EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
BSB BANCORP, INC.
AND
SKANEATELES BANCORP, INC.
DATED AS OF
JANUARY 25, 1999
TABLE OF CONTENTS
PAGE
ARTICLE I THE MERGER......................................................1
1.1 The Merger........................................................1
1.2 Effective Time....................................................2
1.3 Effects of the Merger.............................................2
1.4 Conversion of SKAN Common Stock...................................2
1.5 Options...........................................................3
1.6 Certificate of Incorporation......................................3
1.7 Bylaws............................................................4
1.8 Directors and Officers............................................4
1.9 Tax Consequences..................................................4
ARTICLE II EXCHANGE OF SHARES.............................................4
2.1 BSB Bancorp to Make Shares Available..............................4
2.2 Exchange of Shares................................................4
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SKAN........................6
3.1 Corporate Organization............................................6
3.2 Capitalization....................................................6
3.3 Authority; No Violation...........................................7
3.4 Consents and Approvals............................................8
3.5 Loan Portfolio; Reports...........................................9
3.6 Financial Statements; Exchange Act Filings; Books and
Records.........................................................9
3.7 Broker's Fees....................................................10
3.8 Absence of Certain Changes or Events.............................10
3.9 Legal Proceedings................................................10
3.10 Taxes and Tax Returns...........................................10
3.11 Employee Plans..................................................12
3.12 Certain Contracts...............................................13
3.13 Agreements with Regulatory Agencies.............................14
3.14 State Takeover Laws; Certificate of Incorporation...............14
3.15 Environmental Matters...........................................14
3.16 Reserves for Losses.............................................15
3.17 Properties and Assets...........................................15
3.18 Insurance.......................................................16
3.19 Compliance with Applicable Laws.................................16
3.20 Loans...........................................................16
3.21 Affiliates......................................................17
3.22 Ownership of BSB Bancorp Common Stock...........................18
3.23 Fairness Opinion................................................18
3.24 SKAN DRIP and Purchase Plan.....................................18
3.25 Accounting Matters..............................................18
3.26 Accuracy of Information.........................................18
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BSB BANCORP.................18
4.1 Corporate Organization...........................................18
4.2 Capitalization...................................................19
4.3 Authority; No Violation..........................................19
4.4 Regulatory Approvals.............................................20
4.5 Financial Statements; Exchange Act Filings; Books and
Records........................................................21
4.6 Agreements with Regulatory Agencies..............................21
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4.7 Legal Proceedings................................................22
4.8 Compliance with Applicable Laws..................................22
4.9 Accounting Matters...............................................22
4.10 Ownership of SKAN Common Stock..................................22
4.11 Insurance of Deposits...........................................22
ARTICLE V COVENANTS RELATING TO CONDUCT OF BUSINESS......................22
5.1 Covenants of SKAN................................................22
5.2 Merger Covenants.................................................25
5.3 Compliance with Antitrust Laws...................................26
5.4 Termination of 401(k) Plan and ESOP..............................26
ARTICLE VI ADDITIONAL AGREEMENTS.........................................26
6.1 Regulatory Matters...............................................26
6.2 Access to Information............................................28
6.3 Shareholder Meeting..............................................28
6.4 Legal Conditions to Merger.......................................28
6.5 Stock Exchange Listing...........................................29
6.6 Employees and Advisory Directors.................................29
6.7 Indemnification..................................................30
6.8 Subsequent Interim and Annual Financial Statements...............31
6.9 Additional Agreements............................................31
6.10 Advice of Changes...............................................31
6.11 Current Information.............................................32
6.12 Execution and Authorization of Bank Merger Agreement............32
6.13 Change in Structure.............................................32
6.14 Transaction Expenses of SKAN....................................32
ARTICLE VII CONDITIONS PRECEDENT.........................................33
7.1 Conditions to Each Party's Obligation To Effect the
Merger.........................................................33
7.2 Conditions to Obligations of BSB Bancorp.........................34
7.3 Conditions to Obligations of SKAN................................35
ARTICLE VIII TERMINATION AND AMENDMENT...................................36
8.1 Termination......................................................36
8.2 Effect of Termination............................................39
8.3 Amendment........................................................39
8.4 Extension; Waiver................................................39
ARTICLE IX GENERAL PROVISIONS............................................39
9.1 Closing..........................................................39
9.2 Nonsurvival of Representations, Warranties and Agreements........40
9.3 Expenses.........................................................40
9.4 Notices..........................................................40
9.5 Interpretation...................................................41
9.6 Counterparts.....................................................41
9.7 Entire Agreement.................................................41
9.8 Governing Law....................................................41
9.9 Enforcement of Agreement.........................................41
9.10 Severability....................................................42
9.11 Publicity.......................................................42
9.12 Assignment; Limitation of Benefits..............................42
9.13 Additional Definitions..........................................42
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EXHIBITS
A Bank Plan of Merger
B Option Agreement
C Certificate of Merger
D Stockholder Agreement
E Index Group
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER, dated as of January 25, 1999 (this
"Agreement"), is entered into by and between BSB BANCORP, INC., a Delaware
corporation ("BSB Bancorp"), and SKANEATELES BANCORP, INC., a Delaware
corporation ("SKAN").
WHEREAS, the Boards of Directors of BSB Bancorp and SKAN have determined
that it is in the best interests of their respective companies and shareholders
to consummate the business combination transaction provided for herein in which
SKAN will, subject to the terms and conditions set forth herein, merge (the
"Merger") with and into BSB Bancorp, with BSB Bancorp being the Surviving
Corporation (as defined below);
WHEREAS, prior to consummation of the Merger, BSB Bancorp and SKAN will
respectively cause BSB Bank & Trust Company, a New York-chartered commercial
bank and trust company and wholly owned subsidiary of BSB Bancorp ("BSB Bank"),
and Skaneateles Savings Bank, a New York-chartered savings bank and wholly owned
subsidiary of SKAN ("Skaneateles Bank"), to enter into a merger agreement, in
the form attached hereto as Exhibit A (the "Bank Merger Agreement"), providing
for the merger (the "Bank Merger") of Skaneateles Bank with and into BSB Bank,
with BSB Bank being the surviving Bank of the Bank Merger, and it is intended
that the Bank Merger be consummated immediately after consummation of the
Merger;
WHEREAS, as an inducement to BSB Bancorp to enter into this Agreement,
SKAN has entered into an option agreement, in the form attached hereto as
Exhibit B (the "Option Agreement"), with BSB Bancorp concurrently with the
execution of this Agreement pursuant to which SKAN has granted BSB Bancorp an
option to purchase, under certain circumstances, an aggregate of 290,142 newly
issued shares of common stock, par value $.01 per share, of SKAN ("SKAN Common
Stock") upon the terms and conditions therein contained (which number of shares
is equal to 19.99% of the total number of outstanding shares of SKAN Common
Stock on the date hereof); and
WHEREAS, the parties desire to make certain representations, warranties
and agreements in connection with the Merger and also to prescribe certain
conditions to the Merger as set forth hereinbelow.
NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties and agreements contained herein, and intending to be legally bound
hereby, the parties agree as follows:
ARTICLE I
THE MERGER
1.1 THE MERGER.
Subject to the terms and conditions of this Agreement, in accordance with
the Delaware General Corporation Law (the "DGCL"), at the Effective Time (as
defined in Section 1.2 hereof), SKAN shall merge with and into BSB Bancorp, with
BSB Bancorp being the surviving corporation (hereinafter sometimes called the
"Surviving Corporation") in the Merger. Upon consummation of the Merger, the
corporate existence of SKAN shall cease and the Surviving Corporation shall
continue to exist as a Delaware corporation.
1.2 EFFECTIVE TIME.
The Merger shall become effective on the Closing Date (as defined in
Section 9.1 hereof), as set forth in the certificate of merger (the "Certificate
of Merger") in the form attached as Exhibit C hereto which shall be filed with
the Secretary of State of the State of Delaware on or before the Closing Date.
The term "Effective Time" shall be the date and time when the Merger becomes
effective on the Closing Date, as set forth in the Certificate of Merger.
1.3 EFFECTS OF THE MERGER.
At and after the Effective Time, the Merger shall have the effects set
forth in Sections 259 and 261 of the DGCL.
1.4 CONVERSION OF SKAN COMMON STOCK.
(a) At the Effective Time, subject to Sections 1.4(b), 2.2(e) and
8.1(h) hereof, each share of SKAN Common Stock issued and outstanding prior to
the Effective Time shall, by virtue of this Agreement and without any action on
the part of the holder thereof, be converted into and exchangeable for .970
shares of BSB Bancorp common stock, par value $.01 per share ("BSB Bancorp
Common Stock"). The ratio of the number of shares of BSB Bancorp Common Stock to
be exchanged for each share of SKAN Common Stock issued and outstanding is
hereinafter referred to as the "Exchange Ratio." For the purposes of this
Agreement, references to BSB Bancorp Common Stock shall be deemed to include,
where appropriate, references to the right to receive shares of BSB Bancorp's
Series A Junior Participating Preferred Stock pursuant to the Rights Agreement,
dated as of May 22, 1989, as amended, between BSB Bancorp and American Stock
Transfer & Trust Company (the "Rights Agreement").
(b) All of the shares of SKAN Common Stock converted into BSB
Bancorp Common Stock pursuant to this Article I shall no longer be outstanding
and shall automatically be canceled and shall cease to exist, and each
certificate (each a "Certificate") previously representing any such shares of
SKAN Common Stock shall thereafter represent the right to receive (i) the number
of whole shares of BSB Bancorp Common Stock and (ii) cash in lieu of fractional
shares into which the shares of SKAN Common Stock represented by such
Certificate have been converted pursuant to Section 1.4(a) and Section 2.2(e)
hereof. Certificates previously representing shares of SKAN Common Stock shall
be exchanged for certificates representing whole shares of BSB Bancorp Common
Stock and cash in lieu of fractional shares issued in consideration therefor
upon the surrender of such Certificates in accordance with Section 2.2 hereof,
without any interest thereon. If prior to the Effective Time BSB Bancorp should
split or combine its common stock, or pay a dividend or other distribution in
such common stock, then the Exchange Ratio shall be appropriately adjusted to
reflect such split, combination, dividend or distribution.
(c) At the Effective Time, all shares of SKAN Common Stock that are
owned by SKAN as treasury stock and all shares of SKAN Common Stock that are
owned directly or indirectly by BSB Bancorp or SKAN or any of their respective
Subsidiaries (other than shares of SKAN Common Stock held directly or indirectly
in trust accounts, managed accounts and the like or otherwise held in a
fiduciary capacity that are beneficially owned by third parties (any such
shares, and shares of BSB Bancorp Common Stock which are similarly held, whether
held directly or indirectly by BSB Bancorp or SKAN, as the case may be, being
referred to herein as "Trust Account Shares") and other than any shares of SKAN
Common Stock held by BSB Bancorp or SKAN or any of their respective Subsidiaries
in respect of a debt previously contracted (any such shares of SKAN Common
Stock, and shares of BSB Bancorp Common Stock which are similarly held, whether
held directly or indirectly by BSB Bancorp or SKAN, being referred to herein as
"DPC Shares")) shall be canceled and shall cease to exist and no stock of BSB
Bancorp or other consideration shall be delivered in exchange therefor. All
shares of BSB Bancorp Common Stock that are owned by SKAN or any of its
Subsidiaries (other than Trust Account Shares and DPC Shares) shall become
treasury
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stock of BSB Bancorp.
(d) Certificates for fractions of shares of BSB Bancorp Common Stock
will not be issued. In lieu of a fraction of a share of BSB Bancorp Common
Stock, each holder of SKAN Common Stock otherwise entitled to a fraction of a
share of BSB Bancorp Common Stock shall be entitled to receive an amount of cash
equal to (i) the fraction of a share of the BSB Bancorp Common Stock to which
such holder would otherwise be entitled, multiplied by (ii) the actual market
value of the BSB Bancorp Common Stock, which shall be deemed to be the average
of the daily closing prices per share for BSB Bancorp Common Stock for the
twenty consecutive trading days on which shares of BSB Bancorp Common Stock are
actually traded (as reported on the Nasdaq Stock Market National Market System)
ending on the third trading day preceding the Closing Date. Following
consummation of the Merger, no holder of SKAN Common Stock shall be entitled to
dividends or any other rights in respect of any such fraction.
1.5 OPTIONS.
At the Effective Time, each option or warrant granted by SKAN to purchase
shares of SKAN Common Stock which is outstanding and unexercised immediately
prior thereto shall be converted automatically into an option to purchase shares
of BSB Bancorp Common Stock in an amount and at an exercise price determined as
provided below (and otherwise subject to the terms of the 1995 Non-Employee
Directors Warrant Plan and 1998 Non-Employee Directors Warrant Plan, the 1998
Stock Option Plan, the 1991 Long Term Incentive and Capital Accumulation Plan
and the 1987 Long Term Incentive and Capital Accumulation Plan (collectively,
all such plans are referred to as the "SKAN Stock Plans");
(1) The number of shares of BSB Bancorp Common Stock to be subject
to the option or warrant immediately after the Effective Time shall
be equal to the product of the number of shares of SKAN Common Stock
subject to the option or warrant immediately before the Effective
Time, multiplied by the Exchange Ratio, provided that any fractional
shares of BSB Bancorp Common Stock resulting from such
multiplication shall be rounded down to the nearest share; and
(2) The exercise price per share of BSB Bancorp Common Stock under
the option or warrant immediately after the Effective Time shall be
equal to the exercise price per share of SKAN Common Stock under the
option or warrant immediately before the Effective Time divided by
the Exchange Ratio, provided that such exercise price shall be
rounded down to the nearest cent.
The adjustment provided herein shall be and is intended to be effected in a
manner which is consistent with Section 424(a) of the Internal Revenue Code of
1986, as amended (the "Code"). The duration and other terms of the option or
warrant immediately after the Effective Time shall be the same as the
corresponding terms in effect immediately before the Effective Time, except that
all references to SKAN or Skaneateles Bank in the SKAN Stock Plans (and the
corresponding references in the option or warrant agreement documenting such
option or warrant) shall be deemed to be references to BSB Bancorp. Nothing
herein shall be construed as preventing option or warrant holders from
exercising the same prior to the Effective Time in accordance with the terms
thereof.
1.6 CERTIFICATE OF INCORPORATION.
At the Effective Time, the Certificate of Incorporation of BSB Bancorp, as
in effect at the Effective Time, shall become the Certificate of Incorporation
of the Surviving Corporation.
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1.7 BYLAWS.
At the Effective Time, the Bylaws of BSB Bancorp, as in effect immediately
prior to the Effective Time, shall become the Bylaws of the Surviving
Corporation.
1.8 DIRECTORS AND OFFICERS.
At the Effective Time, the directors and officers of BSB Bancorp
immediately prior to the Effective Time shall become the directors and officers
of the Surviving Corporation. As of the Effective Time, BSB Bancorp shall amend
its Bylaws to increase the size of its Board of Directors by two members, and
promptly thereafter invite two members of the SKAN Board of Directors (as
constituted on the date hereof) to serve as members of the Board of Directors of
BSB Bancorp
1.9 TAX CONSEQUENCES.
It is intended that the Merger shall constitute a reorganization within
the meaning of Section 368(a) of the Code, and that this Agreement shall
constitute a "plan of reorganization" for the purposes of the Code.
ARTICLE II
EXCHANGE OF SHARES
2.1 BSB BANCORP TO MAKE SHARES AVAILABLE.
At or prior to the Effective Time, BSB Bancorp shall deposit, or shall
cause to be deposited, with BSB Bancorp's transfer agent, American Stock
Transfer & Trust Company, or such other bank, trust company or transfer agent as
BSB Bancorp may select (the "Exchange Agent"), for the benefit of the holders of
Certificates, for exchange in accordance with this Article II, certificates
representing the shares of BSB Bancorp Common Stock and the cash in lieu of
fractional shares (such cash and certificates for shares of BSB Bancorp Common
Stock, being hereinafter referred to as the "Exchange Fund") to be issued
pursuant to Section 1.4 and paid pursuant to Section 2.2(a) hereof
(collectively, sometimes referred to herein as the "Shares") in exchange for
outstanding shares of SKAN Common Stock.
2.2 EXCHANGE OF SHARES.
(a) As soon as practicable after the Effective Time, the Exchange
Agent shall mail to each holder of record of a Certificate or Certificates a
form letter of transmittal (which shall specify that delivery shall be effected,
and risk of loss and title to the Certificates shall pass, only upon delivery of
the Certificates to the Exchange Agent) and instructions for use in effecting
the surrender of the Certificates in exchange for certificates representing the
shares of BSB Bancorp Common Stock and the cash in lieu of fractional shares
into which the shares of SKAN Common Stock represented by such Certificate or
Certificates shall have been converted pursuant to this Agreement. SKAN shall
have the right to review both the letter of transmittal and the instructions
prior to such documents being finalized. Upon surrender of a Certificate for
exchange and cancellation to the Exchange Agent, together with such letter of
transmittal, duly executed, the holder of such Certificate shall be entitled to
receive promptly in exchange therefor (x) a certificate representing that number
of whole shares of BSB Bancorp Common Stock to which such holder of SKAN Common
Stock shall have become entitled pursuant to the provisions of Article I hereof
and (y) a check representing the amount of cash in lieu of fractional shares, if
any, which such holder has the right to receive in respect of the Certificate
surrendered pursuant to the provisions of Article I,
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and the Certificate so surrendered shall forthwith be canceled. No interest will
be paid or accrued on the cash in lieu of fractional shares and unpaid dividends
and distributions, if any, payable to holders of Certificates.
(b) No dividends or other distributions declared after the Effective
Time with respect to BSB Bancorp Common Stock and payable to the holders of
record thereof shall be paid to the holder of any unsurrendered Certificate
until the holder thereof shall surrender such Certificate in accordance with
this Article II. After the surrender of a Certificate in accordance with this
Article II, the record holder thereof shall be entitled to receive any such
dividends or other distributions, without any interest thereon, which
theretofore had become payable with respect to shares of BSB Bancorp Common
Stock represented by such Certificate. No holder of an unsurrendered Certificate
shall be entitled, until the surrender of such Certificate, to vote the shares
of BSB Bancorp Common Stock into which his SKAN Common Stock shall have been
converted.
(c) If any certificate representing shares of BSB Bancorp Common
Stock is to be issued in a name other than that in which the Certificate
surrendered in exchange therefor is registered, it shall be a condition of the
issuance thereof that the Certificate so surrendered shall be properly endorsed
(or accompanied by an appropriate instrument of transfer) and otherwise in
proper form for transfer, and that the person requesting such exchange shall pay
to the Exchange Agent in advance any transfer or other taxes required by reason
of the issuance of a certificate representing shares of BSB Bancorp Common Stock
in any name other than that of the registered holder of the Certificate
surrendered, or shall establish to the satisfaction of the Exchange Agent that
such tax has been paid or is not payable.
(d) As of the Effective Time, there shall be no transfers on the
stock transfer books of SKAN of the shares of SKAN Common Stock which were
issued and outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates representing such shares are presented for transfer
to the Exchange Agent, they shall be canceled and exchanged for certificates
representing shares of BSB Bancorp Common Stock as provided in this Article II.
(e) Any portion of the Exchange Fund that remains unclaimed by the
shareholders of SKAN for nine months after the Effective Time may be returned to
BSB Bancorp. After such funds have been returned to BSB Bancorp, any
shareholders of SKAN who have not theretofore complied with this Article II
shall thereafter look only to BSB Bancorp for payment of their shares of BSB
Bancorp Common Stock, cash in lieu of fractional shares and unpaid dividends and
distributions on BSB Bancorp Common Stock deliverable in respect of each share
of SKAN Common Stock such shareholder holds as determined pursuant to this
Agreement, in each case, without any interest thereon. Notwithstanding the
foregoing, none of BSB Bancorp, SKAN, the Exchange Agent or any other person
shall be liable to any former holder of shares of SKAN Common Stock for any
amount properly delivered to a public official pursuant to applicable abandoned
property, escheat or similar laws.
(f) In the event any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate to be lost, stolen or destroyed and, if required by BSB
Bancorp, the posting by such person of a bond in such amount as BSB Bancorp may
reasonably direct as indemnity against any claim that may be made against it
with respect to such Certificate, the Exchange Agent will issue in exchange for
such lost, stolen or destroyed Certificate the shares of BSB Bancorp Common
Stock and cash in lieu of fractional shares deliverable in respect thereof
pursuant to this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SKAN
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SKAN hereby makes the following representations and warranties to BSB
Bancorp as set forth in this Article III, each of which is being relied upon by
BSB Bancorp as a material inducement to enter into and perform this Agreement.
All of the disclosure schedules of SKAN referenced below and thereby required of
SKAN pursuant to this Agreement, which disclosure schedules shall be
cross-referenced to the specific sections and subsections of this Agreement and
delivered herewith, are referred to herein as the "SKAN Disclosure Schedule."
3.1 CORPORATE ORGANIZATION.
(a) SKAN is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware. SKAN has the corporate
power and authority to own or lease all of its properties and assets and to
carry on its business as it is now being conducted, and is duly licensed or
qualified to do business in each jurisdiction in which the nature of any
material business conducted by it or the character or location of any material
properties or assets owned or leased by it makes such licensing or qualification
necessary. SKAN is duly registered as a bank holding company with the Board of
Governors of the Federal Reserve System ("FRB") under the Bank Holding Company
Act of 1956, as amended ("BHCA"). The Certificate of Incorporation and Bylaws of
SKAN, copies of which have previously been delivered to BSB Bancorp, are true,
correct and complete copies of such documents as in effect as of the date of
this Agreement. Skaneateles Bank and Skaneateles Preferred Capital Corp., a New
York corporation ("SPCC"), are the only Subsidiaries of SKAN.
(b) Skaneateles Bank is a New York-chartered savings bank duly
organized and validly existing and in good standing under the laws of New York.
The deposit accounts of Skaneateles Bank are insured by the Federal Deposit
Insurance Corporation (the "FDIC") through the Bank Insurance Fund (the "BIF")
to the fullest extent permitted by law, and all premiums and assessments
required in connection therewith have been paid by Skaneateles Bank. Skaneateles
Bank has the corporate power and authority to own or lease all of its properties
and assets and to carry on its business as it is now being conducted and is duly
licensed or qualified to do business in each jurisdiction in which the nature of
any material business conducted by it or the character or the location of any
material properties or assets owned or leased by it makes such licensing or
qualification necessary. The Certificate of Incorporation and Bylaws of
Skaneateles Bank, copies of which have previously been delivered to BSB Bancorp,
are true, correct and complete copies of such documents as in effect as of the
date of this Agreement.
(c) SPCC is a New York corporation duly organized and validly
existing and in good standing under the laws of New York. SPCC is a subsidiary
of Skaneateles Bank. SPCC has the corporate power and authority to own or lease
all of its properties and assets and to carry on its business as it is now being
conducted and is duly licensed or qualified to do business in each jurisdiction
in which the nature of any material business conducted by it or the character or
the location of any material properties or assets owned or leased by it makes
such licensing or qualification necessary. The Certificate of Incorporation and
Bylaws of SPCC, copies of which have previously been delivered to BSB Bancorp,
are true, correct and complete copies of such documents as in effect as of the
date of this Agreement.
