<PAGE> 1
FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 2, 1996
-----------------------------
Center Banks Incorporated
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
Delaware 0-18513 16-1368745
- -------- ------- ----------
<S> <C> <C>
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
</TABLE>
33 E. Genesee Street
Skaneateles, New York 13152
- --------------------------------------------------------------------------------
(address of principal executive office) (Zip Code)
Registrant's Telephone number, including area code: (315) 685-2265
----------------------------
Not applicable
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
Page 1 of 4 pages.
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On February 6, 1996, Registrant and its wholly owned subsidiary,
Skaneateles Savings Bank ("Skaneateles" or the "Bank"), entered into a certain
Purchase and Assumption Agreement (the "Agreement") with Cicero Bank, a New
York State chartered commercial bank ("Cicero"), pursuant to which Skaneateles
will acquire substantially all of Cicero's assets and assume substantially all
of Cicero's deposit liabilities, subject to regulatory approvals and the
favorable vote of Cicero's shareholders.
Assets to be acquired include Cicero's sole banking branch and the
improvements and equipment located therein, and Cicero's loan portfolio. All
assets will be valued at their book value as of the last day of the month
preceding the closing of the transactions contemplated by the Agreement, net of
loan loss reserves of $569,000. At December 31, 1995, Cicero had total loans
of approximately $15,706,000, net of a loan loss reserve of approximately
$217,000. The book value of the other assets to be acquired was approximately
$661,000 at December 31, 1995.
Skaneateles will pay the purchase price for the assets by assumption of
Cicero's deposit liabilities and certain specified contractual obligations,
such as safe deposit box contracts and miscellaneous lease obligations, entered
into by Cicero in the ordinary course of its business, valued at their book
value as of the last day of the month preceding the closing. At December 31,
1995, Cicero's deposit liabilities were approximately $21,319,000.
The parties intend that the value of the liabilities assumed by
Skaneateles will equal the value of the assets being acquired. Under the
Agreement, to the extent that the liabilities being assumed by Skaneateles
exceed the book value of the assets being acquired, Cicero will, at the
closing, make a payment to Skaneateles in the form of cash or assignment of
marketable securities having a value equal to the amount of the shortfall. The
Agreement provides for a post-closing verification of this amount.
The Agreement contains customary representations, warranties and
covenants by Cicero with respect to its business and the assets being acquired
and liabilities being assumed by Skaneateles.
Closing of the transactions contemplated by the Agreement is subject to
several conditions, primarily receipt of regulatory approvals and the favorable
vote of Cicero's shareholders holding two-thirds of Cicero's outstanding common
stock. Directors and officers of Cicero, who together with certain of their
affiliates hold approximately 50% of Cicero's outstanding common stock, have
committed to Registrant to vote their respective shares in favor of the
transaction. Registrant anticipates closing to occur in June 1996.
2
<PAGE> 3
Following the closing, Registrant intends to conduct its banking
business through Skaneateles at the location acquired, and Cicero intends to
dissolve and liquidate. At the closing, Cicero will deposit into escrow for
the benefit of Registrant and Skaneateles the sum of $225,000 as security for
any damages they may incur as a result of Cicero's breach of any
representation, warranty or obligation on its part contained in the Agreement,
such escrow to exist for one year after the closing or until any disputes
between the parties are resolved.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial statements of business acquired.
(b) Pro forma financial information.
It is impracticable for Registrant to provide the required
financial statements and pro forma financial information at this
time. Registrant intends to file such information as soon as
practicable, but in any event before April 20, 1996.
(c) Exhibits.
(2.1) Purchase and Assumption Agreement dated February 2, 1996
3
<PAGE> 4
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 hereunto duly authorized.
Center Banks Incorporated
-------------------------
(Registrant)
By: /s/ J. Daniel Mohr
-------------------
J. Daniel Mohr
Treasurer
Dated February 20, 1996
4
<PAGE> 1
Exhibit 2.1
PURCHASE AND ASSUMPTION AGREEMENT
BY AND BETWEEN
CICERO BANK
SKANEATELES SAVINGS BANK
AND
CENTER BANKS INCORPORATED
February 2, 1996
<PAGE> 2
TABLE OF CONTENTS 2/2/96
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
1. Sale and Purchase of Transferred Property ............................ 1
2. Definitions .......................................................... 2
3. Assets and Liabilities ............................................... 10
3.1 Transfer of Property and Assumption of Liabilities ............. 10
3.2 Assignment of Qualifying Other Agreements, if any .............. 13
3.3 Books and Records .............................................. 14
3.4 Items in Transit; Items Presented After Closing Date............ 15
3.5 Sales and Other Transaction Taxes and Fees ..................... 17
3.6 Delivery of Other Agreements ................................... 18
3.7 Inventory of Fixed Assets ...................................... 18
3.8 Structural Condition of Subject Banking Office ................. 19
3.9 General Access ................................................. 19
3.10 Special Access ................................................. 21
3.11 Possession and Risk of Loss .................................... 23
3.12 Apportionment; Proration ....................................... 23
3.13 Allocation of Purchase Price and Reporting ..................... 23
4. Closing ............................................................... 25
5. Conditions Precedent to the Obligations of the Parties ................ 25
5.1 Regulatory Approvals; Shareholder Approvals;
Corporate Consents; Other Filings .............................. 26
5.2 Absence of Litigation .......................................... 27
5.3 Absence of Bankruptcy and Insolvency ........................... 27
5.4 Truth of Representations; Performance of Covenants ............. 27
5.5 Purchase of Subject Banking Office ............................. 28
5.6 Assumption of Real Property Leases ............................. 28
5.7 Off Balance Sheet Liabilities .................................. 29
5.8 Principal Shareholders Agreement ............................... 29
6. Agreements of Both Parties ............................................ 29
6.1 Assistance in Obtaining Regulatory Approvals ................... 29
6.2 Public Announcements; Releases Prior to Closing ................ 30
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C> <C>
6.3 Further Assurances ............................................. 30
6.4 Corporate Consents ............................................. 31
6.5 Customer Notices; Customer Contact ............................. 31
6.6 Finders or Brokers ............................................. 32
6.7 Forwarding of Mail, etc ........................................ 32
6.8 Legal Requirements ............................................. 33
6.9 Sale and Purchase of Subject Banking Office .................... 33
7. Covenants and Other Agreements of Seller ................................ 34
7.1 Access to Records and Information .............................. 34
7.2 Conduct of Business Pending Closing ............................ 36
7.3 Training of Employees .......................................... 39
7.4 Employees ...................................................... 39
7.5 Insurance Policies ............................................. 39
7.6 Competition .................................................... 40
7.7 Seller Notices of Default ...................................... 41
7.8 ATM Access Devices ............................................. 41
7.9 Dissolution of Seller .......................................... 41
7.10 Loan Loss Reserves ............................................. 42
7.11 Covenants, Representations and Agreements With Respect
to Taxes Other Than Transaction Taxes .......................... 42
7.12 Matters Relating to Seller's Sales and Use Taxes ............... 43
7.13 Investment Portfolio ........................................... 44
7.14 Financial Statements and Related Information ................... 44
8. Covenants of Purchaser .................................................. 45
8.1 Change of Name ................................................. 45
8.2 Confidentiality ................................................ 45
8.3 Purchaser Notices of Default ................................... 46
8.3A Covenants, Representations and Agreements With Respect
to Certain Taxes ............................................... 47
8.4 Safe Deposit Agreements ........................................ 47
8.5 Contract Employees ............................................. 47
9. Agreements Regarding Employees and Benefits ............................. 47
10. Transactions at Closing ................................................. 53
10.1 Items to be Delivered by Seller ................................. 53
10.2 Items to be Delivered by Purchaser or Center Banks .............. 55
11. Representations and Warranties of Seller ................................ 56
11.1 Organization and Ownership ...................................... 56
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C> <C>
11.2 Authority .................................................... 57
11.3 Legal Proceedings ............................................ 57
11.4 Disputes or Controversies .................................... 57
11.5 Compliance with Law and Other Instruments .................... 57
11.6 Deposits and Charges to Accounts;
Withdrawals From Accounts .................................... 58
11.7 Title to Personal Property; Leased Personal
Propert No Default ........................................... 58
11.8 Other Agreements ............................................. 59
11.9 Consent ...................................................... 59
11.10 Individual Retirement Accounts and Qualified
Retirement Plans ............................................. 59
11.11 Insurance .................................................... 61
11.12 Financial Information ........................................ 61
11.13 Absence of Certain Changes or Events ......................... 61
11.14 Condition of Fixed Assets .................................... 62
11.15 Governmental Notices ......................................... 62
11.16 Permits, Authorizations, etc ................................. 62
11.17 Powers of Attorney ........................................... 63
11.18 Books and Records ............................................ 63
11.20 Deposit Insurance ............................................ 64
11.21 Regulatory Approvals ......................................... 64
11.22 Use of Subject Banking Office ................................ 64
11.23 Market Value Analysis ........................................ 64
12. Representations and Warranties of Purchaser and Center Banks ....... 64
12.1 Organization ................................................. 64
12.2 Authority and Consent ........................................ 65
12.3 Legal Procedures ............................................. 65
12.4 Governmental Notice .......................................... 65
12.5 Compliance with Law and Other Instruments .................... 66
12.6 Publicity .................................................... 66
12.7 Deposit Insurance ............................................ 66
12.8 Regulatory Approvals ......................................... 66
13. Survival of Representations, Warranties and Agreements;
Limitation of Claims; Indemnification .............................. 66
14. Termination ........................................................ 71
14.1 Termination of Agreement ..................................... 71
14.2 Immaterial Breach ............................................ 71
14.3 Effect of Termination ........................................ 72
14.4 Waiver of Right to Terminate ................................. 72
</TABLE>
iii
<PAGE> 5
<TABLE>
<S> <C> <C>
15. Miscellaneous ................................................. 72
15.1 Expenses .............................................. 72
15.2 Notice ................................................ 73
15.3 Successors and Assigns ................................ 74
15.4 Effect on Third Partie ................................ 74
15.5 Counterparts .......................................... 75
15.6 Captions; Table of Contents;
Construction of References to
Sections .............................................. 75
15.7 Scrivener's Clause .................................... 75
15.8 Entire Agreement; Limitations ......................... 75
15.9 Governing Law ......................................... 76
15.10 Signature Page ........................................ 76
SIGNATURE PAGE .................................................... 77
INDEX TO SCHEDULES ................................................ 78
</TABLE>
iv
<PAGE> 6
2/2/96
AGREEMENT made as of the 6th day of February, 1996 between Skaneateles
Savings Bank, a New York State chartered stock savings bank (hereinafter
referred to as "Purchaser") with its principal offices at 33 East Genesee
Street, Skaneateles, New York 13152; Center Banks Incorporated, a Delaware bank
holding company (hereinafter referred to as "Center Banks") with its principal
offices at 33 East Genesee Street, Skaneateles, New York 13152; and Cicero
Bank, a New York State chartered commercial bank (hereinafter referred to as
"Seller") with its principal offices at 5791 East Seymour Street, Cicero, New
York 13039.
The parties agree, on the terms and conditions herein set forth, as
follows:
1. SALE AND PURCHASE OF TRANSFERRED PROPERTY
(a) Upon and subject to all of the terms and conditions of this
Agreement, Seller agrees to sell, assign and transfer to Purchaser, and
Purchaser agrees to purchase, accept and assume from Seller, the following:
(i) Qualifying Fixed Assets and Qualifying Fixed Asset
Related Liabilities of the Subject Banking Office.
(ii) Transferable Deposit Liabilities;
(iii) Cash on Hand at the Subject Banking Office;
(iv) Qualifying Deposit Related Loans;
(v) Qualifying Other Agreements;
(vi) Qualifying Other Loans;
(vii) Qualifying Other Assets;
<PAGE> 7
(viii) The Subject Banking Office; and
(ix) Prepaid safe deposit rental fees and any other fees
or charges that have been prepaid by customers of
the Subject Banking Office and that are properly
allocable to periods subsequent to the Closing Date.
(b) The items described in the foregoing clauses (i) through (ix) (the
capitalized terms therein being used as hereinafter defined) shall be
hereinafter referred to in the aggregate as the "Transferred Property".
(c) Within ten (10) days prior to Closing, Seller shall deliver
to Purchaser separate Schedules identifying the nature and where appropriate
dollar amount of all: (i) Qualifying Fixed Assets; (ii) Qualifying Fixed Asset
Related Liabilities; (iii) Qualifying Other Agreements; (iv) Qualifying Deposit
Related Loans; (v) Qualifying Other Loans; and (vi) Qualifying Other Assets,
which lists once accepted by Purchaser shall be attached to and become a part
of this Agreement as Schedules 1(c)(i), 1(c)(ii), 1(c)(iii), 1(c)(iv), 1(c)(v)
and 1(c)(vi) respectively.
2. DEFINITIONS
The following terms, as used herein shall have the following meanings:
2.1 "Account" shall mean the account referred to in Section
3.4(d).
2.2 "Agreement" shall mean this agreement, together with
all Schedules attached hereto and all Schedules delivered herewith, including
any modifications, and amendments to or extensions of any of the foregoing.
2
<PAGE> 8
2.3 "Book Value" shall mean for purposes of this Agreement the book
value of any Transferred Property, calculated pursuant to generally accepted
accounting principles as of the last day of the calendar month preceding the
Closing.
2.4 "Business Day" shall mean a day other than a Saturday, Sunday or
other day on which banking organizations located within the State of New York
are permitted to be closed.
2.5 "Cash on Hand" shall mean the amount of all actual cash on hand at
the Subject Banking Office as of the Closing Date.
2.6 "Closing" shall have the meaning assigned to such term in
Section 4 hereof.
2.7 "Closing Date" shall mean as of 12:01 a.m. on the first day of the
calendar month after which all of the following shall have occurred, or such
date thereafter mutually acceptable to Purchaser, Center Banks and Seller after
which all of the following have occurred and/or shall occur, as the case may
be:
(a) All regulatory approvals referred to in Section
5.1(a) hereof shall have been obtained at least 30
days earlier;
(b) All notices required by law shall have been timely
given by Seller and/or Purchaser.
(c) All Shareholder and Corporate Consents referred to
in Section 5.1(b) and Section 5.1(c) hereof shall
have been obtained.
2.8 "Closing Date Defect" shall have the meaning assigned to such
term in Section 3.8(a) hereof.
2.9 "Closing Statement" shall mean the statement referred to in
Section 3.1(d) hereof.
2.10 "Code" shall mean the Internal Revenue Code of 1986, as
amended.
3
<PAGE> 9
2.11 "Compensation Amount" shall have the meaning assigned to such
term in Section 3.1(b) hereof.
2.11A "Contract Employee" shall mean those employees of Seller
listed in Schedule 2.11A hereof.
2.12 "Day of Closing" shall mean the Business Day on which the
Closing Date occurs.
2.13 "Encumbrances" shall mean all mortgages, liens, charges,
easements, restrictions, options, security interests, or other restrictions
or limitations upon the ownership or use of property.
