Common use of Certain U Clause in Contracts

Certain U. S. FEDERAL INCOME TAX CONSEQUENCES The receipt of cash for Shares pursuant to the Offer or in the Merger will be a taxable transaction for U.S. federal income tax purposes under the Code and may also be a taxable transaction under applicable state, local or foreign tax laws. In general, a stockholder will recognize gain or loss for U.S. federal income tax purposes equal to the difference between the amount of cash received in exchange for the Shares sold and such stockholder's adjusted tax basis in such Shares. Assuming the Shares constitute capital assets in the hands of the stockholder, such gain or loss will be capital gain or loss. In the case of an individual stockholder, such capital gain generally will be subject to a maximum federal income tax rate of 20% if the individual has held the Shares for more than one year. Gain or loss will be calculated separately for each block of Shares tendered pursuant to the Offer or converted pursuant to the Merger. The deductibility of capital losses is subject to certain limitations. Prospective investors should consult their own tax advisors in this regard. In general, in order to prevent backup federal income tax withholding at a rate of 31% on the cash consideration to be received in the Offer or pursuant to the Merger, each stockholder who is not otherwise exempt from such requirements must provide such stockholder's correct taxpayer identification number (and certain other information) by completing the Substitute Form W-9 in the Letter of Transmittal. THE FOREGOING DISCUSSION MAY NOT BE APPLICABLE TO CERTAIN TYPES OF STOCKHOLDERS, INCLUDING BROKER-DEALERS, STOCKHOLDERS WHO ACQUIRED SHARES PURSUANT TO THE EXERCISE OF EMPLOYEE STOCK OPTIONS OR OTHERWISE AS COMPENSATION, INDIVIDUALS WHO ARE NOT CITIZENS OR RESIDENTS OF THE UNITED STATES AND FOREIGN CORPORATIONS.

Certain U. S. FEDERAL INCOME TAX CONSEQUENCES The discussion set forth below of the U.S. federal income tax consequences of participating in the Offer is for general information only and does not purport to consider all aspects of federal income taxation that may be relevant to stockholders. The consequences to any particular stockholder may differ depending upon that stockholder's own circumstances and tax position. In addition, certain types of stockholders (including financial institutions, tax-exempt organizations, foreign persons and persons who acquired their Shares upon the exercise of employee stock options or otherwise as compensation) may be subject to special rules. The discussion does not consider the effect of any applicable foreign, state or local tax laws. EACH STOCKHOLDER IS URGED TO CONSULT HIS TAX ADVISOR AS TO THE PARTICULAR TAX CONSEQUENCES OF THE OFFER TO SUCH STOCKHOLDER, INCLUDING THE APPLICATIONS OF STATE, LOCAL AND FOREIGN TAX LAWS. For purposes of this discussion, stockholders are assumed to hold their Shares as capital assets (generally, property held for investment). The sale of Shares pursuant to the Offer will be a taxable transaction, the consequences of which will be determined under the stock redemption rules of Section 302 of the Internal Revenue Code of 1986, as amended (the "Code"). Under those rules, the entire cash proceeds received by a stockholder for his Shares pursuant to the Offer will be treated as a distribution taxable as a dividend (to the extent of the Company's available "earnings and profits"), without regard to gain or loss realized, unless the particular stockholder satisfies one of the three tests described below. Amounts includible in income as a dividend will not be reduced by the stockholder's basis in the Shares purchased pursuant to the Offer and (except as described below for corporate holdings eligible for the dividends received deduction) the stockholder's basis in those Shares will be added to the stockholder's basis in the remaining Shares. If any of the tests described below are satisfied, the stockholder will recognize capital gain or loss equal to the difference between the cash proceeds received for the Shares pursuant to the Offer and the tax basis of such Shares. Under Section 302 the entire proceeds received from the sale of Shares pursuant to the Offer will be treated as a distribution unless the sale (a) results in a "complete redemption" of the stockholder's stock in the Company, (b) is "substantially disproportionate" with respect to the stockholder or (c) is "not essentially equivalent to a dividend" with respect to the stockholder. In determining whether any of these tests is satisfied, a stockholder must take into account both Shares actually owned by such stockholder and any Shares considered as owned by such stockholder by reason of certain constructive ownership rules set forth