3.2 CAPITALIZATION.
(a) The authorized capital stock of SKAN consists of 4,000,000
shares of SKAN Common Stock and 500,000 shares of serial preferred stock, par
value $.01 per share (the "SKAN Preferred Stock"). As of the date hereof, there
are (x) 1,450,712 shares of SKAN Common Stock issued and outstanding and no
shares of SKAN Common Stock are held in SKAN's treasury, (y) no shares of SKAN
Common Stock reserved for issuance upon exercise of outstanding stock options or
otherwise, except for (i) 345,163 shares of SKAN Common Stock reserved for
issuance pursuant to
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the SKAN Stock Plans other than those referred to in clause (ii) (of which
options for 120,350 shares are currently outstanding), (ii) 203,150 shares of
SKAN Common Stock reserved for issuance pursuant to the 1998 Directors Stock
Purchase Plan and Employee Stock Purchase Plan (collectively, the "Purchase
Plan") and the Skaneateles Bancorp, Inc. Dividend Reinvestment Plan (the "SKAN
DRIP"), and (iii) 290,142 shares of SKAN Common Stock reserved for issuance upon
exercise of the option issued to BSB Bancorp pursuant to the Option Agreement,
and (z) no shares of SKAN Preferred Stock issued or outstanding, held in SKAN's
treasury or reserved for issuance upon exercise of outstanding stock options or
otherwise. All of the issued and outstanding shares of SKAN Common Stock have
been duly authorized and validly issued and are fully paid, nonassessable and
free of preemptive rights, with no personal liability attaching to the ownership
thereof. Except for the Option Agreement and the SKAN Stock Plans, SKAN does not
have and is not bound by any outstanding subscriptions, options, warrants,
calls, commitments or agreements of any character calling for the purchase or
issuance of any shares of SKAN Common Stock or SKAN Preferred Stock or any other
equity security of SKAN or any securities representing the right to purchase or
otherwise receive any shares of SKAN Common Stock or any other equity security
of SKAN. The names of the optionees, the date of each option to purchase SKAN
Common Stock granted, the number of shares subject to each such option, the
expiration date of each such option, and the price at which each such option may
be exercised under the SKAN Stock Plans are set forth in Section 3.2(a)(i) of
the SKAN Disclosure Schedule. Except as set forth at Section 3.2(a)(ii) of the
SKAN Disclosure Schedule, since December 31, 1997 SKAN has not issued any shares
of its capital stock or any securities convertible into or exercisable for any
shares of its capital stock.
(b) Section 3.2(b) of the SKAN Disclosure Schedule sets forth a
true, correct and complete list of all direct or indirect Subsidiaries of SKAN
as of the date of this Agreement. Except as set forth at Section 3.2(b) of the
SKAN Disclosure Schedule, SKAN owns, directly or indirectly, all of the issued
and outstanding shares of capital stock of each of its Subsidiaries, free and
clear of all liens, charges, encumbrances and security interests whatsoever, and
all of such shares are duly authorized and validly issued and are fully paid,
nonassessable and free of preemptive rights, with no personal liability
attaching to the ownership thereof. No SKAN Subsidiary has or is bound by any
outstanding subscriptions, options, warrants, calls, commitments or agreements
of any character calling for the purchase or issuance of any shares of capital
stock or any other equity security of such Subsidiary or any securities
representing the right to purchase or otherwise receive any shares of capital
stock or any other equity security of such Subsidiary.
3.3 AUTHORITY; NO VIOLATION.
(a) SKAN has full corporate power and authority to execute and
deliver this Agreement and the Option Agreement and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of this
Agreement and the Option Agreement and the consummation of the transactions
contemplated hereby and thereby have been duly and validly approved by the Board
of Directors of SKAN. The Board of Directors of SKAN has directed that this
Agreement and the transactions contemplated hereby be submitted to SKAN's
shareholders for approval at a special meeting of such shareholders and, except
for the adoption of this Agreement by the requisite vote of SKAN's shareholders,
no other corporate proceedings on the part of SKAN (except for matters related
to setting the date, time, place and record date for the special meeting) are
necessary to approve this Agreement or the Option Agreement or to consummate the
transactions contemplated hereby or thereby. This Agreement has been, and the
Option Agreement will be, duly and validly executed and delivered by SKAN and
(assuming due authorization, execution and delivery by BSB Bancorp of this
Agreement and by BSB Bancorp of the Option Agreement) will constitute valid and
binding obligations of SKAN, enforceable against SKAN in accordance with their
terms, except as enforcement may be limited by general principles of equity
whether applied in a court of law or a court of equity and by bankruptcy,
insolvency and similar laws affecting creditors' rights and remedies generally.
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(b) Skaneateles Bank has full corporate power and authority to
execute and deliver the Bank Merger Agreement and to consummate the transactions
contemplated thereby. The execution and delivery of the Bank Merger Agreement
and the consummation of the transactions contemplated thereby have been duly and
validly approved by the Board of Directors of Skaneateles Bank and by SKAN as
the sole shareholder of Skaneateles Bank. No other corporate proceedings on the
part of Skaneateles Bank will be necessary to consummate the transactions
contemplated thereby. The Bank Merger Agreement, upon execution and delivery by
Skaneateles Bank, will be duly and validly executed and delivered by Skaneateles
Bank and will (assuming due authorization, execution and delivery by BSB Bank)
constitute a valid and binding obligation of Skaneateles Bank, enforceable
against Skaneateles Bank in accordance with its terms, except as enforcement may
be limited by general principles of equity whether applied in a court of law or
a court of equity and by bankruptcy, insolvency and similar laws affecting
creditors' rights and remedies generally.
(c) Neither the execution and delivery of this Agreement and the
Option Agreement by SKAN or the Bank Merger Agreement by Skaneateles Bank, nor
the consummation by SKAN or Skaneateles Bank, as the case may be, of the
transactions contemplated hereby or thereby, nor compliance by SKAN or
Skaneateles Bank with any of the terms or provisions hereof or thereof, will (i)
violate any provision of the Certificate of Incorporation or Bylaws of SKAN or
the Certificate of Incorporation or Bylaws of Skaneateles Bank, or (ii) assuming
that the consents and approvals referred to in Section 3.4 hereof are duly
obtained, (x) violate any Laws (as defined in Section 9.13) applicable to SKAN
or Skaneateles Bank or any of their respective properties or assets, or (y)
violate, conflict with, result in a breach of any provision of or the loss of
any benefit under, constitute a default (or an event which, with notice or lapse
of time, or both, would constitute a default) under, result in the termination
of or a right of termination or cancellation under, accelerate the performance
required by, or result in the creation of any lien, pledge, security interest,
charge or other encumbrance upon any of the respective properties or assets of
SKAN or Skaneateles Bank under, any of the terms, conditions or provisions of
any note, bond, mortgage, indenture, deed of trust, license, lease, agreement or
other instrument or obligation to which SKAN or Skaneateles Bank is a party, or
by which they or any of their respective properties or assets may be bound or
affected.
3.4 CONSENTS AND APPROVALS.
(a) Except for (i) the filing of applications, notices and waiver
requests, as applicable, as to the Merger and the Bank Merger with the FRB under
the BHCA, the FDIC under the Bank Merger Act and the Superintendent of Banks of
New York State (the "New York Superintendent"), and approval of the foregoing
applications, notices and waiver requests, (ii) the filing of any required
applications or notices with the FDIC and the New York Superintendent as to the
subsidiary activities of Skaneateles Bank which become subsidiaries of BSB Bank
and approval of such applications and notices, (iii) the filing with the
Securities and Exchange Commission ("SEC") of a registration statement on Form
S-4 to register the shares of BSB Bancorp Common Stock to be issued in
connection with the Merger (including the shares of BSB Bancorp Common Stock
that may be issued upon the exercise of the options referred to in Section 1.5
hereof), which will include the proxy statement/prospectus to be used in
soliciting the approval of SKAN's shareholders at a special meeting to be held
in connection with this Agreement and the transactions contemplated hereby (the
"Proxy Statement/Prospectus"), (iv) the approval of this Agreement by the
requisite vote of the shareholders of SKAN, (v) the filing of the Certificate of
Merger with the Secretary of State of Delaware pursuant to the DGCL, (vi) the
filings required by the Bank Merger Agreement, and (vii) such filings,
authorizations or approvals as may be set forth in Section 3.4 of the SKAN
Disclosure Schedule, no consents or approvals of or filings or registrations
with any court, administrative agency or commission or other governmental
authority or instrumentality (each a "Governmental Entity"), or with any third
party are necessary in connection with (1) the execution and delivery by SKAN of
this Agreement and the Option Agreement, (2) the consummation by SKAN
8
of the Merger and the other transactions contemplated hereby, (3) the execution
and delivery by Skaneateles Bank of the Bank Merger Agreement, (4) the
consummation by SKAN of the Option Agreement; and (5) the consummation by
Skaneateles Bank of the Bank Merger and the transactions contemplated thereby,
except, in each case, for such consents, approvals or filings, the failure of
which to obtain will not have a material adverse effect on the ability of BSB
Bancorp to consummate the transactions contemplated hereby.
(b) SKAN hereby represents to BSB Bancorp that it has no knowledge
of any reason why approval or effectiveness of any of the applications, notices
or filings referred to in Section 3.4(a) cannot be obtained or granted on a
timely basis.
3.5 LOAN PORTFOLIO; REPORTS.
(a) Except as set forth at Section 3.5(a) of the SKAN Disclosure
Schedule, as of December 31, 1998 and thereafter through and including the date
of this Agreement, neither SKAN nor Skaneateles Bank is a party to any written
or oral loan agreement, note or borrowing arrangement (including, without
limitation, leases, credit enhancements, commitments, guarantees and
interest-bearing assets) (collectively, "Loans"), with any Affiliated Person (as
defined in Section 9.13).
(b) SKAN and Skaneateles Bank have timely filed all reports,
registrations and statements, together with any amendments required to be made
with respect thereto, that they were required to file since December 31, 1993
with (i) the FRB, (ii) the FDIC, (iii) the New York Superintendent and any other
state banking commissions or any other state regulatory authority (each a "State
Regulator"), (iv) the SEC and (v) any other self-regulatory organization ("SRO")
(collectively "Regulatory Agencies"). Except for normal examinations conducted
by a Regulatory Agency in the regular course of the business of SKAN and its
Subsidiaries, no Governmental Entity is conducting, or has conducted, any
proceeding or investigation into the business or operations of SKAN or
Skaneateles Bank since December 31, 1993, other than as set forth at Section
3.5(b) of the SKAN Disclosure Schedule.
3.6 FINANCIAL STATEMENTS; EXCHANGE ACT FILINGS; BOOKS AND RECORDS.
SKAN has previously delivered to BSB Bancorp true, correct and
complete copies of the consolidated balance sheets of SKAN and its Subsidiaries
as of December 31 for the fiscal years 1996 and 1997 and the related
consolidated statements of earnings, shareholders' equity and cash flows for the
fiscal years 1995 through 1997, inclusive, as reported in SKAN's Annual Report
on Form 10-K for the fiscal year ended December 31, 1997 filed with the SEC
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), in
each case accompanied by the audit report of KPMG LLP, independent auditors, and
the interim financial statements of SKAN as of and for the nine months ended
September 30, 1997 and 1998, as included in the SKAN quarterly report on Form
10-Q for the period ended September 30, 1998 as filed with the SEC. The
financial statements referred to in this Section 3.6 (including the related
notes, where applicable) fairly present, and the financial statements referred
to in Section 6.8 hereof will fairly present (subject, in the case of the
unaudited statements, to recurring audit adjustments normal in nature and
amount), the results of the consolidated operations and consolidated financial
condition of SKAN and its Subsidiaries for the respective fiscal periods or as
of the respective dates therein set forth; each of such statements (including
the related notes, where applicable) comply, and the financial statements
referred to in Section 6.8 hereof will comply, with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto and each of such statements (including the related notes, where
applicable) has been, and the financial statements referred to in Section 6.8
hereof will be prepared in accordance with generally accepted accounting
principles consistently applied during the periods involved ("GAAP"), except in
each case as indicated in such
9
statements or in the notes thereto or, in the case of unaudited statements, as
permitted by Form 10-Q. SKAN's Annual Report on Form 10-K for the fiscal year
ended December 31, 1997 and all reports filed under Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act since December 31, 1995 comply in all material
respects with the appropriate requirements for such reports under the Exchange
Act, and SKAN has previously delivered or made available to BSB Bancorp true,
correct and complete copies of such reports. SKAN has made all filings required
of it under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act. The books
and records of SKAN and Skaneateles Bank have been, and are being, maintained in
all material respects in accordance with GAAP and any other applicable legal and
accounting requirements.
3.7 BROKER'S FEES.
Neither SKAN nor any SKAN Subsidiary nor any of their respective officers
or directors has employed any broker or finder or incurred any liability for any
broker's fees, commissions or finder's fees in connection with any of the
transactions contemplated by this Agreement, the Bank Merger Agreement or the
Option Agreement, except that SKAN has engaged, and will pay a fee or commission
to ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇, Inc. ("MBD") in accordance with the terms of a
letter agreement between MBD and SKAN, dated December 17, 1998, a true, complete
and correct copy of which is attached at Section 3.7 of the SKAN Disclosure
Schedule.
3.8 ABSENCE OF CERTAIN CHANGES OR EVENTS.
(a) Except as set forth at Section 3.8 of the SKAN Disclosure
Schedule, or as disclosed in SKAN's Annual Report on Form 10-K for the fiscal
year ended December 31, 1997, since December 31, 1997 (i) neither SKAN nor any
of its Subsidiaries has incurred any material liability, except as contemplated
by the Agreement or in the ordinary course of their business consistent with
their past practices, and (ii) no event has occurred which has had, or is likely
to have, individually or in the aggregate, a Material Adverse Effect (as defined
in Section 9.13) on SKAN
(b) Except for (i) the organization of SPCC, and (ii) the
transactions contemplated by this Agreement, since December 31, 1997 SKAN and
its Subsidiaries have carried on their respective businesses in the ordinary and
usual course consistent with their past practices.
3.9 LEGAL PROCEEDINGS.
(a) Except as set forth at Section 3.9 of the SKAN Disclosure
Schedule, neither SKAN nor any of its Subsidiaries is a party to any, and there
are no pending or to the knowledge of SKAN, threatened, legal, administrative,
arbitration or other proceedings, claims, actions or governmental or regulatory
investigations of any nature against SKAN or any of its Subsidiaries in which,
to the knowledge of SKAN, there is a reasonable probability of any material
recovery against or other material effect upon SKAN or any of its Subsidiaries
or which challenge the validity or propriety of the transactions contemplated by
this Agreement, the Bank Merger Agreement or the Option Agreement as to which
there is a reasonable probability of success.
(b) There is no injunction, order, judgment, decree, or regulatory
restriction (other than regulations of general application) imposed upon SKAN,
any of its Subsidiaries or the assets of SKAN or any of its Subsidiaries.
3.10 TAXES AND TAX RETURNS.
(a) Each of SKAN and its Subsidiaries has duly filed all Tax Returns
required to be filed by it on or prior to the date hereof (all such returns
being accurate and complete in all
10
material respects) and has duly paid or made provision on the financial
statements referred to in Sections 3.6 and 6.8 hereof in accordance with GAAP
for the payment of all material Taxes which have been incurred or are due or
claimed to be due from it by Taxing Authorities on or prior to the date hereof
other than Taxes (a) which (x) are not yet delinquent or (y) are being contested
in good faith and set forth in Section 3.10 of the SKAN Disclosure Schedule and
(b) which have not been finally determined. All liability with respect to the
Tax Returns of SKAN and its Subsidiaries has been satisfied for all years to and
including 1997. The Internal Revenue Service ("IRS") has not notified SKAN of,
or otherwise asserted, that there are any material deficiencies with respect to
the federal income Tax Returns of SKAN subsequent to 1993. There are no material
disputes pending, or claims asserted for, Taxes or assessments upon SKAN or any
of its Subsidiaries, nor has SKAN or any of its Subsidiaries been requested to
give any currently effective waivers extending the statutory period of
limitation applicable to any federal or state income Tax Return for any period.
In addition, Tax Returns which are accurate and complete in all material
respects have been filed by SKAN and its Subsidiaries for all periods for which
returns were due with respect to income tax withholding, Social Security and
unemployment taxes and the amounts shown on such Tax Returns to be due and
payable have been paid in full or adequate provision therefor in accordance with
GAAP has been included by SKAN in the financial statements referred to in
Sections 3.6 and 6.8 hereto. All SKAN Tax Returns relating to federal income
taxes have been examined by the relevant Taxing Authorities, or closed without
audit by applicable statutes of limitations, and all deficiencies proposed as a
result of such examinations have been paid or settled, for all periods before
and including the taxable year ended 1992. Neither SKAN nor any of its
Subsidiaries has consented to any waiver or extension of any statute of
limitations with respect to any Tax. Neither SKAN nor any SKAN Subsidiary has
made an election under Section 341(f) of the IRC. SKAN has provided or made
available to BSB Bancorp complete and correct copies of its Tax Returns and all
material correspondence and documents, if any, relating directly or indirectly
to taxes for each taxable year or other relevant period as to which the
applicable statute of limitations has not run on the date hereof. For this
purpose, "correspondence and documents" include, without limitation, amended Tax
Returns, claims for refunds, notices from Taxing Authorities of proposed changes
or adjustments to Taxes or Tax Returns, consents to assessment or collection of
Taxes, acceptances of proposed adjustments, closing agreements, rulings and
determination letters and requests therefor, and all other written
communications to or from Taxing Authorities relating to any material Tax
liability of SKAN or any SKAN Subsidiary. SKAN will not be a "foreign person" as
that term is used in ss. 1.1445-2 of the Treasury Regulations promulgated under
the IRC. Skaneateles Bank is not a "United States real property holding
corporation" within meaning of ss. 897 of the IRC and was not a "United States
real propertY holding corporation" on any "determination date" (as defined in
ss. 1.897-2(c) of such Regulations) that occurred during any relevant period.
(b) For all taxable years commencing with December 31, 1998, SPCC
has been subject to taxation as a real estate investment trust within the
meaning of Section 856 of the Code ("REIT") and has satisfied all requirements
to qualify as a REIT for such years, (B) has operated, and intends to continue
to operate, in such a manner as to qualify as a REIT for the tax year ending
December 31, 1999, and (C) has not taken or omitted to take any action which
would reasonably be expected to result in a challenge to its status as a REIT,
and to SKAN's knowledge, no such challenge is pending or threatened. SPCC does
not hold any asset (x) the disposition of which would be subject to rules
similar to Section 1374 of the Code as a result of an election under IRS Notice
88-19 or (y) that is subject to a consent filed pursuant to Section 341(f) of
the Code and the regulations thereunder.
(c) For purposes of this Agreement:
"Tax" means any tax (including any income tax, capital gains tax,
value-added tax, sales tax, property tax, gift tax, or estate tax), levy,
assessment, tariff, duty (including any customs duty), deficiency, or other fee,
and any related charge or amount (including any fine, penalty, interest, or
addition to tax), imposed, assessed, or collected by or under the authority of
any Taxing
11
Authority or payable pursuant to any tax-sharing agreement or any other contract
relating to the sharing or payment of any such tax, levy, assessment, tariff,
duty, deficiency, or fee.
"Tax Return" means any return (including any information return),
report, statement, schedule, notice, form, or other document or information
filed with or submitted to, or required to be filed with or submitted to, any
Taxing Authority in connection with the determination, assessment, collection,
or payment of any Tax or in connection with the administration, implementation,
or enforcement of or compliance with any law, regulation or other legal
requirement relating to any Tax.
"Taxing Authority" means any:
(i) nation, state, county, city, town, village, district, or
other jurisdiction of any nature;
(ii) federal, state, local, municipal, foreign, or other
government;
(iii) governmental or quasi-governmental authority of any
nature (including any governmental agency, branch, department, official, or
entity and any court or other tribunal);
(iv) multi-national organization or body; or
(v) body exercising, or entitled to exercise, any
administrative, executive, judicial, legislative, police, regulatory, or taxing
authority or power of any nature.
3.11 EMPLOYEE PLANS.
(a) Section 3.11(a) of the SKAN Disclosure Schedule sets forth a
true and complete list of each employee benefit plan (within the meaning of
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")), arrangement or agreement that is maintained or contributed to as of
the date of this Agreement, or that has within the last six years been
maintained or contributed to, by SKAN or any of its Subsidiaries or any other
entity which together with SKAN would be deemed a "single employer" within the
meaning of Section 4001 of ERISA or Code Sections 414(b), (c) or (m) or under
which SKAN or any such Subsidiary has any liability (collectively, the "Plans").
(b) SKAN has heretofore delivered or made available to BSB Bancorp
true, correct and complete copies of each of the Plans and all related
documents, including but not limited to (i) the actuarial report for such Plan
(if applicable) for each of the last five years, (ii) the most recent
determination letter from the IRS (if applicable) for such Plan, (iii) the
current summary plan description and any summaries of material modification,
(iv) all annual reports (Form 5500 series) for each Plan filed for the preceding
five plan years, (v) all agreements with fiduciaries and service providers
relating to the Plan, and (vi) all substantive correspondence relating to any
such Plan addressed to or received from the Internal Revenue Service, the
Department of Labor, the Pension Benefit Guaranty Corporation or any other
governmental agency.
(c) Except as set forth at Section 3.11(c) of the SKAN Disclosure
Schedule, (i) Each of the Plans has been operated and administered in all
material respects in compliance with applicable Laws, including but not limited
to ERISA and the Code, (ii) each of the Plans intended to be "qualified" within
the meaning of Section 401(a) of the Code is so qualified, (iii) with respect to
each Plan which is subject to Title IV of ERISA, the present value of accrued
benefits under such Plan, based upon the actuarial assumptions used for funding
purposes in the most recent actuarial report prepared by such Plan's actuary
with respect to such Plan, did not, as of its latest valuation
12
date, exceed the then current value of the assets of such Plan allocable to such
accrued benefits, (iv) no Plan provides benefits, including, without limitation,
death or medical benefits (whether or not insured), with respect to current or
former employees of SKAN or any SKAN Subsidiary beyond their retirement or other
termination of service, other than (w) coverage mandated by applicable Law, (x)
death benefits or retirement benefits under a Plan that is an "employee pension
plan," as that term is defined in Section 3(2) of ERISA, (y) deferred
compensation benefits under a Plan that are accrued as liabilities on the books
of SKAN or any SKAN Subsidiary, or (z) benefits the full cost of which is borne
by the current or former employee (or his beneficiary), (v) no liability under
Title IV of ERISA has been incurred by SKAN or any SKAN Subsidiary that has not
been satisfied in full, and no condition exists that presents a material risk of
SKAN or any SKAN Subsidiary incurring a material liability thereunder, (vi) no
Plan is a "multi employer pension plan," as such term is defined in Section
3(37) of ERISA, (vii) all contributions or other amounts payable by SKAN or any
SKAN Subsidiary as of the Effective Time with respect to each Plan and all other
liabilities of each such entity with respect to each Plan, in respect of current
or prior plan years have been paid or accrued in accordance with generally
accepted accounting practices and Section 412 of the Code, (viii) neither SKAN
nor any SKAN Subsidiary has engaged in a transaction in connection with which
SKAN or any SKAN Subsidiary could be subject to either a civil penalty assessed
pursuant to Section 409 or 502(i) of ERISA or a tax imposed pursuant to Section
4975 or 4976 of the Code, (ix) to the knowledge of SKAN, there are no pending,
threatened or anticipated claims (other than routine claims for benefits) by, on
behalf of or against any of the plans or any trusts related thereto, and (x) all
Plans (other than Plans providing for the payment of benefits from the general
assets of SKAN or any SKAN Subsidiary) could be terminated as of the Effective
Time without material liability; (xi) no Plan, program, agreement or other
arrangement, either individually or collectively, provides for any payment by
SKAN or any SKAN Subsidiary that would not be deductible under Code Sections
162(a)(1), 162(m) or 404 or that would constitute a "parachute payment" within
the meaning of Code Section 280G; (xii) no "accumulated funding deficiency" as
defined in Section 302(a)(2) of ERISA or Section 412 of the Code, whether or not
waived, and no "unfunded current liability" as determined under Section 412(l)
of the Code exists with respect to any Plan; and (xiii) no Plan has experienced
a "reportable event" (as such term is defined in Section 4043(b) of ERISA) that
is not subject to an administrative or statutory waiver from the reporting
requirement.
