holding company under the Bank Holding
Company Act, as amended.
2. Hudson Valley is organized, validly existing and in good standing as a
national banking association.
3. The Reorganization Agreement and the Plan of Merger and the Merger have
been duly approved and adopted by the Board of Directors and shareholders
of Hudson Chartered and the Board of Directors of Hudson Valley has
approved and adopted the Reorganization Agreement, all as required by law.
The Bank Merger Agreement has been duly approved and adopted by the Board
of Directors and sole shareholder of Hudson Valley.
4. The Reorganization Agreement and the Plan of Merger have been duly executed
and delivered by Hudson Chartered and the Reorganization Agreement has been
duly executed and delivered by Hudson Valley and (assuming due approval and
execution thereof by Progressive and Pawling as applicable) constitute
valid and binding obligations of Hudson Chartered and Hudson Valley
enforceable against Hudson Chartered and Hudson Valley in accordance with
their respective terms, except to the extent that (1) enforceability
thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance of other laws relating to or from time to
time affecting the enforcement of creditors' rights generally or the rights
of creditors of bank holding companies, the accounts of whose subsidiaries
are insured by the Federal Deposit Insurance Corporation and (2) the
availability of certain remedies may be precluded by general principles of
equity.
5. The execution, delivery and performance of the Reorganization Agreement,
the Plan of Merger and the Bank Merger Agreement do not violate the
Certificate of Incorporation, Charter or Bylaws of Hudson Chartered or
Hudson Valley.
<PAGE>
6. To our actual knowledge, all approvals required to be obtained by Hudson
Chartered or Hudson Valley in connection with the Merger and the Bank
Merger provided for in the Reorganization Agreement, the Plan of Merger and
the Bank Merger Agreement have been obtained from the appropriate
regulatory authorities.
Exhibit 2.2
PLAN OF MERGER OF PROGRESSIVE BANK, INC.
WITH AND INTO HUDSON CHARTERED BANCORP, INC.
THIS PLAN OF MERGER (this "Plan of Merger"), dated as of December 16, 1997,
is by and between PROGRESSIVE BANK, INC. ("Progressive"), a New York
corporation, and HUDSON CHARTERED BANCORP, INC. ("Hudson Chartered"), a New York
corporation.
WITNESSETH
WHEREAS, the respective Boards of Directors of Progressive and Hudson
Chartered deem the merger of Progressive with and into Hudson Chartered, under
and pursuant to the terms and conditions herein set forth or referred to,
desirable and in the best interests of the respective corporations and their
respective shareholders, and the respective Boards of Directors of Progressive
and Hudson Chartered have adopted resolutions approving this Plan of Merger and
an Agreement and Plan of Reorganization dated of even date herewith (the
"Reorganization Agreement");
WHEREAS, the Board of Directors of Progressive has directed that this Plan
of Merger be submitted to the shareholders of Progressive; and
WHEREAS, the Board of Directors of Hudson Chartered has directed that this
Plan of Merger be submitted to the shareholders of Hudson Chartered;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements herein contained, the parties hereto do hereby agree that the Plan of
Merger shall be as follows:
ARTICLE I.
MERGER
Subject to the terms and conditions of this Plan of Merger and the
Reorganization Agreement, on the Effective Date (as hereinafter defined),
Progressive shall be merged with and into Hudson Chartered, pursuant to the
provisions of, and with the effect provided in Article 9 of the New York
Business Corporation Law (said transaction being hereinafter referred to as the
"Merger"). On the Effective Date, the separate existence of Progressive shall
cease and Hudson Chartered, as the surviving entity, shall continue unaffected
and unimpaired by the Merger and shall operate under the name "Premier National
Bancorp, Inc." (Hudson Chartered as existing on and after the Effective Date
being hereinafter sometimes referred to as the "Surviving Corporation.")
<PAGE>
ARTICLE II.
CERTIFICATE OF INCORPORATION AND BY-LAWS
Upon the Effective Date, the Certificate of Incorporation of the Surviving
Corporation shall be restated in the form to be agreed to by the parties hereto
in good faith and attached hereto as Annex A prior to submission of this Plan of
Merger to the respective shareholders of Progressive and Hudson Chartered (the
"Submission"), and the By-Laws of the Surviving Corporation shall be restated in
the form to be agreed to by the parties hereto in good faith and attached hereto
as Annex B prior to the Submission, in each case until amended in accordance
with applicable law.
ARTICLE III.
BOARD OF DIRECTORS AND OFFICERS
1. From and after the Effective Date, the directors of the Surviving
Corporation, who shall hold office until the expiration of their respective
terms or until their successors are duly elected and qualified, shall be the ten
persons designated by Hudson Chartered and the ten persons designated by
Progressive pursuant to the Reorganization Agreement, or any persons chosen to
replace such designated persons pursuant to the Reorganization Agreement and the
Certificate of Incorporation and By-Laws of the Surviving Corporation. The
directors of the Surviving Corporation shall be divided into three classes as
nearly equal in number as possible, as provided in the Reorganization Agreement.
It is intended by the parties hereto that, following the Effective Date,
T. Jefferson Cunningham III shall serve as Chairman of the Board and Chairman of
the Executive Committee of the Board of the Surviving Corporation, Peter Van
Kleeck shall serve as President and Chief Executive Officer of the Surviving
Corporation, and John C. VanWormer shall serve as an Executive Vice President of
the Surviving Corporation, each to serve until their successors are duly elected
and qualified. All other officers of the Surviving Corporation shall be
appointed by resolution of the directors in accordance with the By-Laws of the
Surviving Corporation.
ARTICLE IV.
CAPITAL
1. The designation and number of outstanding shares of capital stock of
Progressive is as follows: (a) 3,831,809 shares of common stock, par value $1.00
per share ("Progressive Common Stock"), and (b) no shares of preferred stock,
par value $1.00 per share ("Progressive Preferred Stock"). Each share of
Progressive Common Stock is entitled
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<PAGE>
to vote with respect to the Merger. Such number of outstanding shares of
Progressive Common Stock may be changed prior to the Effective Date as a result
of the exercise of stock options or other rights or upon the repurchase by
Progressive of such shares.
2. The designation and number of outstanding shares of capital stock of
Hudson Chartered is as follows: (a) 7,076,263 shares of common stock, par value
$0.80 per share ("Hudson Chartered Common Stock" until the Effective Date and
"Surviving Corporation Common Stock" from and after the Effective Date); and (b)
no shares of preferred stock, par value $0.01 per share ("Hudson Chartered
Preferred Stock"). Each share of Hudson Chartered Common Stock is entitled to
vote with respect to the Merger. Such number of outstanding shares of Hudson
Chartered Common Stock may be changed prior to the Effective Date as a result of
the exercise of stock options or other rights, the sale of such shares by Hudson
Chartered pursuant to its Dividend Reinvestment and Stock Purchase Plan or upon
the repurchase by Hudson Chartered of such shares.
3. The shares of capital stock of Hudson Chartered issued and outstanding
immediately prior to the Effective Date shall, on the Effective Date, continue
to be issued and outstanding capital stock of the Surviving Corporation.
ARTICLE V.
CONVERSION AND EXCHANGE OF PROGRESSIVE
SHARES; FRACTIONAL SHARE INTERESTS
1. On the Effective Date, each share of Progressive Common Stock
outstanding immediately prior to the Effective Date (except as provided in
Paragraphs 2, 5, 6 and 7 of this Article) shall, by virtue of the Merger, be
converted into 1.82 shares of Surviving Corporation Common Stock (the "Exchange
Ratio") and shall no longer be shares of common stock of Progressive. Each share
of Hudson Chartered Common Stock issued and outstanding immediately before the
Effective Date shall remain an outstanding share of Surviving Corporation Common
Stock after the Effective Date.
2. On the Effective Date, all shares of Progressive Common Stock held in
the treasury of Progressive or owned beneficially by any subsidiary of
Progressive other than in a fiduciary capacity or in connection with a debt
previously contracted and all shares of Progressive Common Stock owned by the
Surviving Corporation or owned beneficially by any subsidiary of the Surviving
Corporation other than in a fiduciary capacity or in connection with a debt
previously
- 3 -
<PAGE>
contracted shall be canceled and no cash, stock or other property shall be
delivered in exchange therefor.
3. On and after the Effective Date, each holder of a certificate or
certificates theretofore representing outstanding shares of Progressive Common
Stock (any such certificate being hereinafter referred to as a "Certificate")
may surrender the same to the Surviving Corporation or its agent for
cancellation and each such holder shall be entitled upon such surrender to
receive in exchange therefor certificate(s) representing the number of whole
shares of Surviving Corporation Common Stock to which such holder is entitled as
provided herein and a check in an amount equal to the amount of cash, without
interest, to which such holder is entitled for fractional shares. As soon as
practicable after the Effective Date, the Surviving Corporation or its agent
will send a notice and transmittal form to each Progressive stockholder of
record at the Effective Date whose Progressive Common Stock shall have been
converted into Surviving Corporation Common Stock advising such stockholder of
the effectiveness of the Merger and the procedure for surrendering to the
Surviving Corporation or its agent outstanding certificates formerly
representing Progressive Common Stock in exchange for new certificates for
Surviving Corporation Common Stock. Until so surrendered, each Certificate shall
be deemed for all purposes to evidence ownership of the number of whole shares
of Surviving Corporation Common Stock into which the shares represented by such
Certificates have been changed or converted as aforesaid and the right to
receive cash for fractional shares. Certificates surrendered for exchange by any
person who is an "affiliate" of Progressive for purposes of Rule 145(c) under
the Securities Act of 1933, as amended, shall not be exchanged for certificates
representing shares of Surviving Corporation Common Stock until the Surviving
Corporation has received the written agreement of such person contemplated by
Section 4.10 of the Reorganization Agreement. If any certificate surrendered for
exchange is to be issued in a name other than that in which a certificate
surrendered for exchange is issued, the certificate so surrendered shall be
properly endorsed and otherwise in proper form for transfer and the person
requesting such exchange shall affix any requisite stock transfer tax stamps to
the certificate surrendered or provide funds for their purchase or establish to
the satisfaction of the Surviving Corporation or its agent that such taxes are
not payable.