in Section 318 of the Code. Under these rules an individual stockholder generally will be considered to own Shares which such stockholder has the right to acquire by the exercise of an option or warrant and Shares owned (and, in some cases, constructively owned) by certain members of the stockholder's family and by certain entities (such as corporations, partnerships, trusts and estates) in which such stockholder, a member of such stockholder's family or a related entity has an interest. Under Section 318, participants in the ESOP will not be considered to own Shares held by the ESOP and attributable to participants' accounts ("ESOP Shares"). ESOP participants may also actually own or be considered to own Shares ("Non-ESOP Shares") other than ESOP Shares. Whether an ESOP participant satisfies one of the three tests under Section 302 with respect to a sale of Non-ESOP Shares pursuant to the Offer is determined without regard to ESOP Shares. A sale of Shares pursuant to the Offer will result in a "complete redemption" of a stockholder's stock in the Company if, pursuant to the Offer, the Company purchases all of the Shares actually and constructively owned by the stockholder and the stockholder holds no other stock of the Company. If the stockholder's sale of Shares pursuant to the Offer includes all Shares actually owned by the stockholder but the stockholder continues to constructively own Shares held by family members, such stockholder may qualify for "complete redemption" treatment if he is eligible to elect and properly elects waiver of the constructive ownership rules regarding attribution from family members. Stockholders in this position should consult their tax advisors as to the availability of such an election. The sale of Shares pursuant to the Offer will be "substantially disproportionate" with respect to a stockholder if, immediately after the sale pursuant to the Offer, such stockholder's actual and constructive percentage ownership of Shares is less than 80% of the stockholder's actual and constructive percentage ownership of Shares immediately before the purchase of Shares pursuant to the Offer. In order for the sale of Shares by a stockholder pursuant to the Offer to qualify as "not essentially equivalent to a dividend" the stockholder must experience a "meaningful reduction" in his proportionate interest in the Company as a result of such sale, taking into account the constructive ownership rules. The Internal Revenue Service has held in a published ruling that, under the particular facts of that ruling, a very small reduction in the percentage stock ownership of a stockholder constituted a "meaningful reduction" when the stockholder owned an insignificant percentage of the corporation's stock before and after a redemption and did not exercise any control over corporate affairs. Stockholders seeking to rely on this test should consult their tax advisors as to the application of this standard to their particular situations. Stockholders should be aware that their ability to satisfy any of the foregoing tests may be affected by any proration pursuant to the Offer. While not free from doubt, it is possible that an acquisition or disposition of Shares (including market purchases and sales) substantially contemporaneous with the Offer will be taken into account in determining whether any of the three tests described above is satisfied. If none of the tests described above is satisfied with respect to a stockholder, such stockholder's receipt of cash for Shares pursuant to the Offer or in the Merger will be treated as a distribution, taxable transaction as a dividend to the extent of the Company's available "earnings and profits." Any cash received in excess of such earnings and profits will be treated, first, as a non-taxable return of capital to the extent of the stockholder's basis in all of his Shares, and, thereafter, as a capital gain to the extent it exceeds the stockholder's basis. The Company anticipates, but there can be no assurance, that its available earnings and profits will be such that all amounts treated as a distribution will be taxed as a dividend. Any income which is treated as a dividend pursuant to the rules described above will be eligible for U.S. federal income tax purposes the 70% dividends received deduction generally allowable to corporate stockholders under Section 243 of the Code, subject to applicable limitations, including those relating to "debt-financed portfolio stock" under Section 246A of the Code and to the 45-day holding period requirement of Section 246 of the Code. Also, since it is expected that purchases pursuant to the Offer will not be pro rata as to all stockholders, any amount treated as a dividend to a corporate stockholder will constitute an "extraordinary