3.12 CERTAIN CONTRACTS.
(a) Except as set forth at Section 3.12 of the SKAN Disclosure
Schedule, neither SKAN nor any of its Subsidiaries is a party to or bound by any
contract, arrangement or commitment (i) with respect to the employment of any
directors, officers, employees or consultants, (ii) which, upon the consummation
of the transactions contemplated by this Agreement or the Bank Merger Agreement
will (either alone or upon the occurrence of any additional acts or events)
result in any payment (whether of severance pay or otherwise) becoming due from
BSB Bancorp, SKAN, Skaneateles Bank, BSB Bank or any of their respective
Subsidiaries to any director, officer or employee thereof, (iii) which
materially restricts the conduct of any line of business by SKAN or Skaneateles
Bank, (iv) with or to a labor union or guild (including any collective
bargaining agreement) or (v) except as set forth on Section 3.12(a)(v) of the
SKAN Disclosure Schedule, any of the benefits of which will be increased, or the
vesting of the benefits of which will be accelerated by the occurrence of any of
the transactions contemplated by this Agreement or the Bank Merger Agreement, or
the value of any of the benefits of which will be calculated on the basis of any
of the transactions contemplated by this Agreement or the Bank Merger Agreement
(including as to this clause (v), any stock option plan, stock appreciation
rights plan, restricted stock plan or stock purchase plan). Except as set forth
at Section 3.12 of the SKAN Disclosure Schedule, there are no employment,
consulting and deferred compensation agreements to which SKAN or any of its
Subsidiaries is a party. Section 3.12(a) of the SKAN Disclosure Schedule sets
forth a list of all material contracts (as defined in Item 601(b)(10) of
Regulation S-K) of SKAN and its Subsidiaries. Each contract, arrangement or
commitment of the type described in this Section 3.12(a), whether or
13
not set forth in Section 3.12(a) of the SKAN Disclosure Schedule, is referred to
herein as a "SKAN Contract," and neither SKAN nor any of its Subsidiaries has
received notice of, nor do any executive officers of such entities know of, any
violation of any SKAN Contract.
(b) (i) Each SKAN Contract is valid and binding and in full force
and effect, (ii) SKAN and each of its Subsidiaries has in all material respects
performed all obligations required to be performed by it to date under each SKAN
Contract, and (iii) no event or condition exists which constitutes or, after
notice or lapse of time or both, would constitute, a material default on the
part of SKAN or any of its Subsidiaries under any such SKAN Contract.
3.13 AGREEMENTS WITH REGULATORY AGENCIES.
Neither SKAN nor Skaneateles Bank is subject to any cease-and-desist or
other order issued by, or is a party to any written agreement, consent agreement
or memorandum of understanding with, or has adopted any board resolutions at the
request of (each, whether or not set forth on Section 3.13 of the SKAN
Disclosure Schedule, a "Regulatory Agreement") any Governmental Entity that
restricts the conduct of its business or that in any manner relates to its
capital adequacy, its credit policies, its management or its business, nor has
SKAN or Skaneateles Bank been advised by any Governmental Entity that it is
considering issuing or requesting any Regulatory Agreement.
3.14 STATE TAKEOVER LAWS; CERTIFICATE OF INCORPORATION.
The Board of Directors of SKAN has approved the offer of BSB Bancorp to
enter into this Agreement, the Bank Merger Agreement and the Option Agreement,
and has authorized and approved this Agreement, the Bank Merger Agreement and
the Option Agreement, and the consummation of the transactions contemplated
hereby and thereby, such that under applicable law and SKAN's Certificate of
Incorporation the only vote of SKAN shareholders necessary to consummate the
transactions contemplated hereby (including the Bank Merger and issuance under
the Option Agreement) is the approval of two-thirds of the outstanding shares of
SKAN Common Stock. Assuming that the consents and approvals referred to in
Section 3.4 hereof are obtained, the Board of Directors of SKAN has conclusively
determined that the provisions of Articles 10 and 12 of the Certificate of
Incorporation of SKAN does not apply to this Agreement, the Bank Merger
Agreement or the Option Agreement, or any of the transactions contemplated
hereby or thereby.
3.15 ENVIRONMENTAL MATTERS.
(a) Each of SKAN and the SKAN Subsidiaries is in compliance in all
material respects with all applicable federal and state laws and regulations
relating to pollution or protection of the environment (including without
limitation, laws and regulations relating to emissions, discharges, releases and
threatened releases of Hazardous Materials (as hereinafter defined), or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Hazardous Materials;
(b) There is no suit, claim, action, proceeding, investigation or
notice pending or, to the knowledge of SKAN, threatened (or, to the knowledge of
SKAN, past or present actions or events that could form the basis of any such
suit, claim, action, proceeding, investigation or notice), in which SKAN or any
SKAN Subsidiary has been or, with respect to threatened suits, claims, actions,
proceedings, investigations or notices may be, named as a defendant (i) for
alleged material noncompliance (including by any predecessor), with any
environmental law, rule or regulation or (ii) relating to any material release
or threatened release into the environment of any Hazardous Material, occurring
at or on a site owned, leased or operated by SKAN or any SKAN Subsidiary, or to
the knowledge of SKAN, relating to any material release or threatened release
into the environment
14
of any Hazardous Material, occurring at or on a site not owned, leased or
operated by SKAN or any SKAN Subsidiary;
(c) During the period of SKAN's or any SKAN Subsidiary's ownership
or operation of any of its properties, there has not been any material release
of Hazardous Materials in, on, under or affecting any such property.
(d) To the knowledge of SKAN, neither SKAN nor any SKAN Subsidiary
has made or participated in any loan to any person who is subject to any suit,
claim, action, proceeding, investigation or notice, pending or threatened, with
respect to (i) any alleged material noncompliance as to any property securing
such loan with any environmental law, rule or regulation, or (ii) the release or
the threatened release into the environment of any Hazardous Material at a site
owned, leased or operated by such person on any property securing such loan.
(e) For purposes of this section 3.15, the term "Hazardous Material"
means any hazardous waste, petroleum product, polychlorinated biphenyl,
chemical, pollutant, contaminant, pesticide, radioactive substance, or other
toxic material, or other material or substance (in each such case, other than
small quantities of such substances in retail containers) regulated under any
applicable environmental or public health statute, law, ordinance, rule or
regulation.
3.16 RESERVES FOR LOSSES.
All reserves or other allowances for possible losses reflected in SKAN's
most recent financial statements referred to in Section 3.6 complied with all
Laws and are adequate under GAAP. Neither SKAN nor Skaneateles Bank has been
notified by the FRB, the FDIC, the New York Superintendent or SKAN's independent
auditor, in writing or otherwise, that such reserves are inadequate or that the
practices and policies of SKAN or Skaneateles Bank in establishing such reserves
and in accounting for delinquent and classified assets generally fail to comply
with applicable accounting or regulatory requirements, or that the FRB, the
FDIC, the New York Superintendent or SKAN's independent auditor believes such
reserves to be inadequate or inconsistent with the historical loss experience of
SKAN or Skaneateles Bank. SKAN has previously furnished BSB Bancorp with a
complete list of all extensions of credit and other real estate owned ("OREO")
that have been classified by any bank or trust examiner (regulatory or internal)
as other loans specially mentioned, special mention, substandard, doubtful,
loss, classified or criticized, credit risk assets, concerned loans or words of
similar import. SKAN agrees to update such list no less frequently than monthly
after the date of this Agreement until the earlier of the Closing Date or the
date that this Agreement is terminated in accordance with Section 8.1. All OREO
held by SKAN or Skaneateles Bank is being carried net of reserves at the lower
of cost or net realizable value.
3.17 PROPERTIES AND ASSETS.
Section 3.17 of the SKAN Disclosure Schedule lists (i) all real property
owned by SKAN and each SKAN Subsidiary; (ii) each real property lease, sublease
or installment purchase arrangement to which SKAN or any SKAN Subsidiary is a
party; (iii) a description of each contract for the purchase, sale, or
development of real estate to which SKAN or any SKAN Subsidiary is a party; and
(iv) all items of SKAN's or any SKAN Subsidiary's tangible personal property and
equipment with a book value of $10,000 or more or having any annual lease
payment of $10,000 or more. Except for (a) items reflected in SKAN's
consolidated financial statements as of December 31, 1997 referred to in Section
3.6 hereof, (b) exceptions to title that do not interfere materially with SKAN's
or any SKAN Subsidiary's use and enjoyment of owned or leased real property
(other than OREO), (c) liens for current real estate taxes not yet delinquent,
or being contested in good faith, properly reserved against (and reflected on
the financial statements referred to in Section 3.6 above), (d) properties and
assets sold or transferred in the ordinary course of business consistent with
past practices since
15
December 31, 1997, and (e) items listed in Section 3.17 of the SKAN Disclosure
Schedule, SKAN and each SKAN Subsidiary have good and, as to owned real
property, marketable and insurable title to all their properties and assets,
free and clear of all liens, claims, charges and other encumbrances. SKAN and
each SKAN Subsidiary, as lessees, have the right under valid and subsisting
leases to occupy, use and possess all property leased by them, and neither SKAN
nor any SKAN Subsidiary has experienced any material uninsured damage or
destruction with respect to such properties since December 31, 1997. All
properties and assets used by SKAN and each SKAN Subsidiary are in good
operating condition and repair suitable for the purposes for which they are
currently utilized and comply in all material respects with all Laws relating
thereto now in effect or scheduled to come into effect. SKAN and each SKAN
Subsidiary enjoy peaceful and undisturbed possession under all leases for the
use of all property under which they are the lessees, and all leases to which
SKAN or any SKAN Subsidiary is a party are valid and binding obligations in
accordance with the terms thereof. Neither SKAN nor any SKAN Subsidiary is in
material default with respect to any such lease, and there has occurred no
default by SKAN or any SKAN Subsidiary or event which with the lapse of time or
the giving of notice, or both, would constitute a material default under any
such lease. There are no Laws, conditions of record, or other known impediments
which interfere with the intended use by SKAN or any SKAN Subsidiary of any of
the property owned, leased, or occupied by them.
3.18 INSURANCE.
Section 3.18 of the SKAN Disclosure Schedule contains a true, correct and
complete list of all insurance policies and bonds maintained by SKAN and any
SKAN Subsidiary, including the name of the insurer, the policy number, the type
of policy and any applicable deductibles, and all such insurance policies and
bonds (or other insurance policies and bonds that have, from time to time, in
respect of the nature of the risks insured against and amount of coverage
provided, been substantially similar in kind and amount to that customarily
carried by parties similarly situated who own properties and engage in
businesses substantially similar to that of SKAN and any SKAN Subsidiary) are in
full force and effect and have been in full force and effect. As of the date
hereof, neither SKAN nor any SKAN Subsidiary has received any notice of
cancellation or amendment of any such policy or bond or is in default under any
such policy or bond, no coverage thereunder is being disputed and all material
claims thereunder have been filed in a timely fashion. The existing insurance
carried by SKAN and SKAN Subsidiaries is and will continue to be, in respect of
the nature of the risks insured against and the amount of coverage provided,
substantially similar in kind and amount to that customarily carried by parties
similarly situated who own properties and engage in businesses substantially
similar to that of SKAN and the SKAN Subsidiaries, and is sufficient for
compliance by SKAN and the SKAN Subsidiaries with all requirements of Law and
agreements to which SKAN or any of the SKAN Subsidiaries is subject or is a
party. True, correct and complete copies of all such policies and bonds
reflected at Section 3.18 of the SKAN Disclosure Schedule, as in effect on the
date hereof, have been delivered to BSB Bancorp.
3.19 COMPLIANCE WITH APPLICABLE LAWS.
Each of SKAN and any SKAN Subsidiary has complied in all material respects
with all Laws applicable to it or to the operation of its business. Neither SKAN
nor any SKAN Subsidiary has received any notice of any material alleged or
threatened claim, violation, or liability under any such Laws that has not
heretofore been cured and for which there is no remaining liability.
3.20 LOANS.
As of the date hereof:
(a) All loans owned by SKAN or any SKAN Subsidiary, or in which SKAN
or any
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SKAN Subsidiary has an interest, comply in all material respects with all Laws,
including, but not limited to, applicable usury statutes, underwriting and
recordkeeping requirements and the Truth in Lending Act, the Equal Credit
Opportunity Act, and the Real Estate Procedures Act, and other applicable
consumer protection statutes and the regulations thereunder.
(b) All loans owned by SKAN or any SKAN Subsidiary, or in which SKAN
or any SKAN Subsidiary has an interest, have been made or acquired by SKAN in
accordance with board of director-approved loan policies. Each of SKAN and each
SKAN Subsidiary holds mortgages contained in its loan portfolio for its own
benefit to the extent of its interest shown therein; such mortgages evidence
liens having the priority indicated by their terms, subject, as of the date of
recordation or filing of applicable security instruments, only to such
exceptions as are discussed in attorneys' opinions regarding title or in title
insurance policies in the mortgage files relating to the loans secured by real
property or are not material as to the collectability of such loans; and all
loans owned by SKAN and each SKAN Subsidiary are with full recourse to the
borrowers (except as set forth at Section 3.20(b) of the SKAN Disclosure
Schedule), and each of SKAN and any SKAN Subsidiary has taken no action which
would result in a waiver or negation of any rights or remedies available against
the borrower or guarantor, if any, on any loan. All applicable remedies against
all borrowers and guarantors are enforceable except as may be limited by
bankruptcy, insolvency, moratorium or other similar laws affecting creditors'
rights and except as may be limited by the exercise of judicial discretion in
applying principles of equity. Except as set forth at Section 3.20(b) of the
SKAN Disclosure Schedule, all loans purchased or originated by SKAN or any SKAN
Subsidiary and subsequently sold by SKAN or any SKAN Subsidiary have been sold
without recourse to SKAN or any SKAN Subsidiary and without any liability under
any yield maintenance or similar obligation. True, correct and complete copies
of loan delinquency reports as of December 31, 1998 prepared by SKAN and each
SKAN Subsidiary, which reports include all loans delinquent or otherwise in
default, have been furnished to BSB Bancorp. True, correct and complete copies
of the currently effective lending policies and practices of SKAN and each SKAN
Subsidiary also have been furnished to BSB Bancorp.
(c) Except as set forth at Section 3.20(c) of the Disclosure
Schedule each outstanding loan participation sold by SKAN or any SKAN Subsidiary
was sold with the risk of non-payment of all or any portion of that underlying
loan to be shared by each participant (including SKAN or any SKAN Subsidiary)
proportionately to the share of such loan represented by such participation
without any recourse of such other lender or participant to SKAN or any SKAN
Subsidiary for payment or repurchase of the amount of such loan represented by
the participation or liability under any yield maintenance or similar
obligation. SKAN and any SKAN Subsidiary have properly fulfilled in all material
respects its contractual responsibilities and duties in any loan in which it
acts as the lead lender or servicer and has complied in all material respects
with its duties as required under applicable regulatory requirements.
(d) SKAN and each SKAN Subsidiary have properly perfected or caused
to be properly perfected all security interests, liens, or other interests in
any collateral securing any loans made by it.
3.21 AFFILIATES.
Each director, executive officer and other person who is an "affiliate"
(for purposes of Rule 145 under the Securities Act of 1933, as amended (the
"Securities Act"), and for purposes of qualifying the Merger for
"pooling-of-interests" accounting treatment) of SKAN is listed at Section 3.21
of the SKAN Disclosure Schedule, and except as indicated thereon each such
person has delivered to BSB Bancorp, concurrently with the execution of this
Agreement, a stockholder agreement in the form of Exhibit D hereto (the "SKAN
Stockholder Agreement"). The SKAN Stockholder Agreement has been duly and
validly executed and delivered by each person that is a
17
party thereto and, assuming due authorization, execution and delivery by BSB
Bancorp, constitutes the valid and binding obligation of such person,
enforceable against such person in accordance with their terms, except as
enforcement may be limited by general principles of equity whether applied in a
court of law or a court of equity and by bankruptcy, insolvency and similar laws
affecting creditors' rights and remedies generally.
3.22 OWNERSHIP OF BSB BANCORP COMMON STOCK.
Except as set forth at Section 3.23 of the SKAN Disclosure Schedule,
neither SKAN nor, to its knowledge, any of its directors, officers or affiliates
(as used above in Section 3.21) (i) beneficially own, directly or indirectly, or
(ii) is a party to any agreement, arrangement or understanding for the purpose
of acquiring, holding, voting or disposing of, in each case, any shares of
outstanding capital stock of BSB Bancorp (other than those agreements,
arrangements or understandings specifically contemplated hereby).
3.23 FAIRNESS OPINION.
SKAN has received an oral opinion from MBD to the effect that, in its
opinion as of the date hereof, the Exchange Ratio is fair to SKAN's shareholders
from a financial point of view (the "MBD Fairness Opinion"). MBD has agreed to
furnish a written opinion to such effect (the "MBD Fairness Opinion") for
inclusion, and has consented to such inclusion, in the Registration Statement
(as hereinafter defined).
3.24 SKAN DRIP AND PURCHASE PLAN.
Except as disclosed in Section 3.24 of the SKAN Disclosure Schedule, SKAN
has taken such action as is necessary to terminate the SKAN DRIP and the
Purchase Plan such that from the date hereof, no issuances or purchases of SKAN
Common Stock under the SKAN DRIP or the Purchase Plan shall be permitted, nor
shall any other obligations thereunder accrue.
3.25 ACCOUNTING MATTERS.
Neither SKAN nor, to its knowledge, any of its affiliates (as such term is
defined in Rule 145 under the Securities Act), has through the date of this
Agreement taken or agreed to take any action that would prevent SKAN from
accounting for the business combination contemplated by this Agreement as a
"pooling of interests".
3.26 ACCURACY OF INFORMATION.
No representation or warranty by SKAN in this Agreement or any exhibit,
schedule or certificate delivered or to be delivered by SKAN to BSB Bancorp
pursuant hereto contains, or when so delivered will contain, any untrue
statement of a material fact, or omits, or when so delivered will omit, a
material fact necessary in order to make the statement(s) of facts contained
herein or therein (in light of the circumstances under which they were made) not
misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BSB BANCORP
BSB Bancorp, on behalf of itself and its wholly owned subsidiary, BSB Bank
hereby makes the following representations and warranties to SKAN as set forth
in this Article IV, each of which is
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being relied upon by SKAN as a material inducement to enter into and perform
this Agreement.
4.1 CORPORATE ORGANIZATION.
(a) BSB Bancorp is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware. BSB Bancorp has
the corporate power and authority to own or lease all of its properties and
assets and to carry on its business as it is now being conducted, and is duly
licensed or qualified to do business in each jurisdiction in which the nature of
the business conducted by it or the character or location of the properties and
assets owned or leased by it makes such licensing or qualification necessary.
BSB Bancorp is duly registered as a bank holding company with the FRB under the
BHCA. The Certificate of Incorporation and Bylaws of BSB Bancorp, copies of
which have previously been made available to SKAN, are true, correct and
complete copies of such documents as in effect as of the date of this Agreement.
(b) BSB Bank is a New York-chartered commercial duly organized and
validly existing and in good standing under the laws of New York. The deposit
accounts of BSB Bank are insured by the FDIC through the BIF to the fullest
extent permitted by law, and all premiums and assessments required in connection
therewith have been paid by BSB Bank. BSB Bank has the corporate power and
authority to own or lease all of its properties and assets and to carry on
business as is now being conducted, and is duly licensed or qualified to do
business in each jurisdiction in which the nature of the business conducted by
it or the character or location of the properties and assets owned or leased by
it makes such licensing or qualification necessary. The Charter and Bylaws of
BSB Bank, copies of which have previously been made available to SKAN, are true,
correct and complete copies of such documents as in effect as of the date of
this Agreement.
4.2 CAPITALIZATION.
(a) The authorized capital stock of BSB Bancorp consists of (i)
30,000,000 shares of BSB Bancorp Common Stock, of which 8,646,977 shares were
outstanding (net of 2,604,180 treasury shares) at January 8, 1999 and (ii)
2,500,000 shares of serial preferred stock, par value $.01 per share ("BSB
Bancorp Preferred Stock"), none of which were outstanding at January 8, 1999. At
such date, there were 697,351 shares of BSB Bancorp Common Stock reserved for
issuance pursuant to options. All of the issued and outstanding shares of BSB
Bancorp Common Stock have been duly authorized and validly issued and are fully
paid, nonassessable and free of preemptive rights, with no personal liability
attaching to the ownership thereof, and upon issuance in accordance with the
terms hereof, the Shares will be duly authorized and validly issued, and fully
paid, nonassessable and free of preemptive rights. As of the date of this
Agreement, except as set forth above, BSB Bancorp does not have and is not bound
by any outstanding subscriptions, options, warrants, calls, commitments or
agreements of any character calling for the purchase or issuance of any shares
of BSB Bancorp Common Stock or BSB Bancorp Preferred Stock or any other equity
securities of BSB Bancorp or any securities presenting the right to purchase or
otherwise receive any shares of BSB Bancorp Common Stock or BSB Bancorp
Preferred Stock, other than pursuant to the Rights Agreement.
(b) All of the outstanding shares of common stock of BSB Bank are
owned by BSB Bancorp free and clear of all liens, charges, encumbrances and
security interests whatsoever, and all of such shares are duly authorized and
validly issued and fully paid, nonassessable and free of preemptive rights, with
no personal liability attaching to ownership thereof.
4.3 AUTHORITY; NO VIOLATION.
(a) BSB Bancorp has full corporate power and authority to execute
and deliver
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this Agreement and the Option Agreement and to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this Agreement
and the Option Agreement and the consummation of the transactions contemplated
hereby have been duly and validly approved by the Board of Directors of BSB
Bancorp. No other corporate proceedings on the part of BSB Bancorp are necessary
to approve this Agreement or the Option Agreement or to consummate the
transactions contemplated hereby or thereby. This Agreement has been, and the
Option Agreement will be, duly and validly executed and delivered by BSB Bancorp
and (assuming due authorization, execution and delivery by SKAN) will constitute
valid and binding obligations of BSB Bancorp, enforceable against BSB Bancorp in
accordance with their terms, except as enforcement may be limited by general
principles of equity whether applied in a court of law or a court of equity and
by bankruptcy, insolvency and similar law affecting creditors' rights and
remedies generally.
(b) BSB Bank has full corporate power and authority to execute and
deliver the Bank Merger Agreement and to consummate the transactions
contemplated thereby. The execution and delivery of the Bank Merger Agreement
and the consummation of the transactions contemplated thereby have been duly and
validly approved by the Board of Directors of BSB Bank and by BSB Bancorp as the
sole shareholder of BSB Bank. All corporate proceedings on the part of BSB Bank
necessary to consummate the transactions contemplated thereby have been taken.
The Bank Merger Agreement, upon execution and delivery by BSB Bank, will be duly
and validly executed and delivered by BSB Bank and will (assuming due
authorization, execution and delivery by Skaneateles Bank) constitute a valid
and binding obligation of BSB Bank, enforceable against BSB Bank in accordance
with its terms, except as enforcement may be limited by general principles of
equity whether applied in a court of law or a court of equity and by bankruptcy,
insolvency and similar laws affecting creditors' rights and remedies generally.
(c) Neither the execution and delivery of this Agreement or the
Option Agreement by BSB Bancorp or the Bank Merger Agreement by BSB Bank, nor
the consummation by BSB Bancorp or BSB Bank, as the case may be, of the
transactions contemplated hereby or thereby, nor compliance by BSB Bancorp or
BSB Bank with any of the terms or provisions hereof or thereof, will (i) violate
any provision of the Certificate of Incorporation or Bylaws of BSB Bancorp or
the Charter or Bylaws of BSB Bank, as the case may be, or (ii) assuming that the
consents and approvals referred to in Section 4.4 are duly obtained, (x) violate
any Laws applicable to BSB Bancorp, BSB Bank or any of their respective
properties or assets, or (y) violate, conflict with, result in a breach of any
provision of or the loss of any benefit under, constitute a default (or an event
which, with notice or lapse of time, or both, would constitute a default) under,
result in the termination of or a right of termination or cancellation under,
accelerate the performance required by, or result in the creation of any lien,
pledge, security interest, charge or other encumbrance upon any of the
respective properties or assets of BSB Bancorp or BSB Bank under any of the
terms, conditions or provisions of any note, bond, mortgage, indenture, deed of
trust, license, lease, agreement or other instrument or obligation to which BSB
Bancorp or BSB Bank is a party, or by which they or any of their respective
properties or assets may be bound or affected.