4. Upon the Effective Date, the stock transfer books of Progressive shall
be closed and no transfer of Progressive Common Stock shall thereafter be made
or recognized. Any other provision of this Plan of Merger notwithstanding,
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<PAGE>
neither the Surviving Corporation or its agent nor any party to the Merger shall
be liable to a holder of Progressive Common Stock for any amount properly paid
or property delivered in good faith to a public official pursuant to any
applicable abandoned property, escheat or similar law.
5. To the extent dissenters' rights apply under New York law, no conversion
under Paragraph 1 of this Article V shall be made in respect of any share of
Progressive Common Stock as to which a Progressive shareholder has elected to
exercise dissenters' rights pursuant to Section 910 of the New York Business
Corporation Law, as amended, if any, until such time as such shareholder shall
have effectively lost dissenters' rights.
6. In the event that during the period commencing on the date hereof and
ending on the Effective Date, the outstanding shares of Hudson Chartered Common
Stock shall have been increased, decreased or changed into or exchanged for a
different number or kind of shares or securities by reorganization,
recapitalization, reclassification, stock dividend, stock split or other like
changes in Hudson Chartered's capitalization, all without Hudson Chartered's
receiving consideration therefor, then an appropriate and proportionate
adjustment shall be made in the number and kind of shares of Surviving
Corporation Common Stock to be thereafter delivered pursuant to this Plan of
Merger.
7. Notwithstanding any other provision hereof, each holder of shares of
Progressive Common Stock who would otherwise have been entitled to receive a
fraction of a share of Surviving Corporation Common Stock (after taking into
account all Certificates delivered by such holder) shall receive, in lieu
thereof, upon presentation of such Certificates, cash in an amount equal to such
fractional part of a share of Surviving Corporation Common Stock multiplied by
the market value of such Surviving Corporation Common Stock. The market value of
one share of Surviving Corporation Common Stock on the Effective Date shall be
the closing price of Hudson Chartered Common Stock on the American Stock
Exchange (as reported by The Wall Street Journal) on the last business day
preceding such date. No such holder shall be entitled to dividends, voting
rights or any other shareholder right in respect of any fractional share.
8. On the Effective Date, Progressive's obligations with respect to stock
options granted under the Progressive Stock-Based Compensation Plans (as that
term is defined in the Reorganization Agreement) shall be assumed by the
Surviving Corporation. At the Effective Date, each option to
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<PAGE>
purchase or other right with respect to shares of Progressive Common Stock
pursuant to stock options, stock appreciation rights or other rights, including
stock awards ("Progressive Options") granted by Progressive under the
Progressive stock option plans, which are outstanding at the Effective Date
whether or not exercisable, shall be converted into and become rights with
respect to Surviving Corporation Common Stock, and the Surviving Corporation
shall assume each Progressive Option, in accordance with the terms of the
applicable Progressive stock plan and stock option or other agreement by which
it is evidenced, except that, from and after the Effective Date, (i) the number
of shares of Surviving Corporation Common Stock subject to each Progressive
Option shall be equal to the number of shares of Progressive Common Stock
subject to such Progressive Option immediately prior to the Effective Date
multiplied by the Exchange Ratio, and (ii) the per share exercise price under
each such Progressive Option shall be adjusted by dividing the per share
exercise price under each such Progressive Option by the Exchange Ratio, rounded
up to the nearest cent. Notwithstanding the provisions of clause (i) of the
preceding sentence, the Surviving Corporation shall not be obligated to issue
any fraction of a share of Surviving Corporation Common Stock upon exercise of
Progressive Options and any fraction of a share of Surviving Corporation Common
Stock that otherwise would be subject to a converted Progressive Option shall
represent the right to receive a cash payment upon exercise of such converted
Progressive Option equal to the product of such fraction and the market value of
one share of the Surviving Corporation Common Stock, as determined in the manner
set forth in next succeeding sentence, less the exercise price attributable to
such fractional share, rounded down to the nearest cent. The market value of one
share of the Surviving Corporation Common Stock at the time of exercise of an
Option shall be the closing price of such common stock on the national exchange
on which such stock is traded (as reported by The Wall Street Journal) on the
last trading day preceding the exercise date. In addition, notwithstanding
clauses (i) and (ii) of this paragraph 8, in respect of any stock option which
is an "incentive stock option" within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended ("Code"), the conversion hereinabove provided
for shall comply with the requirements of Section 424(a) of the Code, including
the requirement that such converted options shall not give to the holder thereof
any benefits additional to those which such holder had prior to such conversion
under the option as originally granted.
9. As soon as practicable after the Effective Date, the Surviving
Corporation shall deliver to the participants in each Progressive stock plan an
appropriate notice setting
- 6 -
<PAGE>
forth such participant's rights pursuant thereto and the grants subject to such
Progressive stock plan shall continue in effect on the same terms and conditions
(subject to the adjustments required by Paragraph 8 of this Article V after
giving effect to the Merger), and the Surviving Corporation shall comply with
the terms of each Progressive stock plan to ensure, to the extent required by,
and subject to the provisions of, such Progressive stock plan, that Progressive
Options which qualified as incentive stock options prior to the Effective Date
continue to qualify as incentive stock options after the Effective Date.
10. Hudson Chartered shall reserve for issuance a sufficient number of
shares of Hudson Chartered Common Stock for the purpose of issuing its shares to
Progressive's shareholders in accordance with this Article V. At all times after
the Effective Date, the Surviving Corporation shall reserve for issuance such
number of shares of Surviving Corporation Common Stock as necessary so as to
permit exercise of options granted under the Progressive option plans in the
manner contemplated in Paragraph 8 of this Article V of this Plan of Merger and
the instruments pursuant to which such options are granted.
ARTICLE VI.
EFFECTIVE DATE OF THE MERGER
A certificate of merger evidencing the transactions contemplated herein
shall be delivered to the New York Department of State for filing as provided in
the Reorganization Agreement. The Merger shall be effective at the time and on
the date specified in such certificate of merger (such date and time being
herein referred to as the "Effective Date").
ARTICLE VII.
FURTHER ASSURANCES
If at any time the Surviving Corporation shall consider or be advised that
any further assignments, conveyances or assurances are necessary or desirable to
vest, perfect or confirm in the Surviving Corporation title to any property or
rights of Progressive, or otherwise carry out the provisions hereof, the proper
officers and directors of Progressive, as of the Effective Date, and thereafter
the officers of the Surviving Corporation acting on behalf of Progressive, shall
execute and deliver any and all proper assignments, conveyances and assurances,
and do all things necessary or desirable to vest, perfect or confirm title to
such property or rights in the Surviving Corporation and otherwise carry out the
provisions hereof.
- 7 -
<PAGE>
ARTICLE VIII.
CONDITIONS PRECEDENT
The obligations of Hudson Chartered and Progressive to effect the Merger as
herein provided shall be subject to satisfaction, unless duly waived, of the
conditions set forth in the Reorganization Agreement.
ARTICLE IX.
TERMINATION
Anything contained in this Plan of Merger to the contrary notwithstanding,
and notwithstanding adoption hereof by the shareholders of Progressive and
Hudson Chartered, this Plan of Merger may be terminated and the Merger abandoned
as provided in the Reorganization Agreement. If the Reorganization Agreement is
terminated, then this Plan of Merger shall terminate automatically, without
further action of the parties.
ARTICLE X.
MISCELLANEOUS
1. This Plan of Merger may be amended or supplemented at any time prior to
its Effective Date by mutual agreement of Hudson Chartered and Progressive. Any
such amendment or supplement must be in writing and approved by their respective
Boards of Directors and/or by officers authorized thereby and shall be subject
to the proviso in Section 6.4 of the Reorganization Agreement.
2. Any notice or other communication required or permitted under this Plan
of Merger shall be given, and shall be effective, in accordance with the
provisions of the Reorganization Agreement.
3. The headings of the several Articles herein are inserted for convenience
of reference only and are not intended to be a part of or to affect the meaning
or interpretation of this Plan of Merger.
4. This Plan of Merger shall be governed by and construed in accordance
with the laws of the State of New York applicable to agreements made and
entirely to be performed in such jurisdiction, except to the extent Federal law
may be applicable.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have caused this Plan of Merger to be executed in counterparts by their
duly authorized officers and their corporate seal to be hereunto affixed and
attested by their officers thereunto duly authorized, all as of the day and year
first above written.
Attest HUDSON CHARTERED BANCORP, INC.
______________________ By _____________________________
Kathy D. Seaboldt T. Jefferson Cunningham III
Assistant Secretary Chairman and Chief Executive
Officer
(SEAL)
Attest PROGRESSIVE BANK, INC.
______________________ By _____________________________
Beatrice D. Parent Peter Van Kleeck
Corporate Secretary President and Chief Executive
Officer
(SEAL)
- 9 -
<PAGE>
ANNEX A
RESTATED CERTIFICATE OF INCORPORATION
OF THE SURVIVING CORPORATION
<PAGE>
ANNEX B
RESTATED BY-LAWS OF THE SURVIVING CORPORATION
Exhibit 2.3
AGREEMENT AND PLAN OF MERGER OF PAWLING SAVINGS BANK
WITH AND INTO FIRST NATIONAL BANK OF THE HUDSON VALLEY
THIS AGREEMENT AND PLAN OF MERGER (this "Bank Merger Agreement"), dated as
of December 16, 1997, is adopted and made by and between FIRST NATIONAL BANK OF
THE HUDSON VALLEY ("Hudson Valley"), a national banking association, and PAWLING
SAVINGS BANK ("Pawling"), a New York state-chartered stock savings bank, each
acting pursuant to resolutions adopted by the vote of a majority of its board of
directors.