2.14 "ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended.
2.14A "Escrow Agreement" shall have the meaning assigned to such
term in Section 13(d) hereof.
2.15 "Fed Funds Rate" shall have the meaning of that term as used
in Section 3.1(e).
2.16 "Fixed Assets" shall mean collectively (a) the Leasehold
Improvements respecting the Subject Banking Office, owned or leased by Seller
or an affiliate of Seller, and all terminals integral to the operations of the
Subject Banking Office, all as set forth in Schedule 2.16; (b) the trade
fixtures owned or (to the extent of lessee's interest) leased by Seller or an
affiliate of Seller's as of the Closing Date and which are now located at the
Subject Banking Office; and (c) machinery, materials, furniture and all other
tangible personal property owned or (to the extent of the lessee's interest)
leased, by Seller or an affiliate of Seller, as of the Closing Date
(collectively "F&E") and which are now located at the Subject Banking Office.
4
<PAGE> 10
2.17 "Fixed Asset Related Liabilities" shall mean, as set forth on
Schedule 2.17, obligations for payment of money incurred in connection with
the Fixed Assets, if any.
2.17A "F&E" shall have the meaning assigned to such term in Section
2.16 hereof.
2.18 "Gross Deposit Amount" shall mean all Transferable Deposit
Liabilities, plus all safe deposit box rentals and any other fees and charges
that have been pre-paid to the same extent as set forth in clause (a)(ix) of
Section 1 hereof.
2.19 "Inventory" shall have the meaning assigned to such term in
Section 3.7 hereof.
2.20 "IRA" shall mean an Individual Retirement Account.
2.21 "Knowledge of Purchaser" or "Knowledge of Center Banks" or any
similarly phrased term shall mean knowledge of the directors and officers of
the Purchaser or Center Banks.
2.21A "Knowledge of Seller" or any similarly phrased term shall
mean knowledge of the directors and officers of the Seller.
2.22 "Leasehold Improvements" shall mean all buildings, structures,
structural modifications, roofs, ceilings, walls, flooring, drive-up banking
facilities, vaults and other improvements and fixtures which are situated on,
incorporated into, or affixed to the Subject Banking Office as of the Closing
Date so as to be a part of the real property comprising such Subject Banking
Office.
2.23 "Liabilities" shall mean the Transferable Deposit Liabilities,
the liabilities and obligations of Seller pursuant to Qualifying Other
Agreements, and Qualifying Fixed Asset Related Liabilities (in each case
exclusive of liabilities or obligations resulting from any breach or violation
of any of the foregoing by Seller).
5
<PAGE> 11
2.24 "Mediator" or "Mediators" shall mean those individuals or
entities selected by the Seller and Purchaser or by the Mediators selected by
the Seller and Purchaser to serve as arbitrators pursuant to the Escrow
Agreement.
2.25 "Other Agreements" shall mean all agreements of the Seller
made by or with respect to the operation of the Subject Banking Office in the
normal course of business, including but not limited to safe deposit contracts,
deposit account agreements, leases of personal property, maintenance and
janitorial agreements, and vendor agreements of all types, agreements relating
to Qualifying Deposit Related Loans, Qualifying Other Loans, Qualifying Fixed
Assets and Qualifying Other Assets which have been disclosed in writing to
Purchaser or Center Banks prior to the effective date of this Agreement.
2.26 "Owner" shall mean the current fee owner of the Subject
Banking Office.
2.27 "Permitted Encumbrances" shall mean (a) as to the Fixed
Assets, any encumbrance that secures the payment of a Fixed Asset Related
Liability that is listed on Schedule 2.17; and (b) as to the Subject Banking
Office any encumbrance for taxes or similar charges or assessments that are not
yet due and payable.
2.28 "Preliminary Closing Statement" shall mean the statement
referred to in Section 3.1(c).
2.29 Intentionally deleted
2.30 "Procedures Manual" shall mean the manual referred to in
Section 3.4(g).
2.31 Intentionally deleted.
2.32 "QRP" shall mean a defined contribution retirement plan that
is a qualified retirement plan under Section 401(a) of the Code.
6
<PAGE> 12
2.33 "Qualifying Deposit Related Loan" means an obligation
(including any agreements with customers, borrowers or guarantors evidencing or
relating thereto) for the payment of money owing from a depositor to Seller
that is (a) secured by a deposit account that in all other respects constitutes
a Transferable Deposit Liability; or (b) drawn against a line of credit
automatically accessed by an overdraft on a Transferable Deposit Liability.
2.34 "Qualifying Fixed Assets" shall have the meaning assigned
to such term in Section 3.7.
2.35 "Qualifying Fixed Asset Related Liabilities" shall mean those
Fixed Asset Related Liabilities, if any, which relate to the Qualifying Fixed
Assets.
2.36 "Qualifying Other Agreements" shall mean (a) all agreements
relating to deposit accounts that are Transferable Deposit Liabilities,
agreements relating to Qualifying Deposit Related Loans, and safe deposit
contracts that are applicable to the Subject Banking Office and (b) such Other
Agreements (in their entirety or as applicable to the Subject Banking Office)
as are set forth in Schedule 2.36.
2.36A "Qualifying Other Assets" shall mean those assets of Seller
other than Cash on Hand at the Subject Banking Office, Qualifying Fixed Assets,
Qualifying Deposit Related Loans, Qualifying Other Loans and Seller's non-cash
investment portfolio, which Purchaser takes title to in partial consideration
for the assumption of Seller's Transferable Deposit Liabilities.
2.36B "Qualifying Other Loans" shall mean those loans owned by
Seller, other than Qualifying Deposit Related Loans, which Purchaser takes
title to in partial consideration for the assumption of Seller's Transferable
Deposit Liabilities.
7
<PAGE> 13
2.37 "Real Property Agreement" shall mean that certain agreement
pertaining to the sale of the Subject Banking Office by Seller to Center Banks
or Purchaser, in partial consideration of transactions described herein,
described in Section 6.9 of this Agreement.
2.37A "Real Property Leases" shall mean those certain three (3)
lease agreements pertaining to three (3) office facilities appurtenant to the
Subject Banking Office, as more particularly described on Schedule 2.37A.
2.38 "Schedules" shall mean all schedules and exhibits annexed to
or prepared in connection with this Agreement and the transactions contemplated
hereby, as completed and initialed by both parties, which except as otherwise
expressly provided in this Agreement, will be completed no later than thirty
(30) days after the effective date of this Agreement.
2.39 "Seller Retirement Plan" shall have the meaning assigned to
such term in Section 9(c).
2.40 "Settlement Date" shall mean the date referred to in Section
3.4(g).
2.41 "Structural Defect" shall have the meaning assigned to such
term in Section 3.8(b).
2.42 "Subject Banking Office" shall mean the parcel of real
property and all improvements thereto (including but not limited to Leasehold
Improvements and trade fixtures) which constitute the banking office and
property described on Schedule 2.42 attached hereto.
2.43 "TIN" shall mean a Federal Tax Identification Number.
2.44 "Transferable Deposit Liabilities" shall mean those deposit
accounts (and any customer agreements evidencing or relating thereto) as of the
Closing Date which are defined as deposits pursuant to Section 3(l) of the
Federal Deposit Insurance Act (12 U.S.C. 1813) which
8
<PAGE> 14
are maintained with or at the Subject Banking Office and that remain on deposit
as of the Closing Date including in all cases, (a) principal and accrued
interest thereon as of the Closing Date, and (b) any collected or uncollected
deposits associated therewith, but excluding:
(i) certified and official checks, bank drafts, and
similar instruments charged against depositors'
accounts prior to the Closing Date and outstanding
as of that time;
(ii) deposit accounts that are pledged as or otherwise
constitute collateral security for an obligation to
Seller for the payment of money that is not a
Qualifying Deposit Related Loan;
(iii) deposit accounts that are the subject of actual or
threatened litigation as of the Closing Date, or
that Purchaser is prohibited from assuming by
applicable law, court order, or pre-existing binding
agreement;
(iv) deposit accounts that are subject to restraining
notices, executions, levies, attachments, or other
legal process;
(v) reserves maintained with the Federal Reserve System
if any on all Transferable Deposit Liabilities;
Notwithstanding any provision contained in subsection (i) of
Section 2.44, any item listed in said subsection (i) of this Section 2.44 will
not be excluded from Transferable Deposit Liabilities if it is assumed as one
of the liabilities assumed by Purchaser as a part of the transaction described
herein.
2.45 "Transferred Employees" shall mean those Contract Employees of
the Subject Banking Office on the calendar day preceding the Day of Closing who
accept Purchaser's offer
9
<PAGE> 15
of employment and commence employment with Purchaser immediately upon the Day
of Closing as provided in Section 9 or as soon after Closing as they cease to
be employees of Seller.
2.46 "Transferred Property" shall have the meaning assigned to such
term in Section 1(b) hereof.
2.47 "Verified Compensation Amount" shall have the meaning assigned
to such term in Section 3.1(d) hereof.
3. ASSETS AND LIABILITIES
3.1 Transfer of Property and Assumption of Liabilities Unless
otherwise provided herein, on the Closing Date Seller will transfer to
Purchaser the assets and property hereinafter described and the Purchaser will
assume from Seller the liabilities hereafter described:
(a) On the Day of Closing and as of the Closing Date, except
as otherwise provided herein, subject to the terms and conditions set
forth in this Agreement, (i) Seller shall sell, transfer and assign to
Purchaser (or in the case of Fixed Assets owned by or leased to an
affiliate of Seller cause such affiliate to transfer, lease and/or
assign to Purchaser as the case may be) in each case free and clear of
Encumbrances except Permitted Encumbrances, all of Seller's (or such
affiliate's) right, title and interest in and to the: (A) Qualifying
Fixed Assets and Qualifying Other Assets, (B) Qualifying Deposit
Related Loans, Qualifying Other Loans and Cash on Hand, (C) if
applicable, all rights in and to the Qualifying Other Agreements,
(C-1) the Subject Banking Office, (D) if appropriate, an additional
cash payment in an amount determined pursuant to paragraph
10
<PAGE> 16
(b) of this Section 3.1, (E) subject to Section 3.3 hereof, all
documents, books and records relating to the deposit accounts that
constitute the Transferable Deposit Liabilities and the business of
the Subject Banking Office that relate to the foregoing except to the
extent otherwise specified in Schedule 3.1(a)E annexed hereto, and (F)
all other Transferred Property not otherwise mentioned herein, and
(ii) Purchaser shall assume all of the Liabilities. Without limitation
of express covenants, agreements and obligations of Purchaser, if any,
pursuant to this Agreement, Purchaser shall not assume, nor shall it
be deemed to have assumed, any liabilities, duties or obligations of
Seller, other than the Liabilities.
(b) Not later than 2:00 p.m. on the Day of Closing, Seller
shall make a payment to Purchaser in immediately available funds, by
Fedwire transfer, of an amount, if any (the "Compensation Amount"),
determined by subtracting from the Gross Deposit Amount, the sum of
the following items: (i) Cash on Hand being transferred, (ii) the Book
Value of the F&E, (iii) the unaccrued portion, as of the Closing Date,
of interest prepaid by Seller on Transferable Deposit Liabilities, if
any, (iv) the aggregate principal balance and accrued but unpaid
interest on Qualifying Deposit Related Loans and Qualifying Other
Loans (decreased, however, by the amount, if any, of prepaid interest
received by Seller in respect of such loans allocable to any period
beginning on or after the Closing Date), (v) the Book Value of the
Subject Banking Office, (vi) the Book Value of the Qualifying Other
Assets, and (vii) adjustments, if any, as hereinafter described in
respect of other related matters provided that it is agreed that it is
the intention of Seller, Purchaser and Center Banks that the aggregate
of the dollar amount of the items
11
<PAGE> 17
described in subsections (b)(i) through and including (b)(vii) of this
Section 3.1 shall equal, but not exceed or be less than, the Gross
Deposit Amount.
(c) Not later than 2:00 p.m. on the Saturday preceding the
Day of Closing, Seller shall deliver a Preliminary Closing Statement
for the Subject Banking Office, setting forth the information
prescribed by Schedule 3.1(c) hereof as of a date not more than three
(3) Business Days earlier, and any items described in paragraph (b)
above, to Purchaser, and setting forth the computation of the
Compensation Amount, if any.
(d) Not later than twenty (20) Business Days subsequent to
the Day of Closing, Seller and Purchaser shall agree upon a final
Closing Statement, updating to and as of the Closing Date all
information set forth on the Preliminary Closing Statement and making
a final determination of the Compensation Amount, if any (as so
recalculated, the "Verified Compensation Amount"), using the same
method described in Section 3.1(b) above, but using for the items set
forth in Sections 3.1(b)(i), (ii), (iii), (iv), (v), (vi) and (vii)
above, the amounts of such items as given on the final Closing
Statement. If Seller and Purchaser are unable to agree on the Verified
Compensation Amount in such twenty (20) day period, they will within
thirty (30) days after the Closing Date submit any disputes regarding
the preparation of the final Closing Statement and/or the calculation
of the Verified Compensation Amount, if any, to the Mediators, whose
determination on such matters (which shall be rendered within twenty
(20) days following such submission) shall be binding upon Seller and
Purchaser. The costs and expenses of such submission shall be equally
shared between Seller and Purchaser.
12
<PAGE> 18
(e) If the Verified Compensation Amount as so determined is
less than the Compensation Amount, Purchaser shall, no later than five
(5) days after Seller's and Purchaser's agreement on the Verified
Compensation Amount or a decision on any disputes by the Mediators, as
applicable, pay to Seller the amount of such difference together with
interest thereon for each day from the Closing Date to the date of
payment at a rate per annum equal to the average Fed Funds Rate for
such period. If the Verified Compensation Amount as so determined is
greater than the Compensation Amount, Seller shall, within the time
period described in the preceding sentence, pay Purchaser the amount
of such excess, together with interest thereon for each day from the
Closing Date to the date of payment at a rate per annum equal to the
average Fed Funds Rate for such period. The Fed Funds Rate shall be as
published by the Federal Reserve Bank of New York. All payments shall
be made in immediately available funds, by Fedwire transfer.
(f) Nothing contained in this Section 3.1 shall be in
limitation of the respective obligations of the parties, relating to
payments and transfers of funds, if any, pursuant to Section 9 hereof.
3.2 Assignment of Qualifying Other Agreements, if any
(a) Seller shall use its best efforts to obtain and deliver
to Purchaser on the Day of Closing all required consents authorizing
all Qualifying Other Agreements, if any, to be transferred or assigned
hereunder, effective as of the Closing Date.
(b) Nothing in this Agreement shall constitute an
agreement on the part of the Seller to assign or otherwise transfer
any Other Agreement, if such assignment (or transfer), without the
consent of another party, would constitute a breach thereof.