4.4 REGULATORY APPROVALS.
(a) Except for (i) the filing of applications, notices and waiver
requests, as applicable, as to the Merger and the Bank Merger with the FRB and
the New York Superintendent and approval of such applications, notices and
waiver requests, (ii) the filing of any required applications or notices with
the FDIC and the New York Superintendent as to the subsidiary activities of
Skaneateles Bank which become service corporation or operating subsidiaries of
BSB Bank and approval of such applications and notices, (iii) the filing with
the SEC of a registration statement on Form S-4 to register the shares of BSB
Bancorp Common Stock to be issued in connection with the Merger (including the
shares of BSB Bancorp Common Stock that may be issued upon the exercise of the
options referred to in Section 1.5 hereof), which will include the Proxy
20
Statement/Prospectus, (iv) the approval of this Agreement by the requisite vote
of the shareholders of SKAN, (v) the filing of the Certificate of Merger with
the Secretary of State of Delaware pursuant to the DGCL, (vi) the filings
required by the Bank Merger Agreement, and (vii) such filings and approvals as
are required to be made or obtained under the securities or "Blue Sky" laws of
various states or with Nasdaq (or such other exchange as may be applicable) in
connection with the issuance of the shares of BSB Bancorp Common Stock pursuant
to this Agreement, no consents or approvals of or filings or registrations with
any Governmental Entity or with any third party are necessary in connection with
(1) the execution and delivery by BSB Bancorp of this Agreement and the Option
Agreement, (2) the consummation by BSB Bancorp of the Merger and the other
transactions contemplated hereby, (3) the execution and delivery by BSB Bank of
the Bank Merger Agreement, and (4) the consummation by BSB Bank of the
transactions contemplated by the Bank Merger Agreement except for such consents,
approvals or filings the failure of which to obtain will not have a material
adverse effect on the ability of SKAN to consummate the transactions
contemplated thereby.
(b) BSB Bancorp hereby represents to SKAN that it has no knowledge
of any reason why approval or effectiveness of any of the applications, notices
or filings referred to in Section 4.4(a) cannot be obtained or granted on a
timely basis.
4.5 FINANCIAL STATEMENTS; EXCHANGE ACT FILINGS; BOOKS AND RECORDS.
(a) BSB Bancorp's consolidated balance sheets as of December 31,
1996 and 1997 and the related consolidated statements of income, changes in
shareholders' equity and cash flows are as reported in BSB Bancorp's Annual
Report on Form 10-K for the fiscal year ended December 31, 1997 filed with the
SEC under the Exchange Act, in each case accompanied by the audit report of BSB
Bancorp's independent auditors, and the interim financial statements of BSB
Bancorp as of and for the nine months ended September 30, 1997 and 1998, are as
included in BSB Bancorp's quarterly report on Form 10-Q for the period ended
September 30, 1998, as filed with the SEC. The financial statements referred to
in this Section 4.5 (including the related notes, where applicable) fairly
present, and the financial statements referred to in Section 6.8 hereof will
fairly present (subject, in the case of the unaudited statements, to recurring
audit adjustments normal in nature and amount), the results of the consolidated
operations and consolidated financial condition of BSB Bancorp and its
Subsidiaries for the respective fiscal periods or as of the respective dates
therein set forth; each of such statements (including the related notes, where
applicable) comply, and the financial statements referred to in Section 6.8
hereof will comply, with applicable accounting requirements and with the
published rules and regulations of the SEC with respect thereto; and each of
such statements (including the related notes, where applicable) has been, and
the financial statements referred to in Section 6.8 hereof will be, prepared in
accordance with GAAP consistently applied during the periods involved, except as
indicated in the notes thereto or, in the case of unaudited statements, as
permitted by Form 10-Q. BSB Bancorp's Annual Report on Form 10-K for the fiscal
year ended December 31, 1997 and all subsequently filed reports under Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act comply in all material respects
with the appropriate requirements for such reports under the Exchange Act, and
BSB Bancorp has previously delivered to SKAN true, correct and complete copies
of such reports. BSB Bancorp has made all filings required of it under Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act. The books and records of BSB
Bancorp and BSB Bank have been, and are being, maintained in all material
respects in accordance with GAAP and any other applicable legal and accounting
requirements and reflect only actual transactions.
(b) Neither BSB Bancorp nor any of its Subsidiaries is an
"affiliate" (as such term is defined in DGCL ss.203(c) (1)) or an "associate"
(as such term is defined in DGCL ss.203(c) (2)) of SKAN.
4.6 AGREEMENTS WITH REGULATORY AGENCIES.
21
Neither BSB Bancorp nor any of its affiliates is subject to any
cease-and-desist or other order issued by, or is a party to any written
agreement, consent agreement or memorandum of understanding with, or has adopted
any board resolutions at the request of any Governmental Entity that restricts
the conduct of its business or that in any manner relates to its capital
adequacy, its credit policies, its management or its business, nor has BSB
Bancorp, nor BSB Bank been advised by any Governmental Entity that it is
considering issuing or requesting any Regulatory Agreement.
4.7 LEGAL PROCEEDINGS.
(a) Neither BSB Bancorp nor any of its Subsidiaries is a party to
any, and there are no pending or, to BSB Bancorp's knowledge, threatened, legal,
administrative, arbitration or other proceedings, claims, actions or
governmental or regulatory investigations of any nature against BSB Bancorp or
any of its Subsidiaries in which, to BSB Bancorp's knowledge, there is a
reasonable probability of any material recovery against or other material effect
upon BSB Bancorp or any of its Subsidiaries or which challenge the validity or
propriety of the transactions contemplated by this Agreement, the Bank Merger
Agreement or the Option Agreement as to which there is a reasonable probability
of success.
(b) There is no injunction, order, judgment, decree, or regulatory
restriction (other than regulations of general application) imposed upon BSB
Bancorp, any of its Subsidiaries or the assets of BSB Bancorp or any of its
Subsidiaries.
4.8 COMPLIANCE WITH APPLICABLE LAWS.
Each of BSB Bancorp and any BSB Bancorp Subsidiary has complied in all
material respects with all Laws applicable to it or to the operation of its
business. Neither BSB Bancorp nor any BSB Bancorp Subsidiary has received any
notice of any material alleged or threatened claim, violation, or liability
under any such Laws that has not heretofore been cured and for which there is no
remaining liability.
4.9 ACCOUNTING MATTERS.
Neither BSB Bancorp nor, to its knowledge, any of its affiliates (as such
term is defined in Rule 145 under the Securities Act), has through the date of
this Agreement taken or agreed to take any action that would prevent BSB Bancorp
from accounting for the business combination contemplated by this Agreement as a
"pooling of interests".
4.10 OWNERSHIP OF SKAN COMMON STOCK.
Except for BSB Bancorp's right to acquire share of SKAN Common Stock
pursuant to the Option Agreement, neither BSB Bancorp nor any of its affiliates
or associates beneficially owns, directly or indirectly, more than 5% of the
outstanding shares of SKAN Common Stock.
4.11 INSURANCE OF DEPOSITS.
Deposit accounts in BSB Bank are insured by the Federal Deposit Insurance
Corporation in accordance with the Federal Deposit Insurance Act ("FDIA"). BSB
Bank has paid all assessments and filed all reports required under the FDIA and
is in compliance with all regulatory requirements imposed in connection with the
insurance of its deposits.
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ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 COVENANTS OF SKAN
During the period from the date of this Agreement and continuing until the
Effective Time, except as expressly contemplated or permitted by this Agreement,
the Bank Merger Agreement or the Option Agreement or with the prior written
consent of BSB Bancorp, SKAN and each SKAN Subsidiary shall carry on their
respective businesses in the ordinary course consistent with past practices and
consistent with prudent banking practices. SKAN will use its reasonable efforts
to (x) preserve its business organization and that of each SKAN Subsidiary
intact, (y) keep available to itself and BSB Bancorp the present services of the
employees of SKAN and each SKAN Subsidiary and (z) preserve for itself and BSB
Bancorp the goodwill of the customers of SKAN and each SKAN Subsidiary and
others with whom business relationships exist. Without limiting the generality
of the foregoing, and except as set forth in Section 5.1 of the SKAN Disclosure
Schedule or as otherwise contemplated by this Agreement or consented to by BSB
Bancorp in writing, SKAN shall not, and shall not permit any SKAN Subsidiary to:
(a) declare or pay any dividends on, or make other distributions in
respect of, any of its capital stock (except for the payment of regular
quarterly cash dividends by SKAN not to exceed $.07 per share on the SKAN Common
Stock with declaration, record and payment dates corresponding to the quarterly
dividends paid by SKAN during its fiscal year ended December 31, 1998 and except
that any SKAN Subsidiary may declare and pay dividends and distributions to
SKAN; provided, however, that SPCC may make any required distributions to
holders of its capital stock within 30 days after the end of calendar year 1998
pursuant to a distribution declared and payable to holders of record prior to
the end of calendar year 1998; provided further, however, that under no
circumstances shall SKAN declare, set aside or pay any dividends if it would
result in the holders of SKAN Common Stock receiving more than four cash
dividend payments in fiscal 1998, when considered with anticipated BSB Bancorp
dividends based on past practice, nor shall SKAN be prohibited from declaring,
setting aside or paying dividends consistent herewith if the Closing Date is
such that holders of SKAN Common Stock would receive fewer than four cash
dividends in 1999, when considered with anticipated BSB Bancorp dividends based
on past practice, it being understood that the parties hereto intend for SKAN to
pay its regular quarterly cash dividends to shareholders as to any completed
fiscal quarter prior to the Effective Time;
(b) (i) split, combine or reclassify any shares of its capital stock
or issue, authorize or propose the issuance of any other securities in respect
of, in lieu of or in substitution for shares of its capital stock except upon
the exercise or fulfillment of rights or options issued or existing pursuant to
the SKAN Stock Plans in accordance with their present terms, all to the extent
outstanding and in existence on the date of this Agreement, and except pursuant
to the Option Agreement, or (ii) repurchase, redeem or otherwise acquire (except
for the acquisition of Trust Account Shares and DPC Shares, as such terms are
defined in Section 1.4(c) hereof), any shares of the capital stock of SKAN or
any SKAN Subsidiary, or any securities convertible into or exercisable for any
shares of the capital stock of SKAN or any SKAN Subsidiary;
(c) issue, deliver or sell, or authorize or propose the issuance,
delivery or sale of, any shares of its capital stock or any securities
convertible into or exercisable for, or any rights, warrants or options to
acquire, any such shares, or enter into any agreement with respect to any of the
foregoing, other than (i) the issuance of SKAN Common Stock pursuant to stock
options or similar rights to acquire SKAN Common Stock granted pursuant to the
SKAN Stock Plans and outstanding prior to the date of this Agreement, in each
case in accordance with their present terms, (ii) pursuant to the Option
Agreement and (iii) the issuance of 10% Cumulative Preferred Stock in accordance
with the subscriptions therefor accepted by SPCC through January 7, 1999;
23
(d) amend its Certificate of Incorporation, Bylaws or other similar
governing documents;
(e) authorize or permit any of its officers, directors, employees or
agents to, directly or indirectly, (i) solicit, initiate or encourage any
inquiries relating to, or the making of any proposal from, (ii) engage in
discussions or negotiations with or (iii) provide any information to, any
person, entity or group (other than BSB Bancorp) concerning any Acquisition
Transaction (as defined below). Notwithstanding the foregoing, SKAN may enter
into discussions or negotiations or provide information in connection with a
possible Acquisition Transaction if the Board of Directors of SKAN, based upon a
written opinion of counsel, reasonably determines in the exercise of its
fiduciary duty that such discussions or negotiations must be commenced or such
information must be furnished. SKAN shall promptly communicate to BSB Bancorp
the material terms of any proposal, whether written or oral, which it may
receive in respect of any such Acquisition Transaction and whether it is having
discussions or negotiations with a third party about an Acquisition Transaction
with, or providing information in connection with, or which may lead to, an
Acquisition Transaction with a third party. SKAN will promptly cease and cause
to be terminated any existing activities, discussions or negotiations previously
conducted with any parties other than BSB Bancorp with respect to any of the
foregoing. As used in this Agreement, Acquisition Transaction shall mean any
offer, proposal or expression of interest relating to (I) any tender or exchange
offer, (II) merger, consolidation or other business combination involving SKAN
or any SKAN Subsidiary, or (III) the acquisition in any manner of a substantial
equity interest in, or a substantial portion of the assets out of the ordinary
course of business of, SKAN or Skaneateles Bank other than the transactions
contemplated or permitted by this Agreement, the Bank Merger Agreement and the
Option Agreement;
(f) make capital expenditures aggregating in excess of $10,000;
(g) enter into any new line of business;
(h) acquire or agree to acquire, by merging or consolidating with,
or by purchasing an equity interest in or the assets of, or by any other manner,
any business or any corporation, partnership, association or other business
organization or division thereof or otherwise acquire any assets, other than in
connection with foreclosures, settlements in lieu of foreclosure or troubled
loan or debt restructurings, or in the ordinary course of business consistent
with prudent banking practices;
(i) take any action that is intended or may reasonably be expected
to result in any of its representations and warranties set forth in this
Agreement being or becoming untrue or in any of the conditions to the Merger set
forth in Article VII not being satisfied, or in a violation of any provision of
this Agreement or the Bank Merger Agreement, except, in every case, as may be
required by applicable law;
(j) change its methods of accounting in effect at December 31, 1997
except as required by changes in GAAP or regulatory accounting principles as
concurred to by BSB Bancorp's independent auditors;
(k) (i) except as required by applicable law or to maintain
qualification pursuant to the Code, adopt, amend, renew or terminate any Plan or
any agreement, arrangement, plan or policy between SKAN or any SKAN Subsidiary
and one or more of its current or former directors or officers, (ii) increase in
any manner the compensation of any employee or director or pay any benefit not
required by any plan or agreement as in effect as of the date hereof (including,
without limitation, the granting of stock options, stock appreciation rights,
restricted stock, restricted stock units or performance units or shares), (iii)
enter into, modify or renew any contract, agreement, commitment or arrangement
providing for the payment to any director, officer or employee of
24
compensation or benefits, (iv) hire any new employee at an annual compensation
in excess of $20,000, (v) pay expenses of any employees or directors for
attending conventions or similar meetings which conventions or meetings are held
after the date hereof, (vi) promote to a rank of vice president or more senior
any employee, or (vii) pay any retention or other bonuses to any employees;
(l) except for short-term borrowings with a maturity of one year or
less in the ordinary course of business consistent with past practices, incur
any indebtedness for borrowed money, assume, guarantee, endorse or otherwise as
an accommodation become responsible for the obligations of any other individual,
corporation or other entity;
(m) sell, purchase, enter into a lease, relocate, open or close any
banking or other office, or file an application pertaining to such action with
any Governmental Entity;
(n) make any equity investment or commitment to make such an
investment in real estate or in any real estate development project, other than
in connection with foreclosure, settlements in lieu of foreclosure, or troubled
loan or debt restructuring, in the ordinary course of business consistent with
past banking practices;
(o) make any new loans to, modify the terms of any existing loan to,
or engage in any other transactions (other than routine banking transactions)
with, any Affiliated Person of SKAN or any SKAN Subsidiary other than transfers
of loans to SPCC;
(p) make any investment, or incur deposit liabilities, other than in
the ordinary course of business consistent with past practices, including
deposit pricing, and which would not change the risk profile of Skaneateles Bank
based on its existing deposit and lending policies or make any equity
investments;
(q) purchase any loans or sell, purchase or lease any real property,
except for the sale of real estate that is the subject of a casualty loss or
condemnation or the sale of OREO on a basis consistent with past practices;
(r) originate (i) any loans except in accordance with existing
Skaneateles Bank lending policies, (ii) conforming residential mortgage loans in
excess of $200,000, (iii) unsecured consumer loans in excess of $25,000, (iv)
commercial business loans in excess of $100,000 as to any loan or $100,000 in
the aggregate as to related loans, or loans to related persons, (v) commercial
real estate first mortgage loans in excess of $100,000 as to any loan or
$100,000 in the aggregate as to related loans, or loans to related persons, or
(vi) land acquisition loans to borrowers who intend to construct a residence on
such land in excess of the lesser of 75% of the appraised value of such land or
$25,000, except in each case for loans for which written applications have been
received by Skaneateles Bank as of the date hereof (each of which is set forth
at Section 5.1(r) of the SKAN Disclosure Schedule);
(s) make any investments in any equity or derivative securities, or
any debt securities issued or guaranteed by any municipality or otherwise exempt
to any extent from federal, state or local taxation, or engage in any forward
commitment, futures transaction, financial options transaction, hedging or
arbitrage transaction or covered asset trading activities or make any
investments in any investment security with a maturity of greater than one year;
(t) sell or purchase any mortgage loan servicing rights other than
selling servicing rights associated with FHA loans; or
(u) agree or commit to do any of the actions set forth in (a) - (t)
above.
The consent of BSB Bancorp to any action by SKAN or any SKAN Subsidiary that is
not permitted
25
by any of the preceding paragraphs shall be evidenced by a writing signed by the
Chairman, President or any Senior Vice President of BSB Bancorp.
5.2 MERGER COVENANTS.
Notwithstanding that SKAN believes that it has established all reserves
and taken all provisions for possible loan losses required by GAAP and
applicable laws, rules and regulations, SKAN recognizes that BSB Bancorp may
have adopted different loan, accrual and reserve policies (including loan
classifications and levels of reserves for possible loan losses). In that
regard, and in general, from and after the date of this Agreement to the
Effective Time, SKAN and BSB Bancorp shall consult and cooperate with each other
in order to formulate the plan of integration for the Merger, including, among
other things, with respect to conforming, based upon such consultation, SKAN's
loan, accrual and reserve policies to those policies of BSB Bancorp to the
extent appropriate.
5.3 COMPLIANCE WITH ANTITRUST LAWS.
Each of BSB Bancorp and SKAN shall use its reasonable best efforts to
resolve objections, if any, which may be asserted with respect to the Merger
under antitrust laws, including, without limitation, the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act.
In the event a suit is threatened or instituted challenging the Merger as
violative of antitrust laws, each of BSB Bancorp and SKAN shall use its
reasonable best efforts to avoid the filing of, or resist or resolve such suit.
BSB Bancorp and SKAN shall use their reasonable best efforts to take such action
as may be required: (a) by the Antitrust Division of the Department of Justice
or the Federal Trade Commission in order to resolve such objections as either of
them may have to the Merger under antitrust laws, or (b) by any federal or state
court of the United States, in any suit brought by a private party or
governmental entity challenging the Merger as violative of antitrust laws, in
order to avoid the entry of, or to effect the dissolution of, any injunction,
temporary restraining order, or other order which has the effect of preventing
the consummation of the Merger. Reasonable best efforts shall not include, among
other things and to the extent BSB Bancorp so desires, the willingness of BSB
Bancorp to accept an order agreeing to the divestiture, or the holding separate,
of any assets of BSB Bancorp or SKAN.
5.4 TERMINATION OF 401(K) PLAN AND ESOP.
As soon as practicable after the date of this Agreement, but in no event
less than 24 hours prior to the Effective Time, SKAN and each SKAN Subsidiary
shall adopt all corporate resolutions necessary to: (i) freeze participation and
benefit accruals under all Plans that are intended to the "qualified" under Code
section 401 (the "Qualified Plans"), effective no later than 24 hours prior to
the Effective Time; and (ii) terminate such Qualified Plans, effective no later
than 24 hours prior to the Effective Time. As soon as practicable after the date
of this Agreement, but in no event less than 24 hours prior to the Effective
Time, SKAN and each SKAN Subsidiary shall contribute to each Qualified Plan all
contributions, including but not limited to employee deferrals and related
matching contributions, required or necessary under the terms of such Qualified
Plan covering the benefits that have accrued as of the Effective Time.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 REGULATORY MATTERS.
(a) Upon the execution and delivery of this Agreement, BSB Bancorp
and SKAN (as to information to be included therein pertaining to SKAN) shall
promptly cause to be prepared and filed with the SEC a registration statement of
BSB Bancorp on Form S-4, including the Proxy
26
Statement/Prospectus (the "Registration Statement") for the purpose of
registering the BSB Bancorp Common Stock to be issued in the Merger, and for
soliciting the approval of this Agreement and the Merger by the shareholders of
SKAN. BSB Bancorp and SKAN shall use their reasonable best efforts to have the
Registration Statement declared effective by the SEC as soon as possible after
the filing. The parties shall cooperate in responding to and considering any
questions or comments from the SEC staff regarding the information contained in
the Registration Statement. If at any time after the Registration Statement is
filed with the SEC, and prior to the Closing Date, any event relating to SKAN is
discovered by SKAN which should be set forth in an amendment of, or a supplement
to, the Registration Statement, including the Prospectus/Proxy Statement, SKAN
shall promptly inform BSB Bancorp, and shall furnish BSB Bancorp with all
necessary information relating to such event whereupon BSB Bancorp shall
promptly cause an appropriate amendment to the Registration Statement to be
filed with the SEC. Upon the effectiveness of such amendment, each of BSB
Bancorp and SKAN (if prior to the meeting of shareholders pursuant to Section
6.3 hereof) will take all necessary action as promptly as practicable to permit
an appropriate amendment or supplement to be transmitted to its shareholders
entitled to vote at such meeting. If at any time after the Registration
Statement is filed with the SEC, and prior to the Closing Date, any event
relating to BSB Bancorp is discovered by BSB Bancorp which should be set forth
in an amendment of, or a supplement to, the Registration Statement, including
the Prospectus/Proxy Statement, BSB Bancorp shall promptly inform SKAN, and BSB
Bancorp shall promptly cause an appropriate amendment to the Registration
Statement to be filed with the SEC. Upon the effectiveness of such amendment,
each of BSB Bancorp and SKAN (if prior to the meeting of shareholders pursuant
to Section 6.3 hereof) will take all necessary action as promptly as practicable
to permit an appropriate amendment or supplement to be transmitted to its
shareholders entitled to vote at such meeting. BSB Bancorp shall also use
reasonable efforts to obtain all necessary state securities law or "Blue Sky"
permits and approvals required to carry out the transactions contemplated by
this Agreement and the Bank Merger Agreement and SKAN shall furnish all
information concerning SKAN and the holders of SKAN Common Stock as may be
reasonably requested in connection with any such action.
(b) The parties hereto shall cooperate with each other and use their
best efforts to promptly prepare and file all necessary documentation, to effect
all applications, notices, petitions and filings, and to obtain as promptly as
practicable all permits, consents, approvals and authorizations of all third
parties and Governmental Entities which are necessary or advisable to consummate
the transactions contemplated by this Agreement (including without limitation
the Merger and the Bank Merger). SKAN and BSB Bancorp shall have the right to
review in advance, and to the extent practicable each will consult the other on,
in each case subject to applicable laws relating to the exchange of information,
all the information relating to SKAN or BSB Bancorp, as the case may be, which
appears in any filing made with, or written materials submitted to, any third
party or any Governmental Entity in connection with the transactions
contemplated by this Agreement; provided, however, that nothing contained herein
shall be deemed to provide either party with a right to review any information
provided to any Governmental Entity on a confidential basis in connection with
the transactions contemplated hereby. In exercising the foregoing right, each of
the parties hereto shall act reasonably and as promptly as practicable. The
parties hereto agree that they will consult with each other with respect to the
obtaining of all permits, consents, approvals and authorizations of all third
parties and Governmental Entities necessary or advisable to consummate the
transactions contemplated by this Agreement and each party will keep the other
apprised of the status of matters relating to contemplation of the transactions
contemplated herein.
(c) SKAN shall, upon request, furnish BSB Bancorp with all
information concerning SKAN and its directors, officers and shareholders and
such other matters as may be reasonably necessary or advisable in connection
with the Registration Statement or any other statement, filing, notice or
application made by or on behalf of BSB Bancorp to any Governmental Entity in
connection with the Merger or the other transactions contemplated by this
Agreement.
(d) SKAN shall provide all information relating to SKAN and its
Subsidiaries
27
necessary for inclusion in the Registration Statement, and such information
shall not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in light of the
circumstances in which they are made, not misleading. Each of SKAN and BSB
Bancorp shall cause the portions of the Registration Statement relating to it or
any of its Subsidiaries to comply in all material respects with the provisions
of the Securities Act, Exchange Act and the rules and regulations thereunder.
(e) BSB Bancorp and SKAN shall promptly advise each other upon
receiving any communication from any Governmental Entity whose consent or
approval is required for consummation of the transactions contemplated by this
Agreement which causes such party to believe that there is a reasonable
likelihood that any Requisite Regulatory Approval (defined in Section 7.1(c)
hereof) will not be obtained or that the receipt of any such approval will be
materially delayed.