WITNESSETH
WHEREAS, Hudson Valley is a national banking association organized and
existing under the laws of the United States, the authorized capital stock of
which consists of 1,000,000 shares of common stock, par value $5.00 per share,
347,380 shares of which are issued and outstanding and owned by Hudson Chartered
Bancorp, Inc. ("Hudson Chartered"), 5,000 shares of Class A perpetual
noncumulative preferred stock, par value $1,000 par value per share, all of
which are issued and outstanding and owned by Hudson Chartered, and 475,000
shares of 7.25% noncumulative convertible preferred stock, Series B, par value
$1.00 per share, all of which are issued and outstanding and owned by Hudson
Chartered;
WHEREAS, Pawling is a stock savings bank organized and existing under the
laws of the State of New York, the authorized capital stock of which consists of
(i) 1,500,000 shares of common stock, par value $1.00 per share ("Pawling Common
Stock"), one share of which is issued and outstanding and owned by Progressive
Bank, Inc. ("Progressive"), and 1,000,000 shares of preferred stock, par value
$1.00 per share ("Pawling Preferred Stock"), none of which are issued or
outstanding;
WHEREAS, Hudson Chartered, Progressive, Hudson Valley and Pawling have
entered into an Agreement and Plan of Reorganization (the "Reorganization
Agreement") that contemplates the contemporaneous mergers of Hudson Chartered
with and into Progressive pursuant to a Plan of Merger and of Pawling with and
into Hudson Valley pursuant to this Bank Merger Agreement;
WHEREAS, the respective Boards of Directors of Hudson Valley and Pawling
deem the merger of Pawling with and into Hudson Valley, under and pursuant to
the terms and conditions herein set forth or referred to, desirable and in the
best interests of the respective institutions and their respective
<PAGE>
shareholders, and the respective Boards of Directors of Hudson Valley and
Pawling have adopted resolutions approving this Bank Merger Agreement and each
of the Boards of Directors of Hudson Valley and Pawling has directed that this
Bank Merger Agreement be submitted to their respective shareholders for
approval;
WHEREAS, approval of this Bank Merger Agreement requires the affirmative
vote of the holders of at least two-thirds of the outstanding shares of the
common stock of each of Hudson Valley and Pawling;
WHEREAS, Hudson Chartered, as the sole shareholder of Hudson Valley, has
approved this Bank Merger Agreement; and
WHEREAS, Progressive, as the sole shareholder of Pawling, has approved this
Bank Merger Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements herein contained and intending to be legally bound hereby, the
parties hereto do hereby agree as follows:
ARTICLE I
BANK MERGER
Subject to the terms and conditions of this Bank Merger Agreement, on the
Effective Date (as hereinafter defined), Pawling shall be merged with and into
Hudson Valley pursuant to the provisions of, and with the effect provided in, 12
U.S.C. ss. 215a and 1828(c) (said transaction being hereinafter referred to as
the "Bank Merger"). On the Effective Date, the separate existence of Pawling
shall cease and Hudson Valley, as the surviving entity, shall continue its
existence under the name "Premier National Bank" unaffected and unimpaired by
the Bank Merger, and shall be liable for all the liabilities of Pawling existing
at the Effective Date (Hudson Valley as existing on and after the Effective Date
being hereinafter sometimes referred to as the "Surviving Bank"). The main
office of the Surviving Bank shall be located at the main office of Hudson
Valley, and branch offices thereof will be located at the locations set forth on
Annex A hereto. After the Effective Date, the Surviving Bank shall continue to
maintain in accordance with the requirements of applicable laws and regulations
the liquidation accounts previously maintained by Pawling and any predecessor
institutions.
- 2 -
<PAGE>
ARTICLE II
ARTICLES OF ASSOCIATION AND BY-LAWS
The Articles of Association and By-Laws of the Surviving Bank shall be the
Articles of Association and By-Laws of Hudson Valley in effect immediately prior
to the Effective Date, as the same may be subsequently amended as provided
therein.
ARTICLE III
BOARD OF DIRECTORS AND MANAGEMENT
1. On the Effective Date, the Board of Directors of the Surviving Bank
shall consist of 20 persons, 10 of whom shall be persons named by the Board of
Directors of Progressive and 10 of whom shall be persons named by the Board of
Directors of Hudson Chartered. If prior to the Effective Date (i) any of the
individuals named by either Progressive or Hudson Chartered to serve on the
Board of Directors of the Surviving Bank following the Effective Date becomes
unable or unwilling to serve as a director of the Surviving Bank, or (ii) either
Progressive or Hudson Chartered determines to replace an individual named by
such party to serve on the Board of Directors of the Surviving Bank, the party
that designated such individual may name a replacement to become a director of
the Surviving Bank after the Effective Date. It is intended by the parties
hereto that, from and after the Effective Date, T. Jefferson Cunningham III
shall serve as Chairman of the Board and Chairman of the Executive Committee of
the Board of the Surviving Bank, Peter Van Kleeck shall serve as President and
Chief Executive Officer of the Surviving Bank, and John C. VanWormer shall serve
as Vice Chairman of the Surviving Bank, each to serve until their successors are
duly elected and qualified. All other officers of the Surviving Bank shall be
appointed by the Board of Directors of the Surviving Bank pursuant to the
By-Laws thereof.
ARTICLE IV
CAPITAL
The shares of capital stock of Hudson Valley issued and outstanding
immediately prior to the Effective Date shall, on the Effective Date, continue
to be issued and outstanding.
- 3 -
<PAGE>
ARTICLE V
CANCELLATION AND CONVERSION
OF PAWLING SHARES
1. On the Effective Date, each share of Pawling Common Stock and Pawling
Preferred Stock outstanding immediately prior to the Effective Date shall by
virtue of the Bank Merger be canceled and no cash, stock or other property shall
be delivered in exchange therefor.
3. On the Effective Date, the stock transfer books of Pawling shall be
closed and no transfer of Pawling Common Stock shall thereafter be made or
recognized.
ARTICLE VI
EFFECTIVE DATE OF THE BANK MERGER
The Bank Merger shall be effective at the time and on the date upon which
the Bank Merger is permitted to occur by the Office of the Comptroller of the
Currency (such date and time being herein referred to as the "Effective Date").
ARTICLE VII
FURTHER ASSURANCES
If at any time the Surviving Bank shall consider or be advised that any
further assignments, conveyances or assurances are necessary or desirable to
vest, perfect or confirm in the Surviving Bank title to any property or rights
of Pawling, or otherwise carry out the provisions hereof, the proper officers
and directors of Pawling, as of the Effective Date, and thereafter the officers
of the Surviving Bank acting on behalf of Pawling, shall execute and deliver any
and all proper assignments, conveyances and assurances, and do all things
necessary or desirable to vest, perfect or confirm title to such property or
rights in the Surviving Bank and otherwise carry out the provisions hereof.
ARTICLE VIII
CONDITIONS PRECEDENT
The obligations of Pawling and Hudson Valley to effect the Bank Merger as
herein provided shall be subject to satisfaction, unless duly waived, of the
conditions set forth in the Reorganization Agreement.
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<PAGE>
ARTICLE IX
TERMINATION
Anything contained in this Bank Merger Agreement to the contrary
notwithstanding, and notwithstanding adoption hereof by the shareholders of
Pawling or Hudson Valley, this Bank Merger Agreement may be terminated and the
Bank Merger abandoned as provided in the Reorganization Agreement. In the event
the Reorganization Agreement is terminated pursuant to the terms thereof, this
Bank Merger Agreement shall become void and have no effect.
ARTICLE X
MISCELLANEOUS
1. This Bank Merger Agreement may be amended or supplemented at any time by
mutual agreement of Pawling and Hudson Valley. Any such amendment or supplement
must be in writing and approved by their respective Boards of Directors.
2. The headings of the several Articles herein are inserted for convenience
of reference only and are not intended to be a part of or to affect the meaning
or interpretation of this Bank Merger Agreement.
3. This Bank Merger Agreement may be executed in several counterparts, each
of which shall be deemed the original, but all of which together shall
constitute one and the same instrument.
4. This Bank Merger Agreement shall be governed by and construed in
accordance with the laws of the State of New York applicable to agreements made
and entirely to be performed in such jurisdiction, except to the extent federal
law may be applicable.
- 5 -
<PAGE>
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have caused this Bank Merger Agreement to be executed in counterparts by
their duly authorized officers and their corporate seals to be hereunto affixed
and attested by their officers thereunto duly authorized, all as of the day and
year first above written.
ATTEST FIRST NATIONAL BANK OF THE HUDSON
VALLEY
- --------------------------- By: ------------------------------
Kathy D. Seaboldt John C. VanWormer
Assistant Secretary President and Chief Executive
Officer
(SEAL)
ATTEST: PAWLING SAVINGS BANK
- --------------------------- By: ------------------------------
Beatrice D. Parent Peter Van Kleeck
Corporate Secretary President and Chief Executive
Officer
(SEAL)
- 6 -
<PAGE>
STATE OF NEW YORK )
) ss:
COUNTY OF DUTCHESS)
On this 16th day of December, 1997, before me, a notary public for this state
and county, personally came John C. VanWormer, as President and Chief
Executive Officer, and Kathy D. Seaboldt, as Assistant Secretary, of First
National Bank of Hudson Valley, and each in his or her capacity acknowledged
this instrument to be the act and deed of the association and the seal affixed
to it be its seal.
WITNESS my official seal and signature this day and year.
-----------------------------------------
(Seal of Notary) Notary Public, County
----------------------
My commission expires
--------------------
STATE OF NEW YORK )
) ss:
COUNTY OF DUTCHESS)
On this 16th day of December, 1997, before me, a notary public for this state
and county, personally came Peter Van Kleeck, as President and Chief Executive
Officer, and Beatrice D. Parent, as Corporate Secretary, of Pawling Savings
Bank, and each in his or her capacity acknowledged this instrument to be the
act and deed of the association and the seal affixed to it be its seal.