13
<PAGE> 19
3.3 BOOKS AND RECORDS
Except as otherwise provided herein or listed on Schedule
3.1(a)E attached hereto, Purchaser shall receive possession of and
right, title and interest in, all of Seller's books and records which
are maintained at, or in any way applicable to Seller's business at,
the Subject Banking Office or necessary to service and properly
account for such Transferred Property and Liabilities after Closing.
Purchaser shall also receive (in addition to any documents that are to
be transferred to Purchaser as Qualifying Other Agreements) any and
all documents and files that relate to or are reasonably necessary for
servicing of, each Transferable Deposit Liability, each Qualifying
Deposit Related Loan and each Qualifying Other Loan (including without
limitation copies of all adoption agreements, distribution agreements,
if any, and designation of beneficiary forms as related to both IRAs
and QRPs) or any Contract Employee except to the extent otherwise
specified as set forth in Schedule 3.1(a)E. In any event, all books
and records directly relating to the Transferred Property and
Liabilities and/or the Contract Employees to be transferred and
assumed under this Agreement of which a party is in possession after
the Closing Date shall be open for inspection by the other party and
its authorized agents, representatives and regulators during regular
business hours after the Closing Date and the party with the right of
inspection may request and obtain from the other, or itself make, such
reasonable copies of and excerpts from such books and records as it
may deem desirable. For a period of six (6) months after the Closing
Date the party in possession of the books and records from which such
copies are made (the "Copy Provider") shall bear the expense of such
copying, provided that if such copies are requested by reason of a
14
<PAGE> 20
request initiated by a customer, the Copy Provider may impose charges
customarily imposed by it for such copies, which the party requesting
the copy may elect to charge such customer. After the aforesaid six
(6) month period, the party obtaining such copies shall bear the
expense of any copying. All books and records relating to the
Transferred Property and Liabilities to be transferred and assumed
under this Agreement shall be maintained by the party in possession
thereof after the Closing Date for a period which is at least the
longer of the period required by law, court order, regulatory
directive, or that party's current record retention policies unless
the parties shall, applicable law permitting, agree upon a shorter
period. Notwithstanding, neither Purchaser or Center Banks shall
have any liability to Seller or any third party with respect to any of
Seller's books or records delivered to Purchaser or Center Banks which
become lost or misplaced.
3.4 Items in Transit; Items Presented After Closing Date
(a) Purchaser shall obtain the benefit of and shall bear
the risk of all items which are in transit as of the close of business
on the last Business Day preceding the Closing Date and that relate to
any Transferable Deposit Liabilities. Adjustments shall be made
between the parties in respect of such items in the same manner as if
taken into account for determination of the Verified Compensation
Amount.
(b) Items relating to Transferable Deposit Liabilities
presented or returned unpaid to Seller after the Closing Date shall be
credited to the Purchaser by an adjustment to the Verified
Compensation Amount, if appropriate, and reflected on the final
Closing Statement or if presented or returned after the preparation of
the final Closing Statement paid to Purchaser by Seller as soon as
practicable thereafter upon presentment to Seller by Purchaser. Any
item presented to Seller for payment after Seller's liquidation shall
be paid to Purchaser by the Escrow Agent, defined in the
15
<PAGE> 21
Escrow Agreement, upon presentment, from the Escrow Fund as defined
in the Escrow Agreement.
(c) For so long after the Closing Date as Seller and
Purchaser shall reasonably deem to be necessary, Seller shall deliver
to Purchaser each Business Day, in a manner agreed to by Seller and
Purchaser, the information received by Seller with respect to
Automated Clearing House (the "ACH") debit and credit entries
(including adjustments thereto) to any account that constituted a
Transferable Deposit Liability. Each day's delivery or transmission
shall be completed as set forth in the Procedures Manual.
(d) Purchaser shall utilize an account to be identified (the
"Account") for settlement of debit and credit entries, as well as for
settlement of claims, returns, error and adjustments thereto. Seller
shall deposit to the Account an amount equal to the amount of all
credit entries on the Settlement Date, as hereinafter defined.
Purchaser shall credit the Account for an amount equal to the amount
of all debit entries on the later of the Settlement Date or the date
received by Purchaser.
(e) Each party shall be responsible for its own costs and
expenses in connection with its performance of its responsibilities
under this Section 3.4.
(f) Any written instructions or other mail received by Seller
relating to the Transferable Deposit Liabilities after the Closing
Date will be made available to Purchaser no later than the Business
Day after such mail arrives at Seller's central processing area and in
accordance with the procedures to be agreed upon by the Seller and
Purchaser prior to Closing.
16
<PAGE> 22
(g) Further detail on the matters or transactions described
in or contemplated by this Section 3.4 shall be set forth in a manual
or memorandum of procedures which shall be substantially in the form
of that certain manual or memorandum of procedures to be agreed to by
Seller and Purchaser within thirty (30) days of the date hereof which
shall be signed by both parties no later than the Closing Date (the
"Procedures Manual"). The Procedures Manual shall also specify the
time and manner of the closing of the Account which in no event will
be later than Seller's final liquidation date (the "Settlement Date"),
provisions as to adjustments between the parties relating thereto, and
if acceptable to Seller and Purchaser may provide for the Purchaser to
service certain deposit liabilities and assets not transferred to the
Purchaser pursuant to the Agreement.
3.5 Sales and Other Transaction Taxes and Fees
Except as otherwise expressly provided herein, Purchaser
shall be responsible for and shall pay all sales, use, excise, personal
property transfer and similar taxes, and all recording fees (but not any
income, franchise or similar taxes or taxes and fees which would normally be
paid by the Seller in connection with Purchaser's acquisition of the Subject
Banking Office), applicable to or arising out of the transactions contemplated
by this Agreement. At or before Closing, Seller and/or Purchaser shall notify
the New York State Tax Department of the full amount of applicable sales taxes
attributable to the transactions contemplated by this Agreement. Thereafter,
Purchaser shall cause said amount to be properly and timely remitted with all
required returns and/or reports to the extent Purchaser is legally obligated to
do so. Purchaser and Seller shall cooperate in preparing, executing and
delivering any forms that Purchaser or Seller reasonably requests and
determines are required to be filed under applicable
17
<PAGE> 23
provisions of the New York Tax Law. Seller shall indemnify and hold
Purchaser harmless for the payment of any sales or use taxes collected by
Seller which may be attributable to Purchaser if unpaid by Seller on or after
the Closing.
3.6 Delivery of Other Agreements
Seller has or will have delivered to Purchaser copies of all
Other Agreements (except that in the case of account agreements, safe deposit
agreements and others for which there is one form of agreement and a multiple
number of such agreements with different parties, copies of the form thereof
have been provided).
3.7 Inventory of Fixed Assets
(a) Not later than thirty (30) days prior to Closing, Seller
shall deliver to Purchaser a written inventory ("Inventory")
summarizing categories of all Fixed Assets. The Fixed Assets at the
Subject Banking Office shall be the Qualifying Fixed Assets.
(b) Within ten (10) days prior to Closing Seller and
Purchaser will inspect the Fixed Assets at the Subject Banking Office.
(c) Following the inspection of the Fixed Assets at the
Subject Banking Office as described in subsection (b) hereof, if any
material Fixed Asset is in such state of disrepair or deterioration
that it is substantially unsuitable for its intended purpose Seller
shall have the option to: (i) cause same to be repaired or restored to
good working order at its expense by the Closing Date; or (ii) if the
Fixed Asset in question is not a fixture at the Subject Banking Office
or Leasehold Improvement to retain title to said asset and not
transfer it to Purchaser or Center Banks pursuant to the terms of this
Agreement.
18
<PAGE> 24
3.8 Structural Condition of Subject Banking Office
(a) Except as set forth on Schedule 3.8 attached hereto,
Seller represents and warrants to Purchaser that no Structural Defect
to the Subject Banking Office now exists or will exist on the Closing
Date, or if any Structural Defect does exist as of the Closing Date
that did not exist as of the date hereof (a "Closing Date Defect"),
Seller shall describe the nature thereof and repair same or cause
same to be repaired in a manner reasonably acceptable to Purchaser.
(b) A "Structural Defect" for purposes of this Agreement
shall be a structural or other condition with respect to the Subject
Banking Office that (i) materially disrupts or adversely affects the
operations of the Subject Banking Office or materially increases the
costs thereof, or (ii) constitutes a material health or safety hazard.
(c) In the event that a Closing Date Defect shall exist,
Seller shall cure such Closing Date Defect as is necessary to restore
the premises to a condition that is reasonably acceptable to Purchaser
or that is substantially the same as the condition of such premises as
of the date hereof. In the event a Closing Date Defect cannot be
repaired in a manner reasonably acceptable to Purchaser before the
Closing, Seller shall place sufficient dollars to pay for the cost of
any required repairs in an escrow account the terms and conditions of
which shall be reasonably acceptable to Seller and Purchaser to assure
that any such required repairs are made in a proper and timely manner.
3.9 General Access
At any time after all regulatory approvals described in
Section 5.1(a) and shareholder approvals described in Section 5.1(c) hereof
have been obtained, or, if such
19
<PAGE> 25
approvals have not all been obtained by September 1, 1996, then 30 days prior
to the then anticipated Closing Date, Seller shall permit Purchaser access
to the Subject Banking Office, with the consent of Owner, if necessary, for the
purpose of making such electrical and such other physical modifications,
including the installation of Purchaser's proprietary security and operating
equipment, as are required by Purchaser to enable it to conduct banking
business on and after the Closing Date. Purchaser at its expense shall obtain
all licenses and/or permits required for such modifications, and all such
modifications shall comply in all material respects with all applicable
building codes, zoning regulations and similar laws. Seller shall provide such
safeguards for any equipment installed by Purchaser hereunder as Purchaser
shall reasonably quest, at Purchaser's expense if Seller is required thereby to
incur expenses exceeding those ordinarily incurred by Seller in the
safeguarding of its own property at such locations.
Such access shall be subject to and conditioned upon: (i) prior written
notice from Purchaser to Seller and shall be arranged at such times as are
agreed upon by the parties so as to not interfere with or materially disrupt
Seller's conduct of banking business at the Subject Banking Office; (ii)
Purchaser's obligation to indemnify and hold Seller harmless against any
losses, claims, damage and liability resulting from any act or omission of
Purchaser in exercising its rights under this Section 3.9; and (iii) physical
modifications, if any, prior to Seller's acquisition of the Subject Banking
Office not being made without the prior written consent of the Owner.
If the Closing fails to occur for any reason other than Seller's fault,
at Seller's election, promptly but in any event by no later than thirty (30)
Business Days after notice of such election (which notice shall be given on a
Business Day), Purchaser shall, at its option,
20
<PAGE> 26
either (i) restore, at its sole cost and expense, the Subject Banking Office
substantially to its condition immediately prior to the exercise of any of its
rights under this Section (but without any obligation to remove cables or
wires that are in walls or otherwise not readily accessible, unless such
removal is required under applicable law), or (ii) reimburse Seller for the
costs of such restoration.
3.10 Special Access
(a) From 6:00 p.m. on the Friday immediately preceding the
Day of Closing until the Day of Closing ("Transition Period"), Seller
shall provide Purchaser with such access to the Subject Banking Office
as is reasonably necessary for the purpose of Purchaser's preparing,
at its sole cost and expense, the Subject Banking Office for operation
as a branch office of Purchaser at and after the Closing Date. During
the Transition Period, Purchaser shall have the right to remove and
replace signs, supplies, stationery and other personal property not
removed by Seller, to rearrange furniture, equipment and trade
fixtures, and to do such other things as may be reasonably necessary
to prepare the Subject Banking Office for operation on the Closing
Date as a branch of Purchaser. Purchaser shall not, however, remove
any sign prior to 6:00 p.m. on the Business Day immediately preceding
the Day of Closing, and any supplies, stationery and other personal
property removed by Purchaser shall be isolated and kept separate, but
available for use by Seller during the period prior to the Day of
Closing, at the premises of the Subject Banking Office to be delivered
to Seller on the Day of Closing. Each of the parties shall bear the
expense of salaries and overtime expenses of those of its employees
participating in the transition process.
21
<PAGE> 27
(b) Except for its normal banking hours, Seller shall not
open the Subject Banking Office during the Transition Period.
Notwithstanding any other provision contained herein to the contrary,
the automated teller machine(s), if any, adjoining the Subject Banking
Office will remain open for business during the Transition Period
subject to appropriate post-Closing adjustments for transactions
consummated during the Transition Period.
(c) In the event that the Closing does not occur as of the
Closing Date as provided herein, due to Purchaser's failure to satisfy
the Conditions to Closing set forth in Section 5 hereof or other fault
of Purchaser, then Purchaser shall, at Seller's election, promptly
after notice of such election (which notice shall be given on a
Business Day), but in no event later than five (5) Business Days after
such notice, restore the Subject Banking Office to substantially its
condition at the commencement of the Transition Period at Purchaser's
sole cost and expense, which obligation shall include repairing any
damage done by Purchaser, replacing any supplies and signs removed by
Purchaser, and rearranging any furniture, equipment or trade fixtures
moved by Purchaser. In the event that the Closing does not occur as of
the Closing Date as provided herein due to Seller's failure to satisfy
the Conditions to Closing set forth in Section 5 hereof or other fault
of Seller, then any and all costs of repairing or restoring the
Subject Banking Office to substantially their condition at the
commencement of the Transition Period shall be borne by Seller. In the
event that the Closing does not occur through no fault of either
party, then any and all costs of repairing or restoring the
22
<PAGE> 28
Subject Banking Office to substantially its condition at the
commencement of the Transition Period shall be shared equally by the
Purchaser and Seller.
3.11 Possession and Risk of Loss
From and after Closing Date, Purchaser shall be entitled to
possession of the Subject Banking Office and the Qualifying Fixed Assets, and
all risk of loss thereto shall pass to Purchaser at the time of Closing.
3.12 Apportionment; Proration
Except as otherwise specifically provided in this Agreement,
it is the intention of the parties hereto that Seller shall operate for its own
account the business of the Subject Banking Office being transferred pursuant
to this Agreement and the Real Property Agreement until the Closing Date and
Purchaser shall operate for its own account such business thereafter. Thus,
except as otherwise specifically provided in this Agreement or the Real
Property Agreement, all items of income and expense related to the Subject
Banking Office, including but not limited to utilities, service and maintenance
charges, if appropriate, shall be prorated as of the Closing Date, whether or
not such adjustment would normally be made as of such time.
3.13 Allocation of Purchase Price and Reporting
(a) Subject to the terms and conditions contained herein,
Purchaser and Seller acknowledge and agree that Schedule 3.13 annexed
hereto constitutes a preliminary allocation of the total consideration
that shall flow between the parties hereto in connection with the
transfer of the Transferred Property among the constituent items of
such Transferred Property and other items set forth on Schedule 3.13.