6.2 ACCESS TO INFORMATION.
(a) Upon reasonable notice and subject to applicable Laws relating
to the exchange of information, SKAN shall accord to the officers, employees,
accountants, counsel and other representatives of BSB Bancorp, access, during
normal business hours during the period prior to the Effective Time, to all its
and its Subsidiaries' properties, books, contracts, commitments and records and,
during such period, SKAN shall make available to BSB Bancorp (i) a copy of each
report, schedule, registration statement and other document filed or received by
it (including Skaneateles Bank) during such period pursuant to the requirements
of federal securities laws or federal or state banking laws and (ii) all other
information concerning its (including Skaneateles Bank) business, properties and
personnel as BSB Bancorp may reasonably request. BSB Bancorp shall receive
notice of all meetings of the SKAN and Skaneateles Bank Board of Directors and
any committees thereof, and of any management committees (in all cases, at least
as timely as all SKAN and Skaneateles Bank, as the case may be, representatives
to such meetings are required to be provided notice). Up to two representatives
of BSB Bancorp shall be permitted to attend all meetings of the Board of
Directors (except for the portion of such meetings which relate to the Merger or
an Acquisition Transaction or such other matters deemed confidential
("Confidential Matters") of SKAN or Skaneateles Bank, as the case may be) and
such meetings of committees of the Board of Directors and management of SKAN and
Skaneateles Bank which BSB Bancorp desires. BSB Bancorp will hold all such
information in confidence to the extent required by, and in accordance with, the
provisions of that certain confidentiality agreement between BSB Bancorp and
SKAN dated January 15, 1999 (the "Confidentiality Agreement").
(b) No investigation by either of the parties or their respective
representatives shall affect the representations and warranties of the other set
forth herein.
(c) SKAN shall provide BSB Bancorp with true, correct and complete
copies of all financial and other information provided to directors of SKAN and
Skaneateles Bank in connection with meetings of their Boards of Directors or
committees thereof.
6.3 SHAREHOLDER MEETING.
SKAN shall take all steps necessary to duly call, give notice of,
convene and hold a meeting of its shareholders within 35 days after the
Registration Statement becomes effective for the purpose of voting upon the
approval of this Agreement and the Merger (the "Special Meeting"). Management
and the Board of Directors of SKAN shall recommend to SKAN's shareholders
approval of this Agreement, including the Merger, and the transactions
contemplated hereby, together with any matters incident thereto, and shall
oppose any third party proposal or other action that is inconsistent with this
Agreement or the consummation of the transactions contemplated hereby,
28
unless the Board of Directors of SKAN reasonably determines, based upon the
written advice of SKAN's legal counsel, that such recommendation or opposition,
as the case may be, would constitute a breach of the exercise of its fiduciary
duty. SKAN and BSB Bancorp shall coordinate and cooperate with respect to the
foregoing matters.
6.4 LEGAL CONDITIONS TO MERGER.
Each of BSB Bancorp and SKAN shall use their reasonable best efforts (a)
to take, or cause to be taken, all actions necessary, proper or advisable to
comply promptly with all legal requirements which may be imposed on such party
with respect to the Merger and, subject to the conditions set forth in Article
VII hereof, to consummate the transactions contemplated by this Agreement and
(b) to obtain (and to cooperate with the other party to obtain) any consent,
authorization, order or approval of, or any exemption by, any Governmental
Entity and any other third party which is required to be obtained by SKAN or BSB
Bancorp in connection with the Merger and the other transactions contemplated by
this Agreement.
6.5 STOCK EXCHANGE LISTING.
BSB Bancorp shall cause the shares of BSB Bancorp Common Stock to be
issued in the Merger and pursuant to options referred to herein to be approved
for quotation on the Nasdaq Stock Market National Market System (or such other
exchange on which the BSB Bancorp Common Stock has become listed, or approved
for listing) prior to or at the Effective Time.
6.6 EMPLOYEES AND ADVISORY DIRECTORS.
(a) To the extent permissible under the applicable provisions of the
Code and ERISA, for purposes of crediting periods of service for eligibility to
participate under employee pension benefit plans (within the meaning of ERISA
Section 3(2)) maintained by BSB Bancorp or BSB Bank, as applicable, and in the
case of BSB Bank's 401(k) Plan, for purposes of vesting, individuals who are
employees of SKAN or any SKAN Subsidiary at the Effective Time will be credited
with periods of service with SKAN or any SKAN Subsidiary before the Effective
Time as if such service had been with BSB Bancorp or BSB Bank, as applicable;
provided, however, that no such service credit shall be given for purposes of
benefit accrual and (except in the case of BSB Bank' s 401(k) Plan) vesting.
Similar service credit shall also be given by BSB Bancorp or BSB Bank in
determining eligibility to participate in other retirement, vacation and similar
benefits provided to such employees of SKAN or Skaneateles Bank after the
Merger.
(b) After the Effective Time, employees of SKAN or its Subsidiaries
who continue to be employed by BSB Bancorp or any of its Subsidiaries, will be
eligible for benefits that BSB Bancorp or such Subsidiary, as the case may be,
provides to its employees generally and on substantially the same basis to such
employees. BSB Bancorp will cause BSB Bank to use its reasonable best efforts to
offer a position of at-will employment to each of the non-officer and
non-managerial branch office personnel of SKAN or its Subsidiaries who is in
good standing as of the Effective Time (a "SKAN Employee") at or within 25 miles
of his or her place of employment as of the Effective Time. In addition, BSB
Bancorp will cause BSB Bank to use its reasonable best efforts in connection
with reviewing applicants for employment positions to give SKAN Employees who
are not offered positions at the Effective Time the same consideration as is
afforded BSB Bancorp or BSB Bank employees for such position in accordance with
its policies in effect at such time. BSB Bancorp or BSB Bank will use their
reasonable best efforts to provide reasonable and appropriate on-the-job
training to SKAN Employees whose positions are eliminated as a result of the
Merger or the Bank Merger. For purposes of the severance policies of BSB Bank
(as now in effect or hereafter amended), employees of SKAN and its Subsidiaries
who become employees of BSB Bancorp or BSB Bank as a
29
result of the Merger or the Bank Merger (other than any such employee who is a
party to a written agreement with BSB Bancorp or BSB Bank relating to employment
or severance, including any such agreement with SKAN or any Subsidiary that is
assumed as a result of the Merger or the Bank Merger) shall be credited with
periods of service with SKAN and such Subsidiaries as if such service had been
with BSB Bancorp or BSB Bank, as appropriate. BSB Bancorp will or will cause BSB
Bank to (i) give credit to employees of SKAN and its Subsidiaries, with respect
to the satisfaction of the limitations as to pre-existing condition exclusions
and waiting periods for participation and coverage which are applicable under
the welfare benefit plans of BSB Bancorp or BSB Bank, equal to the credit that
any such employee had received as of the Effective Time towards the satisfaction
of any such limitations and waiting periods under the comparable welfare benefit
plans of SKAN or its Subsidiaries.
(c) Following the Merger, BSB Bancorp agrees that it shall honor the
existing written deferred compensation, employment, change of control and
severance contracts with directors and employees of SKAN and its Subsidiaries
that are specifically listed at Section 3.12(a) of the SKAN Disclosure Schedule;
provided, however, that in making the foregoing agreement, except as otherwise
required by law, BSB Bancorp will honor such contracts only to the extent that,
as represented at Section 3.11 hereof, none of such deferred compensation,
employment, change of control and severance contracts, nor any other Plan,
program, agreement or other arrangement, either individually or collectively,
provides for any payment by SKAN or any Subsidiary that would not be deductible
under Code Sections 162(a)(1), 162(m) or 404 or that would constitute a
"parachute payment" within the meaning of Code Section 280G.
(d) Following the Merger, BSB Bancorp shall offer to any Skaneateles
Bank employee who, as of the Bank Merger, has a title at BSB Bank of
Administrative Vice President or higher, a Change of Control Severance Agreement
in the form offered to other such senior officers of BSB Bank.
(e) The non-employee directors of Skaneateles Bank serving
immediately prior to the Effective Time will be invited to serve on an advisory
board to BSB Bank after the Bank Merger for a period of at least 12 months. Such
advisory directors each will be paid an annual retainer for such service of
$2,000.
6.7 INDEMNIFICATION.
(a) In the event of any threatened or actual claim, action, suit,
proceeding or investigation, whether civil, criminal or administrative, in which
any person who is now, or has been at any time prior to the date of this
Agreement, or who becomes prior to the Effective Time, a director or officer or
employee of SKAN (the "Indemnified Parties") is, or is threatened to be, made a
party based in whole or in part on, or arising in whole or in part out of, or
pertaining to (i) the fact that he is or was a director, officer or employee of
SKAN or any of their respective predecessors or (ii) this Agreement or any of
the transactions contemplated hereby, whether in any case asserted or arising
before or after the Effective Time, the parties hereto agree to cooperate and
defend against and respond thereto to the extent permitted by applicable law and
the Certificate of Incorporation and Bylaws of SKAN. It is understood and agreed
that after the Effective Time, BSB Bancorp shall indemnify and hold harmless, as
and to the fullest extent permitted by applicable law and the Certificate of
Incorporation and Bylaws of BSB Bancorp as in effect on the date hereof (subject
to change as required by law), each such Indemnified Party against any losses,
claims, damages, liabilities, costs, expenses (including reasonable attorney's
fees and expenses in advance of the final disposition of any claim, suit,
proceeding or investigation to each Indemnified Party to the fullest extent
permitted by law upon receipt of any undertaking required by applicable law),
judgments, fines and amounts paid in settlement in connection with any such
threatened or actual claim, action,
30
suit, proceeding or investigation, and in the event of any such threatened or
actual claim, action, suit, proceeding or investigation (whether asserted or
arising before or after the Effective Time), the Indemnified Parties may retain
counsel reasonably satisfactory to BSB Bancorp; provided, however, that (1) BSB
Bancorp shall have the right to assume the defense thereof and upon such
assumption BSB Bancorp shall not be liable to any Indemnified Party for any
legal expenses of other counsel or any other expenses subsequently incurred by
any Indemnified Party in connection with the defense thereof, except that if BSB
Bancorp elects not to assume such defense or counsel for the Indemnified Parties
reasonably advises the Indemnified Parties that there are issues which raise
conflicts of interest between BSB Bancorp and the Indemnified Parties, the
Indemnified Parties may retain counsel reasonably satisfactory to BSB Bancorp,
and BSB Bancorp shall pay the reasonable fees and expenses of such counsel for
the Indemnified Parties, (2) BSB Bancorp shall be obligated pursuant to this
paragraph to pay for only one firm of counsel for each Indemnified Party, (3)
BSB Bancorp shall not be liable for any settlement effected without its prior
written consent (which consent shall not be unreasonably withheld or delayed),
and (4) BSB Bancorp shall not be obligated pursuant to this paragraph to the
extent that a final judgment determines that any such losses, claims, damages,
liabilities, costs, expenses, judgments, fines and amounts paid in settlement
are as a result of the gross negligence, willful misconduct or malfeasance of
the Indemnified Party. BSB Bancorp shall have no obligation to advance expenses
incurred in connection with a threatened or pending action, suit or preceding in
advance of final disposition of such action, suit or proceeding, unless (i) BSB
Bancorp would be permitted to advance such expenses pursuant to the DGCL and BSB
Bancorp's Certificate of Incorporation or Bylaws, and (ii) BSB Bancorp receives
an undertaking by the Indemnified Party to repay such amount if it is determined
that such party is not entitled to be indemnified by BSB Bancorp pursuant to the
DGCL and BSB Bancorp's Certificate of Incorporation or Bylaws. Any Indemnified
Party wishing to claim indemnification under this Section 6.7, upon learning of
any such claim, action, suit, proceeding or investigation, shall notify BSB
Bancorp thereof; provided, however, that the failure to so notify shall not
affect the obligations of BSB Bancorp under this Section 6.7 except to the
extent such failure to notify materially prejudices BSB Bancorp. BSB Bancorp's
obligations under this Section 6.7 continue in full force and effect for a
period of three years from the Effective Time; provided, however, that all
rights to indemnification in respect of any claim asserted or made within such
period shall continue until the final disposition of such claim.
(b) BSB Bancorp shall use commercially reasonable efforts to cause
the persons serving as officers and directors of SKAN immediately prior to the
Effective Time to be covered by a directors' and officers' liability insurance
policy ("Tail Insurance") of substantially the same coverage and amounts
containing terms and conditions which are generally not less advantageous than
SKAN's current policy with respect to acts or omissions occurring prior to the
Effective Time which were committed by such officers and directors in their
capacity as such for an aggregate premium cost for the Tail Insurance reasonably
consistent with the aggregate premium cost for SKAN's current policy and for a
period not less than one year.
6.8 SUBSEQUENT INTERIM AND ANNUAL FINANCIAL STATEMENTS.
As soon as reasonably available, but in no event more than 45 days after
the end of each fiscal quarter (other than the fourth fiscal quarter, as to
which the time period shall be 90 days), BSB Bancorp will deliver to SKAN and
SKAN will deliver to BSB Bancorp their respective Quarterly Reports on Form 10-Q
and Annual Reports on Form 10-K, as filed with the SEC under the Exchange Act.
Each party shall deliver to the other any Current Reports on Form 8-K promptly
after filing such reports with the SEC.
6.9 ADDITIONAL AGREEMENTS.
In case at any time after the Effective Time any further action is
necessary or desirable to carry out the purposes of this Agreement, or to vest
the Surviving Corporation or the Surviving Bank
31
with full title to all properties, assets, rights, approvals, immunities and
franchises of any of the parties to the Merger, or the constituent banks to the
Bank Merger, as the case may be, the proper officers and directors of each party
to this Agreement and BSB Bancorp's and SKAN's Subsidiaries shall take all such
necessary action as may be reasonably requested by BSB Bancorp.
6.10 ADVICE OF CHANGES.
BSB Bancorp and SKAN shall promptly advise the other party of any change
or event that, individually or in the aggregate, has or would be reasonably
likely to have a Material Adverse Effect on it or to cause or constitute a
material breach of any of its representations, warranties or covenants contained
herein. From time to time prior to the Effective Time, each party will promptly
supplement or amend its disclosure schedule delivered in connection with the
execution of this Agreement to reflect any matter which, if existing, occurring
or known at the date of this Agreement, would have been required to be set forth
or described in such disclosure schedule or which is necessary to correct any
information in such disclosure schedule which has been rendered inaccurate
thereby. No supplement or amendment to such disclosure schedule shall have any
effect for the purpose of determining satisfaction of the conditions set forth
in Sections 7.2(a) or 7.3(a) hereof, as the case may be, or the compliance by
SKAN with the covenants set forth in Section 5.1 hereof.
6.11 CURRENT INFORMATION.
During the period from the date of this Agreement to the Effective Time,
SKAN will cause one or more of its designated representatives to confer on a
regular and frequent basis (not less than monthly) with representatives of BSB
Bancorp and to report the general status of the ongoing operations of SKAN. SKAN
will promptly notify BSB Bancorp of any material change in the normal course of
business or in the operation of the properties of SKAN and of any governmental
complaints, investigations or hearings (or communications indicating that the
same may be contemplated), or the institution or the threat of litigation
involving SKAN, and will keep BSB Bancorp fully informed of such events.
6.12 EXECUTION AND AUTHORIZATION OF BANK MERGER AGREEMENT.
Prior to the Effective Time, (a) BSB Bancorp and SKAN each shall execute
and deliver the Certificate of Merger substantially in the form at Exhibit C,
and (b) BSB Bancorp and SKAN each shall cause BSB Bank and Skaneateles Bank,
respectively, to execute and deliver the Bank Merger Agreement, in substantially
the form at Exhibit A.
6.13 CHANGE IN STRUCTURE.
BSB Bancorp may elect to modify the structure of the transactions
contemplated by this Agreement as noted herein so long as (i) there are no
material adverse federal income tax consequences to the SKAN shareholders as a
result of such modification, (ii) the consideration to be paid to the SKAN
shareholders under this Agreement is not thereby changed or reduced in kind or
amount, and (iii) such modification will not be reasonably likely to delay
materially or jeopardize receipt of any required regulatory approvals. In the
event that BSB Bancorp elects to change the structure of the Merger, the Bank
Merger or any other transactions contemplated hereby, the parties agree to
modify this Agreement and the various exhibits hereto, or enter into any other
agreements, to reflect such revised structure. In such event, BSB Bancorp shall
prepare appropriate amendments to this Agreement and the exhibits hereto, or
other documents, for execution by the parties hereto. BSB Bancorp and SKAN agree
to cooperate fully with each other to effect such amendments or other documents.
32
6.14 TRANSACTION EXPENSES OF SKAN.
(a) For planning purposes, SKAN shall, within 15 days from the date
hereof, provide BSB Bancorp with its estimated budget of transaction-related
expenses reasonably anticipated to be payable by SKAN in connection with this
transaction, including the fees and expenses of counsel, accountants, investment
bankers and other professionals. SKAN shall promptly notify BSB Bancorp if or
when it determines that it will expect to exceed its budget.
(b) Promptly after the execution of this Agreement, SKAN shall ask
all of its attorneys and other professionals to render current and correct
invoices for all unbilled time and disbursements. SKAN shall accrue and/or pay
all of such amounts which are actually due and owing as soon as possible.
(c) SKAN shall advise BSB Bancorp monthly of all out-of-pocket
expenses which SKAN has incurred in connection with this transaction.
(d) BSB Bancorp, in reasonable consultation with SKAN, shall make
all arrangements with respect to the printing and mailing of the Proxy
Statement/Prospectus. SKAN shall, if BSB Bancorp reasonably deems necessary,
also engage a proxy solicitation firm to assist in the solicitation of proxies
for their respective the Special Meeting. SKAN agrees to cooperate as to such
matters.
ARTICLE VII
CONDITIONS PRECEDENT
7.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER.
The respective obligation of each party to effect the Merger shall be
subject to the satisfaction at or prior to the Effective Time of the following
conditions:
(A) SHAREHOLDER APPROVAL.
This Agreement, including the Certificate of Merger, and the Merger
shall have been approved and adopted by the affirmative vote of the holders of a
two-thirds of the outstanding shares of SKAN Common Stock entitled to vote
thereon.
(B) STOCK EXCHANGE LISTING.
The shares of BSB Bancorp Common Stock which shall be issued in the
Merger (including the BSB Bancorp Common Stock that may be issued upon exercise
of the options referred to in Section 1.5 hereof) upon consummation of the
Merger shall have been authorized for quotation on the Nasdaq Stock Market
National Market System (or such other exchange on which the BSB Bancorp Common
Stock may become listed).
(C) OTHER APPROVALS.
All regulatory approvals required to consummate the transactions
contemplated hereby shall have been obtained and shall remain in full force and
effect and all statutory waiting periods in respect thereof shall have expired
(all such approvals and the expiration of all such waiting periods being
referred to herein as the "Requisite Regulatory Approvals"). No Requisite
Regulatory Approval shall contain a non-customary condition that BSB Bancorp
reasonably determines to be burdensome or otherwise alter the benefits for which
it bargained in this
33
Agreement.
(D) REGISTRATION STATEMENT.
The Registration Statement shall have become effective under the
Securities Act, and no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been initiated or threatened by the SEC.
(E) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY.
No order, injunction or decree issued by any court or agency of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Merger or any of the other transactions (an "Injunction")
contemplated by this Agreement or the Certificate of Merger shall be in effect.
No statute, rule, regulation, order, injunction or decree shall have been
enacted, entered, promulgated or enforced by any Governmental Entity which
prohibits, restricts or makes illegal consummation of the Merger.
(F) FEDERAL TAX OPINION.
BSB Bancorp and SKAN shall have received from [▇▇▇▇▇ & ▇▇▇▇▇▇▇
L.L.P., counsel to BSB Bancorp], an opinion in form and substance reasonably
satisfactory to BSB Bancorp, substantially to the effect that on the basis of
facts, representations, and assumptions set forth in such opinion which are
consistent with the state of facts existing at the time of such opinion, the
Merger will be treated for federal income tax purposes as a reorganization
within the meaning of Section 368(a) of the Code. In rendering such opinion,
such counsel may require and, to the extent such counsel deems necessary or
appropriate, may rely upon representations made in certificates of officers of
SKAN, BSB Bancorp, their respective affiliates and others.
(G) POOLING OF INTERESTS.
BSB Bancorp shall have received (i) advice of PricewaterhouseCoopers
LLP and KPMG LLP, independent accountants, within two weeks of the date hereof,
to the effect that the Merger will be accounted for as a pooling of interests,
and (ii) as of the Effective Time, a written opinion of each of
PricewaterhouseCoopers LLP and KPMG LLP to the effect that the Merger will be
accounted for as a pooling-of-interests.
7.2 CONDITIONS TO OBLIGATIONS OF BSB BANCORP.
The obligation of BSB Bancorp to effect the Merger is also subject to the
satisfaction or waiver by BSB Bancorp at or prior to the Effective Time of the
following conditions:
(A) REPRESENTATIONS AND WARRANTIES.
The representations and warranties of SKAN set forth in this
Agreement shall be true and correct as of the date of this Agreement and (except
to the extent such representations and warranties speak as of an earlier date)
as of the Closing Date as though made on and as of the Closing Date; provided,
however, that for purposes of this paragraph, such representations and
warranties shall be deemed to be true and correct, unless the failure or
failures of such representations and warranties to be so true and correct,
individually or in the aggregate, would have a Material Adverse Effect on SKAN.
Such determination of aggregate Material Adverse Effect shall be made as if
there were no materiality qualifications in such representations and warranties.
BSB Bancorp shall have received a certificate signed on behalf of SKAN by each
of the President and Chief Executive Officer and the Chief Financial Officer of
SKAN to the foregoing effect.
34
(B) PERFORMANCE OF COVENANTS AND AGREEMENTS OF SKAN
SKAN shall have performed in all material respects all covenants and
agreements required to be performed by it under this Agreement at or prior to
the Closing Date. BSB Bancorp shall have received a certificate signed on behalf
of SKAN by each of the President and Chief Executive Officer and the Chief
Financial Officer of SKAN to such effect.
(C) CONSENTS UNDER AGREEMENTS.
(i) The consent, approval or waiver of each person (other than the
Governmental Entities referred to in Section 7.1(c) hereof) whose consent or
approval shall be required in order to permit the succession by the Surviving
Corporation pursuant to the Merger to any obligation, right or interest of SKAN
under any loan or credit agreement, note, mortgage, indenture, lease, license or
other agreement or instrument shall have been obtained except for those, the
failure of which to obtain, will not result in a Material Adverse Effect on the
Surviving Corporation.
(ii) The consent, approval or waiver of each person (other than the
Governmental Entities referred to in Section 7.1(c) hereof) whose consent or
approval shall be required in order to permit the succession by the Surviving
Bank pursuant to the Bank Merger to any obligation, right or interest of
Skaneateles Bank under any loan or credit agreement, note, mortgage, indenture,
lease, license or other agreement or instrument shall have been obtained except
for those, the failure of which to obtain, will not result in a Material Adverse
Effect on the Surviving Bank.
(D) NO PENDING GOVERNMENTAL ACTIONS.
No proceeding initiated by any Governmental Entity seeking an
Injunction shall be pending.
(E) NO MATERIAL ADVERSE CHANGE.
There shall have been no changes, other than changes contemplated by
this Agreement, in the business, operations, condition (financial or otherwise),
assets or liabilities of SKAN or any SKAN Subsidiary (regardless of whether or
not such events or changes are inconsistent with the representations and
warranties given herein) that individually or in the aggregate has had or would
have a Material Adverse Effect on SKAN.
(F) LEGAL OPINION.
BSB Bancorp shall have received the opinion of ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ &
▇▇▇▇▇ LLP, counsel to SKAN, dated the Closing Date, as to such matters as BSB
Bancorp may reasonably request. As to any matter in such opinion which involves
matters of fact, such counsel may rely upon the certificates of officers and
directors of SKAN and of public officials, reasonably acceptable to BSB Bancorp.
(G) ACCOUNTANT'S COMFORT LETTER.
SKAN shall have caused to be delivered on the respective dates
thereof to BSB Bancorp "comfort letters" from KPMG LLP, SKAN's independent
auditors, dated the date on which the Registration Statement or last amendment
thereto shall become effective, and dated the date of the Closing (defined in
Section 9.1 hereof), and addressed to BSB Bancorp and SKAN, with respect to
SKAN's financial data presented in the Proxy Statement/Prospectus, which letters
shall be based upon Statements on Auditing Standards Nos. 72 and 76.
35
7.3 CONDITIONS TO OBLIGATIONS OF SKAN.
The obligation of SKAN to effect the Merger is also subject to the
satisfaction or waiver by SKAN at or prior to the Effective Time of the
following conditions:
(A) REPRESENTATIONS AND WARRANTIES.