WITNESS my official seal and signature this day and year.
-----------------------------------------
(Seal of Notary) Notary Public, County
----------------------
My commission expires
--------------------
<PAGE>
ANNEX A
LIST OF BRANCHES OF THE SURVIVING BANK
Exhibit 99.1
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (this "Option Agreement"), dated as of December
16, 1997, is by and between HUDSON CHARTERED BANCORP, INC. ("Hudson Chartered"),
a New York corporation, as issuer, and PROGRESSIVE BANK, INC. ("Progressive"), a
New York corporation, as grantee.
WITNESSETH
WHEREAS, the respective Boards of Directors of Hudson Chartered and
Progressive have approved an Agreement and Plan of Reorganization (the
"Reorganization Agreement") and have adopted a related Agreement and Plan of
Merger dated as of the date hereof (together with the Reorganization Agreement,
the "Merger Agreements"), providing for certain transactions pursuant to which
Progressive would be merged with and into Hudson Chartered; and
WHEREAS, as a condition to and as consideration for Progressive's entry
into the Merger Agreements and to induce such entry, Hudson Chartered has agreed
to grant to Progressive the option set forth herein to purchase authorized but
unissued shares of common stock, par value $0.80 per share, of Hudson Chartered
("Hudson Chartered Common Stock");
NOW, THEREFORE, in consideration of the premises herein contained, the
parties agree as follows:
1. Definitions.
Capitalized terms defined in the Merger Agreements and used herein shall
have the same meanings as set forth in the Merger Agreements.
2. Grant of Option.
Subject to the terms and conditions set forth herein, Hudson Chartered
hereby grants to Progressive an option ("Option") to purchase up to 1,415,250
shares of Hudson Chartered Common Stock, at a price of $21.75 per share, payable
in cash as provided in Section 4 hereof; provided, however, that, in the event
Hudson Chartered issues or agrees to issue any shares of Hudson Chartered Common
Stock (other than as permitted under the Merger Agreements) at a price less than
$21.75 per share (as adjusted pursuant to Section 6 hereof), the exercise price
shall be equal to such lesser
<PAGE>
price. Notwithstanding anything else in this Agreement to the contrary, the
number of shares of Hudson Chartered Common Stock subject to the Option shall be
reduced to such lesser number, if any, as may from time-to-time be necessary,
but only for so long as may be necessary, to cause Progressive not to be deemed
an "interested shareholder" as such term is defined for purposes of Section 912
of the New York Business Corporation Law, as amended.
3. Exercise of Option.
(a) Unless Progressive shall have breached in any material respect any
material covenant or representation contained in the Reorganization Agreement
and such breach has not been cured, Progressive may exercise the Option, in
whole or part, at any time or from time to time if a Purchase Event (as defined
below) shall have occurred and be continuing; provided that, to the extent the
Option shall not have been exercised, it shall terminate and be of no further
force and effect (i) on the Effective Date of the Merger or (ii) upon
termination of the Merger Agreements in accordance with the provisions thereof
(other than a termination resulting from a willful breach by Hudson Chartered of
any Specified Covenant (as defined below) following receipt of a bona fide
proposal by Hudson Chartered or Hudson Valley to acquire Hudson Chartered or
Hudson Valley by merger, consolidation, purchase of all or substantially all of
its assets or any other similar transaction, or, following the occurrence of a
Purchase Event, failure of Hudson Chartered's shareholders to approve the Merger
Agreements by the vote required under applicable law or under Hudson Chartered's
Certificate of Incorporation), or (iii) twelve months after termination of the
Merger Agreements due to a willful breach by Hudson Chartered of any Specified
Covenant following receipt of a bona fide proposal by Hudson Chartered or Hudson
Valley to acquire Hudson Chartered or Hudson Valley by merger, consolidation,
purchase of all or substantially all of its assets or any other similar
transaction, or, following the occurrence of a Purchase Event, failure of Hudson
Chartered's shareholders to approve the Merger Agreements by the vote required
under applicable law or under Hudson Chartered's Certificate of Incorporation;
and provided further that any such exercise shall be subject to compliance with
applicable provisions of law.
(b) As used herein, a "Purchase Event" shall mean any of the following
events or transactions occurring after the date hereof:
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<PAGE>
(i) Hudson Chartered or its wholly owned subsidiary, First National Bank of
the Hudson Valley, a national banking association ("Hudson Valley"), without
having received Progressive's prior written consent, shall have entered into an
agreement with any person (other than Progressive or its wholly owned
subsidiary, Pawling Savings Bank, a New York state-chartered stock savings bank
("Pawling")) to (x) merge or consolidate, or enter into any similar transaction,
with Hudson Chartered or Hudson Valley, (y) purchase, lease or otherwise acquire
all or substantially all of the assets of Hudson Chartered or Hudson Valley or
(z) purchase or otherwise acquire (including by way of merger, consolidation,
share exchange or any similar transaction) securities representing 10% or more
of the voting power of Hudson Chartered or Hudson Valley;
(ii) any person (other than Hudson Chartered, Hudson Valley, Hudson Valley
in a fiduciary capacity, Progressive, Pawling or Pawling in a fiduciary
capacity) shall have acquired beneficial ownership or the right to acquire
beneficial ownership of 20% or more of the outstanding shares of Hudson
Chartered Common Stock after the date hereof (the term "beneficial ownership"
for purposes of this Option Agreement having the meaning assigned thereto in
Section 13(d) of the Exchange Act and the regulations promulgated thereunder);
(iii) any person (other than Progressive or Pawling) shall have made a bona
fide proposal to Hudson Chartered by public announcement or written
communication that is or becomes the subject of public disclosure to acquire
Hudson Chartered or Hudson Valley by merger, consolidation, purchase of all or
substantially all of its assets or any other similar transaction, and following
such bona fide proposal the shareholders of Hudson Chartered vote not to adopt
the Plan of Merger; or
(iv) Hudson Chartered shall have willfully and intentionally breached any
Specified Covenant following receipt of a bona fide proposal to Hudson Valley or
Hudson Chartered to acquire Hudson Chartered or Hudson Valley by merger,
consolidation, purchase of all or substantially all of its assets or any other
similar transaction, which breach would entitle Progressive to terminate the
Merger Agreements (without regard to the cure periods provided for therein) and
such breach shall not have been cured prior to the Notice Date (as defined
below).
If more than one of the transactions giving rise to a Purchase Event under this
Section 3(b) is undertaken or
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<PAGE>
effected, then all such transactions shall give rise only to one Purchase Event,
which Purchase Event shall be deemed continuing for all purposes hereunder until
all such transactions are abandoned. As used in this Option Agreement, "person"
shall have the meanings specified in Sections 3(a)(9) and 13(d)(3) of the
Exchange Act.
(c) In the event Progressive wishes to exercise the Option, it shall send
to Hudson Chartered a written notice (the date of which being herein referred to
as "Notice Date") specifying (i) the total number of shares it will purchase
pursuant to such exercise, and (ii) a place and date not earlier than three
business days nor later than 60 business days from the Notice Date for the
closing of such purchase ("Closing Date"); provided that, if prior notification
to or approval of any federal or state regulatory agency is required in
connection with such purchase, Progressive shall promptly file the required
notice or application for approval and shall expeditiously process the same and
the period of time that otherwise would run pursuant to this sentence shall run
instead from the date on which any required notification period has expired or
been terminated or such approval has been obtained and any requisite waiting
period shall have passed.
(d) As used herein, "Specified Covenant" means any covenant contained in
Sections 4.1, 4.4 or 4.9, or subsections (2), (3), (4), (5), (6), (12), (14)
and, to the extent applicable to the foregoing subsections, (15) of Section
4.8(b) of the Reorganization Agreement.
4. Payment and Delivery of Certificates.
(a) At the closing referred to in Section 3 hereof, Progressive shall pay
to Hudson Chartered the aggregate purchase price for the shares of Hudson
Chartered Common Stock purchased pursuant to the exercise of the Option in
immediately available funds by a wire transfer to a bank account designated by
Hudson Chartered.
(b) At such closing, simultaneously with the delivery of funds as provided
in subsection (a), Hudson Chartered shall deliver to Progressive a certificate
or certificates representing the number of shares of Hudson Chartered Common
Stock purchased by Progressive, and Progressive shall deliver to Hudson
Chartered a letter agreeing that Progressive will not offer to sell or otherwise
dispose of such shares in violation of applicable law or the provisions of this
Option Agreement.
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<PAGE>
(c) Certificates for Hudson Chartered Common Stock delivered at a closing
hereunder may be endorsed with a restrictive legend which shall read
substantially as follows:
"The transfer of the shares represented by this certificate is subject to
certain provisions of an agreement between the registered holder hereof and
Hudson Chartered Bancorp, Inc. and to resale restrictions arising under the
Securities Act of 1933, as amended, a copy of which agreement is on file at
the principal office of Hudson Chartered Bancorp, Inc. A copy of such
agreement will be provided to the holder hereof without charge upon receipt
by Hudson Chartered Bancorp, Inc. of a written request."
It is understood and agreed that the above legend shall be removed by delivery
of substitute certificate(s) without such legend if Progressive shall have
delivered to Hudson Chartered a copy of a letter from the staff of the
Commission, or an opinion of counsel, in form and substance satisfactory to
Hudson Chartered, to the effect that such legend is not required for purposes of
the Securities Act.
5. Representations.
Hudson Chartered hereby represents, warrants and covenants to Progressive
as follows:
(a) Hudson Chartered shall at all times maintain sufficient authorized but
unissued shares of Hudson Chartered Common Stock so that the Option may be
exercised without authorization of additional shares of Hudson Chartered Common
Stock.