In connection with reaching agreement upon a final Closing Statement
pursuant to Section 3.1(d)
23
<PAGE> 29
Purchaser and Seller shall agree upon adjustments to Schedule 3.13 to
reflect the actual items and amounts of Transferred Property as of the
Closing Date, and any disputes regarding such adjustments shall be
resolved by the Mediators in the same manner as provided in Section
3.1(d). Notwithstanding any other provisions contained herein to the
contrary, Purchaser shall be permitted to allocate the aggregate of
the Book Value of F&E, Qualifying Other Assets and the Subject Banking
Office, respectively, among the various F&E, Qualifying Other Assets,
Subject Banking Office, and any other intangible asset(s) that
Purchaser deems appropriate, in any manner which Purchaser, in its
sole discretion, deems appropriate.
(b) In the preparation of all federal, state or local
reports, returns and/or filings in respect of income that relate in
whole or in part to the transactions contemplated hereby (including
reporting pursuant to applicable requirements of Section 1060 of the
Code), Purchaser and Seller shall account for the transactions
contemplated hereby in accordance with the allocation, if any, to be
set forth in Schedule 3.13 as finally adjusted.
(c) If any federal, state or local tax return, report or
filing of Purchaser or Seller relating to the transactions
contemplated hereby is challenged by the taxing authority with which
such return, report or filing was filed on the basis of the allocation
set forth in Schedule 3.13 as finally adjusted, the filing party
shall, during the audit thereof, assert and maintain in good faith the
validity and correctness of such allocation; provided, however, that
this obligation shall terminate upon the issuance by the taxing
authority of a "30 Day Letter", or a determination of liability
equivalent thereto, to such
24
<PAGE> 30
party, whereupon such party shall, in its sole discretion, have the
right to pay, compromise, settle, dispute, or otherwise deal with its
alleged tax liability. If a tax return or filing is challenged as
herein described, the party filing such return or filing shall keep
the other party apprised of its decisions and the current status and
progress of all administrative and judicial proceedings, if any, that
are undertaken at the election of such party.
4. CLOSING
The closing of the purchase and sale of the Transferred Property and
assumption of the Liabilities (the "Closing") described in this Agreement shall
take place as of the Closing Date on the Day of Closing at the offices of
Purchaser located at 431 East Fayette Street, Syracuse, New York or at such
other location as Purchaser may elect by written notice to Seller at least ten
(10) days prior to Closing.
5. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE PARTIES
Each obligation of the parties hereto are subject to fulfillment at or
prior to the Closing Date of each of the following conditions precedent, but
compliance with or occurrence of any one or more of such conditions precedent
(excluding the conditions set forth in Section 5.1) may be waived in writing by
the parties hereto or by the Purchaser and Center Banks alone in the case of
Sections 5.4, 5.5, 5.6, 5.7 and 5.8 of this Agreement.
25
<PAGE> 31
5.1 Regulatory Approvals; Shareholder Approvals; Corporate
Consents; Other Filings
(a) All required licenses, approvals and consents of any
relevant state and federal regulatory agencies (including, but not
limited to, consents for Purchaser to operate the Subject Banking
Office as one of its branch banking offices) shall have been obtained
and all necessary conditions, including all legally required waiting
or protest periods, of such licenses, approvals and consents and all
legally required notices to be given shall have been fully satisfied;
provided, however, that if any such licenses, approvals, consents and
notices in the reasonable judgment of any party hereto is qualified
and/or conditioned in any manner material to it, such party may deem
this condition unfulfilled until such qualification(s) and/or
condition(s) are removed or fulfilled.
(b) Seller, Purchaser and Center Banks shall produce copies
of resolutions of their respective Boards of Directors, as of a date
no later than 30 days after the date of this Agreement and certified
by a corporate secretary, evidencing the requisite corporate consents
as required under applicable law and/or either party's certificate of
incorporation, organization certificate, restated organization
certificate, and/or by-laws, and the authority of Seller and
Purchaser, respectively, to execute, deliver and perform this
Agreement.
(c) All required shareholder approvals of the shareholders of
Seller, Purchaser and Center Banks, if any, shall have been obtained
in a manner consistent with applicable federal and state statutes and
regulations and the corporate charter documents of Seller, Purchaser
and Center Banks, as the case may be.
26
<PAGE> 32
5.2 Absence of Litigation
No action or proceeding instituted by any governmental authority or any
other party seeking to prevent the consummation of the transactions
contemplated by this Agreement or which would otherwise have a material adverse
effect on the contemplated transactions shall be pending or threatened at the
time of the Closing, provided that this condition may be waived in writing by
the Purchaser or Center Banks as it relates to any action or proceeding
instituted by a non-governmental entity.
5.3 Absence of Bankruptcy and Insolvency
Neither Purchaser, Seller or Center Banks shall (i) have been declared
insolvent by any regulatory body having jurisdiction, (ii) have filed a
voluntary petition for relief under the United States Bankruptcy Code or any
similar federal or state statute for the protection of debtors or involving
reorganization, (iii) have had an involuntary petition for relief (as described
in the preceding clause) filed against it and (A) shall have failed for thirty
days to deny or contest the allegations thereof or otherwise move against such
petition or (B) shall have failed by the sixty-first day thereafter to have had
such petition withdrawn or dismissed, (iv) have filed any other document with
any governmental or regulatory body which declares its general inability to pay
obligations when due or otherwise declares its insolvency, or (v) made any
general assignment for the benefit of creditors.
5.4 Truth of Representations; Performance of Covenants
The respective representations and warranties of Seller, Purchaser and
Center Banks as set forth in this Agreement shall be deemed to be made again on
the Closing Date and shall then be true and correct, subject to any changes
contemplated by this Agreement; the
27
<PAGE> 33
covenants of Seller, Purchaser and Center Banks set forth in this Agreement
and to be performed on or before the Closing Date shall have been performed in
all material respects; and none of the parties shall have asserted any material
error, misstatement or omission in a representation by, or any breach of a
warranty or covenant of, the other; provided, however, that none of the parties
shall be relieved of any obligations or liabilities as a result of such party's
own error, misstatement, omission or breach.
5.5 Purchase of Subject Banking Office
On or before the Closing Date, Seller will purchase the
Subject Banking Office, directly or indirectly, from Owner. Thereafter,
simultaneously with the Closing, Seller shall sell and convey the Subject
Banking Office to Center Banks or Purchaser, as provided in Section 6.9 of this
Agreement.
5.6 Assumption of Real Property Leases
Purchaser's receipt of originally executed assignments of all
of the Real Property Leases, together, if applicable, with estoppel
certificates and attornments from each tenant thereunder (including the
Seller), evidencing the assignment of all interests of every lessor thereunder
to Purchaser. Purchaser shall be obligated to assume each of the Real Property
Leases only if: (a) the Real Property Lease which expired on December 31, 1995
is continued on a month to month basis and expires by its terms thirty (30)
days after the Closing Date; and (b) the two (2) remaining Real Property Leases
are amended and modified so as to expire by their terms on December 31, 1996.
28
<PAGE> 34
5.7 Off Balance Sheet Liabilities
Purchaser and Center Banks shall confirm that neither entity
will be subjected to any off balance sheet liabilities attributable to the
other party as a result of consummating the transactions contemplated by this
Agreement, including any liability resulting from unfunded or under funded
pension or benefit plans attributable to Seller's employees.
5.8 Principal Shareholders Agreement
Purchaser's and Center Banks' receipt of a copy of the
Principal Shareholders Agreement annexed hereto as Schedule 5.8 properly
executed by all parties thereto as of and on the effective date of this
Agreement.
6. AGREEMENTS OF BOTH PARTIES
6.1 Assistance in Obtaining Regulatory Approvals
Seller, Purchaser and Center Banks agree to use all
reasonable efforts to satisfy all of the conditions to Closing, including but
not limited to giving assistance to each other in obtaining the regulatory
approvals and shareholder approvals referred to in Sections 5.1(a) and 5.1(c)
of this Agreement and producing all necessary registration, proxies and related
statements for filing, if appropriate, with the Securities and Exchange
Commission ("SEC"), Federal Deposit Insurance Corporation ("FDIC"), and/or New
York State Banking Department. In fulfilling this obligation, each of the
Seller, Purchaser and Center Banks will cooperate in preparing and provide to
the other and/or to the appropriate regulatory authorities all information
reasonably required to be submitted in connection with such approvals and/or
filings in a manner consistent with Schedule 6.1 hereof. Notwithstanding
anything else contained herein to the
29
<PAGE> 35
contrary, Seller, Purchaser and Center Banks, to the extent required by statute
or regulation, will apply for all appropriate regulatory approvals within
forty-five (45) days of the date of this Agreement and shall, as soon as
reasonably practicable after the effective date of this Agreement, take all
required actions to obtain any necessary shareholder approvals.
6.2 Public Announcements; Releases Prior to Closing
Seller and Purchaser agree to prepare and jointly release a
public announcement or press release with respect to the contemplated or
consummated transactions, prior to or on the Day of Closing, which is
acceptable to both parties and in compliance with any applicable statute,
regulation or rule, and if appropriate consistent with and subject to Section
6.5. Notwithstanding the provisions of the immediately preceding sentence,
should Center Banks determine that any such a public announcement, disclosure
or press release is required by law or regulation it may make any public
announcement, disclosure or press release which it deems appropriate.
6.3 Further Assurances
(a) On and after the Closing Date, each party shall give to
the other such further assurances, and shall execute, acknowledge and deliver
all such other instruments and take such further action as may be reasonably
necessary and appropriate to effect the contemplated transactions, provided
that any action taken by one party after the Closing at the request of the
other and not otherwise required by this Agreement shall be at the cost and
expense of the party requesting such action.
30
<PAGE> 36
(b) On or before Closing Seller will deliver to Purchaser a
special and limited power of attorney which will permit Purchaser to assign
and/or transfer documents relating to the Transferred Property, if any, from
Seller to Purchaser as of the Closing Date.
6.4 Corporate Consents
Each party shall secure all necessary corporate consents and
use its best efforts to secure all necessary shareholder consents required to
be secured by it and shall comply with all applicable laws, regulations and
rulings in connection with this Agreement and the consummation of the
transactions contemplated hereby.
6.5 Customer Notices; Customer Contact
Seller and Purchaser shall jointly provide all notices to
customers of the Subject Banking Office that Seller or Purchaser, as the case
may be, is required to give by any regulatory authority having jurisdiction or
under applicable law or the terms of any Other Agreement between Seller and any
customer in connection with the transactions contemplated hereby. A party
proposing to send any notice pursuant to this Section 6.5 shall furnish to the
other party a copy of the proposed form of such notice at least five days in
advance of the proposed date of the first mailing, posting, or other
dissemination thereof to customers, and shall not unreasonably refuse to amend
such notice to incorporate any changes that the other such party proposes as
necessary to comply with applicable statutes, rules, regulations or
requirements of any regulatory authority having jurisdiction. The costs of the
required notices, announcements or releases described or referred to in this
Section 6.5 shall be shared equally between Seller and Purchaser.
Notwithstanding any other provision contained herein to the
31
<PAGE> 37
contrary, Seller and Purchaser shall notify all owners of the Transferable
Deposit Liabilities which will be assumed by Purchaser on the Closing Date
of the transactions contemplated by this Agreement at least twenty (20) days
prior to Closing.
6.6 Finders or Brokers
With the exception of A. Notarpole, who Seller is obligated
to pay and agrees to pay $15,000.00 on the completion of the transactions
described herein, each party represents and warrants to the other that it has
not in any manner whatsoever paid or agreed to pay any fee or commission to any
agent, broker, finder or other person for or on account of services rendered as
a broker or finder in connection with this Agreement or the transactions
covered and contemplated hereby, and each party shall indemnify the other for
any claim or liability (including but not limited to reasonable attorneys'
fees) based in any way on agreements, arrangements or understandings of such
nature claimed to have been made by such party with any third party.
6.7 Forwarding of Mail, etc.
To the extent not otherwise provided by Section 3.4 or the
Procedures Manual:
(a) On and after the Closing Date, each party will promptly
deliver to the other all mail and other communications which are properly
addressable or deliverable to the other as a consequence of the transactions
pursuant to this Agreement; and
(b) without limitation of the foregoing, on and after the
Closing Date, Seller shall promptly forward any mail, communications or other
material relating to the Transferable Deposit Liabilities or other Transferred
Property (not otherwise made available to Purchaser pursuant to Section 3.4(c)
hereof), including but not limited to appropriate IRS tapes (to the
32
<PAGE> 38
extent mutually agreed to by the Seller and Purchaser), to such employees of
Purchaser at such addresses as may from time to time be specified by Purchaser
in writing. Notwithstanding any other provision contained herein to the
contrary, Seller will provide all tax notices, including but not limited to all
required 1099 or similar forms attributable to interest paid on the
Transferable Deposit Liabilities prior to Closing to the appropriate legal or
beneficial owner of such Transferable Deposit Liability in a manner consistent
with all federal, state and local laws, rules and regulations.
6.8 Legal Requirements
Each party shall satisfy, and shall indemnify the other
against the indemnifying party's failure to satisfy, requirements of law with
which it may be required to comply in connection with, or as a consequence of
consummation of, the transactions contemplated by this Agreement (and that are
not otherwise provided for in this Agreement or required to be satisfied as
legal conditions to such consummation).
6.9 Sale and Purchase of Subject Banking Office
As additional consideration for the transactions described
herein, Seller and Purchaser agree that on the Closing Date Seller will sell
the Subject Banking Office to Purchaser (or Center Banks should Purchaser so
elect) and Purchaser (or Center Banks, should Purchaser so elect) will purchase
the Subject Banking Office from Seller pursuant to the terms and conditions
annexed hereto as Schedule 6.9 and subject to the following additional
agreements by Seller to obligate itself as a part of its sale of the Subject
Banking Office to Purchaser or Center Banks at its sole expense to (i) provide
an acceptable Phase I (and Phase II, if necessary) Environmental Audit Report
for the benefit of Center Banks and Purchaser; (ii) take all
33
<PAGE> 39
necessary steps prior to Closing to convey the Subject Banking Office to Center
Banks or Purchaser free and clear of any environmental hazards or problems;
(iii) deliver good and marketable title for the Subject Banking Office to
Center Banks or Purchaser; (iv) provide a currently redated survey of the
Subject Banking Office with permanent corner pins set on the premises in
question and shown on said survey; (v) provide that Center Banks and Purchaser
must approve, in writing, any easements or rights of way to be retained by or
conveyed to the Owner or other third parties affecting the Subject Banking
Office before or after Closing; and (vi) provide for unencumbered ingress and
egress from the Subject Banking Office to a dedicated street or streets
adjoining the premises in question. Notwithstanding any other agreement herein
to the contrary, the sale and purchase of the Subject Banking Office to and by
Purchaser shall be subject to and conditioned upon Purchaser's ability to use
the Subject Banking Office as a banking and commercial office facility after
the Closing Date without any unreasonable restrictions or limitations on
such use.