The representations and warranties of BSB Bancorp set forth in this
Agreement shall be true and correct as of the date of this Agreement and (except
to the extent such representations and warranties speak as of an earlier date)
as of the Closing Date as though made on and as of the Closing Date; provided,
however, that for purposes of this paragraph, such representations and
warranties shall be deemed to be true and correct, unless the failure or
failures of such representations and warranties to be so true and correct,
individually or in the aggregate, would have a Material Adverse Effect on BSB
Bancorp. Such determination of aggregate Material Adverse Effect shall be made
as if there were no materiality qualifications in such representations and
warranties. SKAN shall have received a certificate signed on behalf of BSB
Bancorp by each of the President and the Chief Financial Officer of BSB Bancorp
to the foregoing effect.
(B) PERFORMANCE OF COVENANTS AND AGREEMENTS OF BSB BANCORP.
BSB Bancorp shall have performed in all material respects all
covenants and agreements required to be performed by it under this Agreement at
or prior to the Closing Date. SKAN shall have received a certificate signed on
behalf of BSB Bancorp by each of the President and the Chief Financial Officer
of BSB Bancorp to such effect.
(C) CONSENTS UNDER AGREEMENTS.
The consent or approval or waiver of each person (other than the
Governmental Entities referred to in Section 7.1(c)) whose consent or approval
shall be required in connection with the transactions contemplated hereby under
any loan or credit agreement, note, mortgage, indenture, lease, license or other
agreement or instrument to which BSB Bancorp is a party or is otherwise bound
shall have been obtained.
(D) NO PENDING GOVERNMENTAL ACTIONS.
No proceeding initiated by any Governmental Entity seeking an
Injunction shall be pending.
(E) LEGAL OPINION.
SKAN shall have received the opinion of ▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P.,
counsel to BSB Bancorp, as to the authorization, validity and non-assessibility
of the BSB Bancorp Common Stock to be issued pursuant to this Agreement. As to
any matter in such opinion which involves matters of fact, such counsel may rely
upon the certificates of officers and directors of BSB Bancorp and of public
officials and opinions of local counsel, reasonably acceptable to SKAN
(F) NO MATERIAL ADVERSE CHANGE.
There shall have been no changes, other than changes contemplated by
this Agreement, in the business, operations, condition (financial or otherwise),
assets or liabilities of BSB Bancorp or any BSB Bancorp Subsidiary (regardless
of whether or not such events or changes are inconsistent with the
representations and warranties given herein) that individually or in the
aggregate has had or would have a Material Adverse Effect on BSB Bancorp.
36
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1 TERMINATION.
This Agreement may be terminated at any time prior to the Effective Time,
whether before or after approval of the matters presented in connection with the
Merger by the shareholders of SKAN:
(a) by mutual consent of BSB Bancorp and SKAN in a written
instrument, if the Board of Directors of each so determines by a vote of a
majority of the members of its entire Board;
(b) by either BSB Bancorp or SKAN upon written notice to the other
party (i) 30 days after the date on which any request or application for a
Regulatory Approval shall have been denied or withdrawn at the request or
recommendation of the Governmental Entity which must grant such Regulatory
Approval, unless within the 30-day period following such denial or withdrawal
the parties agree to file, and have filed with the applicable Governmental
Entity, a petition for rehearing or an amended application, provided, however,
that no party shall have the right to terminate this Agreement pursuant to this
Section 8.1(b), if such denial or request or recommendation for withdrawal shall
be due to the failure of the party seeking to terminate this Agreement to
perform or observe the covenants and agreements of such party set forth herein;
(c) by either BSB Bancorp or SKAN if the Merger shall not have been
consummated on or before December 31, 1999, unless the failure of the Closing to
occur by such date shall be due to the failure of the party seeking to terminate
this Agreement to perform or observe the covenants and agreements of such party
set forth herein;
(d) by either BSB Bancorp or SKAN (provided that SKAN is not in
breach of its obligations under Section 6.3 hereof) if the approval of the
shareholders of SKAN required for the consummation of the Merger shall not have
been obtained by reason of the failure to obtain the required vote at a duly
held meeting of shareholders or at any adjournment or postponement thereof;
(e) by either BSB Bancorp or SKAN (provided that the terminating
party is not then in breach of any representation, warranty, covenant or other
agreement contained herein that, individually or in the aggregate, would give
the other party the right to terminate this Agreement) if there shall have been
a breach of any of the representations or warranties set forth in this Agreement
on the part of the other party, if such breach, individually or in the
aggregate, has had or is likely to have a Material Adverse Effect on the
breaching party, and such breach shall not have been cured within 30 days
following receipt by the breaching party of written notice of such breach from
the other party hereto or such breach, by its nature, cannot be cured prior to
the Closing;
(f) by either BSB Bancorp or SKAN (provided that the terminating
party is not then in breach of any representation, warranty, covenant or other
agreement contained herein that, individually or in the aggregate, would give
the other party the right to terminate this Agreement) if there shall have been
a material breach of any of the covenants or agreements set forth in this
Agreement on the part of the other party, and such breach shall not have been
cured within 30 days following receipt by the breaching party of written notice
of such breach from the other party hereto or such breach, by its nature, cannot
be cured prior to the Closing;
(g) by BSB Bancorp, if the management of SKAN or its Board of
Directors, for any reason, (i) fails to call and hold within 35 days of the
effectiveness of the Registration Statement a special meeting of SKAN's
shareholders to consider and approve this Agreement and the transactions
contemplated hereby, (ii) fails to recommend to shareholders the approval of
this
37
Agreement and the transactions contemplated hereby, (iii) fails to oppose any
third party proposal that is inconsistent with the transactions contemplated by
this Agreement or (iv) violates Section 5.1(e) of this Agreement;
(h)
(1) by SKAN, if (either before or after its approval by the
shareholders of SKAN) both (A) its Board of Directors so determines by a vote of
at least two-thirds of the members of its entire Board, at any time during the
ten-day period commencing with the Determination Date, and (B) the BSB Bancorp
Common Stock Average Price on the Determination Date shall be less than the
lesser of $23.00, or $25.30 multiplied by the Index Ratio.
(2) Notwithstanding the foregoing, if SKAN elects to exercise
its termination right pursuant to subsection (h)(1), it shall give prompt
written notice to BSB Bancorp (provided that such notice of election to
terminate may be withdrawn at any time within the aforementioned ten-day
period). During the seven-day period commencing with its receipt of such notice,
BSB Bancorp shall have the option of increasing the consideration to be received
by the holders of SKAN Common Stock hereunder by increasing the Exchange Ratio
to equal the lesser of (A) a number (rounded to four decimals) equal to a
quotient, the numerator of which is $28.75 multiplied by the Exchange Ratio (as
then in effect) and the denominator of which is the BSB Bancorp Common Stock
Average Price (defined below), and (B) a number equal to a quotient, the
numerator of which is the Index Ratio multiplied by $28.75, and the denominator
of which is the BSB Bancorp Common Stock Average Price (defined below). If BSB
Bancorp makes an election contemplated by the preceding sentence, within such
seven-day period, it shall give prompt written notice to SKAN of such election
and the revised Exchange Ratio, whereupon no termination shall have occurred
pursuant to subsection (h)(1) and this Agreement shall remain in effect in
accordance with its terms (except as the Exchange Ratio shall have been so
modified), and any references in this Agreement to "Exchange Ratio" shall
thereafter be deemed to refer to the Exchange Ratio as adjusted pursuant to this
subsection (h)(2).
For purposes of this subsection (h), the following terms shall have
the meanings indicated:
"BSB Bancorp Common Stock Average Price" means the average of the
daily closing sales prices of BSB Bancorp Common Stock as reported on the Nasdaq
Stock Market's National Market Tier for the 20 consecutive full trading days in
which such shares are reported on the Nasdaq Stock Market ending at the close of
trading on the Determination Date.
"BSB Bancorp Ratio" means the number obtained by dividing the BSB
Bancorp Common Stock Average Price on the Determination Date by the closing
price on the Starting Date.
"Determination Date" means the date on which the approval of the
FDIC required for consummation of the Merger shall be received or, if no FDIC
approval is required, then the date of the last federal or state bank regulatory
approval required of BSB Bancorp is received.
"Index Price" on a given date means the sum of the average closing
sale prices of the companies comprising the Index Group (as defined below) for
the 15 trading days ending on such date, in each case, multiplied by the
weighting assigned to such company (weighted in accordance with the factors
listed below). If any company belonging to the Index Group or BSB Bancorp
declares or effects a stock dividend, reclassification, recapitalization,
split-up, combination, exchange of share or similar transaction between the
Starting Date and the Determination Date, the prices for the common stock of
such company or BSB Bancorp will be appropriately adjusted for use in the Index.
38
"Starting Date" means the first Nasdaq Stock Market trading day
preceding the date of this Agreement.
"Index Ratio" means the number obtained by dividing the Index Price
at the close of business on the Determination Date by the Index Price at close
of business on the Starting Date.
"Index Group" means the 18 bank holding companies listed at Exhibit
E hereto, the common stock of all of which will be publicly traded and as to
which there will not have been, since the Starting Date and before the
Determination Date, any public announcement of a proposal for such company to be
acquired or for such company to acquire another company or companies in
transactions with a value exceeding 25% of the acquirors market capitalization
as of the Starting Date. In the event that the common stock of any such company
ceases to be publicly traded or such an announcement is made, such company will
be removed from the Index Group, and the weights (which were determined based on
the number of outstanding shares of common stock) redistributed proportionately
for the purposes of determining the Index Price. The 18 holding companies and
the weights attributed to them are as set forth at Exhibit E.
(i) by BSB Bancorp if SKAN has complied with Section 5.1(e) above,
and has given written notice to BSB Bancorp that SKAN has agreed to enter into
an Acquisition Transaction other than as contemplated hereby; provided, however,
that such termination under this Section 8.1(i) shall not be effective unless
and until SKAN shall have complied with the expense provisions of Section 9.3
below, and shall have acknowledged in the written notice to be provided in
accordance herewith that the Option granted pursuant to the Option Agreement
shall then be exercisable in accordance with terms thereof.
8.2 EFFECT OF TERMINATION.
In the event of termination of this Agreement by either BSB Bancorp or
SKAN as provided in Section 8.1 hereof, this Agreement shall forthwith become
void and have no effect except (i) the last sentences of Sections 6.2(a) and
6.2(b) and Sections 8.2, 9.2 and 9.3 hereof shall survive any termination of
this Agreement, and (ii) notwithstanding anything to the contrary contained in
this Agreement, no party shall be relieved or released from any liabilities or
damages arising out of its willful or intentional breach of any provision of
this Agreement.
8.3 AMENDMENT.
Subject to compliance with applicable law, this Agreement may be amended
by the parties hereto, by action taken or authorized by their respective Board
of Directors, at any time before or after approval of the matters presented in
connection with the Merger by the shareholders of SKAN; provided, however, that
after any approval of the transactions contemplated by this Agreement by SKAN's
shareholders, there may not be, without further approval of such shareholders,
any amendment of this Agreement which reduces the amount or changes the form of
the consideration to be delivered to SKAN shareholders hereunder other than as
contemplated by this Agreement. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.
8.4 EXTENSION; WAIVER.
At any time prior to the Effective Time, the parties hereto, by action
taken or authorized by their respective Boards of Directors, may, to the extent
legally allowed, (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered
39
pursuant hereto, and (c) waive compliance with any of the agreements or
conditions contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in a written
instrument signed on behalf of such party, but such extension or waiver or
failure to insist on strict compliance with an obligation, covenant, agreement
or condition shall not operate as a waiver of, or estoppel with respect to, any
subsequent or other failure.
ARTICLE IX
GENERAL PROVISIONS
9.1 CLOSING.
Subject to the terms and conditions of this Agreement, the closing of the
Merger (the "Closing") will take place at 10:00 a.m. at the main offices of BSB
Bancorp on (i) the fifth day after the last Requisite Regulatory Approval and
shareholder approvals are received and all applicable waiting periods have
expired, or (ii) such other date, place and time as the parties may agree (the
"Closing Date").
9.2 NONSURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
None of the representations, warranties, covenants and agreements in this
Agreement or in any instrument delivered pursuant to this Agreement (other than
pursuant to the Option Agreement, which shall terminate in accordance with its
terms) shall survive the Effective Time, except for those covenants and
agreements contained herein and therein which by their terms apply in whole or
in part after the Effective Time.
9.3 EXPENSES.
All costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
expense, except that all filing and other fees paid to the SEC and the New York
Superintendent in connection with this Agreement shall be borne by BSB Bancorp.
Except as set forth in the next sentence, in the event that this Agreement is
terminated by either BSB Bancorp or SKAN by reason of a material breach pursuant
to Sections 8.1(e) or (f) hereof or by BSB Bancorp or SKAN pursuant to Section
8.1(g) hereof, the other party shall pay all documented, reasonable costs and
expenses up to $250,000 incurred by the terminating party in connection with
this Agreement and the transactions contemplated hereby. In the event that this
Agreement is terminated by BSB Bancorp under Section 8.1(d) by reason of SKAN
shareholders not having given any required approval, or in the event this
Agreement is terminated by BSB Bancorp by reason of a willful material breach
pursuant to Sections 8.1(e) or (f) hereof, SKAN shall pay all documented,
reasonable costs and expenses up to $250,000 incurred by BSB Bancorp in
connection with this Agreement and the transactions contemplated hereby. In the
event that this Agreement is terminated by BSB Bancorp under Section 8.1(i) by
reason of SKAN having agreed to enter into an Acquisition Transaction other than
as contemplated hereby, SKAN shall pay all documented, reasonable costs and
expenses up to $250,000 incurred by BSB Bancorp in connection with this
Agreement and the transactions contemplated hereby.
9.4 NOTICES.
All notices and other communications hereunder shall be in writing and
shall be deemed given if delivered personally, mailed by registered or certified
mail (return receipt requested) or delivered by an express courier (with
confirmation) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
40
(a) if to BSB Bancorp, to:
BSB Bancorp, Inc.
▇▇-▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn.: President and Chief Executive Officer
with a copy (which shall not constitute notice) to:
▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P.
Columbia Square
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn.: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
and
(b) if to SKAN, to:
Skaneateles Bancorp, Inc.
▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn.: President and Chief Executive Officer
with a copy (which shall not constitute notice) to:
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn.: ▇▇▇▇ ▇. ▇▇▇▇, Esq.
9.5 INTERPRETATION.
When a reference is made in this Agreement to Sections, Exhibits or
Schedules, such reference shall be to a Section of or an Exhibit or Schedule to
this Agreement unless otherwise indicated. The table of contents and headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. Whenever the words
"include", "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation".
9.6 COUNTERPARTS.
This Agreement may be executed in counterparts, all of which shall be
considered one and the same agreement and shall become effective when
counterparts have been signed by each of the parties and delivered to the other
parties, it being understood that all parties need not sign the same
counterpart.
9.7 ENTIRE AGREEMENT.
This Agreement (including the disclosure schedules, documents and the
instruments referred
41
to herein) constitutes the entire agreement and supersedes all prior agreements
and understandings, both written and oral, among the parties with respect to the
subject matter hereof, other than the Confidentiality Agreement, the Certificate
of Merger, the Option Agreement and the Stockholder Agreement.
9.8 GOVERNING LAW.
This Agreement shall be governed and construed in accordance with the laws
of the State of Delaware, without regard to any applicable conflicts of law
rules.
9.9 ENFORCEMENT OF AGREEMENT.
The parties hereto agree that irreparable damage would occur in the event
that the provisions of this Agreement were not performed in accordance with its
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent breaches of
this Agreement and to enforce specifically the terms and provisions thereof in
any court of the United States or any state having jurisdiction, this being in
addition to any other remedy to which they are entitled at law or in equity.
9.10 SEVERABILITY.
Any term or provision of this Agreement which is invalid or unenforceable
in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent
of such invalidity or unenforceability without rendering invalid or
unenforceable the remaining terms and provisions of this Agreement or affecting
the validity or enforceability of any of the terms or provisions of this
Agreement in any other jurisdiction. If any provision of this Agreement is so
broad as to be unenforceable, the provision shall be interpreted to be only so
broad as is enforceable.
9.11 PUBLICITY.
Except as otherwise required by law or the rules of the Nasdaq Stock
Market National Market System (or such other exchange on which the SKAN Common
Stock or BSB Bancorp Common Stock is or may become listed), so long as this
Agreement is in effect, neither BSB Bancorp nor SKAN shall, or shall permit any
of BSB Bancorp's or SKAN's Subsidiaries to, issue or cause the publication of
any press release or other public announcement with respect to, or otherwise
make any public statement concerning, the transactions contemplated by this
Agreement, the Certificate of Merger, the Option Agreement or the Stockholder
Agreement without the consent of the other party, which consent shall not be
unreasonably withheld.
9.12 ASSIGNMENT; LIMITATION OF BENEFITS.
Neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by any of the parties hereto (whether by operation
of law or otherwise) without the prior written consent of the other parties.
Subject to the preceding sentence, this Agreement will be binding upon, inure to
the benefit of and be enforceable by the parties and their respective successors
and assigns. Except as otherwise specifically provided in Section 6.7 hereof,
this Agreement (including the documents and instruments referred to herein) is
not intended to confer upon any person other than the parties hereto any rights
or remedies hereunder, and the covenants, undertakings and agreements set out
herein shall be solely for the benefit of, and shall be enforceable only by, the
parties hereto and their permitted assigns.
42
9.13 ADDITIONAL DEFINITIONS.
In addition to any other definitions contained in this Agreement, the
following words, terms and phrases shall have the following meanings when used
in this Agreement.
"Affiliated Person": any director, officer or 5% or greater shareholder,
spouse or other person living in the same household of such director, officer or
shareholder, or any company, partnership or trust in which any of the foregoing
persons is an officer, 5% or greater shareholder, general partner or 5% or
greater trust beneficiary.
"knowledge": with respect to SKAN, refers to the knowledge of both of
SKAN's and Skaneateles Bank's directors and officers in the ordinary course of
their duties in such positions.
"Laws": any and all statutes, laws, ordinances, rules, regulations,
orders, permits, judgments, injunctions, decrees, case law and other rules of
law enacted, promulgated or issued by any Governmental Entity.
"Material Adverse Effect": with respect to BSB Bancorp or SKAN, as the
case may be, means a condition, event, change or occurrence that is reasonably
likely to have a material adverse effect upon (A) the financial condition,
results of operations, business or properties of BSB Bancorp or SKAN (other than
as a result of changes in laws or regulations or accounting rules of general
applicability or interpretations thereof), or (B) the ability of BSB Bancorp or
SKAN to perform its obligations under, and to consummate the transactions
contemplated by, this Agreement, the Certificate of Merger and, in the case of
SKAN, the Option Agreement.
"Subsidiary": with respect to any party means any corporation, partnership
or other organization, whether incorporated or unincorporated, which is
consolidated with such party for financial reporting purposes.
[SIGNATURES PAGE FOLLOWS]
43
IN WITNESS WHEREOF, BSB Bancorp and SKAN have caused this Agreement to be
executed and delivered by their respective officers thereunto duly authorized as
of the date first above written.
BSB BANCORP, INC.
ATTEST:
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------- ------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Senior Vice President and Title: President and Chief Executive
Corporate Secretary Officer
SKANEATELES BANCORP, INC.
ATTEST:
By: /s/ J. ▇▇▇▇▇ ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------- -------------------------------------
Name: J. ▇▇▇▇▇ ▇▇▇▇▇▇▇ Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Executive Vice President Title: Chairman of the Board,
and Secretary President and Chief Executive
Officer
EXHIBIT A
BANK PLAN OF MERGER
This Bank Plan of Merger (this "Plan of Merger") is made and entered
into this _____ day of January, 1999 between BSB BANK & TRUST COMPANY, a New
York-chartered commercial bank and trust company ("BSB Bank"), and SKANEATELES
SAVINGS BANK, a New York-chartered savings bank ("Skaneateles Bank").
WITNESSETH
WHEREAS, BSB Bancorp, Inc., a Delaware corporation ("BSB Bancorp"),
and Skaneateles Bancorp, Inc. a Delaware corporation ("SKAN"), have entered into
an Agreement and Plan of Merger, dated as of January ___ , 1999 (the
"Agreement");
WHEREAS, SKAN will merge with and into BSB Bancorp pursuant to the
terms of the Agreement, and immediately thereafter Skaneateles Bank will merge
with and into BSB Bank, with BSB Bank emerging as the surviving bank; and
WHEREAS, BSB Bank has 25,272,00 shares of capital stock outstanding,
$1.00 par value per share, and Skaneateles Bank has ______ shares of common
stock outstanding, $______ par value per share.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein and in the Agreement, the parties
hereto do mutually agree, intending to be legally bound, as follows:
ARTICLE 1
DEFINITIONS
Except as otherwise provided herein, the capitalized terms set forth
below shall have the following meanings:
1.1 "BANK MERGER" shall mean to the merger of Skaneateles Bank with and
into BSB Bank as provided in Section 2.1 of this Plan of Merger.
1.2 "EFFECTIVE TIME" shall mean the date and time at which the merger
contemplated by this Plan of Merger becomes effective as provided in Section 2.2
hereof.
1.3 "MERGING BANKS" shall mean, collectively, Skaneateles Bank and BSB
Bank.
1.4 "NEW YORK SUPERINTENDENT" shall mean the Superintendent of Banks of
New York State.
1.5 "SURVIVING BANK" shall refer to BSB Bank as the surviving bank in the
Bank Merger. The location of the home office and other offices of the Surviving
Bank shall be as set forth at Annex 1 hereto.
ARTICLE 2
TERMS OF THE BANK MERGER
45
2.1 THE BANK MERGER
(a) Subject to the terms and conditions set forth in the Agreement,
and in accordance with the New York Banking Law and the rules and regulations of
the Banking Board of New York State, at the Effective Time, Skaneateles Bank
shall be merged with and into BSB Bank pursuant to and upon the terms set forth
in this Plan of Merger. BSB Bank shall continue as the Surviving Bank in the
Bank Merger and the separate existence of Skaneateles Bank shall cease.
(b) As a result of the Bank Merger, (i) each share of common stock,
par value $______ per share, of Skaneateles Bank issued and outstanding
immediately prior to the Effective Time shall be canceled and (ii) each share of
capital stock, par value $1.00 per share, of BSB Bank issued and outstanding
immediately prior to the Effective Time shall remain issued and outstanding and
shall constitute the only shares of capital stock of the Surviving Bank issued
and outstanding immediately after the Effective Time.
(c) On and after the Effective Time, the Bank Merger shall have the
effects set forth in Section 602 of the New York Banking Law.
2.2 EFFECTIVE TIME
The Bank Merger shall become effective (the "Effective Time") at the
time of filing of this Plan of Merger by the New York Superintendent in the
office of the New York Superintendent.
2.3 NAME OF THE SURVIVING BANK
The name of the Surviving Bank shall be "BSB Bank & Trust Company."
2.4 CHARTER
On and after the Effective Time, the organization certificate of BSB
Bank shall be the organization certificate of the Surviving Bank, unless and
until amended in accordance with applicable law.
2.5 BYLAWS
On and after the Effective Time, the bylaws of BSB Bank shall be the
bylaws of the Surviving Bank.
2.6 DIRECTORS AND OFFICERS
On and after the Effective Time, until changed in accordance with
the organization certificate and bylaws of the Surviving Bank, the directors of
the Surviving Bank shall be the directors of BSB Bank immediately prior to the
Effective Time. On and after the Effective Time, until changed in accordance
with the organization certificate and bylaws of the Surviving Bank, the officers
of the Surviving Bank shall be the officers of BSB Bank immediately prior to the
Effective Time.
2.7 CORPORATE ACTION
This Plan of Merger and the consummation of the transactions
contemplated hereby have been duly and validly adopted and approved by the Board
of Directors and the sole shareholder of each of the Merging Banks.
46
ARTICLE 3
MISCELLANEOUS
3.1 SUCCESSORS
This Plan of Merger shall be binding on the successors of BSB Bank
and Skaneateles Bank.
3.2 COUNTERPARTS
This Plan of Merger may be executed in two counterparts, each of
which shall be deemed an original, but which taken together shall constitute one
and the same agreement.
47
IN WITNESS WHEREOF, each of the parties has caused this Agreement to
be duly executed on its behalf by an officer thereunto duly authorized, all as
of the day and year first above written.
BSB BANCORP, INC.