(b) The shares to be issued upon due exercise, in whole or in part, of the
Option, when paid for as provided herein, will be duly authorized, validly
issued, fully paid and nonassessable.
6. Adjustment Upon Changes in Capitalization.
In the event of any change in Hudson Chartered Common Stock by reason of
stock dividends, split-ups, mergers, recapitalizations, combinations, exchanges
of shares or the like, the type and number of shares subject to the Option, and
the purchase price per share, as the case may be, shall be adjusted
appropriately. In the event that any additional shares of Hudson Chartered
Common Stock are issued or otherwise become outstanding after the date of this
Option Agreement (other than pursuant to this Option Agreement), the
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<PAGE>
number of shares of Hudson Chartered Common Stock subject to the Option shall be
adjusted so that, after such issuance, it equals 19.99% of the number of shares
of Hudson Chartered Common Stock then issued and outstanding without giving
effect to any shares subject or issued pursuant to the Option. Nothing contained
in this Section 6 shall be deemed to authorize Hudson Chartered to breach any
provision of the Merger Agreements.
7. Repurchase.
At the request of Progressive at any time commencing immediately following
the occurrence of a Repurchase Event (as defined below) and ending upon the
termination of this Agreement pursuant to the terms hereof ("Repurchase
Period"), Hudson Chartered shall repurchase the Option from Progressive together
with any shares of Hudson Chartered Common Stock purchased by Progressive
pursuant thereto, at a price equal to the sum of:
(a) The exercise price paid by Progressive for any shares of Hudson
Chartered Common Stock acquired pursuant to the Option;
(b) The difference between the "market/tender offer" price for shares
of Hudson Chartered Common Stock (defined as the highest of (i) the highest
price per share at which a tender or exchange offer has been made, (ii) the
price per share, whether in cash or the value of securities or other
property or a combination thereof, of Hudson Chartered Common Stock to be
paid by any third party pursuant to an agreement with Hudson Chartered, or
(iii) the highest reported sale price for shares of Hudson Chartered Common
Stock within that portion of the Repurchase Period preceding the date
Progressive gives notice of the required repurchase under this Section 7)
and the exercise price as determined pursuant to Section 2 hereof,
multiplied by the number of shares of Hudson Chartered Common Stock with
respect to which the Option has not been exercised, but only if the
market/tender offer price is greater than such exercise price;
(c) The difference between the market/tender offer price (as defined in
Section 7(b) hereof) and the exercise price paid by Progressive for any
shares of Hudson Chartered Common Stock purchased pursuant to the exercise
of the Option, multiplied by the number of shares so purchased, but only if
the market/tender offer price is greater than such exercise price; and
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<PAGE>
(d) Progressive's reasonable out-of-pocket expenses incurred in
connection with the transactions contemplated by the Reorganization
Agreement, including, without limitation, legal, accounting, financial
advisory and investment banking fees.
In the event Progressive exercises its right to require the repurchase of
the Option, Hudson Chartered shall, within ten business days thereafter, pay the
required amount to Progressive in immediately available funds and Progressive
shall surrender the Option to Hudson Chartered and the certificates evidencing
the shares of Hudson Chartered Common Stock purchased thereunder; provided that
if prior notification to or approval of the Federal Reserve Board or other
regulatory agency is required in connection with such purchase, Hudson Chartered
shall promptly file the required notice or application for approval and shall
expeditiously process the same and the period of time that otherwise would run
pursuant to this sentence shall run instead from the date on which any required
notification period has expired or been terminated.
As used herein, a "Repurchase Event" shall mean any of the transactions
described in clauses (i), (ii), (iii) or (iv) of Section 3(b) herein except, for
this purpose, the percentage in clause (ii) shall be 50% and, for purposes of
clauses (iii) and (iv) for a Repurchase Event to occur, any party shall, prior
to the termination of this Agreement, engage in a transaction contemplated by
clauses (i) or (ii) (at the 50% level) of Section 3(b), provided that, for all
purposes herein, the payment required by this Section 7 shall be due and payable
only upon consummation of the events described in clauses (i) and (ii) of
Section 3(b) of this Agreement.
8. Registration Rights.
Hudson Chartered shall, if requested by Progressive, as expeditiously as
possible file a registration statement on a form of general use under the
Securities Act if necessary in order to permit the sale or other disposition of
the shares of Hudson Chartered Common Stock that have been acquired upon
exercise of the Option in accordance with the intended method of sale or other
disposition requested by Progressive. Progressive shall provide all information
reasonably requested by Hudson Chartered for inclusion in any registration
statement to be filed hereunder. Hudson Chartered will use its best efforts to
cause such registration statement first to become effective and then to remain
effective for such period not in excess of 180 days
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<PAGE>
from the day such registration statement first becomes effective as may be
reasonably necessary to effect such sales or other dispositions. The first
registration effected under this Section 7 shall be at Hudson Chartered's
expense except for underwriting commissions and the fees and disbursements of
Progressive's counsel attributable to the registration of such Hudson Chartered
Common Stock. A second registration may be requested hereunder at Progressive's
expense. In no event shall Hudson Chartered be required to effect more than two
registrations hereunder. The filing of any registration statement hereunder may
be delayed for such period of time as may reasonably be required to facilitate
any public distribution by Hudson Chartered of Hudson Chartered Common Stock. If
requested by Progressive, in connection with any such registration, Hudson
Chartered will become a party to any underwriting agreement relating to the sale
of such shares, but only to the extent of obligating itself in respect of
representations, warranties, indemnities and other agreements customarily
included in such underwriting agreements. Upon receiving any request from
Progressive or assignee thereof under this Section 8, Hudson Chartered agrees to
send a copy thereof to Progressive and to any assignee thereof known to Hudson
Chartered, in each case by promptly mailing the same, postage prepaid, to the
address of record of the persons entitled to receive such copies.
9. Severability.
If any term, provision, covenant or restriction contained in this Option
Agreement is held by a court or a federal or state regulatory agency of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions and covenants and restrictions contained in this Option
Agreement shall remain in full force and effect, and shall in no way be
affected, impaired or invalidated. If for any reason such court or regulatory
agency determines that the Option will not permit the holder to acquire or
Hudson Chartered to repurchase pursuant to Section 7 hereof the full number of
shares of Hudson Chartered Common Stock provided in Section 2 hereof (as
adjusted pursuant to Section 6 hereof), it is the express intention of Hudson
Chartered to allow the holder to acquire or to require Hudson Chartered to
repurchase up to the maximum number of shares as may be permissible from time to
time, without any amendment or modification hereof.
10. Miscellaneous.
(a) Expenses. Except as otherwise provided herein, each of the parties
hereto shall bear and pay all costs and
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<PAGE>
expenses incurred by it or on its behalf in connection with the transactions
contemplated hereunder, including fees and expenses of its own financial
consultants, investment bankers, accountants and counsel.
(b) Entire Agreement. Except as otherwise expressly provided herein, this
Option Agreement contains the entire agreement between the parties with respect
to the transactions contemplated hereunder and supersedes all prior arrangements
or understandings with respect thereto, written or oral. The terms and
conditions of this Option Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective successors and assigns. Nothing in
this Option Agreement, expressed or implied, is intended to confer upon any
party, other than the parties hereto, and their respective successors and
assigns, any rights, remedies, obligations or liabilities under or by reason of
this Option Agreement, except as expressly provided herein.
(c) Assignment. Neither of the parties hereto may assign any of its rights
or obligations under this Option Agreement or the Option created hereunder to
any other person, without the express written consent of the other party, except
that, in the event a Purchase Event shall have occurred and be continuing,
Progressive may assign, in whole or in part, its rights and obligations
hereunder; provided, however, that to the extent required by applicable
regulatory authorities, Progressive may not assign its rights under the Option
except in (i) a widely dispersed public distribution, (ii) a private placement
in which no one party acquires the right to purchase 2% or more of the voting
shares of Hudson Chartered, (iii) an assignment to a single party (e.g., a
broker or investment banker) for the purpose of conducting a widely dispersed
public distribution on Progressive's behalf, or (iv) any other manner approved
by applicable regulatory authorities.
(d) Notices. All notices or other communications which are required or
permitted hereunder shall be in writing and sufficient if delivered in the
manner and to the addresses provided for in or pursuant to Section 7.4 of the
Reorganization Agreement.
(e) Counterparts. This Option Agreement may be executed in any number of
counterparts, and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
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<PAGE>
(f) Specific Performance. The parties agree that damages would be an
inadequate remedy for a breach of the provisions of this Option Agreement by
either party hereto and that this Option Agreement may be enforced by either
party hereto through injunctive or other equitable relief.
(g) Governing Law. This Option Agreement shall be governed by and construed
in accordance with the laws of the State of New York applicable to agreements
made and entirely to be performed within such state and such federal laws as may
be applicable.
IN WITNESS WHEREOF, each of the parties hereto has executed this Option
Agreement as of the day and year first written above.
HUDSON CHARTERED BANCORP, INC.
By
------------------------------------
T. Jefferson Cunningham III
Chairman and Chief Executive Officer
PROGRESSIVE BANK, INC.
By
--------------------------------------
Peter Van Kleeck
President and Chief Executive Officer
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STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (this "Option Agreement"), dated as of December
16, 1997, is by and between PROGRESSIVE BANK, INC. ("Progressive"), a New York
corporation, as issuer, and HUDSON CHARTERED BANCORP, INC. ("Hudson Chartered"),
a New York corporation, as grantee.
WITNESSETH
WHEREAS, the respective Boards of Directors of Progressive and Hudson
Chartered have approved an Agreement and Plan of Reorganization (the
"Reorganization Agreement") and have adopted a related Agreement and Plan of
Merger dated as of the date hereof (together with the Reorganization Agreement,
the "Merger Agreements"), providing for certain transactions pursuant to which
Progressive would be merged with and into Hudson Chartered; and
WHEREAS, as a condition to and as consideration for Hudson Chartered's
entry into the Merger Agreements and to induce such entry, Progressive has
agreed to grant to Hudson Chartered the option set forth herein to purchase
authorized but unissued shares of common stock, par value $1.00 per share, of
Progressive ("Progressive Common Stock");
NOW, THEREFORE, in consideration of the premises herein contained, the
parties agree as follows:
1. Definitions.
Capitalized terms defined in the Merger Agreements and used herein shall
have the same meanings as set forth in the Merger Agreements.