7. COVENANTS AND OTHER AGREEMENTS OF SELLER
7.1 Access to Records and Information
(a) Between the date of this Agreement and the Closing Date,
and subject to Seller's receipt of prior oral or written notice, Seller
shall afford to Purchaser, Center Banks and their authorized agents and
representatives, reasonable access during mutually agreeable hours to
the properties, operations, books, records, contracts, documents, loan
files and other information (including, but not limited to, all
personnel files and records relating to employees in the Subject
Banking Office) within Seller's possession relating
34
<PAGE> 40
to the Subject Banking Office and the Transferred Property and
Liabilities to be transferred by Seller and assumed by Purchaser
pursuant to this Agreement. In addition, Seller will use reasonable
efforts to arrange for Purchaser to have reasonable access to similar
information held by third parties, if any, for or on Seller's behalf.
Purchaser and Center Banks shall be entitled to reasonably request and
obtain from Seller or for itself make summaries and copies of any or
all such books, records and other information, subject to the
provisions of Section 8.2 of this Agreement (the "Confidentiality
Provisions").
(b) Seller shall identify one or more individuals that shall
constitute a "transition group" who shall be available to Purchaser and
Center Banks at reasonable times to provide information and assistance
in Purchaser's and/or Center Banks' investigation of matters relating
to the Subject Banking Office and the Transferred Property and
Liabilities and to familiarize Purchaser and Center Banks with basic
policies and operational procedures of Seller relating to the Subject
Banking Office. Seller shall cause other personnel to be reasonably
available during normal business hours, to an extent not
disruptive of ongoing operations, for the same purposes.
(c) (i) Unless otherwise agreed, within thirty (30) days of the
effective date of this Agreement, Seller and Purchaser shall
agree on a reasonable date or dates prior to Closing when
Seller will provide Purchaser and Center Banks with test and/or
mock conversion tapes, in mutually acceptable formats necessary
to facilitate compliance with Section 7.1(c)(ii). Such tape,
which shall be used to test data formats and fields, will
contain names and addresses of a sampling of
35
<PAGE> 41
and/or all customers whose deposits or loans would be,
respectively, Transferable Deposit Liabilities, Qualifying
Deposit Related Loans or Qualifying Other Loans if the Closing
were to occur as of a recent date, reflecting each type of
account or loan product that will constitute Transferred
Property, as well as other data relating thereto as is
reasonably required by Purchaser.
(ii) Two sets of final conversion tapes shall be
delivered to Purchaser or its designated agent, at a location
selected by Purchaser, no later than 12:00 noon on the Day of
Closing. The final conversion tapes shall be complete and
accurate in all respects and shall contain all information and
data reasonably required by Purchaser, current as of the close
of business on the Business Day preceding the Closing Date.
(d) All material and information provided to or obtained by
Purchaser under this Section 7.1 shall be subject to the
Confidentiality Provisions.
7.2 Conduct of Business Pending Closing
Except as may be required to obtain the regulatory approvals
referred to in Section 5.1 of this Agreement, or as may be otherwise required
by statute, regulation or regulatory authority, any and all of which instances
shall have been disclosed in writing to Purchaser, or as expressly permitted or
required by other provisions of this Agreement between the date hereof and the
Closing Date Seller shall not, without the prior written consent of Purchaser,
which consent shall not be unreasonably withheld:
36
<PAGE> 42
(a) Cause the Subject Banking Office to engage or
participate in any material transaction or incur or sustain any
material obligation except in the ordinary course of business;
(b) Cause (except at the unsolicited request of a customer) the
Subject Banking Office to transfer to or acquire from any other banking
or similar organization any Transferable Deposit Liabilities or other
assets or liabilities, except for transfers to other operations of
equipment and supplies, if any, excluded from the definition of Fixed
Assets or which have a unique function in Seller's business and
ordinarily would not be useful to Purchaser (such as, for example,
signs), and cash and other normal inter-bank transfers which may be
made in the ordinary course of business in accordance with normal
banking practices;
(c) Amend any of the Qualifying Other Agreements, other than in
the ordinary course of business (and Seller shall furnish prompt notice
and a copy thereof to Purchaser);
(d) Transfer or terminate any Contract Employee now assigned to
or employed in connection with the Subject Banking Office or increase
or agree to increase the salary or other compensation or change the
title of any such employee, or pay or agree to pay any uncommitted
bonus to any such employees other than regular bonuses granted based on
historical practice or existing employment contracts;
(e) File any application to relocate the Subject Banking Office
unless operations at such Subject Banking Office cease due to or any
casualty, disaster or force beyond Seller's control;
37
<PAGE> 43
(f) Enter into any commitment, agreement, understanding or
other arrangement to transfer, assign, encumber or otherwise dispose of
the Subject Banking Office other than pursuant to the terms of this
Agreement;
(g) Terminate or interrupt the operations of the Subject
Banking Office other than due to casualty, disaster or force beyond
Seller's control;
(h) Engage in any course of action, which will: (i) result
in any material change in the mix of Transferable Deposit Liabilities
or have materially increased the rate of interest paid on any
Transferable Deposit Liability above market rates; (ii) result in any
material change in the manner in which Seller is operating its business
as of the effective date of this Agreement; (iii) unreasonably enhance
the earnings or income of Seller or Seller's shareholders at the
expense of the efficient and profitable operation of the Subject
Banking Office as a branch office of Purchaser after the Closing; or
(iv) adversely effect the business of Seller;
Additionally, Seller agrees, after the effective date of this
Agreement, to originate all loans which will be purchased by Purchaser under
this Agreement pursuant to underwriting standards acceptable to Purchaser or
which Purchaser reviews, implements and/or acts upon on Seller's behalf and not
to originate any loan with an initial principal balance of $25,000 or more
without Purchaser's prior written consent provided that: (i) in no event
will Purchaser or Center Banks have any responsibility or be subject to
any liability for any loan application which may be denied by Seller; and
(ii) Seller agrees to indemnify and hold Purchaser and Center Banks harmless
from any and all cost, expenses, damages and other liabilities attributable
to the denial of any such a loan application by Seller.
38
<PAGE> 44
7.3 Training of Employees
Seller shall permit Purchaser and/or Center Banks, beginning after
the date hereof, to train Transferred Employees of the Subject Banking Office,
in the operations proposed to be conducted by Purchaser, and Seller shall,
as scheduled by Purchaser for reasonable periods of time and subject to
Seller's reasonable approval, such that Seller's on-going operations at the
Subject Banking Office shall not be materially disrupted, excuse such
Transferred Employees from their duties at the Subject Banking Office for the
purpose of training and orientation by Purchaser and/or Center Banks at
locations specified by Purchaser. Purchaser agrees to reimburse Seller for
overtime costs, if any, payable as a result of any such training and
orientation.
7.4 Employees
Seller has or shall distribute to officers and employees of the
Subject Banking Office, who are eligible to become Transferred Employees,
information provided by Purchaser regarding the prospective employment of such
persons by Purchaser, and Seller shall not take any action designed to
discourage or dissuade such persons from accepting employment with Purchaser on
and after the Closing Date.
7.5 Insurance Policies
Seller will maintain in effect until the Closing existing insurance
policies regarding the Subject Banking Office or comparable replacements
thereof. Except as otherwise expressly provided in this Agreement, Seller shall
have no obligation to continue any such insurance subsequent to Closing.
39
<PAGE> 45
7.6 Competition
From and after the Closing Date, Seller will not directly or
indirectly solicit deposits, loans or other banking business. Nothing in this
Section 7.6 shall prevent Seller from forwarding to depositors at the Subject
Banking Office a notice of the transactions covered and contemplated by this
Agreement and/or a closing statement, and, from publishing or forwarding to all
such depositors and customers tax reporting information and such other
communications as may be required by law, regulation or regulatory authority.
(a) (i) From and after the Closing Date, Seller agrees that it
will not directly or indirectly own, engage in, manage,
operate, control, participate in or be connected in any manner
with the ownership, management, operation or control of any
banking office, public accommodation office, automatic teller
machines or any business or facility substantially similar to
the foregoing, within a radius of fifty (50) miles of the
Subject Banking Office.
(ii) In the event that the Subject Banking Office shall
have ceased operations due to a disaster or other force beyond
Seller's control, and Seller, with the approval of Purchaser,
shall establish an office or facilities at another location to
succeed to such operations, such newly established office or
facility shall be treated as having been in operation at its
current location as of the date hereof for purposes of the
preceding subparagraph (i), provided that if Purchaser shall
acquire such newly established office or facility from or
through Seller, the applicable radius described in such
subparagraph (i) shall be measured from such
40
<PAGE> 46
new location and not from the location of the Subject Banking
Office that it replaced.
(b) From and after the Closing Date, Seller will not seek to
employ any persons employed by Purchaser at the Subject Banking Office
who choose to accept employment with Purchaser except as otherwise may
be approved by Purchaser.
7.7 Seller Notices of Default
Seller shall promptly give written notice to Purchaser and
Center Banks upon becoming aware of the impending or threatened occurrence of
any event which would cause or constitute a breach of any of the
representations, warranties, covenants or agreements of Seller contained
in this Agreement.
7.8 ATM Access Devices
Prior to Closing, Seller and Purchaser shall determine when and to
what extent to terminate any outstanding automated teller machine ("ATM")
access agreements with customers whose deposit accounts are among the
Transferable Deposit Liabilities and when and how to deactivate ATM access
devices attributable to such customers.
7.9 Dissolution of Seller
As soon as reasonably practicable after the Closing Date, Seller
(subject to the terms and conditions of the Agreement) will dissolve and
liquidate, following receipt of all required regulatory, court and shareholder
approvals.
41
<PAGE> 47
7.10 Loan Loss Reserves
Seller agrees to increase its loan loss reserve account(s) to
$569,000 if said reserve account(s) are less than $569,000 at Closing prior to
transferring Qualifying Deposit Related Loans and Qualifying Other Loans to
Purchaser. Thereafter, such transfers will be made at Book Value, net of such
loan loss reserves.
7.11 Covenants, Representations and Agreements With Respect to
Taxes Other Than Transaction Taxes
Any reference in this Section 7.11 to "taxes" shall mean all payroll,
property, excise, withholding, sales and use, transfer, income and franchise
taxes, and all similar charges and assessments, imposed by the United States or
by any state or other political subdivision or by any authority or
instrumentality of any of them with respect to the business and operations of
the Subject Banking Office and/or the Transferred Property, but excluding any
such taxes, charges or assessments incurred in connection with or arising out
of the consummation of the transactions contemplated by this Agreement.
(a) All taxes attributable exclusively to periods prior to
the Closing Date, but which may be payable after the Closing Date,
shall be the responsibility of Seller.
(b) Seller has filed or shall file as and when due (after
taking into account any lawful extensions) all tax returns and reports
and similar information (including information returns) required to be
filed with all governmental authorities with respect to any taxes for
all periods ending prior to the Closing Date, and has paid, or will
pay when due, all taxes shown to be due on such returns (including
interest and penalties, if any) and all other taxes for all periods
ending prior to the Closing Date and shall
42
<PAGE> 48
indemnify and hold Purchaser and Center Banks harmless against any
liabilities attributable to such taxes (including any penalties and
interest thereon).
(c) Any claims for refund or refunds of taxes allocable to
all periods prior to the Closing Date shall remain the property of
Seller, provided that Seller (or an affiliate) has discharged the tax
liability giving rise thereto or reimbursed Purchaser for discharging
same. Purchaser shall cooperate with Seller in prosecuting any such
refund claim at Seller's expense, and in prosecuting any such refund
claim that may relate to a period that overlaps the Closing Date, in
which case expenses shall be apportioned between the parties in
proportion to the respective portions of any such claim allocable to
each of them.
7.12 Matters Relating to Seller's Sales and Use Taxes
Without limiting any other representation, warranty, covenant or
agreement of Seller contained herein, Seller represents and warrants that to
the best of its knowledge it has no liability for unpaid sales and use taxes
(including any which are the subject of a contest) and covenants that it shall
pay when due (unless the same are being contested pursuant to appropriate
proceedings diligently pursued), any and all sales and use taxes (arising other
than out of the transactions contemplated by this Agreement) that are assessed
against or payable by Seller for all periods for which Purchaser could have
liability by virtue of being a transferee pursuant to this Agreement of
property of Seller (except such taxes related to the contemplated transactions
as Purchaser has expressly agreed to pay pursuant to this Agreement). Seller
shall indemnify and hold Purchaser harmless from and against any and all taxes
as described in this Section 7.12
43
<PAGE> 49
(including any penalties and interest thereon) except such taxes related to the
contemplated transactions as Purchaser has expressly agreed to pay pursuant to
this Agreement.
7.13 Investment Portfolio
To the extent that Seller, Purchaser and Center Banks may subsequently
agree to have any portions of Seller's investment portfolio constitutes a
Qualifying Other Asset under this Agreement that portion of Seller's investment
portfolio will be marked to market as of the close of business on the Business
Day immediately preceding Closing and thereafter transferred and assigned to
Purchaser at such market value.
7.14 Financial Statements and Related Information
Seller covenants and agrees to furnish (or cause to be furnished) to
Center Banks, at Seller's expense, the financial statements, pro forma
financial information and exhibits relating to Seller that are required by Item
7 of Form 8-K, Rule 3-05 of Regulation S-X, Article 2 of Regulation S-X and
Item 601 of Regulation S-K, within the time periods specified by such rules and
regulations, which were promulgated under the Securities and Exchange Act of
1934. Seller represents and warrants that such financial statements, which
shall include the balance sheet of Seller as of December 31, 1995 and the
related statements of income and cash flows for the fiscal year then ended, and
the notes and schedules thereto, if applicable, will (i) be in accordance with
the books of accounts and records of Seller and conform in all respects to
Regulation S-X, (ii) present fairly and accurately Seller's financial position
as at the dates thereof and the results of Seller's operations, changes in
Seller's financial position and other information of Seller included therein
for the periods or as at the dates therein set forth, and (iii) show all
44
<PAGE> 50
material assets and material liabilities of any kind or nature, direct or
indirect, absolute or contingent, existing as of the dates indicated.
8. COVENANTS OF PURCHASER
8.1 Change of Name
From and after the Closing Date, Purchaser (i) shall promptly change
the name on all documents and facilities relating to the Subject Banking Office
to Purchaser's name or to a name which is not in any way similar to Seller's
name, trade name, trademark or symbol (or any name or initial similar thereto
or any affiliates thereof) and (ii) shall promptly notify all persons who are
Subject Banking Office customers and depositors on the Closing Date of such
change by posting a notice in a conspicuous place in the Subject Banking Office
and by taking any other action required by law or regulation or court or
regulatory authority. It is understood that Seller is not transferring to
Purchaser any right, title or interest in or to, or any right or license to
use, Seller's name (or any name or initial similar thereto or any affiliates
thereof), or any trademark, trade name or symbol, in connection with the
Subject Banking Offices or otherwise. Nothing in this Section 8.1 shall require
Purchaser to undertake to reissue deposits or rewrite outstanding loans or
other documents assumed by or assigned to Purchaser on the Closing Date except
in the ordinary course of business (but in any event no later than maturity in
the case of renewal or rollover of any term or time deposit account).