ATTEST:
By: By:
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Senior Vice President and Title: President and Chief
Corporate Secretary Executive Officer
SKANEATELES BANCORP, INC.
ATTEST:
By: By:
Name: Name:
Title: Title:
48
ANNEX 1
OFFICES OF BSB BANK AFTER THE BANK MERGER
At the Effective Time of the Bank Merger, BSB Bank will have the
following offices:
Location of Home Office:
Location of Other Offices
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* Loan Office
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49
EXHIBIT B
OPTION AGREEMENT
THE TRANSFER OF THE OPTION GRANTED
BY THIS AGREEMENT IS SUBJECT TO RESALE RESTRICTIONS.
This OPTION AGREEMENT, dated as of January 25, 1999 (this
"Agreement"), is entered into by and between SKANEATELES BANCORP, INC., a
Delaware corporation ("Issuer") and BSB BANCORP, INC., a Delaware corporation
("Grantee").
WITNESSETH:
WHEREAS, concurrently herewith Grantee and Issuer have entered into
an Agreement and Plan of Merger, dated as of January 25, 1999 (the "Plan"); and
WHEREAS, as a condition and inducement to Grantee's entering into
the Plan and in consideration therefor, Issuer has agreed to grant Grantee the
Option (as defined below).
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth herein and in the Plan, the parties hereto
agree as follows:
SECTION 1. Issuer hereby grants to Grantee an unconditional, irrevocable
option (the "Option") to purchase, subject to the terms hereof, up to 290,142
fully paid and nonassessable shares of common stock, par value $.01 per share of
Issuer ("Issuer Common Stock") (which number of shares is equal to 19.99% of the
total of the number of outstanding shares of Issuer Common Stock on the date
hereof), at a price per share equal to $15.00 (the "Initial Price"); provided,
however, that in the event Issuer issues or agrees to issue any additional
shares of Issuer Common Stock (other than shares issued upon the exercise of
options outstanding as of the date of the Plan in accordance with their terms
pursuant to existing stock option plans and pursuant to the SKAN DRIP and the
Purchase Plan (both terms as defined in the Plan)), or grants one or more
options to purchase additional shares of Issuer Common Stock at a price less
than the Initial Price, as adjusted pursuant to Section 5(b) hereof, such price
shall be equal to such lesser price (such price, as adjusted, is hereinafter
referred to as the "Option Price"). The number of shares of Issuer Common Stock
that may be received upon the exercise of the Option and the Option Price are
subject to adjustment as herein set forth.
SECTION 2. (a) Grantee may exercise the Option, in whole or part, at any
time and from time to time following the occurrence of a Purchase Event (as
defined below); provided, however, that the Option shall terminate and be of no
further force and effect upon the earliest to occur of the following events
(which are collectively referred to as an "Exercise Termination Event"):
(i) The time immediately prior to the Effective Time;
(ii) 12 months after the first occurrence of a Purchase Event;
(iii) 12 months after the termination of the Plan following
the occurrence of a Preliminary Purchase Event (as defined below), unless
clause (vii) of this Section 2(a) is applicable;
(iv) upon the termination of the Plan, prior to the occurrence
of a Purchase Event or Preliminary Purchase Event, by Issuer pursuant to
Sections 8.1(d), (e), (f), (g) or (h)of the Plan, both parties pursuant to
Section 8.1(a) of the Plan, or by either party
50
pursuant to Section 8.1(b) or (c) of the Plan;
(v) 12 months after the termination of the Plan, by either
party pursuant to Section 8.1(d) of the Plan based on the required vote of
Issuer's shareholders not being received, if no Purchase Event or
Preliminary Purchase Event has occurred prior to the meeting of
shareholders (or any adjournment or postponement thereof) held to vote on
the Plan;
(vi) 12 months after the termination of the Plan, by Grantee
pursuant to Section 8.1(e) or (f) thereof as a result of a breach by
Issuer, unless such breach was willful or intentional; or
(vii) 24 months after the termination of the Plan, by Grantee
pursuant to Section 8.1(e) or (f) thereof as a result of a willful or
intentional breach by Issuer, or by Grantee pursuant to Section 8.1(g) or
(i) of the Plan.
(b) The term "Preliminary Purchase Event" shall mean any of the
following events or transactions occurring on or after the date hereof and prior
to an Exercise Termination Event:
(i) Issuer without having received Grantee's prior written consent,
shall have entered into any letter of intent or definitive agreement to
engage in an Acquisition Transaction (as defined below) with any Person
(as defined below) other than Grantee or any of its subsidiaries (each a
"Grantee Subsidiary") or the Board of Directors of Issuer shall have
recommended that the shareholders of Issuer approve or accept any
Acquisition Transaction with any Person (as the term "person" is defined
in Section 3(a)9 and 13(d)(3) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") and the rules and regulations thereunder)
other than Grantee or any Grantee Subsidiary. For purposes of this
Agreement "Acquisition Transaction" shall mean (x) a merger, consolidation
or other business combination involving Issuer, (y) a purchase, lease or
other acquisition of all or substantially all of the assets of Issuer, (z)
a purchase or other acquisition (including by way of merger,
consolidation, share exchange or otherwise) of Beneficial Ownership (as
the term "beneficial ownership" is defined in Regulation 13d-3(a) of the
Exchange Act) of securities representing 10.0% or more of the voting power
of Issuer; provided, however, that "Acquisition Transaction" shall not
include a transaction entered into after the termination of the Plan in
which the Issuer is the surviving entity, if in connection with such
transaction, no person acquires Beneficial Ownership of 10.0% or more of
the total voting power of the Issuer to be outstanding after giving effect
to such transaction and in which the aggregate voting power of Issuer
acquired by all persons is less than 15% of the total voting power of
Issuer;
(ii) Any Person (other than Grantee, any Grantee Subsidiary or any
current affiliate of Issuer) shall have acquired Beneficial Ownership of
10.0% or more of the outstanding shares of Issuer Common Stock;
(iii) (a) Any Person (other than Grantee or any Grantee Subsidiary)
shall have made a bona fide proposal to Issuer or, by a public
announcement or written communication that is or becomes the subject of
public disclosure, to Issuer's shareholders to engage in an Acquisition
Transaction (including, without limitation, any situation in which any
Person other than Grantee or any Grantee Subsidiary shall have commenced
(as such term is defined in Rule 14d-2 under the Exchange Act), or shall
have filed a registration statement under the Securities Act of 1933, as
amended (the "Securities Act"), with respect to a tender offer or exchange
offer to purchase any shares of Issuer Common Stock such that, upon
consummation of such offer, such person would have Beneficial Ownership of
10.0% or more
51
of the then outstanding shares of Issuer Common Stock (such an offer being
referred to herein as a "Tender Offer" or an "Exchange Offer",
respectively)), and (b) the shareholders of Issuer do not approve the
Merger, as defined in the Plan, at the Special Meeting, as defined in the
Plan;
(iv) There shall exist a willful or intentional breach under the
Plan by Issuer and such breach would entitle Grantee to terminate the
Plan;
(v) The special meeting of Issuers' shareholders held for the
purpose of voting on the Plan shall not have been held pursuant to the
Plan or shall have been canceled prior to termination of the Plan, or for
any reason whatsoever Issuer's Board of Directors shall have failed to
recommend, or shall have withdrawn or modified in a manner adverse to
Grantee the recommendation of Issuer's Board of Directors, that Issuer's
shareholders approve the Plan, or if Issuer or Issuer's Board of Directors
fails to oppose any proposal by any Person (other than Grantee or any
Grantee Subsidiary); or
(vi) Any Person (other than Grantee or any Grantee Subsidiary) shall
have filed an application or notice with the Board of Governors of the
Federal Reserve System (the "FRB"), the Federal Deposit Insurance
Corporation (the "FDIC"), the Superintendent of Banks of New York State
(the "New York Superintendent"), or other regulatory or administrative
agency or commission (each, a "Governmental Authority") for approval to
engage in an Acquisition Transaction.
(c) The term "Purchase Event" shall mean any of the following events
or transactions occurring on or after the date hereof and prior to an Exercise
Termination Event:
(i) The acquisition by any Person (other than Grantee or any Grantee
Subsidiary) of Beneficial Ownership (other than on behalf of the Issuer)
of 25% or more of the then outstanding Issuer Common Stock;
(ii) The occurrence of a Preliminary Purchase Event described in
Section 2(b)(i) except that the percentage referred to in clause (z)
thereof shall be 25%; or
(iii) The termination of the Plan by Grantee pursuant to Section
8.1(e) or (f) thereof as a result of a willful or intentional breach by
Issuer, or by Grantee pursuant to Section 8.1(g) or (i) of the Plan.
(d) Issuer shall notify Grantee promptly in writing of the
occurrence of any Preliminary Purchase Event or Purchase Event known to Issuer;
provided, however, that the giving of such notice by Issuer shall not be a
condition to the right of Grantee to exercise the Option.
(e) In the event that Grantee is entitled to and wishes to exercise
the Option, it shall send to Issuer a written notice (the "Option Notice," the
date of which being hereinafter referred to as the "Notice Date") specifying (i)
the total number of shares of Issuer Common Stock it will purchase pursuant to
such exercise and (ii) the time (which shall be on a business day that is not
less than three nor more than 10 business days from the Notice Date) on which
the closing of such purchase shall take place (the "Closing Date"); such closing
to take place at the principal office of the Issuer; provided, however, that, if
prior notification to or approval of the FDIC, the FRB, or the New York
Superintendent or any other Governmental Authority is required in connection
with such purchase (each, a "Notification" or an "Approval," as the case may
be), (a) Grantee shall promptly file the required notice, application or waiver
request for approval ("Notice/Application"), (b) Grantee shall expeditiously
process the Notice/Application and (c) for the purpose of determining the
Closing Date pursuant to clause (ii) of this sentence, the period of time that
otherwise would run from the
52
Notice Date shall instead run from the later of (x) in connection with any
Notification, the date on which any required notification periods have expired
or been terminated and (y) in connection with any Approval, the date on which
such approval has been obtained and any requisite waiting period or periods
shall have expired. For purposes of Section 2(a) hereof, any exercise of the
Option shall be deemed to occur on the Notice Date relating thereto. On or prior
to the Closing Date, Grantee shall have the right to revoke its exercise of the
Option by written notice to the Issuer given not less than three business days
prior to the Closing Date.
(f) At the closing referred to in Section 2(e) hereof, Grantee shall
pay to Issuer the aggregate purchase price for the number of shares of Issuer
Common Stock specified in the Option Notice in immediately available funds by
wire transfer to a bank account designated by Issuer; provided, however, that
failure or refusal of Issuer to designate such a bank account shall not preclude
Grantee from exercising the Option.
(g) At such closing, simultaneously with the delivery of immediately
available funds as provided in Section 2(f) hereof, Issuer shall deliver to
Grantee a certificate or certificates representing the number of shares of
Issuer Common Stock specified in the Option Notice and, if the Option should be
exercised in part only, a new Option evidencing the rights of Grantee thereof to
purchase the balance of the shares of Issuer Common Stock purchasable hereunder.
(h) Certificates for Issuer Common Stock delivered at a closing
hereunder shall be endorsed with a restrictive legend substantially as follows:
The transfer of the shares represented by this certificate is
subject to resale restrictions arising under the Securities Act of 1933,
as amended, and applicable state securities laws and to certain provisions
of an agreement between BSB Bancorp, Inc. and Skaneateles Bancorp, Inc.
dated as of January 25, 1999. A copy of such agreement is on file at the
principal office of BSB Bancorp, Inc., and will be provided to the holder
hereof without charge upon receipt by BSB Bancorp, Inc. of a written
request therefor.
It is understood and agreed that: (i) the reference to the resale restrictions
of the Securities Act in the above legend shall be removed by delivery of
substitute certificate(s) without such reference if Grantee shall have delivered
to Issuer a copy of a letter from the staff of the Securities and Exchange
Commission (the "SEC") or Governmental Authority responsible for administering
any applicable state securities laws or an opinion of counsel, in form and
substance satisfactory to Issuer's counsel, to the effect that such legend is
not required for purposes of the Securities Act or applicable state securities
laws; (ii) the reference to the provisions of this Agreement in the above legend
shall be removed by delivery of substitute certificate(s) without such reference
if the shares have been sold or transferred in compliance with the provisions of
this Agreement and under circumstances that do not require the retention of such
reference; and (iii) the legend shall be removed in its entirety if the
conditions in the preceding clauses (i) and (ii) are both satisfied. In addition
such certificates shall bear any other legend as may be required by law.
(i) Upon the giving by Grantee to Issuer of an Option Notice and the
tender of the applicable purchase price in immediately available funds on the
Closing Date, unless prohibited by applicable law, Grantee shall be deemed to be
the holder of record of the number of shares of Issuer Common Stock specified in
the Option Notice, notwithstanding that the stock transfer books of Issuer shall
then be closed or that certificates representing such shares of Issuer Common
Stock shall not then actually be delivered to Grantee. Issuer shall pay all
expenses and other charges that may be payable in connection with the
preparation, issuance and delivery of stock certificates under this Section 2 in
the name of Grantee.
SECTION 3. Issuer agrees: (i) that it shall at all times until the
termination of this
53
Agreement have reserved for issuance upon the exercise of the Option that number
of authorized and reserved shares of Issuer Common Stock equal to the maximum
number of shares of Issuer Common Stock at any time and from time to time
issuable hereunder, all of which shares will, upon issuance pursuant hereto, be
duly authorized, validly issued, fully paid, non-assessable, and delivered free
and clear of all claims, liens, encumbrances and security interests and not
subject to any preemptive rights; (ii) that it will not, by amendment of its
certificate of incorporation or through reorganization, consolidation, merger,
dissolution or sale of assets, or by any other voluntary act, avoid or seek to
avoid the observance or performance of any of the covenants, stipulations or
conditions to be observed or performed hereunder by Issuer; (iii) promptly to
take all reasonable action as may from time to time be requested by the Grantee,
at Grantee's expense (including (x) complying with all premerger notification,
reporting and waiting period requirements specified in 15 U.S.C. ss. 18a anD
regulations promulgated thereunder and (y) in the event prior approval of or
notice to the FDIC, the FRB, the New York Superintendent or any other
Governmental Authority, under the Change in Bank Control Act of 1978, as
amended, the Bank Holding Company Act, as amended, or any other applicable
federal or state banking law, is necessary before the Option may be exercised,
cooperating with Grantee in preparing such applications or notices and providing
such information to each such Governmental Authority as it may require in order
to permit Grantee to exercise the Option and Issuer duly and effectively to
issue shares of Issuer Common Stock pursuant hereto; and (iv) to take all action
provided herein to protect the rights of Grantee against dilution.
SECTION 4. This Agreement (and the Option granted hereby) are
exchangeable, without expense, at the option of Grantee, upon presentation and
surrender of this Agreement at the principal office of Issuer, for other
agreements providing for Options of different denominations entitling the holder
thereof to purchase, on the same terms and subject to the same conditions as are
set forth herein, in the aggregate the same number of shares of Issuer Common
Stock purchasable hereunder. The terms "Agreement" and "Option" as used herein
include any agreements and related options for which this Agreement (and the
Option granted hereby) may be exchanged. Upon receipt by Issuer of evidence
reasonably satisfactory to it of the loss, theft, destruction or mutilation of
this Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer will execute and deliver a new Agreement of like
tenor and date.
SECTION 5. The number of shares of Issuer Common Stock purchasable upon
the exercise of the Option shall be subject to adjustment from time to time as
follows:
(a) In the event of any change in the type or number of shares of
Issuer Common Stock by reason of stock dividends, split-ups, mergers,
recapitalizations, combinations, subdivisions, conversions, exchanges of shares
or other issuances of additional shares (other than pursuant to the exercise of
the Option), the type and number of shares of Issuer Common Stock purchasable
upon exercise hereof shall be appropriately adjusted and proper provision shall
be made so that, in the event that any additional shares of Issuer Common Stock
are to be issued or otherwise become outstanding as a result of any such change
(other than pursuant to an exercise of the Option), the number of shares of
Issuer Common Stock that remain subject to the Option shall be increased or
decreased (as applicable) so that, after such issuance and together with the
shares of Issuer Common Stock previously issued pursuant to the exercise of the
Option (as adjusted on account of any of the foregoing changes in the Issuer
Common Stock), the Option shall equal the sum of 19.99% of the total of the
number of shares of Issuer Common Stock then issued and outstanding.
(b) Whenever the number of shares of Issuer Common Stock purchasable
upon exercise hereof is adjusted as provided in this Section 5, the Option Price
shall be adjusted by multiplying the Option Price by a fraction, the numerator
of which shall be equal to the number of shares of Issuer Common Stock
purchasable prior to the adjustment and the denominator of which shall be equal
to the number of shares of Issuer Common Stock purchasable after the adjustment.
54
SECTION 6. (a) Upon the occurrence of a Purchase Event that occurs prior
to an Exercise Termination Event, Issuer shall, at the request of Grantee
(whether on its own behalf or on behalf of any subsequent holder of the Option
(or part thereof) or of any of the shares of Issuer Common Stock issued pursuant
hereto), promptly prepare, file and keep current a shelf registration statement
with the SEC, under the Securities Act covering any shares issued and issuable
pursuant to the Option and shall use its reasonable best efforts to cause such
registration statement to become effective, and to remain current and effective
for a period not in excess of 180 days from the day such registration statement
first becomes effective, in order to permit the sale or other disposition of any
shares of Issuer Common Stock issued upon total or partial exercise of the
Option ("Option Shares") in accordance with any plan of disposition requested by
Grantee. Grantee shall have the right to demand two such registrations which
right shall be transferable. Grantee shall provide all information reasonably
requested by Issuer for inclusion in any offering circular or, if applicable,
registration statement to be filed hereunder. In connection with any such
offering circular or, if applicable, registration statement, Issuer and Grantee
shall provide each other with representations, warranties, indemnities and other
agreements customarily given in connection with such registration. If requested
by Grantee in connection with such registration, Issuer and Grantee shall become
a party to any underwriting agreement relating to the sale of such shares, but
only to the extent of obligating themselves in respect of representations,
warranties, indemnities and other agreements customarily included in such
underwriting agreements. Notwithstanding the foregoing, if Grantee revokes any
exercise notice or fails to exercise any Option with respect to any exercise
notice pursuant to Section 2(e) hereof, Issuer shall not be obligated to
continue any registration process with respect to the sale of Option Shares
issuable upon the exercise of such Option and Grantee shall not be deemed to
have demanded registration of Option Shares.
(b) In the event that Grantee requests Issuer to prepare an offering
circular or, if applicable, to file a registration statement following the
failure to obtain any approval required to exercise the Option as described in
Section 9 hereof, the closing of the sale or other disposition of the Issuer
Common Stock or other securities pursuant to such offering circular or, if
applicable, registration statement shall occur substantially simultaneously with
the exercise of the Option.
(c) Concurrently with the preparation and filing of a registration
statement under Section 6(a) hereof, Issuer shall also make all filings required
to comply with state securities laws in such number of states as Grantee may
reasonably request.
SECTION 7. (a) Upon the occurrence of a Purchase Event that occurs prior
to an Exercise Termination Event, (i) at the request (the date of such request
being the "Option Repurchase Request Date") of Grantee, Issuer shall repurchase,
subject to compliance with applicable law and out of funds legally available
therefor, the Option from Grantee at a price (the "Option Repurchase Price")
equal to the amount by which (A) the market/offer price (as defined below)
exceeds (B) the Option Price, multiplied by the number of shares for which the
Option may then be exercised and (ii) at the request (the date of such request
being the "Option Share Repurchase Request Date") of the owner of Option Shares
from time to time (the "Owner"), Issuer shall repurchase such number of the
Option Shares from the Owner as the Owner shall designate at a price (the
"Option Share Repurchase Price") equal to the market/offer price multiplied by
the number of Option Shares so designated. The term "market/offer price" shall
mean the highest of (i) the price per share of Issuer Common Stock at which a
tender offer or exchange offer therefor has been made after the date hereof and
on or prior to the Option Repurchase Request Date or the Option Share Repurchase
Request Date, as the case may be, (ii) the price per share of Issuer Common
Stock paid or to be paid by any third party pursuant to an agreement with Issuer
(whether by way of a merger, consolidation or otherwise), (iii) the average of
the 20 highest last sale prices for shares of Issuer Common Stock as reported
within the 90-day period ending on the Option Repurchase Request Date or the
Option Share Repurchase Request Date, as the case may be, and (iv) in the event
of a sale of all or substantially all of Issuer's assets, the sum of the price
paid in such sale for such assets and the
55
current market value of the remaining assets of Issuer as determined by an
investment banking firm selected by Grantee or the Owner, as the case may be,
and reasonably acceptable to Issuer, divided by the number of shares of Issuer
Common Stock outstanding at the time of such sale. In determining the
market/offer price, the value of consideration other than cash shall be the
value determined by an investment banking firm selected by Grantee or the Owner,
as the case may be, and reasonably acceptable to Issuer. The investment banking
firm's determination shall be conclusive and binding on all parties.
(b) Grantee or the Owner, as the case may be, may exercise its right
to require Issuer to repurchase the Option and/or any Option Shares pursuant to
this Section 7 by surrendering for such purpose to Issuer, at its principal
office, a copy of this Agreement or certificates for Option Shares, as
applicable, accompanied by a written notice or notices stating that Grantee or
the Owner, as the case may be, elects to require Issuer to repurchase the Option
and/or the Option Shares in accordance with the provisions of this Section 7. As
promptly as practicable, and in any event within 30 business days after the
surrender of the Option and/or certificates representing Option Shares and the
receipt of such notice or notices relating thereto, Issuer shall deliver or
cause to be delivered to Grantee the Option Repurchase Price or to the Owner the
Option Share Repurchase Price.
(c) Issuer hereby undertakes to use its reasonable best efforts to
obtain all required regulatory, shareholder and legal approvals and to file any
required notices as promptly as practicable in order to accomplish any
repurchase contemplated by this Section 7. Nonetheless, to the extent that
Issuer is prohibited under applicable law or regulation from repurchasing any
Option and/or any Option Shares in full, Issuer shall promptly so notify Grantee
and/or the Owner and thereafter deliver or cause to be delivered, from time to
time, to Grantee and/or the Owner, as appropriate, the portion of the Option
Repurchase Price and the Option Share Repurchase Price, respectively, that it is
no longer prohibited from delivering, within five business days after the date
on which Issuer is no longer so prohibited; provided, however, that if Issuer at
any time after delivery of a notice of repurchase pursuant to Section 7(b)
hereof is prohibited as referred to above, from delivering to Grantee and/or the
Owner, as appropriate, the Option Repurchase Price or the Option Share
Repurchase Price, respectively, in full, Grantee or the Owner, as appropriate,
may revoke its notice of repurchase of the Option or the Option Shares either in
whole or in part whereupon, in the case of a revocation in part, Issuer shall
promptly (i) deliver to Grantee and/or the Owner, as appropriate, that portion
of the Option Purchase Price or the Option Share Repurchase Price that Issuer is
not prohibited from delivering after taking into account any such revocation and
(ii) deliver, as appropriate, either (A) to Grantee, a new Agreement evidencing
the right of Grantee to purchase that number of shares of Issuer Common Stock
equal to the number of shares of Issuer Common Stock purchasable immediately
prior to the delivery of the notice of repurchase less the number of shares of
Issuer Common Stock covered by the portion of the Option repurchased or, (B) to
the Owner, a certificate for the number of Option Shares covered by the
revocation.
(d) Issuer shall not enter into any agreement with any Person (other
than Grantee or a Grantee Subsidiary) for an Acquisition Transaction unless the
other Person assumes all the obligations of Issuer pursuant to this Section 7 in
the event that Grantee or the Owner elects, in its sole discretion, to require
such other Person to perform such obligations.