2. Grant of Option.
Subject to the terms and conditions set forth herein, Progressive hereby
grants to Hudson Chartered an option ("Option") to purchase up to 766,300 shares
of Progressive Common Stock, at a price of $36.63 per share, payable in cash as
provided in Section 4 hereof; provided, however, that, in the event Progressive
issues or agrees to issue any shares of Progressive Common Stock (other than as
permitted under the Merger Agreements) at a price less than $36.63 per share (as
adjusted pursuant to Section 6 hereof), the exercise price shall be equal to
such lesser price. Notwithstanding anything else in this Agreement to the
contrary, the number of shares of Progressive Common Stock subject to the Option
<PAGE>
shall be reduced to such lesser number, if any, as may from time-to-time be
necessary, but only for so long as may be necessary, to cause Hudson Chartered
not to be deemed an "interested shareholder" as such term is defined for
purposes of Section 912 of the New York Business Corporation Law, as amended.
Each share of Progressive Common Stock issued upon exercise of the Option shall
be accompanied by such rights as provided in the Shareholder Rights Agreement
dated as of October 15, 1997 by and between Progressive and Registrar and
Transfer Company, as rights agent.
3. Exercise of Option.
(a) Unless Hudson Chartered shall have breached in any material respect any
material covenant or representation contained in the Reorganization Agreement
and such breach has not been cured, Hudson Chartered may exercise the Option, in
whole or part, at any time or from time to time if a Purchase Event (as defined
below) shall have occurred and be continuing; provided that, to the extent the
Option shall not have been exercised, it shall terminate and be of no further
force and effect (i) on the Effective Date of the Merger or (ii) upon
termination of the Merger Agreements in accordance with the provisions thereof
(other than a termination resulting from a willful breach by Progressive of any
Specified Covenant (as defined below) following receipt of a bona fide proposal
by Progressive or Pawling to acquire Progressive or Pawling by merger,
consolidation, purchase of all or substantially all of its assets or any other
similar transaction, or, following the occurrence of a Purchase Event, failure
of Progressive's shareholders to approve the Merger Agreements by the vote
required under applicable law or under Progressive's Certificate of
Incorporation), or (iii) twelve months after termination of the Merger
Agreements due to a willful breach by Progressive of any Specified Covenant
following receipt of a bona fide proposal by Progressive or Pawling to acquire
Progressive or Pawling by merger, consolidation, purchase of all or
substantially all of its assets or any other similar transaction, or, following
the occurrence of a Purchase Event, failure of Progressive's shareholders to
approve the Merger Agreements by the vote required under applicable law or under
Progressive's Certificate of Incorporation; and provided further that any such
exercise shall be subject to compliance with applicable provisions of law.
(b) As used herein, a "Purchase Event" shall mean any of the following
events or transactions occurring after the date hereof:
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<PAGE>
(i) Progressive or its wholly owned subsidiary, Pawling Savings Bank,
a New York state-chartered stock savings bank ("Pawling"), without having
received Hudson Chartered's prior written consent, shall have entered into
an agreement with any person (other than Hudson Chartered or any of its
subsidiaries) to (x) merge or consolidate, or enter into any similar
transaction, with Progressive or Pawling, (y) purchase, lease or otherwise
acquire all or substantially all of the assets of Progressive or Pawling or
(z) purchase or otherwise acquire (including by way of merger,
consolidation, share exchange or any similar transaction) securities
representing 10% or more of the voting power of Progressive or Pawling;
(ii) any person (other than Progressive, Pawling, Pawling in a
fiduciary capacity, Hudson Chartered, its wholly owned subsidiary, First
National Bank of the Hudson Valley, a national banking association ("Hudson
Valley") or Hudson Valley in a fiduciary capacity) shall have acquired
beneficial ownership or the right to acquire beneficial ownership of 20% or
more of the outstanding shares of Progressive Common Stock after the date
hereof (the term "beneficial ownership" for purposes of this Option
Agreement having the meaning assigned thereto in Section 13(d) of the
Exchange Act and the regulations promulgated thereunder);
(iii) any person (other than Hudson Chartered or any of its
subsidiaries) shall have made a bona fide proposal to Progressive by public
announcement or written communication that is or becomes the subject of
public disclosure to acquire Progressive or Pawling by merger,
consolidation, purchase of all or substantially all of its assets or any
other similar transaction, and following such bona fide proposal the
shareholders of Progressive vote not to adopt the Plan of Merger; or
(iv) Progressive shall have willfully and intentionally breached any
Specified Covenant following receipt of a bona fide proposal to Pawling or
Progressive to acquire Progressive or Pawling by merger, consolidation,
purchase of all or substantially all of its assets or any other similar
transaction, which breach would entitle Hudson Chartered to terminate the
Merger Agreements (without regard to the cure periods provided for therein)
and such breach shall not have been cured prior to the Notice Date (as
defined below).
If more than one of the transactions giving rise to a Purchase Event under this
Section 3(b) is undertaken or effected, then all such transactions shall give
rise only to one Purchase Event, which Purchase Event shall be deemed
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<PAGE>
continuing for all purposes hereunder until all such transactions are abandoned.
As used in this Option Agreement, "person" shall have the meanings specified in
Sections 3(a)(9) and 13(d)(3) of the Exchange Act.
(c) In the event Hudson Chartered wishes to exercise the Option, it shall
send to Progressive a written notice (the date of which being herein referred to
as "Notice Date") specifying (i) the total number of shares it will purchase
pursuant to such exercise, and (ii) a place and date not earlier than three
business days nor later than 60 business days from the Notice Date for the
closing of such purchase ("Closing Date"); provided that, if prior notification
to or approval of any federal or state regulatory agency is required in
connection with such purchase, Hudson Chartered shall promptly file the required
notice or application for approval and shall expeditiously process the same and
the period of time that otherwise would run pursuant to this sentence shall run
instead from the date on which any required notification period has expired or
been terminated or such approval has been obtained and any requisite waiting
period shall have passed.
(d) As used herein, "Specified Covenant" means any covenant contained in
Sections 4.1, 4.4 or 4.9, or subsections (2), (3), (4), (5), (6), (12), (14)
and, to the extent applicable to the foregoing subsections, (15) of Section
4.7(b) of the Reorganization Agreement.
4. Payment and Delivery of Certificates.
(a) At the closing referred to in Section 3 hereof, Hudson Chartered shall
pay to Progressive the aggregate purchase price for the shares of Progressive
Common Stock purchased pursuant to the exercise of the Option in immediately
available funds by a wire transfer to a bank account designated by Progressive.
(b) At such closing, simultaneously with the delivery of funds as provided
in subsection (a), Progressive shall deliver to Hudson Chartered a certificate
or certificates representing the number of shares of Progressive Common Stock
purchased by Hudson Chartered, and Hudson Chartered shall deliver to Progressive
a letter agreeing that Hudson Chartered will not offer to sell or otherwise
dispose of such shares in violation of applicable law or the provisions of this
Option Agreement.
(c) Certificates for Progressive Common Stock delivered at a closing
hereunder may be endorsed with a restrictive legend which shall read
substantially as follows:
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<PAGE>
"The transfer of the shares represented by this certificate is subject to
certain provisions of an agreement between the registered holder hereof and
Progressive Bank, Inc. and to resale restrictions arising under the
Securities Act of 1933, as amended, a copy of which agreement is on file at
the principal office of Progressive Bank, Inc. A copy of such agreement
will be provided to the holder hereof without charge upon receipt by
Progressive Bank, Inc. of a written request."
It is understood and agreed that the above legend shall be removed by delivery
of substitute certificate(s) without such legend if Hudson Chartered shall have
delivered to Progressive a copy of a letter from the staff of the Commission, or
an opinion of counsel, in form and substance satisfactory to Progressive, to the
effect that such legend is not required for purposes of the Securities Act.
5. Representations.
Progressive hereby represents, warrants and covenants to Hudson Chartered
as follows:
(a) Progressive shall at all times maintain sufficient authorized but
unissued shares of Progressive Common Stock so that the Option may be
exercised without authorization of additional shares of Progressive Common
Stock.
(b) The shares to be issued upon due exercise, in whole or in part, of
the Option, when paid for as provided herein, will be duly authorized,
validly issued, fully paid and nonassessable.
6. Adjustment Upon Changes in Capitalization.
In the event of any change in Progressive Common Stock by reason of stock
dividends, split-ups, mergers, recapitalizations, combinations, exchanges of
shares or the like, the type and number of shares subject to the Option, and the
purchase price per share, as the case may be, shall be adjusted appropriately.
In the event that any additional shares of Progressive Common Stock are issued
or otherwise become outstanding after the date of this Option Agreement (other
than pursuant to this Option Agreement), the number of shares of Progressive
Common Stock subject to the Option shall be adjusted so that, after such
issuance, it equals 19.99% of the number of shares of Progressive Common Stock
then issued and outstanding without giving effect to any shares subject or
issued pursuant to the Option. Nothing
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<PAGE>
contained in this Section 6 shall be deemed to authorize Progressive to breach
any provision of the Merger Agreements.