8.2 Confidentiality
From and after the effective date of this Agreement, each of the
parties hereto shall keep secret and retain in strictest confidence, and shall
not use, in competition with or in
45
<PAGE> 51
a manner otherwise detrimental to the interests of the other party to this
Agreement, any information or materials pertaining to the business, operations,
accounts, products, loans or employees of the other party ("Confidential
Information"). The term "Confidential Information" does not include, and there
shall be no obligation hereunder with respect to: (a) information that becomes
generally available to the public, other than as a result of a disclosure by the
party hereto to which such Confidential Information is delivered, or any
employee, agent or other representative thereof, and (b) general business
methods, concepts and techniques. Neither of the parties hereto shall have any
obligation hereunder to keep confidential any of the Confidential Information
to the extent disclosure of any such information is required by law, or
determined in good faith by such party to be necessary or appropriate to comply
with any legal or regulatory order, regulation or requirement; provided,
however, that in the event disclosure is required by law, such party shall
provide the other with prompt notice of such requirement so that such other
party may seek an appropriate protective order. Notwithstanding any other
provision contained herein to the contrary should this Agreement be terminated
prior to Closing each party shall return to the other party, or destroy at the
direction of the other party, any and all Confidential Information received
from the other party.
8.3 Purchaser Notices of Default
Purchaser shall promptly give written notice to Seller upon becoming
aware of the impending or threatened occurrence of any event which would cause
or constitute a breach of any of the representations, warranties, covenants or
agreements of Purchaser contained in this Agreement.
46
<PAGE> 52
8.3A Covenants, Representations and Agreements With Respect to
Certain Taxes
Purchaser shall be responsible for and shall pay all taxes,
as defined in Section 7.11(a) hereof, accruing on and after the Closing Date.
8.4 Safe Deposit Agreements
During the thirty (30) day period after the Closing, Purchaser shall
solicit by mail, and use its best reasonable efforts to obtain, the written
consent of safe deposit customers of the Subject Banking Office to transfer
safe deposit agreements to Purchaser. Pending receipt of such consents (whether
before or after such thirty (30) day period), Purchaser shall perform the
duties of Seller under safe deposit agreements in effect at the Closing and
listed on Schedule 1(c)(ii).
8.5 Contract Employees
Purchaser shall on Closing satisfy the contractual obligations of
Seller to the Contract Employees notwithstanding whether any Contract Employee
shall become employed by Purchaser or not.
9. AGREEMENTS REGARDING EMPLOYEES AND BENEFITS
(a) Purchaser and Center Banks shall not be responsible for
any employment contracts entered into by Seller other than the
contracts between Seller and the Contract Employees listed on Schedule
2.11A regardless of whether or not such Contract Employees become
Transferred Employees at or after Closing. The parties agree that none
of the Contract Employees listed on Schedule 2.11A shall be terminated
or, except as provided in their respective employment contracts, have
their level of
47
<PAGE> 53
responsibility or compensation changed prior to the Closing Date
without the express written consent of Center Banks and Purchaser.
(b) (i) It is understood and agreed that, as between the
parties hereto, Seller and not Purchaser or Center Banks shall be
responsible for and shall retain, and Seller shall indemnify and hold
harmless Purchaser and Center Banks from and against, all liabilities
and obligations, if any (the recitation herein of such possibility not
being intended as an acknowledgment that any such liabilities or
obligations do, in fact, exist or will arise), for (A) all benefits
(including without limitation, salary and benefit continuation or
severance benefits) that may be payable under any "employee benefit
plan" (as defined in Section 3(3) of ERISA) that is or at any time has
been sponsored or contributed or required to be contributed to or
maintained by Seller (a "Seller Plan") to any current or former
employee of Seller as a result of such employee's termination of
employment with Seller arising on, prior to or in connection with the
Closing Date regardless of whether or not any such employee of Seller
is at any time thereafter employed by Purchaser and (B) all notices,
payments, fines or assessments due to any such employee pursuant to
any applicable federal, state or local law or common law, statute,
rule or regulation with respect to any such employment or termination
(or constructive termination) of employment with Seller on or prior to
the Closing Date.
(ii) Seller agrees that it shall retain, consistent
with its normal employment practices, all liability and obligation, if
any, including without limitation, the liability and obligation for
all wages, salary, vacation pay and unemployment, health and insurance
benefits for those Transferred Employees who, due to a temporary
illness,
48
<PAGE> 54
disability or other condition, are unable to report for work
with Purchaser on the Closing Date, until such time as such
Transferred Employees are able to report for work with Purchaser.
(iii) The obligation to pay all benefits, including,
without limitation, retirement, health, dental, life, accidental death
and disability, and related benefits, which are payable to current or
former employees of the Seller under the Seller Plans and, in the case
of employees who are offered and accept employment with Purchaser on
or after the Closing Date, which arise or are based on events which
occurred on or prior to Closing (whether or not claims for such
benefits are submitted on or prior to Closing), shall remain the
responsibility of Seller whether or not the claiming employee becomes
an employee of Purchaser on or after the Closing Date and Seller will
indemnify and hold harmless Purchaser and Center Banks from and
against all such obligations and liabilities relating thereto.
Purchaser or Center Banks shall not assume or be responsible for any
obligations or liability in respect of any benefits which are payable
at any time to, or in respect of, current or former employees of
Seller under the Seller Plans or which arise out of or in connection
with their employment with Seller.
(c) To the extent Seller maintains a retirement plan for the
benefit of its employees including Transferred Employees (the "Seller
Retirement Plan"), it shall retain all liability for all benefits
accrued by Transferred Employees under the Seller Retirement
Plan, except to the extent such liabilities have been properly funded
by purchased annuities, and that all such benefits shall be paid
pursuant to the terms of such plan.
49
<PAGE> 55
(d) Each and every Seller Plan covering employees of the Subject
Banking Office complies as to its form and has been operated and
administered in all material respects, in accordance with applicable
laws, including but not limited to ERISA and the Code. No reportable
event within the meaning of section 4043(b) of ERISA or prohibited
transaction within the meaning of section 406 of ERISA has occurred with
respect to any Seller Plan, no civil penalty has been assessed pursuant
to sections 409 or 502(i) of ERISA and no tax has been imposed pursuant
to sections 4975 or 4976 of the Code. From and after the Closing Date no
further benefit shall accrue to or for the benefit or account of any
Transferred Employee under the Seller Retirement Plan, directly or
indirectly. Seller shall retain liability and Purchaser and Center Banks
shall have no liability with respect to any liability or obligation of
Seller arising from: (A) accrual of benefits under the Seller Retirement
Plan; (B) a prohibited transaction under ERISA or the Code involving the
Seller Retirement Plan (C) a disqualification of the Seller Retirement
Plan or (D) any failure of Seller properly to administer the Seller
Retirement Plan. Additionally:
(i) Seller agrees that Seller will indemnify and
hold Purchaser and Center Banks harmless for any and all
liabilities, obligations, claims, costs and expenses
(including but not limited to legal fees) arising out of,
related to, connected with, resulting from or otherwise
attributable to, (A) the operation and or maintenance of any
Seller Plan, (B) the failure to operate or maintain any
Seller Plan in accordance with all applicable laws, including
but not limited to ERISA and the Code, or (C) any prohibited
transaction under ERISA or the Code
50
<PAGE> 56
involving any Seller Plan. In the event that any such claim
for liability is asserted against Purchaser or Center Banks
(or their affiliates), Purchaser or Center Banks, as the case
may be, shall promptly notify Seller of such claim and
thereafter Seller shall assume full responsibility therefor;
Purchaser and Center Banks shall cooperate with Seller with
respect to the defense of any such asserted liability and
shall furnish Seller with such documents and materials of
Purchaser or Center Banks as in the good faith reasonable
opinion of Seller or its counsel are necessary for the good
faith defense of any asserted liability; provided, however,
that such materials shall be furnished at the expense of
Seller;
(ii) The foregoing indemnification provisions of
this subsection (d) shall survive the Closing Date hereunder
and any limitation period which may be provided in any other
part of this Agreement.
(e) Seller will retain responsibility for and continue
to pay all hospital, medical, life insurance, disability, supplemental
unemployment and other welfare plan expenses and benefits for each
Transferred Employee eligible to participate in those plans with
respect to claims by such employee or their covered dependents prior
to the Closing Date. Expenses and benefits with respect to claims
incurred by any Transferred Employee or their covered dependents on or
after the Closing Date shall be the responsibility of Purchaser in
accordance with the terms of any applicable hospital, medical, life
insurance, disability, supplemental unemployment and other welfare
plan maintained for employees of Purchaser, if any. For purposes of
the two preceding sentences a claim is deemed incurred when the event
which gave rise to the claim first
51
<PAGE> 57
occurred. Anything in the foregoing to the contrary notwithstanding,
Purchaser shall not be liable for any benefits under any welfare
benefit plan which accrued or are attributable to periods of service
occurring prior to the Closing Date. Seller will retain responsibility
for, and continue to pay the cost of, any retirement, life, health, or
other benefits payable to each employee of Seller employed in the
Subject Banking Office who retired prior to the Closing Date, subject
to any rights reserved by Seller to amend or terminate such benefits
under the Seller Plan providing the benefits.
(f) Seller will retain responsibility for, and will make
payment of, any severance pay or benefits that may become payable upon
or after the Closing Date (as a result of or in connection with the
transaction contemplated hereunder or as a result of the termination
by Seller of such employee's employment) to any Transferred Employee
or any other employee employed in the Subject Banking Office under any
benefit or severance policy, plan, agreement, arrangement or program
of Seller.
(g) Except as provided in Section 9(a) of this Agreement,
nothing herein expressed or implied shall confer upon any of the
employees of Seller, Purchaser, Center Banks, or any of the
subsidiaries or affiliates of either of them, any rights or remedies,
including, without limitation, any right to employment, or continued
employment for any specified period, of any nature or kind whatsoever
under or by reason of this Agreement.
(h) Purchaser and Seller hereby also agree to sign any
further agreements and take such further action (before, at, or after
the Closing Date), as may be necessary or convenient to implement the
intent (but not to expand or restrict the intent) of the
52
<PAGE> 58
Purchaser's and Seller's agreement as to pension and welfare benefits
contained in this Section 9.
(i) Except as otherwise provided herein, the employees of
the Subject Banking Office are not subject to any collective
bargaining agreements, employment contracts or consulting
arrangements. There are no unfair labor practice charges or complaints
pending against Seller with respect to the Subject Banking Office, nor
any pending or, to the Knowledge of Seller, threatened unfair labor
practice charges against Seller with respect to the Subject Banking
Office. None of the employees of the Subject Banking Office is
represented by any certified labor organization or any labor
organization recognized by Seller, and, to the Knowledge of Seller,
there are no campaigns being conducted to solicit cards from employees
of the Subject Banking Office to authorize any labor organization to
request the National Labor Relations Board to conduct an election with
respect to any employees of the Subject Banking Office. There are no
strikes or other labor controversies pending, or to the Knowledge of
Seller, threatened against Seller with respect to the Subject Banking
Office which would, individually or in the aggregate, have a material
adverse effect on the Subject Banking Office as a whole.
10. TRANSACTIONS AT CLOSING
10.1 Items to be Delivered by Seller
At the Closing, Seller shall deliver to Purchaser or Center Banks, as
the case may be:
53
<PAGE> 59
(a) Such bills of sale, assignments, and other instruments
and documents described on Schedule 10.1 or that are otherwise
reasonably necessary or desirable for transferring and assigning to
Purchaser all of Seller's interest in and to the Transferred Property,
and permitting assumption by Purchaser of the Liabilities to be
transferred to Purchaser pursuant to this Agreement, in the form and
substance reasonably satisfactory to the parties and their respective
counsel, as well as any and all statements, instruments and documents
as required pursuant to Section 3.1 or described on Schedule 11.9 or
any other provision of this Agreement.
(b) Payment in immediately available funds by Fedwire
transfer of the Compensation Amount, if any, not later than 2:00 p.m.
on the Day of Closing.
(c) Certificates signed by duly authorized officers of
Seller stating that:
(i) the warranties and representations of Seller under
this Agreement are true as of the Closing Date;
(ii) the covenants of Seller to be performed on or before
the Closing Date have been performed in all material
respects; and
(iii) to the Knowledge of Seller, there is no material
error or inaccuracy in the information contained as of its
date in the Preliminary Closing Statement.
The delivery of the certificates called for by clauses (c)(i) and
(c)(ii) above shall in no way diminish Purchaser's or Center Banks'
rights or Seller's obligations under Section 5.4 of this Agreement.
54
<PAGE> 60
(d) Copies, certified by Seller's corporate secretary or
assistant corporate secretary as being accurate and complete, of
resolutions adopted by Seller's Board of Directors and shareholders
authorizing the transactions contemplated by this Agreement and all
actions appropriate to the consummation thereof as of a date not later
than thirty (30) days from the date of this Agreement, and a
certificate of such secretary as to the incumbency of each officer of
Seller executing this Agreement and all instruments, certificates and
documents required to be executed and delivered at the Closing.
10.2 Items To Be Delivered By Purchaser Or Center Banks
At the Closing, Purchaser and/or Center Banks shall deliver
to Seller or the Seller's shareholders in the case of clause (e) of this
Section 10.2:
(a) Instruments, including an instrument of undertaking, (i)
for acceptance of the Transferred Property and (ii) for assumption of
the Liabilities in accordance with Section 3.1 of this Agreement, all
as shall be described on Schedule 10.1 as aforesaid, and in the form
and substance reasonably satisfactory to the parties and their
respective counsel.
(b) Such other instruments and documents as may be required
as of the Closing Date pursuant to this Agreement, all in form and
substance reasonably satisfactory to Seller.
(c) Certificates signed by duly authorized officers of
Purchaser and/or Center Banks stating that:
(i) the warranties and representations of
Purchaser and Center Banks under this Agreement are true as
of the Closing Date.
55
<PAGE> 61
(ii) the covenants of Purchaser and Center Banks to be
performed on or before the Closing Date have been performed
in all material respects.
(iii) to the Knowledge of Purchaser and Center Banks,
there are no material errors or inaccuracies in the
information contained, as of its date, in the Preliminary
Closing Statement.
The delivery of the certificates called for by clauses (i) and (ii)
above shall in no way diminish Seller's rights or Purchaser's or Center Banks'
obligations under Section 5.4 of this Agreement.
(d) Copies, certified by Purchaser's and, where appropriate,
Center Banks' corporate secretary or assistant corporate secretary as
being accurate and complete, of resolutions adopted by Purchaser's and
Center Banks' Board of Directors and, if required by law, Purchaser's
shareholders authorizing the transactions contemplated by this
Agreement and all actions appropriate to the consummation thereof as
of a date not later than thirty (30) days after the date of this
Agreement, and a certificate of such secretary as to the incumbency of
each officer of Purchaser and Center Banks executing this Agreement
and all instruments, certificates and documents required to be
executed and delivered at the Closing.
11. REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Purchaser as follows:
11.1 Organization and Ownership. Seller is a New York State chartered
commercial bank duly organized, validly existing and in good standing under the
laws of New York and the
56
<PAGE> 62
United Sates and is authorized to conduct the business now being conducted at
the Subject Banking Office.