SECTION 8. (a) In the event that prior to an Exercise Termination Event,
Issuer shall enter into a letter of intent or definitive agreement (i) to
consolidate or merge with any Person (other than Grantee or a Grantee
Subsidiary), and Issuer shall not be the continuing or surviving corporation of
such consolidation or merger, (ii) to permit any Person (other than Grantee or a
Grantee Subsidiary) to merge into Issuer, and Issuer shall be the continuing or
surviving corporation, but, in connection with such merger, the then outstanding
shares of Issuer Common Stock shall be changed into or exchanged for stock or
other securities of any other Person or cash or any other property or the then
outstanding shares of Issuer Common Stock shall after such merger
56
represent less than 50% of the outstanding shares and share equivalents of the
merged company, or (iii) to sell or otherwise transfer all or substantially all
of its assets to any Person (other than Grantee or a Grantee Subsidiary) then,
and in each such case, such letter of intent or definitive agreement governing
such transaction shall make proper provision so that the Option shall, upon the
consummation of such transaction and upon the terms and conditions set forth
herein, be converted into, or exchanged for, an option (the "Substitute
Option"), at the election of Grantee, of either (x) the Acquiring Corporation
(as defined below) or (y) any person that controls the Acquiring Corporation
(the Acquiring Corporation and any such controlling person being hereinafter
referred to as the "Substitute Option Issuer").
(b) The Substitute Option shall be exercisable for such number of
shares of Substitute Common Stock (as is hereinafter defined) as is equal to the
market/offer price (as defined in Section 7 hereof) multiplied by the number of
shares of Issuer Common Stock for which the Option was theretofore exercisable,
divided by the Average Price (as hereinafter defined). The exercise price of the
Substitute Option per share of the Substitute Common Stock (the "Substitute
Purchase Price") shall then be equal to the Option Price multiplied by a
fraction in which the numerator is the number of shares of Issuer Common Stock
for which the Option was theretofore exercisable and the denominator is the
number of shares for which the Substitute Option is exercisable.
(c) The Substitute Option shall otherwise have the same terms as the
Option, provided, that if the terms of the Substitute Option cannot, for legal
reasons, be the same as the Option, such terms shall be as similar as possible
and in no event less advantageous to Grantee, provided, further that the terms
of the Substitute Option shall include (by way of example and not limitation)
provisions for the repurchase of the Substitute Option and Substitute Common
Stock by the Substitute Option Issuer on the same terms and conditions as
provided in Section 7 hereof.
(d) The following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean (i) the continuing or
surviving corporation of a consolidation or merger with Issuer (if other
than Issuer), (ii) Issuer in a merger in which Issuer is the continuing or
surviving corporation, and (iii) the transferee of all or any substantial
part of Issuer's assets.
(ii) "Substitute Common Stock" shall mean the common stock issued by
the Substitute Option Issuer upon exercise of the Substitute Option.
(iii) "Average Price" shall mean the average closing price of a
share of Substitute Common Stock for the one-year period immediately
preceding the consolidation, merger or sale in question, but in no event
higher than the closing price of the shares of Substitute Common Stock on
the day preceding such consolidation, merger or sale; provided, that if
Issuer is the issuer of the Substitute Option, the Average Price shall be
computed with respect to a share of Issuer Common Stock issued by Issuer,
the corporation merging into Issuer or by any company which controls or is
controlled by such merging corporation, as Grantee may elect.
(e) In no event, pursuant to any of the foregoing paragraphs, shall
the Substitute Option be exercisable for more than 19.99% of the shares of
Substitute Common Stock outstanding immediately prior to the issuance of the
Substitute Option. In the event that the Substitute Option would be exercisable
for more than such number of shares of Substitute Common Stock but for this
clause (e), the Substitute Option Issuer shall make a cash payment to Grantee
equal to the excess of (i) the value of the Substitute Option without giving
effect to the limitation in this clause (e) over (ii) the value of the
Substitute Option after giving effect to the limitation in this clause (e). This
difference in value shall be determined by a nationally recognized investment
banking firm selected
57
by Grantee and the Substitute Option Issuer. In addition, the provisions of
Section 5(a) hereof shall not apply to the issuance of any Substitute Option and
for purposes of applying Section 5(a) hereof thereafter to any Substitute
Option, the percentage referred to in Section 5(a) hereof shall thereafter equal
the percentage that the percentage of the shares of Substitute Common Stock
subject to the Substitute Option bears to the number of shares of Substitute
Common Stock outstanding.
SECTION 9. Notwithstanding Sections 2, 6 and 7 hereof, if Grantee has
given the notice referred to in one or more of such Sections, the exercise of
the rights specified in any such Section shall be extended (a) if the exercise
of such rights requires obtaining regulatory approvals (including any required
waiting periods) to the extent necessary to obtain all regulatory approvals for
the exercise of such rights, and (b) to the extent necessary to avoid liability
under Section 16(b) of the Exchange Act by reason of such exercise; provided,
that in no event shall any closing date occur more than 12 months after the
related notice date, and, if the closing date shall not have occurred within
such period due to the failure to obtain any required approval by the FRB, the
FDIC, the New York Superintendent or any other Governmental Authority despite
the best efforts of Issuer or the Substitute Option Issuer, as the case may be,
to obtain such approvals, the exercise of the rights shall be deemed to have
been rescinded as of the related notice date. In the event (a) Grantee receives
official notice that an approval of the FRB, the FDIC, the New York
Superintendent or any other Governmental Authority required for the purchase and
sale of the Option Shares will not be issued or granted or (b) a closing date
has not occurred within 12 months after the related notice date due to the
failure to obtain any such required approval, Grantee shall be entitled to
exercise the Option in connection with the concurrent resale of the Option
Shares pursuant to a registration statement as provided in Section 6 hereof.
Nothing contained in this Agreement shall restrict Grantee from specifying
alternative means of exercising rights pursuant to Sections 2, 6 or 7 hereof in
the event that the exercising of any such rights shall not have occurred due to
the failure to obtain any required approval referred to in this Section 9.
SECTION 10. Issuer hereby represents and warrants to Grantee as follows:
(a) Issuer has the requisite corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly approved by
the Board of Directors of Issuer and no other corporate proceedings on the part
of Issuer are necessary to authorize this Agreement or to consummate the
transactions so contemplated. This Agreement has been duly executed and
delivered by, and constitutes a valid and binding obligation of, Issuer,
enforceable against Issuer in accordance with its terms, subject to any required
Governmental Approval, and except as enforceability thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium and other similar
laws affecting the enforcement of creditors' rights generally and except that
the availability of the equitable remedy of specific performance or injunctive
relief is subject to the discretion of the court before which any proceeding may
be brought.
(b) Issuer has taken all necessary corporate action to authorize and
reserve and to permit it to issue, and at all times from the date hereof through
the termination of this Agreement in accordance with its terms will have
reserved for issuance upon the exercise of the Option, that number of shares of
Issuer Common Stock equal to the maximum number of shares of Issuer Common Stock
at any time and from time to time issuable hereunder, and all such shares, upon
issuance pursuant hereto, will be duly authorized, validly issued, fully paid,
non-assessable, and will be delivered free and clear of all claims, liens,
encumbrances and security interests and not subject to any preemptive rights.
SECTION 11. (a) Neither of the parties hereto may assign any of its rights
or delegate any of its obligations under this Agreement or the Option created
hereunder to any other Person without
58
the express written consent of the other party, except that Grantee may assign
this Agreement to a wholly owned subsidiary of Grantee and Grantee may assign
its rights hereunder in whole or in part after the occurrence of a Preliminary
Purchase Event. The term "Grantee" as used in this Agreement shall also be
deemed to refer to Grantee's permitted assigns.
(b) Any assignment of rights of Grantee to any permitted assignee of
Grantee hereunder shall bear the restrictive legend at the beginning thereof
substantially as follows:
The transfer of the option represented by this assignment and the
related option agreement is subject to resale restrictions arising under
the Securities Act of 1933, as amended, and applicable state securities
laws and to certain provisions of an agreement between BSB Bancorp, Inc.
and Skaneateles Bancorp, Inc., dated as of January ___, 1999. A copy of
such agreement is on file at the principal office of BSB Bancorp, Inc.,
and will be provided to any permitted assignee of the Option without
charge upon receipt of a written request therefor.
SECTION 12. Each of Grantee and Issuer will use its reasonable efforts to
make all filings with, and to obtain consents of, all third parties and
Governmental Authorities necessary to the consummation of the transactions
contemplated by this Agreement, including, without limitation, applying to the
FDIC, the FRB, the New York Superintendent and any other Governmental Authority
for approval to acquire the shares issuable hereunder.
SECTION 13. The parties hereto acknowledge that damages would be an
inadequate remedy for a breach of this Agreement by either party hereto and that
the obligations of the parties hereto shall be enforceable by either party
hereto through injunctive or other equitable relief. Both parties further agree
to waive any requirement for the securing or posting of any bond in connection
with the obtaining of any such equitable relief and that this provision is
without prejudice to any other rights that the parties hereto may have for any
failure to perform this Agreement.
SECTION 14. If any term, provision, covenant or restriction contained in
this Agreement is held by a court or a federal or state regulatory agency of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions and covenants and restrictions contained in this Agreement
shall remain in full force and effect, and shall in no way be affected, impaired
or invalidated. If for any reason such court or regulatory agency determines
that Grantee is not permitted to acquire, or Issuer is not permitted to
repurchase pursuant to Section 7 hereof, the full number of shares of Issuer
Common Stock provided in Section 1 hereof (as adjusted pursuant hereto), it is
the express intention of Issuer to allow Grantee to acquire or to require Issuer
to repurchase such lesser number of shares as may be permissible without any
amendment or modification hereof.
SECTION 15. All notices, requests, claims, demands and other
communications hereunder shall be deemed to have been duly given when delivered
in the manner and at the respective addresses of the parties set forth in the
Plan.
SECTION 16. This Agreement, the rights and obligations of the parties
hereto, and any claims or disputes relating thereto shall be governed by and
construed in accordance with the laws of the State of Delaware (but not
including the choice of law rules thereof).
SECTION 17. This Agreement may be executed in counterparts, each of which
shall be deemed to be an original, but all of which shall constitute one and the
same agreement and shall be effective at the time of execution and delivery.
SECTION 18. Except as otherwise expressly provided herein, each of the
parties hereto shall
59
bear and pay all costs and expenses incurred by it or on its behalf in
connection with the transactions contemplated hereunder.
SECTION 19. Except as otherwise expressly provided herein or in the Plan,
this Agreement contains the entire agreement between the parties with respect to
the transactions contemplated hereunder and supersedes all prior arrangements or
understandings with respect thereof, written or oral. The terms and conditions
of this Agreement shall inure to the benefit of and be binding upon the parties
hereto and their respective successors and permitted assigns. Nothing in this
Agreement, expressed or implied, is intended to confer upon any party, other
than the parties hereto, and their respective successors except as assigns, any
rights, remedies, obligations or liabilities under or by reason of this
Agreement, except as expressly provided herein.
SECTION 20. Capitalized terms used in this Agreement and not defined
herein but defined in the Plan shall have the meanings assigned thereto in the
Plan.
SECTION 21. Nothing contained in this Agreement shall be deemed to
authorize or require Issuer or Grantee to breach any provision of the Plan or
any provision of law applicable to the Grantee or Issuer.
SECTION 22. In the event that any selection or determination is to be made
by Grantee or the Owner hereunder and at the time of such selection or
determination there is more than one Grantee or Owner, such selection shall be
made by a majority in interest of such Grantees or Owners.
SECTION 23. In the event of any exercise of the option by Grantee, Issuer
and such Grantee shall execute and deliver all other documents and instruments
and take all other action that may be reasonably necessary in order to
consummate the transactions provided for by such exercise.
SECTION 24. Except to the extent Grantee exercises the Option, Grantee
shall have no rights to vote or receive dividends or have any other rights as a
shareholder with respect to shares of Issuer Common Stock covered hereby.
[SIGNATURE PAGE FOLLOWS]
60
IN WITNESS WHEREOF, each of the parties has caused this Option
Agreement to be executed and delivered on its behalf by their respective
officers thereunto duly authorized, all as of the date first above written.
SKANEATELES BANCORP, INC.
By:
---------------------------------
Name:
Title:
BSB BANCORP, INC.
By:
---------------------------------
Name:
Title:
================================================================================
61
EXHIBIT C
CERTIFICATE OF MERGER
SKANEATELES BANCORP, INC.
INTO
BSB BANCORP, INC.
Pursuant to Title 8, Section 251 of the General Corporation Law of
the State of Delaware, BSB Bancorp, Inc., a corporation organized and existing
under the law of the State of Delaware ("BSB Bancorp"), and Skaneateles Bancorp,
Inc., a corporation organized and existing under the law of the State of
Delaware ("SKAN"), do hereby certify to the following facts relating to the
merger of SKAN with and into BSB Bancorp:
FIRST: The name and state of incorporation of each constituent
entity that is a party to the merger is as follows:
Name State of Incorporation
---- ----------------------
BSB Bancorp, Inc. Delaware
Skaneateles Bancorp, Inc. Delaware
SECOND: An Agreement and Plan of Merger, dated as of January 25,
1999, by and between BSB Bancorp and SKAN (the "Agreement and Plan of Merger"),
has been approved, adopted, certified, executed and acknowledged by each of the
constituent corporations in accordance with the requirements of Section 251 of
the General Corporation Law of the State of Delaware.
THIRD: Pursuant to the Agreement and Plan of Merger, the surviving
corporation of the Merger is BSB Bancorp, a Delaware corporation (the "Surviving
Corporation"), and the name of the Surviving Corporation is "BSB Bancorp, Inc."
The Surviving Corporation shall continue its existence under its present name
pursuant to the provisions of the General Corporation Law of the State of
Delaware.
FOURTH: At the "Effective Time" of the Merger, as defined in and
pursuant to the Agreement and Plan of Merger, the certificate of incorporation
of BSB Bancorp shall become the certificate of incorporation of the Surviving
Corporation, until amended in accordance with the provisions of the General
Corporation Law of the State of Delaware. At the Effective Time, the bylaws of
BSB Bancorp shall become the bylaws of the Surviving Corporation, until amended
in accordance with the certificate of incorporation of BSB Bancorp and the
General Corporation Law of the State of Delaware. At the Effective Time, the
directors and officers of BSB Bancorp shall become the directors and officers of
the Surviving Corporation.
FIFTH: The executed Agreement and Plan of Merger is on file at the
office of the Surviving Corporation at the following address:
BSB Bancorp, Inc.
▇▇-▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
SIXTH: A copy of the Agreement and Plan of Merger will be furnished
by the Surviving Corporation, on request and without cost, to any shareholder of
any constituent corporation.
62
IN WITNESS WHEREOF, BSB Bancorp and SKAN have caused this
Certificate of Merger to be duly executed as of this __ day of , 1999.
ATTEST BSB BANCORP, INC.
By: By:
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Senior Vice President and Title: President and Chief Executive
Corporate Secretary Officer
ATTEST SKANEATELES BANCORP, INC.
By: By:
Name: Name:
Title: Title:
================================================================================
63
EXHIBIT D
SKANEATELES BANCORP, INC.
STOCKHOLDER AGREEMENT
This STOCKHOLDER AGREEMENT, dated as of January 25, 1999, is entered
into by and among BSB Bancorp, Inc., a Delaware corporation ("BSB Bancorp"), and
the stockholders of Skaneateles Bancorp, Inc., a Delaware corporation
("Skaneateles"), identified on Schedule I hereto (collectively, the
"Stockholders"), who are directors, executive officers or other affiliates of
Skaneateles (for purposes of Rule 145 under the Securities Act of 1933, as
amended, and for purposes of qualifying the Merger (defined below) for
"pooling-of-interests" accounting treatment).
WHEREAS, BSB Bancorp and Skaneateles have entered into an Agreement
and Plan of Merger, dated as of January 25, 1999 (the "Agreement"), which is
conditioned upon the execution of this Stockholder Agreement and which provides
for, among other things, the merger of Skaneateles with and into BSB Bancorp, in
a stock-for-stock transaction (the "Merger"); and
WHEREAS, in order to induce BSB Bancorp to enter into and consummate
the Agreement, each of the Stockholders agrees to, among other things, vote in
favor of the Agreement, the Merger and the other transactions contemplated by
the Agreement in his or her capacity as a stockholder of Skaneateles;
NOW, THEREFORE in consideration of the premises, the mutual
covenants and agreements set forth herein and other good and valuable
consideration, the sufficiency of which is hereby acknowledged, the parties
hereto agree as follows:
1. OWNERSHIP OF SKANEATELES COMMON STOCK. Each Stockholder represents and
warrants that the number of shares of Skaneateles common stock, par value $.01
per share ("Skaneateles Common Stock"), set forth opposite such Stockholder's
name on Schedule I hereto is the total number of shares of Skaneateles Common
Stock over which such person has "beneficial ownership" within the meaning of
Rule 13d-3 under the Securities Exchange Act of 1934, as amended, except that
the provisions of Rule 13d-3(d)(1)(i) shall be considered without any limit as
to time.
2. AGREEMENTS OF THE STOCKHOLDERS. Each Stockholder covenants and agrees
that:
(a) Such Stockholder shall, at any meeting of the holders of any or
all classes or series of Skaneateles Common Stock called for the purpose (or in
connection with any action taken by written consent), vote or cause to be voted
all shares of Skaneateles Common Stock with respect to which such Stockholder
has voting power (including the power to vote or to direct the voting of)
whether owned as of the date hereof or hereafter acquired (i) in favor of the
Agreement, the Merger and the other transactions contemplated by the Agreement
and (ii) against any plan or proposal pursuant to which Skaneateles is to be
acquired by or merged with, or pursuant to which Skaneateles proposes to sell
all or substantially all of its assets and liabilities to, any person, entity or
group (other than BSB Bancorp or any affiliate thereof) or any other action that
is inconsistent with the Agreement or the transactions contemplated thereby.
Notwithstanding the foregoing, or any other provision of this Stockholder
Agreement, BSB Bancorp shall have no agreement, arrangement or understanding
with any Stockholder as to directing the voting of any shares of Skaneateles
Common Stock to the extent it would result in BSB Bancorp, individually or with
any of its Affiliates (as defined in the next sentence) or Associates (as
defined in the next sentence) becoming the Beneficial Owner (as defined in the
next sentence) of five percent or more of the Voting Stock (as defined in the
next sentence) of Skaneateles. The terms "Affiliates," "Associates," "Beneficial
Owner," and "Voting Stock" are as defined or referenced in Article 12 of the
Skaneateles
64
Certificate of Incorporation. In determining which, if any, Stockholder that BSB
Bancorp shall have no agreement, arrangement or understanding with as to
directing the voting of any shares of Skaneateles Common Stock, reference shall
be made to the Stockholders in order of the amount of Skaneateles Common Stock
set forth opposite such Stockholder's name on Schedule I hereto, beginning with
the Stockholder who reports the fewest number of shares, and continuing in
ascending order therefrom.
(b) Except as otherwise expressly permitted hereby, such Stockholder
shall not sell, pledge, transfer or otherwise dispose of his or her shares of
Skaneateles Common Stock; provided, however, that this Section 2(b) shall not
apply to a pledge existing as of January 1, 1999.
(c) Such Stockholder shall not in his or her capacity as a
stockholder of Skaneateles directly or indirectly encourage or solicit, initiate
or hold discussions or negotiations with, or provide any information to, any
person, entity or group (other than BSB Bancorp or an affiliate thereof)
concerning any merger, sale of all or substantially all of the assets or
liabilities not in the ordinary course of business, sale of shares of capital
stock or similar transaction involving Skaneateles or otherwise inconsistent
with the Agreement or the transactions contemplated thereby. Nothing herein
shall impair such Stockholder's fiduciary obligations as a director of
Skaneateles.
(d) Stockholder shall use his or her best efforts to take or cause
to be taken all action, and to do or cause to be done all things necessary,
proper or advisable under applicable laws and regulations to consummate and make
effective the Merger contemplated by the Agreement.
(e) Such Stockholder shall not, prior to the public release by BSB
Bancorp of an earnings report to its stockholders covering at least one month of
operations after consummation of the Merger (the "Restricted Period"), sell,
pledge (other than the replacement of a pledge existing on January 1, 1999 of
Skaneateles Common Stock), transfer or otherwise dispose of the shares of BSB
Bancorp common stock, par value $.01 per share (the "BSB Bancorp Common Stock"),
to be received by him or her for his or her shares of Skaneateles Common Stock
upon consummation of the Merger, it being agreed that BSB Bancorp shall use
commercially reasonable efforts to publish such earnings report within 45 days
after the end of the first month after the Merger becomes effective in which
there are at least 30 days of post-Merger combined operations..
(f) Such Stockholder shall comply with all applicable federal and
state securities laws in connection with any sale of BSB Bancorp Common Stock
received in exchange for Skaneateles Common Stock in the Merger, including the
trading and volume limitations as to sales by affiliates contained in Rule 145
under the Securities Act of 1933, as amended.
3. SUCCESSORS AND ASSIGNS. A Stockholder may sell, pledge, transfer or
otherwise dispose of his or her shares of Skaneateles Common Stock only with the
prior written consent of BSB Bancorp and if the acquirer of such Skaneateles
Common Stock agrees in writing to be bound by this Stockholder Agreement.
4. TERMINATION. The parties agree and intend that this Stockholder
Agreement be a valid and binding agreement enforceable against the parties
hereto and that damages and other remedies at law for the breach of this
Stockholder Agreement are inadequate. This Stockholder Agreement may be
terminated at any time prior to the consummation of the Merger by the written
consent of the parties hereto and shall be automatically terminated in the event
that the Agreement is terminated in accordance with its terms; provided,
however, that if the holders of Skaneateles Common Stock fail to approve the
Agreement or Skaneateles fails to hold a stockholders' meeting to vote on the
Agreement, then (i) Section 2(a) clause (ii) hereof shall continue in effect as
to any plan or
65
proposal received by Skaneateles from any person, entity or group (other than
BSB Bancorp or any affiliate thereof) prior to the termination of the Agreement
or within 240 days after such termination ("Plan or Proposal") and (ii) Section
2(b) hereof shall continue in effect to preclude a sale (other than pursuant to
normal brokers transactions on the Nasdaq Stock Market), pledge (other than to a
bona fide financial institution or recognized securities dealer), transfer or
other disposition directly or indirectly to any such person, entity or group in
connection with any such Plan or Proposal, except upon consummation of such Plan
or Proposal.
5. NOTICES. Notices may be provided to BSB Bancorp and the Stockholders in
the manner specified in the Agreement, with all notices to the Stockholders
being provided to them at the addresses set forth at Schedule I.
6. GOVERNING LAW. This Stockholder Agreement shall be governed by the laws
of the State of Delaware, without giving effect to the principles of conflicts
of laws thereof.
7. COUNTERPARTS. This Stockholder Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same and each of
which shall be deemed an original.
8. HEADINGS. The Section headings contained herein are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Stockholder Agreement.
9. REGULATORY APPROVAL. If any provision of this Stockholder Agreement
requires the approval of any regulatory authority in order to be enforceable,
then such provision shall not be effective until such approval is obtained;
provided, however, that the foregoing shall not affect the enforceability of any
other provision of this Stockholder Agreement.
SIGNATURE PAGE FOLLOWS
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IN WITNESS WHEREOF, BSB Bancorp, by a duly authorized officer, and
each of the Stockholders have caused this Stockholder Agreement to be executed
and delivered as of the day and year first above written.
BSB BANCORP, INC.
By:
▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇
President and Chief Executive Officer
STOCKHOLDERS:
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SCHEDULE I
Number of Shares of Skaneateles Common
Name and Address of Stockholder Stock Beneficially Owned
------------------------------- --------------------------------------
================================================================================
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EXHIBIT E
PROPOSED PEER GROUP INDEX
================================================================================
CURRENT
INSTITUTION TICKER WEIGHING
----------- ------ --------
Arrow Financial Corporation AROW 2.64%
BT Financial Corporation BTFC 5.49%
CNB Financial Corp. CNBF 3.20%
Community Bank Systems, Inc. CBU 3.08%
Drovers Bancshares Corp. DROV 1.89%
First Commonwealth Financial Corporation FCF 13.06%
Iroquois Bancorp, Inc. IROQ 1.02%
National Penn Bancshares NPBC 5.57%
NBT Bancorp, Inc. NBTB 5.28%
Premier National Bancorp PNB 6.62%
Prime Bancorp PBNK 4.64%
S&T Bancorp, Inc. STBA 11.68%
State Bancorp, Inc. STBC 2.75%
Suffolk Bancorp SUBK 2.58%
▇▇▇▇▇▇▇▇ County Trustco, Inc. TMP 2.05%
TrustCo Bank Corp NY TRST 11.32%
United National Bancorp UNBJ 4.68%
U.S.B. Holding Company, Incorporated UBH 6.69%
USBANCORP, Inc. UBAN 5.77%
69