7. Repurchase.
At the request of Hudson Chartered at any time commencing immediately
following the occurrence of a Repurchase Event (as defined below) and ending
upon termination of this Agreement pursuant to the terms hereof ("Repurchase
Period"), Progressive shall repurchase the Option from Hudson Chartered together
with any shares of Progressive Common Stock purchased by Hudson Chartered
pursuant thereto, at a price equal to the sum of:
(a) The exercise price paid by Hudson Chartered for any shares of
Progressive Common Stock acquired pursuant to the Option;
(b) The difference between the "market/tender offer" price for shares
of Progressive Common Stock (defined as the highest of (i) the highest
price per share at which a tender or exchange offer has been made, (ii) the
price per share, whether in cash or the value of securities or other
property or a combination thereof, of Progressive Common Stock to be paid
by any third party pursuant to an agreement with Progressive, or (iii) the
highest reported sale price for shares of Progressive Common Stock within
that portion of the Repurchase Period preceding the date Hudson Chartered
gives notice of the required repurchase under this Section 7) and the
exercise price as determined pursuant to Section 2 hereof, multiplied by
the number of shares of Progressive Common Stock with respect to which the
Option has not been exercised, but only if the market/tender offer price is
greater than such exercise price;
(c) The difference between the market/tender offer price (as defined
in Section 7(b) hereof) and the exercise price paid by Hudson Chartered for
any shares of Progressive Common Stock purchased pursuant to the exercise
of the Option, multiplied by the number of shares so purchased, but only if
the market/tender offer price is greater than such exercise price; and
(d) Hudson Chartered's reasonable out-of-pocket expenses incurred in
connection with the transactions contemplated by the Reorganization
Agreement, including, without limitation, legal, accounting, financial
advisory and investment banking fees.
In the event Hudson Chartered exercises its right to require the repurchase
of the Option, Progressive shall,
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<PAGE>
within ten business days thereafter, pay the required amount to Hudson Chartered
in immediately available funds and Hudson Chartered shall surrender the Option
to Progressive and the certificates evidencing the shares of Progressive Common
Stock purchased thereunder; provided that if prior notification to or approval
of the Federal Reserve Board or other regulatory agency is required in
connection with such purchase, Progressive shall promptly file the required
notice or application for approval and shall expeditiously process the same and
the period of time that otherwise would run pursuant to this sentence shall run
instead from the date on which any required notification period has expired or
been terminated.
As used herein, a "Repurchase Event" shall mean any of the transactions
described in clauses (i), (ii), (iii) or (iv) of Section 3(b) herein except, for
this purpose, the percentage in clause (ii) shall be 50% and, for purposes of
clauses (iii) and (iv) for a Repurchase Event to occur, any party shall, prior
to the termination of this Agreement, engage in a transaction contemplated by
clauses (i) or (ii) (at the 50% level) of Section 3(b), provided that, for all
purposes herein, the payment required by this Section 7 shall be due and payable
only upon consummation of the events described in clauses (i) and (ii) of
Section 3(b) of this Agreement.
8. Registration Rights.
Progressive shall, if requested by Hudson Chartered, as expeditiously as
possible file a registration statement on a form of general use under the
Securities Act if necessary in order to permit the sale or other disposition of
the shares of Progressive Common Stock that have been acquired upon exercise of
the Option in accordance with the intended method of sale or other disposition
requested by Hudson Chartered. Hudson Chartered shall provide all information
reasonably requested by Progressive for inclusion in any registration statement
to be filed hereunder. Progressive will use its best efforts to cause such
registration statement first to become effective and then to remain effective
for such period not in excess of 180 days from the day such registration
statement first becomes effective as may be reasonably necessary to effect such
sales or other dispositions. The first registration effected under this Section
7 shall be at Progressive's expense except for underwriting commissions and the
fees and disbursements of Hudson Chartered's counsel attributable to the
registration of such Progressive Common Stock. A second registration may be
requested hereunder at Hudson Chartered's expense. In no event shall Progressive
be required to effect more than two registrations hereunder.
- 7 -
<PAGE>
The filing of any registration statement hereunder may be delayed for such
period of time as may reasonably be required to facilitate any public
distribution by Progressive of Progressive Common Stock. If requested by Hudson
Chartered, in connection with any such registration, Progressive will become a
party to any underwriting agreement relating to the sale of such shares, but
only to the extent of obligating itself in respect of representations,
warranties, indemnities and other agreements customarily included in such
underwriting agreements. Upon receiving any request from Hudson Chartered or
assignee thereof under this Section 8, Progressive agrees to send a copy thereof
to Hudson Chartered and to any assignee thereof known to Progressive, in each
case by promptly mailing the same, postage prepaid, to the address of record of
the persons entitled to receive such copies.
9. Severability.
If any term, provision, covenant or restriction contained in this Option
Agreement is held by a court or a federal or state regulatory agency of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions and covenants and restrictions contained in this Option
Agreement shall remain in full force and effect, and shall in no way be
affected, impaired or invalidated. If for any reason such court or regulatory
agency determines that the Option will not permit the holder to acquire or
Progressive to repurchase pursuant to Section 7 hereof the full number of shares
of Progressive Common Stock provided in Section 2 hereof (as adjusted pursuant
to Section 6 hereof), it is the express intention of Progressive to allow the
holder to acquire or to require Progressive to repurchase up to the maximum
number of shares as may be permissible from time to time, without any amendment
or modification hereof.
10. Miscellaneous.
(a) Expenses. Except as otherwise provided herein, each of the parties
hereto shall bear and pay all costs and expenses incurred by it or on its behalf
in connection with the transactions contemplated hereunder, including fees and
expenses of its own financial consultants, investment bankers, accountants and
counsel.
(b) Entire Agreement. Except as otherwise expressly provided herein, this
Option Agreement contains the entire agreement between the parties with respect
to the transactions contemplated hereunder and supersedes all prior arrangements
or understandings with respect thereto, written or oral. The terms and
conditions of this Option Agreement
- 8 -
<PAGE>
shall inure to the benefit of and be binding upon the parties hereto and their
respective successors and assigns. Nothing in this Option Agreement, expressed
or implied, is intended to confer upon any party, other than the parties hereto,
and their respective successors and assigns, any rights, remedies, obligations
or liabilities under or by reason of this Option Agreement, except as expressly
provided herein.
(c) Assignment. Neither of the parties hereto may assign any of its rights
or obligations under this Option Agreement or the Option created hereunder to
any other person, without the express written consent of the other party, except
that, in the event a Purchase Event shall have occurred and be continuing,
Hudson Chartered may assign, in whole or in part, its rights and obligations
hereunder; provided, however, that to the extent required by applicable
regulatory authorities, Hudson Chartered may not assign its rights under the
Option except in (i) a widely dispersed public distribution, (ii) a private
placement in which no one party acquires the right to purchase 2% or more of the
voting shares of Progressive, (iii) an assignment to a single party (e.g., a
broker or investment banker) for the purpose of conducting a widely dispersed
public distribution on Hudson Chartered's behalf, or (iv) any other manner
approved by applicable regulatory authorities.
(d) Notices. All notices or other communications which are required or
permitted hereunder shall be in writing and sufficient if delivered in the
manner and to the addresses provided for in or pursuant to Section 7.4 of the
Reorganization Agreement.
(e) Counterparts. This Option Agreement may be executed in any number of
counterparts, and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
(f) Specific Performance. The parties agree that damages would be an
inadequate remedy for a breach of the provisions of this Option Agreement by
either party hereto and that this Option Agreement may be enforced by either
party hereto through injunctive or other equitable relief.
(g) Governing Law. This Option Agreement shall be governed by and construed
in accordance with the laws of the State of New York applicable to agreements
made and entirely to be performed within such state and such federal laws as may
be applicable.
- 9 -
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has executed this Option
Agreement as of the day and year first written above.
PROGRESSIVE BANK, INC.
By
----------------------------------
Peter Van Kleeck
President and Chief Executive Officer
HUDSON CHARTERED BANCORP, INC.
By
----------------------------------
T. Jefferson Cunningham III
Chairman and Chief Executive Officer
- 10 -
Exhibit 99.3
HUDSON CHARTERED BANCORP, INC. AND PROGRESSIVE BANK, INC.
AGREE TO MERGE
Fishkill, New York
And
Lagrangeville, New York
Tuesday, December 16, 1997
Hudson Chartered Bancorp, Inc.(AMEX:HCK) and Progressive Bank, Inc. (NASDAQ:
PSBK) today jointly announced that they executed an agreement to create, through
the merger of the two companies, the largest independent bank holding company
headquartered in the Hudson Valley. The new company, to be named Premier
National Bancorp, Inc. with consolidated assets exceeding $1.6 billion and $145
million in capital resources, will serve all of Southeastern New York. Their
respective bank subsidiaries, First National Bank of the Hudson Valley and
Pawling Savings Bank, will merge under the name Premier National Bank.
Presently, the combined banks have more than 38 branch locations in Dutchess,
Ulster, Orange, Sullivan, Putnam, Rockland, and Westchester Counties and employ
over 600 people.
The proposed transaction will be a "merger of equals" and, accordingly, will be
accounted for on a "pooling of interests" basis and will be tax free to the
shareholders of each company. The present shareholders of Progressive and Hudson
Chartered will each own approximately 50% of the merged company. Each Hudson
Chartered shareholder will own one share of Premier National Bancorp, Inc. for
each Hudson Chartered share owned, while each Progressive shareholder will own
1.82 shares of Premier National Bancorp, Inc. for each Progressive share owned.
The present combined market capitalization of the two companies exceeds $300
million based on December 16, 1997 closing prices.
In a joint statement issued today, Peter Van Kleeck, President and Chief
Executive Officer of Progressive, and T. Jefferson Cunningham III, Chairman of
Hudson Chartered, said "Our two strong, local banks have shared, for more than a
century, a common commitment to financial integrity, superior personal service,
community development, and shareholder value. The merger will consolidate our
respective excellence in commercial and consumer banking, our branch networks,
our capital resources, and our management. It will enable up to continue to
offer our communities and customers an independent alternative to the
increasingly remote and depersonalized financial institutions in our market
area. We are confident of our prospects for solid growth and strong financial
performance."