11.2 Authority. Seller has the corporate power and authority to
execute, deliver and perform this Agreement. This Agreement and the execution,
delivery and performance of this Agreement have been duly authorized by all
necessary corporate and shareholder action on the part of Seller and, upon
execution and delivery, this Agreement will constitute a valid and binding
obligation of Seller, subject only to the regulatory and shareholder approvals
referred to in Section 5.1.
11.3 Legal Proceedings. Except as shown on Schedule 11.3 annexed
hereto, there are no actions, suits or proceedings of any kind pending, or to
the Knowledge of Seller threatened, against or affecting Seller which may cause
any material change in the value of any of the Transferred Property or in the
amount of the Liabilities, or prevent or impair Seller's performance of this
Agreement in any material respect.
11.4 Disputes or Controversies. There are no pending, or to the
Knowledge of Seller threatened, disputes or controversies between Seller and
any federal, state or local governmental authority which directly involve or
reasonably could be expected to adversely affect the Subject Banking Office or
the Transferred Property in any material respect.
11.5 Compliance with Law and Other Instruments. To the Knowledge of
Seller the Transferred Property has been acquired or originated, and
maintained, and the business and operations of the Subject Banking Office have
been and are being conducted, in accordance with all material applicable laws,
rules and regulations of all authorities. The execution, delivery and
performance of this Agreement by Seller will not violate any such laws, rules
or regulations, or
57
<PAGE> 63
violate any judgment, order, ruling or decree by which Seller is bound,
Seller's Certificate of Incorporation or by-laws, or violate in any material
respect any material contract or other instrument by which it is bound. To the
Knowledge of Seller, it has not failed (and as of the Closing Date will not
have failed) to perform and/or satisfy any of its obligations with respect to
the Liabilities.
11.6 Deposits and Charges to Accounts; Withdrawals From Accounts.
All deposits, withdrawals and/or charges to or from any of the Transferable
Deposit Liabilities prior to Closing were properly authorized by the legal
owners of any such Transferable Deposit Liabilities and correctly assessed by
Seller.
11.7 Title to Personal Property; Leased Personal Property; No
Default.
Seller (or its affiliate) has, and on the Closing Date will have, good
and marketable title to those of the Fixed Assets owned by Seller (or its
affiliate) that are Qualifying Fixed Assets, free and clear of all Encumbrances
except Permitted Encumbrances. Seller (or its affiliate) has, and on the
Closing Date will have, valid and binding leases under which it (or its
affiliate) is entitled to use in its business those of the Fixed Assets that
are leased by Seller (or its affiliate) as lessee, if any, and that are
Qualifying Fixed Assets, and neither Seller (nor any such affiliate) has
received any notice or otherwise has any knowledge of any default (or condition
or event which with notice, lapse of time or both would constitute a default)
on its part, or on the part of any lessor, under any such personal property
lease, that materially impairs the lessee's possession and use thereof. As of
the Closing Date, true and complete copies of all such leases shall have been
provided to Purchaser. The transfer (if any) by any affiliate of Seller of its
right, title and/or interest in any Qualifying Fixed Asset shall have been
authorized
58
<PAGE> 64
by all necessary corporate action, if any, on the part of such affiliate, and
shall not violate any laws, rules or regulations (including, without
limitation, any law regarding transfers in fraud of creditors) or violate any
judgment, order, ruling or decree by which such affiliate is bound, or such
affiliate's certificate of incorporation or by-laws, or violate in any material
respect, any material contract or other instrument by which such affiliate is
bound.
11.8 Other Agreements. All Other Agreements delivered to Purchaser as
set forth in Section 3.6 are valid and binding in accordance with their
respective terms, and as of the Closing Date with respect to any of them that
are Qualifying Other Agreements, there shall not be any default (or condition
or event which with notice, lapse of time or both would constitute a material
default) of which Seller has knowledge; and, other than the Qualifying Other
Agreements, there are no agreements of any nature between Seller (or any
affiliate of Seller) and any third party which shall be binding on Purchaser
from and after the Closing Date.
11.9 Consents. No third party consents are necessary for the sale,
assignment or transfer of any of the Transferred Property, except consents of a
kind to be described in Schedule 11.9, which Schedule Seller shall deliver to
Purchaser within thirty (30) days of the date hereof. All of such consents
shall be in full force and effect on the Closing Date.
11.10 Individual Retirement Accounts and Qualified Retirement Plans
(a) Each type of IRA, and each type of QRP, if any, offered
by Seller or its respective affiliates ("Prototype Plans"), and
adopted by depositors of the Subject Banking Office, is listed in
Schedule 11.10 hereto. Seller has delivered to Purchaser correct and
complete copies of each Prototype Plan, a copy of the last Internal
Revenue
59
<PAGE> 65
Service approval letter with respect to the form of Prototype Plans,
and copies of all forms of IRA agreements including any currently
effective amendments.
(b) An approval letter has been issued by the Internal
Revenue Service with respect to the form of each Prototype Plan
offered by Seller to depositors. Except as set forth in Schedule
11.10, no Prototype Plan has been amended by the Seller since the date
of the last approval letter with respect thereto.
(c) As of the date of this Agreement, there are no pending or
threatened claims against Seller by any depositor or beneficiary at
the Subject Banking Office with respect to any IRA or Prototype Plan
alleging a breach or breaches of fiduciary duties or violation of
other applicable state or federal laws with respect to such plans, or
otherwise involving such plans, which could result in liability on the
part of Seller under ERISA or any other law, nor is there any basis
for such a claim. Seller will promptly notify Purchaser in writing of
any such threatened or pending claim or claims arising between the
date hereof and the Closing Date.
(d) Seller will have performed all obligations on its part to
be performed, as of the Closing Date, under all agreements with
depositors at the Subject Banking Office with respect to IRAs and
Prototype Plans.
(e) Seller has not procured any determination letter or
other approval from any governmental agency or body with respect to
IRAs sponsored by the Seller which has not been delivered to Purchaser
prior to the effective date of this Agreement.
60
<PAGE> 66
11.11 Insurance. All insurance premiums due and payable
under any casualty and public liability insurance policies of Seller now in
effect with regard to the Subject Banking Office are fully paid, and all such
insurance policies are in full force and effect.
11.12 Financial Information. The Preliminary Closing Statement, when
delivered to Purchaser pursuant to the terms of this Agreement shall not be
known to Seller to be inaccurate in any respect as of the date thereof. All
information used, provided or submitted by Seller in connection with the
procedure set forth in Section 3.1(d) hereof for determining a final Closing
Statement shall be accurate and complete in all material respects as of the
Closing Date. To the extent that any of such information is determined by
Seller for any other purpose in accordance with generally accepted accounting
principles, such principles shall be used in determining that information for
purposes referred to in the first two sentences of this section unless
otherwise provided in this Agreement. If such principles are not used by Seller
for any such information, but regulatory accounting principles are so used for
any other purpose, such regulatory accounting principles shall be used in
determining that information for purposes referred to in the first two
sentences of this section unless otherwise provided in this Agreement.
11.13 Absence of Certain Changes or Events.
(a) As of the Closing Date, Seller shall represent that since
the date hereof, it shall not, except (i) as required to obtain the
regulatory approvals referred to in Section 5.1 of this Agreement or
as otherwise required by statute, regulation or regulatory authority,
any and all of which instances shall be disclosed in writing to
Purchaser, (ii) as expressly permitted or required by other provisions
of this Agreement
61
<PAGE> 67
or (iii) with the prior written consent of Purchaser, have taken or
permitted any of the actions prohibited by clauses (a) through (h)
of Section 7.2.
(b) Seller has not issued any press release,
advertisement or public announcement regarding the transactions
contemplated by this Agreement without the written approval of
Purchaser and Center Banks, except as specifically permitted by this
Agreement.
11.14 Condition of Fixed Assets. With the exception of property
that may be damaged by any employee, agent, contractor or advisor of or to
Purchaser or Center Banks in the course of any examination, inspection or use
pursuant to this Agreement, all of the Qualifying Fixed Assets are, with
immaterial exceptions, properly maintained and repaired and in adequate
condition and working order for their contemplated uses in Seller's business.
11.15 Governmental Notices. Seller has not received notice from any
federal, state or local governmental authority indicating that it would oppose
or not grant or issue its consent or approval, if required, with respect to the
transactions contemplated by this Agreement.
11.16 Permits, Authorizations, etc. Seller has all material permits,
approvals, consents, licenses, certificates of public convenience, orders and
other authorizations of all federal, state and local governmental authorities,
required to permit the operation of the business and operations of the Subject
Banking Office as now conducted. All such permits, approvals, consents,
licenses, certificates of public convenience, orders, and other authorizations
are valid and in good standing with the issuing authorities and are not subject
to any proceedings for suspension, modification or revocation. To the Knowledge
of Seller, there are no facts or
62
<PAGE> 68
circumstances not disclosed in this Agreement (including any Schedules hereto)
that are likely to hinder or prevent it from consummating the transactions
contemplated hereby.
11.17 Powers of Attorney. No power of attorney or similar
authorization given by Seller to a third party and empowering such third party
to act on behalf of Seller in the conduct of the business or operations of the
Subject Banking Office is currently outstanding, other than powers of attorney
issued in the ordinary course of business with respect to routine matters
(including, without limitation, powers of attorney pursuant to leases) or the
powers of attorney required or created by this Agreement.
11.18 Books and Records. The books and records which are to be
delivered to Purchaser or Center Banks pursuant hereto or to which Purchaser or
Center Banks will have access pursuant to Section 3.3 hereof are maintained in
a manner consistent with Seller's normal course of business operations.
11.19 Back-up Withholding. In respect of all Transferable Deposit
Liabilities, Seller has complied with all requirements of the Code and taken
all procedures required thereunder relative to obtaining from customers
properly completed W-8 and W-9 forms and TINs, has fulfilled all related
withholding responsibilities and responsibilities relating to the reporting of
TINs and related information, to the extent such responsibilities are
obligations of Seller, and no penalties have been asserted against Seller under
Section 6676(b) of the Code that have not been (or will not be) paid by Seller.
All TINs furnished to Purchaser conform to information contained on said W-8
and W-9 forms, and all information furnished to Purchaser concerning customers
subject to withholding is accurate.
63
<PAGE> 69
11.20 Deposit Insurance. The Transferable Deposit
Liabilities are, to the extent applicable, insured pursuant to the FDIC's Bank
Insurance Fund.
11.21 Regulatory Approvals. To the Knowledge of Seller
there is no reason why Seller cannot obtain all required regulatory approvals
which it is required to obtain to complete the transactions contemplated by
this Agreement.
11.22 Use of Subject Banking Office. To the Knowledge of Seller
there are no recorded or unrecorded agreements, statutes, local laws, codes or
ordinances which would restrict or impair Purchaser's use of the Subject
Banking Office as a banking or commercial office facility after Closing.
11.23 Market Value Analysis. Seller acknowledges that it
has received a Market Value Analysis or appraisal, at its sole cost and
expense, in connection with the transactions described herein: (i) which is
acceptable to its Board of Directors; and (ii) establishes the value of
Seller's Common Stock.
12. REPRESENTATIONS AND WARRANTIES OF PURCHASER AND CENTER BANKS
Purchaser and Center Banks hereby represent and warrant to Seller as
follows:
12.1 Organization. Purchaser is a savings bank duly organized,
validly existing and in good standing under the laws of the State of New York
and is authorized to conduct a general banking business as permitted under
those laws. Center Banks is a bank holding company duly organized and validly
existing under the laws of the State of Delaware and authorized and in good
standing under the laws of the State of New York. As such Center Banks is
authorized to conduct business as a bank holding company under those laws.
64
<PAGE> 70
12.2 Authority and Consent. Purchaser and Center Banks each has the
corporate power and authority to execute, deliver and perform this Agreement.
This Agreement and the execution, delivery and performance of this Agreement
have been duly authorized by all necessary corporate and shareholder action on
the part of Purchaser and Center Banks and, upon execution and delivery, this
Agreement will constitute a valid and binding obligation of Purchaser and
Center Banks, subject only to the regulatory and additional shareholder
approvals referred to in Section 5.1. As of the Closing Date Purchaser and
Center Banks will have all material permits, licenses, approvals, consents,
certificates of public convenience and other authorizations of all federal,
state and local governmental authorities required for consummation of the
transactions contemplated by this Agreement. To the best Knowledge of Purchaser
or Center Banks there are no facts or circumstances not disclosed in this
Agreement (including Schedules hereto) that are likely to hinder or prevent it
from consummating the transactions contemplated hereby.
12.3 Legal Procedures. There are no actions, suits or proceedings
of any kind pending, or to the Knowledge of Purchaser or Center Banks
threatened, against or affecting Purchaser or Center Banks which may cause any
material change in the value of any Transferred Property or in the amount of
Liability, or prevent or impair Purchaser's or Center Banks' performance of
this Agreement in any material respect.
12.4 Governmental Notices. Neither Purchaser nor Center Banks has
received any notice from any federal, state or local governmental authority
indicating that it would oppose or not grant or issue its consent or approval,
if required, with respect to the transactions contemplated by this Agreement.
65
<PAGE> 71
12.5 Compliance with Law and Other Instruments. To the Knowledge of
Purchaser and Center Banks, each of their business and operations have been and
are being conducted in accordance with all material applicable laws, rules and
regulations of all authorities, a violation of which would adversely affect the
consummation of the transactions contemplated by this Agreement. The execution,
delivery and performance of this Agreement by Purchaser and Center Banks will
not violate any such laws, rules or regulations, or violate any judgment,
order, ruling or decree by which Purchaser or Center Banks is bound,
Purchaser's or Center Bank's certificate of incorporation, organizational
certificate or by-laws, or violate in any material respect any material
contract or other instrument by which either of Purchaser or Center Banks is
bound.
12.6 Publicity. Purchaser or Center Banks have not issued any press
release, advertisement or public announcement regarding the transactions
contemplated by this Agreement without Seller's approval, except as
specifically permitted by this Agreement.
12.7 Deposit Insurance. The deposits of Purchaser are, to the
extent applicable, insured pursuant to the FDIC's Bank Insurance Fund.
12.8 Regulatory Approvals. To the Knowledge of Purchaser and/or
Center Banks, there is no reason Purchaser and/or Center Banks cannot obtain
all necessary regulatory approvals which are necessary to complete the
transactions contemplated by this Agreement.
13. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS; LIMITATION OF
CLAIMS; INDEMNIFICATION
(a) The representations, warranties, covenants and
agreements of either Purchaser, Center Banks and/or Seller contained
in this Agreement (except to the extent
66
<PAGE> 72
waived in accordance with Section 5.4) shall survive the Closing to
the extent hereinafter provided:
(b) (i) Subject to the provisions of Section 5.4 and this
Section 13, and without limitation of any other express
indemnification provision under this Agreement, Seller agrees to
indemnify and hold harmless Purchaser and Center Banks against any
loss, liability, damage or expense of any kind (including reasonable
attorneys' fees whether incurred as party plaintiff or otherwise)
arising out of or in connection with (a) any act or omission of Seller
with respect to the Transferred Property or otherwise relating to the
Subject Banking Office (unless such act or omission was taken or
omitted in reliance on any of the covenants, representations or
warranties of Purchaser or Center Banks, or at Purchaser's or Center
Banks' request), (b) any representation or warranty made by Seller
herein or in any document or certificate delivered pursuant hereto
being untrue, incorrect or misleading as of the time made, or (c) any
failure by Seller to perform any covenant, agreement, undertaking or
obligation on its part hereunder.
For purposes of this indemnity, the terms
"Purchaser" and "Center Banks" shall include, in addition to
Purchaser and Center Banks, subsidiaries and other affiliates
of Purchaser's and Center Banks' and its and their respective
directors, officers and other employees, and agents.
(ii) Subject to the provisions of Section 5.4 and this
Section 13, and without limitation of any other express
indemnification provision under this Agreement, Purchaser and Center
Banks agrees to indemnify and hold harmless Seller against any and all
loss, liability, damage or expense of any kind (including reasonable
attorneys'
67
<PAGE> 73
fees whether incurred as party plaintiff or otherwise) arising out of
or in connection with (a) any act or omission of Purchaser or Center
Banks with respect to the Transferred Property or otherwise relating
to the Subject Banking Office following the Closing Date (unless such
act or omission was taken or omitted in reliance on any of the
covenants, representations or warranties of Seller herein, or at
Seller's request), (b) any representation or warranty made by
Purchaser or Center Banks herein or in any document or certificate
delivered pursuant hereto being untrue, incorrect or misleading as of
the time made, or (c) any failure by Purchaser or Center Banks, as the
case may be, to satisfy or perform any Liability, or any other
covenant, agreement, undertaking or obligation on its part hereunder.
For purposes of this indemnity, the term "Seller" shall
include, in addition to Seller, its subsidiaries and other affiliates,
and its and their respective directors, officers and other employees,
and agents.
(iii) Promptly after any service of process by any third
person in any litigation or proceeding, or the receipt of any claim or
demand, in respect of which indemnity may be sought pursuant to
Section 9 or this Section 13.1, or as soon as reasonably practicable
after a party hereto shall have acquired notice of any other matter
with respect to which indemnity may be so sought, the party seeking
indemnity (the "Indemnitee") will notify the indemnifying party
("Indemnitor") thereof. The Indemnitor shall have the right, within
ten Business Days of receipt of such notice to assume the defense,
settlement or compromise of any such claim, action, suit, or
proceeding at its own expense, including the retention of counsel
reasonably satisfactory to the Indemnitee. In such event, the
68
<PAGE> 74
Indemnitee shall have the right, upon prompt written notice to the
Indemnitor, to retain separate counsel in any such action and
participate (subject to control by the Indemnitor) in the defense
thereof, but the fees and expenses of such counsel shall be at such
Indemnitee's own expense. The Indemnitee shall cooperate with the
Indemnitor as provided in subparagraph (iv) below. With respect to any
matter as to which there is a right of indemnification other
than in respect of a claim, demand, suit or cause of action by a third
party, the Indemnitee shall submit such statements, documents and
other evidence as is relevant to the establishment of its claim and
the amount thereof, and the Indemnitor shall pay the Indemnitee within
ten Business Days thereof.
(iv) Each party hereto shall give the other prompt notice of
any facts coming to its attention that may give rise to a claim for
indemnification pursuant to Section 9 or this Section 13. Each party
shall cooperate with the other in any investigation, or in the defense
of any litigation or proceeding that might give rise to a claim for
indemnification or that would give rise to a claim for indemnification
if brought against the other party. Such cooperation shall include
providing witnesses, files, documents and records that such party is
uniquely in a position to provide.
(v) Except as specifically set forth herein, nothing in this
Section 13 shall be construed in any manner as a limitation of any
rights of either party to indemnification or recovery of damages in
accordance with specific provisions of Section 9 hereof or any other
provision of law or equity.
69
<PAGE> 75
(c) Notwithstanding any other provision contained herein to the
contrary the obligation of the Seller to indemnify the Purchaser and Center
Banks and of the Purchaser and Center Banks to indemnify the Seller as set
forth in Section 9 or this Section 13 shall terminate and not apply to any
claim or demand for indemnification, unless notice of such claim or demand is
given in a manner consistent with Section 15.2 by the Indemnitee to the
Indemnitor within 3 years of the effective date of this Agreement, provided
that such a 3 year termination period shall not apply to any claim or demand
for indemnification which arises in whole or in part from the gross negligence,
fraud or willful misconduct of the Indemnitor or any director, officer,
employee or agent of the Indemnitor.
(d) As security for any damages or losses Center Banks or Purchaser
may incur after the Closing Date as a result of Seller s breach of this
Agreement, including, but not limited to, any breach of any representation,
warranty or obligation contained in this Agreement, $225,000 will be deposited
by Seller in an escrow account for the benefit of Center Banks and/or Purchaser
no later than the Closing Date pursuant to an escrow agreement substantially in
the form attached hereto as Schedule 13(d) ("Escrow Agreement"), for a period
of one year after the Closing Date. Said escrow account will be subject to
claims by and payments to Center Banks or Purchaser. Disputed claims against
such funds will be resolved in accordance with the terms and conditions of the
Escrow Agreement.
70
<PAGE> 76
14. TERMINATION
14.1 Termination of Agreement
Except as is otherwise provided in Section 14.3, this Agreement shall
terminate and shall be of no further force or effect as among the parties
hereto, upon the occurrence of any of the following:
(i) Prior to the Closing, immediately upon the expiration of
thirty (30) days from the date that Seller has given written notice to
Purchaser and Center Banks of a breach or default by Purchaser or
Center Banks in the performance of any covenant, agreement,
representation, warranty, duty or obligation hereunder if, within such
thirty (30) day period, Purchaser and/or Center Banks shall have
failed to substantially correct and cure the grounds for termination
as set forth in such notice of termination;
(ii) Prior to the Closing, immediately upon the expiration of
thirty (30) days from the date that Purchaser or Center Banks has
given written notice to Seller of a breach or default by Seller in the
performance of any covenant, agreement, representation, warranty, duty
or obligation hereunder if, within such thirty (30) day period, Seller
shall have failed to substantially correct and cure the grounds for
termination as set forth in such notice of termination;
(iii) Upon mutual agreement of the parties; or
(iv) The Closing has not occurred on or before October 1,
1996.
14.2 Immaterial Breach
Notwithstanding anything to the contrary contained herein, no party
hereto shall have the right to terminate this Agreement on account of its own
breach or because of any
71
<PAGE> 77
immaterial breach by the other party hereto of any covenant, agreement,
representation, warranty, duty or obligation hereunder.
14.3 Effect of Termination
No termination of this Agreement under this Section 14 for any reason
or in any manner shall release, or be construed as so releasing, either party
hereto from any liability or damage to the other party hereto arising out of,
in connection with, or otherwise relating to, directly or indirectly, such
party's material breach, such party's material default or such party's failure
in performance of any of its material covenants, agreements, duties or
obligations arising hereunder.
14.4 Waiver of Right to Terminate
Any party may, at its election, waive any of its respective rights to
terminate this Agreement under the foregoing provisions of this Section 14,
provided that any such waiver shall not be deemed to be a waiver of any other
or subsequent breach of this Agreement.
15. Miscellaneous
15.1 Expenses
Except as is otherwise specifically provided in this Agreement, whether
the Closing takes place or whether this Agreement is terminated, each party
shall pay its own costs and expenses in connection with this Agreement and the
transactions contemplated hereby, including, but not by way of limitation, all
regulatory fees, attorneys fees, accounting fees and other expenses. In the
event this Agreement is terminated as a result of, or in connection with, one
party's material breach, material default or failure in the performance of any
of its material
72
<PAGE> 78
covenants, agreements, duties or obligations arising hereunder, that party
shall, within five (5) days after such termination, reimburse the other party
in the amount of such other party's costs and expenses incurred in connection
with this Agreement and the transactions contemplated hereby.
15.2 Notices
All notices, demands and other such communications hereunder (except to
the extent expressly provided otherwise) shall be in writing and shall be
deemed to have been duly given if sent by United States mail, certified or
registered, with return receipt requested, or otherwise actually delivered (by
regular mail or otherwise), as follows:
(i) If to Seller to:
Cicero Bank
5791 East Seymour Street
Cicero, New York 13039
Attention: Mr. Theodore J. Scallon
President
copy to:
Richard M. Storto, Esq.
Melvin & Melvin
700 The Plaza
217 South Salina Street
Syracuse, New York 13202
(ii) If to Center Banks and/or Purchaser, to:
Skaneateles Savings Bank
P.O. Box 460
Skaneateles, New York 13152
Attention: Mr. John P. Driscoll
Chairman, President and CEO
copy to:
Frederick A. Wolf, Esq.
Saperston & Day, P.C.
1100 M&T Center
Three Fountain Plaza
Buffalo, New York 14203
73
<PAGE> 79
The persons or addresses to which mailings or deliveries shall be made may
change from time to time by notice given pursuant to the provisions of this
Section 15.2. Any notice, demand or other communication given pursuant to the
provisions of this Section 15.2 shall be deemed to have been given on the
earlier of the date actually delivered or the third Business Day following the
date delivered to the United States Postal Service, properly addressed, postage
prepaid, and certified or registered as aforesaid, or the fifth Business Day
following deposit for mailing by ordinary first class mail, properly addressed
and postage prepaid.
15.3 Successors and Assigns
All terms and provisions of this Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective
transferees, successors and assigns; provided, however, that this Agreement and
all rights, privileges, duties and obligations of the parties hereto may not be
assigned or delegated by any party hereto without the prior written consent of
the other parties to this Agreement; and provided, further, that any such
assignment or delegation shall be void and provided still further that no
purchaser of any branch or other assets from Seller shall be considered a
transferee, successor or assign of Seller hereunder.
15.4 Effect on Third Parties
Each party hereto intends that this Agreement shall not benefit or
create any right or cause of action in or on behalf of any person other than
the parties hereto (and their corporate affiliates); provided, however, that
either party hereto shall have the right and authority to assert claims for
indemnification on behalf of those persons included within the meaning of
"Purchaser", "Center Banks" and "Seller" respectively, pursuant to the last
sentence of Section 13(b)(i) and the last sentence of Section 13(b)(ii).
74
<PAGE> 80
15.5 Counterparts
This Agreement may be executed in one or more counterparts,
all of which taken together shall constitute one instrument.
15.6 Captions; Table of Contents; Construction of References to
Sections
The captions contained in this Agreement and the table of contents
hereto are for convenience of reference only, do not form a part of this
Agreement and shall not affect the construction or interpretation of any of its
provisions. Any reference herein to a Section that is a whole integer shall be
deemed to include all Sections that consist of an integer and a decimal (for
example, a reference to Section 9 shall be deemed to include Section 9.1, 9.2
and 9.3), but a reference to a section consisting of an integer and a decimal
shall not include any other section.
15.7 Scrivener's Clause
The parties hereto acknowledge that the transaction contemplated by
this Agreement constitutes a sophisticated commercial transaction, and that
each party has been represented by legal counsel in connection therewith.
Notwithstanding any law to the contrary, ambiguities in this Agreement or in
any other document executed and delivered in connection herewith shall not be
resolved against the Purchaser due to the drafting thereof by the Purchaser's
counsel.
15.8 Entire Agreement; Limitations
The making, execution and delivery of this Agreement by the parties
hereto have been induced by no representations, statements, warranties or
agreements other than those herein expressed. This Agreement (exclusive of
cover page or Schedules) consists of pages numbered
75
<PAGE> 81
consecutively 1 through 77. This Agreement embodies the entire understanding of
the parties and there are no further or other agreements or understandings,
written or oral, in effect among both parties relating to the subject matter
hereof, except those agreements listed herein. Without limiting the foregoing,
neither Seller, Purchaser or Center Banks makes any representations or
warranties not specifically made or referred to in this Agreement. This
Agreement may be amended or modified only in a writing signed by both parties,
and no provision hereof may be waived except in a writing signed by the party
granting such waiver.
15.9 Governing Law
This Agreement is made and entered into in the State of New York and
the laws of that State shall govern the validity and interpretation hereof and
the performance of the parties hereto of their respective duties and
obligations hereunder.
15.10 Signature Page
Attached hereto is page 77 of this Agreement which is a separate and
distinct signature page which will be signed by an authorized representative of
the Purchaser and Seller at which time the Agreement will become binding and
enforceable against each party pursuant to the terms and conditions contained
therein.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement effective as of the day and year first above written.
END OF TEXT CONTAINED IN AGREEMENT
76
<PAGE> 82
SIGNATURE PAGE
CICERO BANK
By: /s/ Theodore J. Scallon
-----------------------------------
Theodore J. Scallon
President and CEO
SKANEATELES SAVINGS BANK
By: /s/ John P. Driscoll
-----------------------------------
John P. Driscoll
Chairman, President
and CEO
CENTER BANKS INCORPORATED
By: /s/ John P. Driscoll
-----------------------------------
John P.Driscoll
Chairman, President
and CEO
<PAGE> 83
INDEX TO
SCHEDULES
<TABLE>
<CAPTION>
Title Description
----- -----------
<S> <C> <C>
Schedule 1(c)(i) = Qualifying Fixed Assets Related Liabilities
Schedule 1(c)(ii) = Qualifying Other Agreements
Schedule 1(c)(iii) = Qualifying Deposit Related Loans
Schedule 1(c)(iv) = Qualifying Other Loans
Schedule 1(c)(v) = Qualifying Other Assets
Schedule 2.11A = Contract Employees
Schedule 2.16 = Fixed Assets
Schedule 2.17 = Fixed Asset Related Liabilities
Schedule 2.36 = Other Agreements which may be Qualifying Other Agreements
Schedule 2.37A = Real Property Leases
Schedule 2.42 = Subject Banking Office
Schedule 3.1(a)E = Exceptions to Documents, Books and Reports Relating to
Transferable Deposit Liabilities to be Delivered to Purchaser
Schedule 3.1(c) = Information on Preliminary and Final Closing Statements
Schedule 3.8 = Structural Defects
Schedule 3.13 = Allocation of Purchase Price
Schedule 5.8 = Principal Shareholders Agreement
Schedule 6.1 = Regulatory Approvals and Filings
Schedule 6.9 = Terms and Conditions of Purchase of Subject Banking Office
</TABLE>
78
<PAGE> 84
<TABLE>
<CAPTION>
Title Description
----- -----------
<S> <C>
Schedule 10.1 = Form of Assignment, Assumption and Bill of Sale for Transferred Property
Schedule 11.3 = Legal Proceedings
Schedule 11.9 = Other Consents re Transferred Property
Schedule 11.10 = Prototype Plans and IRAs
Schedule 13(d) = Escrow Agreement
</TABLE>