dividend" subject to the provisions of Section 1059 of the Code (except as may also otherwise be provided in regulations yet to be promulgated by the Treasury Department). Under Section 1059, a taxable transaction corporate stockholder must reduce the tax basis in all of such stockholder's stock (but not below zero) by the portion of any "extraordinary dividend" which is an allowable deduction under applicable statethe dividends received deduction rules, local and, if such portion exceeds the stockholder's tax basis for the stock, must treat any such excess as additional gain on the subsequent sale or foreign tax lawsother disposition of such Shares. In generaladdition, corporate stockholders should be aware that the aggregation rules might require that other dividends received by the stockholders on the stock of the Company be treated as an additional part of the extraordinary dividend unless the two-year holding period discussed below is satisfied. Generally, a dividend with respect to a share of common stock is deemed "extraordinary" when it exceeds 10% of a corporate taxpayer's adjusted basis in that share of stock. In determining whether this threshold percentage limitation is met, all dividends that are received by a taxpayer with respect to any share of stock and that have ex-dividend dates within the same period of 85 consecutive days are treated as one dividend. Additionally, all dividends that are received by a taxpayer with respect to any share of stock and that have ex-dividend dates within the same period of 365 consecutive days are treated as extraordinary dividends if the total of these dividends exceeds 20% of the taxpayer's adjusted basis in that share of stock. All dividends paid on the shares of stock held by corporate stockholders within either aggregation period (including dividends deemed received by such stockholders upon sales pursuant to the Offer) will be counted in determining whether such dividends amount to an extraordinary dividend, unless the two-year holding period requirement discussed below is satisfied. In determining whether a dividend paid is an extraordinary dividend, a stockholder will recognize gain may under certain circumstances elect to use the fair market value of the stock rather than its basis for purposes of determining whether the 10% or loss for U.S. federal income tax purposes equal 20% threshold is met. Except with respect to amounts paid in connection with non-pro-rata redemptions (such as those pursuant to the difference between the amount of cash received Offer) and also treated as dividends, no basis reduction is generally required in exchange for the Shares sold and such stockholder's adjusted tax basis in such Shares. Assuming the Shares constitute capital assets in the hands of the stockholder, such gain or loss will be capital gain or loss. In the case of an individual stockholder, such capital gain generally will be subject otherwise extraordinary dividend received with respect to stock of a maximum federal income tax rate of 20% if corporation where the individual has stock was held by the Shares selling stockholder for more than one yeartwo years as of the earlier of the date on which the payment of such dividend is announced, declared, or agreed to. Gain or loss will be calculated separately for each block of Shares tendered pursuant to the Offer or converted pursuant to the Merger. The deductibility of capital losses is subject to certain limitations. Prospective investors Corporate stockholders should consult their own tax advisors in this regard. In general, in order to prevent backup federal income tax withholding at a rate of 31% on the cash consideration to be received in the Offer or pursuant as to the Mergerapplication of Section 1059 of the Code to the Offer. For a discussion of certain withholding tax consequences to tendering stockholders, each stockholder who is not otherwise exempt from such requirements must provide such stockholder's correct taxpayer identification number (and certain other information) by completing the Substitute Form W-9 in the Letter of Transmittalsee Section 3. THE FOREGOING FEDERAL INCOME TAX DISCUSSION MAY NOT BE APPLICABLE SET FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION ONLY. EACH STOCKHOLDER IS URGED TO CERTAIN TYPES CONSULT SUCH STOCKHOLDER'S OWN TAX ADVISOR TO DETERMINE THE PARTICULAR TAX CONSEQUENCES TO SUCH STOCKHOLDER (INCLUDING THE APPLICABILITY AND EFFECT OF STOCKHOLDERSTHE CONSTRUCTIVE OWNERSHIP RULES AND FOREIGN, INCLUDING BROKER-DEALERS, STOCKHOLDERS WHO ACQUIRED STATE AND LOCAL TAX LAWS) OF THE SALE OF SHARES PURSUANT TO THE EXERCISE OF EMPLOYEE STOCK OPTIONS OR OTHERWISE AS COMPENSATION, INDIVIDUALS WHO ARE NOT CITIZENS OR RESIDENTS OF THE UNITED STATES AND FOREIGN CORPORATIONSOFFER.