During fiscal 1998, while the company will only have approximately six months of
operations on a merged basis, the proposed transaction (exclusive of merger
related expenses) is expected to be accretive to earnings. The first full year
of consolidated operations in 1999 should see a material positive impact on the
earnings of the combined company as the anticipated cost savings and revenue
enhancements are more fully realized. The combined company anticipates after-tax
cost savings will reach $3.0 million per annum and will take a one-time
after-tax charge of approximately $5.6 million for costs to be incurred in
connection with the transaction.
<PAGE>
Messrs. Van Kleeck and Cunningham also said "This merger will allow us to
provide a greatly expanded range of products and services ranging from personal
loans and residential and commercial mortgages, to the most complex corporate
financing facilities, including trust and investment services. Premier
National's branch network will cover the entire Southeastern New York market
area from New Jersey, to the Connecticut and Pennsylvania borders. Our combined
resources will ensure our ability to afford the most advanced technology, to
offer the widest product range, and to meet the credit needs of even the largest
borrowers in our area, well beyond what we could expect to achieve on an
individual basis.
"The merger also presents several opportunities to cost effectively consolidate
our operations in many areas, including several overlapping branches, data
processing, and corporate staff functions. We will proceed diligently, but
carefully, to merge our offices, products, and services without inconvenience or
disruption to our customers. No other bank in our region will match our depth
and breadth of experienced bankers which we will have available to our
customers. The advantages of this merger to our clients, communities, staff, and
shareholders, are truly compelling, and we are all dedicated to achieving them."
The membership of the Board of Directors of the new company and bank will be
comprised of twenty members, ten each from Hudson Chartered and Progressive. The
Chairman of both the company and bank will be Mr. Cunningham. Mr. Van Kleeck
will be President and Chief Executive Officer of both units. Other senior
management also will be drawn from both institutions. John C. VanWormer is to be
Vice Chairman of Premier National Bank and will head up the Banking Group, which
will include Robert Gabrielsen, Executive Vice President, who will lead the
Retail Division, and David MacFarland, Executive Vice President who will lead
the Commercial Division. Paul A. Maisch will be Chief Financial Officer.
The corporate headquarters of the new company will be located in Lagrangeville,
New York, its administrative offices in Fishkill, New York, and its trust office
in Poughkeepsie, New York. The merger is subject to approval of the shareholders
of both companies as well as regulatory approvals and other customary closing
conditions. In conjunction with execution of the merger agreement, each party
has granted the other an option to acquire 19.9% of its outstanding stock under
certain circumstances and rescinded their respective authorization for further
open market treasury stock purchases. It is anticipated that the transaction
will close in mid-1998.
Hudson Chartered Bancorp, Inc. is the parent company of First National Bank of
the Hudson Valley, the largest independent commercial bank in the Mid-Hudson
Valley. From its 21 branches in Dutchess, Ulster, Orange, and Putnam Counties,
First Hudson Valley Bank offers individual, business, and municipal customers a
full range of loan and deposit products and trust and investment services. The
common stock of Hudson Chartered Bancorp, Inc is publicly traded on the American
Stock Exchange under the stock symbol "HCK."
<PAGE>
Progressive Bank, Inc. is the parent of Pawling Savings Bank, the largest
independent savings bank in the Mid-Hudson Valley. The bank has 17 branches and
two loan production offices in Dutchess, Putnam, Westchester, Rockland, Orange,
Ulster and Sullivan counties, providing a wide variety of retail and commercial
services to over 50,000 households and businesses. The common stock of
Progressive Bank, Inc. is publicly traded on NASDAQ Exchange under the stock
symbol "PSBK."
- ---------------------
This press release contains certain forward-looking statements with respect to
the financial condition, results of operations and business of Premier National
Bancorp, Inc. following the consummation of the merger, including statements
relating to the cost savings and revenue enhancements that are expected to be
realized from the merger and the expected impact of the merger on financial
performance. These forward-looking statements involve certain risks and
uncertainties. Factors that may cause actual results to differ materially from
those contemplated by such forward-looking statements include, among others, the
following possibilities: (1) expected cost savings from the merger cannot be
fully realized or cannot be realized as quickly as anticipated; (2) the deposit
attrition, customer loss, or revenue loss following the merger is greater than
expected; (3) competitive pressure in the banking industry increases
significantly; (4) costs or difficulties related to the integration of the
businesses of HCK and PSBK are greater than expected; (5) changes in the
interest rate environment reduce margins; (6) general economic conditions,
either nationally or regionally, are less favorable than expected, resulting in,
among other things, a deterioration in credit quality; (7) changes occur in the
regulatory environment; (8) changes occur in the business conditions and
inflation; and (9) changes occur in the securities markets.
- ----------------------
FOR FURTHER INFORMATION, PLEASE CONTACT:
T. Jefferson Cunningham III Peter Van Kleeck
Chairman President and CEO
Hudson Chartered Bancorp, Inc. Progressive Bank, Inc.
914-437-4305 914-897-7412
3
Exhibit 99.4
Information Provided to Financial Analysts on December 16, 1997
Premier National Bancorp, Inc.
Financial Summary
For the Quarter Ended September 30, 1997
HCK PSBK
--- ----
Assets 723,308 884,617
Deposits 648,842 800,664
Equity 68,329 77,243
ROA 1.31% 0.99%
ROE 14.14 11.52
Net Interest Margin (FTE) 5.12 4.03
Efficiency Ratio 55.52 56.46
Customer Accounts (loans & deposits) 91,600 102,000
Business Accounts (loans & deposits) 8,000 4,000
Households 41,000 50,000
Branches 21 17
<PAGE>
Premier National Bancorp, Inc.
Pro Forma Company Profile
September 30, 1997
o Size: $1.6 billion in assets
$318 million in market cap*
o Branch Offices: Dutchess 21**
Ulster 5
Orange 4**
Westchester 1***
Sullivan 3
Putnam 2
Rockland 2
---
38
* Based on 12/15/97 closing price of HCK of $21.75
** Opening one additional office in 1998
*** Opening two additional office in 1998
<PAGE>
Premier National Bancorp, Inc.
Summary of Cost Saves Analysis
($MM)
1998 1999 2000
---- ---- ----
Staff Expense Savings 1.0 2.3 2.5
Occupancy & Equipment 0.5 1.1 1.1
Other Expense Savings 0.7 1.3 1.3
--- --- ---
Total Expense Saves 2.2 4.7 5.0
Tax Cost (41.85%) (0.9) (2.0) (2.1)
----- ---- -----
Net Income Impact $1.3 $2.7 $2.9
---- ---- ----
<PAGE>
Premier National Bancorp, Inc.
Pro Forma EPS Impact (Based on IB/E/S 1998 Est.)
(Cost Saves Only)*
($MM)
1998 1999
---- ----
HCK Net Income 10.0 10.8
PSBK Net Income 9.9 10.7
Net Income Improvement 1.3 2.7
Proforma Net Income 21.2 24.2
HCK Stand-Alone EPS 1.37 1.48
HCK Pro Forma EPS 1.45** 1.66**
$ Change in EPS 0.08 0.18
% Change in EPS 6% 12%
PSBK Stand-Alone EPS 2.48 2.68
PSBK Pro Forma EPS 2.65 3.03
$ Change in EPS 0.17 0.35
% Change in EPS 7% 13%
* Excludes one-time AT merger charge of $5.6MM
** EPS of combined companies
<PAGE>
Premier National Bancorp, Inc.
Investment Summary
Strategy:
- ---------
- - Improved efficiency
o Cost savings conservatively estimated at $5.0
million (equal to 11% of the combined companies'
non-interest expense)
- - Strong revenue enhancement potential
o Expanded product line
o Cross selling opportunities
- - Increased shareholder liquidity and visibility
- - Leading presence in strong southeastern NY market
- - Strongly capitalized and well positioned for growth and
future geographic expansion
Conclusion: Value creation for shareholders
- -----------
<PAGE>
Premier National Bancorp, Inc.
Capital Strength
September 30, 1997
HCK PSBK Pro Forma
--- ---- ---------
o Equity/Assets 9.45% 8.73% 8.74%
o Tangible equity/assets 9.42 7.93 8.29
o Total risk-based capital 14.82 15.34 15.11
<PAGE>
Premier National Bancorp, Inc.
Impact on Loan Mix, Funding and Credit Quality
At, or for 9 months ending, September 30, 1997
HCK PSBK Pro Forma
--- ---- ---------
Loans/Deposits 71% 73% 72%
Core Deposits*/Loans 131 128 130
Reserves/NPLs 220 125 159
NPLs/Loans 0.94 1.31 1.15
NCOs/Loans (annualized) 0.50 0.50 0.50
NPAs/Assets 0.75 0.92 0.85
*Excludes CD's over $100,000
<PAGE>
Premier National Bancorp, Inc.
Deposit Composition
At September 30, 1997
(Dollars in Thousands)
<TABLE>
<CAPTION>
HCK PSBK Combined
-------------------------- ------------------------- ---------------------
Balance % of Total Balance % of Total Balance % of Total
------- ---------- ------- ---------- ------- ----------
<S> <C> <C> <C> <C> <C> <C>
Demand Deposits $149,965 23.1% $68,038 8.5% $218,003 15.0%
Now & Other Trans Accts 49,388 7.6% 21,064 2.6% 70,452 4.9%
------ ------ ------
Total Transaction Accounts 199,353 89,102 288,455
MMDA & Savings 274,486 42.3% 365,201 45.6% 639,687 44.1%
Time Deposits 175,003 27.0% 346,361 43.3% 521,364 36.0%
------- ------- -------
Total Non-Transaction Accounts 449,489 771,562 $1,161,051
------- ------- ----------
Total Deposits $648,842 100.0% $800,664 100.0% $1,449,506 100.0%
======== ======== ==========
- ----------------------------------------------------------------------------------------------------------------------------------
Loan/Deposit Ratio 71% 73% 72%
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
