Exhibit 99.1
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
FIRST NIAGARA FINANCIAL GROUP, INC.
FIRST NIAGARA BANK
AND
▇▇▇▇ FINANCIAL CORPORATION
THE ▇▇▇▇ SAVINGS BANK
AUGUST 10, 2003
TABLE OF CONTENTS
ARTICLE I CERTAIN DEFINITIONS.........................................1
1.1. Certain Definitions.........................................1
ARTICLE II THE MERGER..................................................7
2.1. Merger......................................................7
2.2. Effective Time..............................................7
2.3. Certificate of Incorporation and Bylaws.....................7
2.4. Directors and Officers of Surviving Corporation.............8
2.5. Additional Director of FNFG.................................8
2.6. Effects of the Merger.......................................8
2.7. Tax Consequences............................................8
2.8. Possible Alternative Structures.............................8
ARTICLE III CONVERSION OF SHARES........................................9
3.1. Conversion of TFC Common Stock; Merger Consideration........9
3.2. Election Procedures........................................11
3.3. Procedures for Exchange of TFC Common Stock................13
3.4. Treatment of TFC Options...................................15
3.5. Reservation of Shares......................................16
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF TFC AND TSB..............16
4.1. Standard...................................................16
4.2. Organization...............................................17
4.3. Capitalization.............................................17
4.4. Authority; No Violation....................................18
4.5. Consents...................................................19
4.6. Financial Statements.......................................19
4.7. Taxes......................................................20
4.8. No Material Adverse Effect.................................20
4.9. Material Contracts; Leases; Defaults.......................21
4.10. Ownership of Property; Insurance Coverage..................22
4.11. Legal Proceedings..........................................23
4.12. Compliance With Applicable Law.............................23
4.13. Employee Benefit Plans.....................................24
4.14. Brokers, Finders and Financial Advisors....................27
4.15. Environmental Matters......................................27
4.16. Loan Portfolio.............................................28
4.17. Securities Documents.......................................30
4.18. Related Party Transactions.................................30
4.19. Deposits...................................................30
4.20. Antitakeover Provisions Inapplicable; Required Vote........30
4.21. Registration Obligations...................................31
4.22. Risk Management Instruments................................31
4.23. Fairness Opinion...........................................31
4.24. Trust Accounts.............................................31
(i)
ARTICLE V REPRESENTATIONS AND WARRANTIES OF FNFG AND
FIRST NIAGARA BANK.........................................32
5.1. Standard...................................................32
5.2. Organization...............................................32
5.3. Capitalization.............................................33
5.4. Authority; No Violation....................................33
5.5. Consents...................................................34
5.6. Financial Statements.......................................34
5.7. Taxes......................................................35
5.8. No Material Adverse Effect.................................35
5.9. Ownership of Property; Insurance Coverage..................36
5.10. Legal Proceedings..........................................36
5.11. Compliance With Applicable Law.............................36
5.12. Employee Benefit Plans.....................................37
5.13. Environmental Matters......................................39
5.14. Loan Portfolio.............................................39
5.15. Securities Documents.......................................40
5.16. Deposits...................................................40
5.17. Antitakeover Provisions Inapplicable.......................40
5.18. Risk Management Instruments................................40
5.19. Brokers, Finders and Financial Advisors....................41
ARTICLE VI COVENANTS OF TFC AND TSB...................................41
6.1. Conduct of Business........................................41
6.2. Current Information........................................45
6.3. Access to Properties and Records...........................45
6.4. Financial and Other Statements.............................46
6.5. Maintenance of Insurance...................................46
6.6. Disclosure Supplements.....................................47
6.7. Consents and Approvals of Third Parties....................47
6.8. All Reasonable Efforts.....................................47
6.9. Failure to Fulfill Conditions..............................47
6.10. No Solicitation............................................47
6.11. Reserves and Merger-Related Costs..........................48
6.12. Board of Directors and Committee Meetings..................49
ARTICLE VII COVENANTS OF FNFG AND FIRST NIAGARA BANK.........................49
7.1. Conduct of Business........................................49
7.2. Current Information........................................49
7.3. Financial and Other Statements.............................49
7.4. Disclosure Supplements.....................................50
7.5. Consents and Approvals of Third Parties....................50
7.6. All Reasonable Efforts.....................................50
7.7. Failure to Fulfill Conditions..............................50
7.8. Employee Benefits; Advisory Board..........................50
7.9. Directors and Officers Indemnification and Insurance.......53
7.10. Stock Listing..............................................55
7.11. Stock and Cash Reserve.....................................55
(ii)
ARTICLE VIII REGULATORY AND OTHER MATTERS....................................55
8.1. TFC Special Meeting........................................55
8.2. Proxy Statement-Prospectus.................................55
8.3. Regulatory Approvals.......................................57
8.4. Affiliates.................................................57
ARTICLE IX CLOSING CONDITIONS................................................57
9.1. Conditions to Each Party's Obligations under this
Agreement.................................................57
9.2. Conditions to the Obligations of FNFG and First
Niagara Bank under this Agreement..........................59
9.3. Conditions to the Obligations of TFC and TSB under
this Agreement.............................................60
ARTICLE X THE CLOSING........................................................60
10.1. Time and Place.............................................60
10.2. Deliveries at the Pre-Closing and the Closing..............61
ARTICLE XI TERMINATION, AMENDMENT AND WAIVER.................................61
11.1. Termination................................................61
11.2. Effect of Termination......................................65
11.3. Amendment, Extension and Waiver............................66
ARTICLE XII MISCELLANEOUS....................................................66
12.1. Confidentiality............................................66
12.2. Public Announcements.......................................67
12.3. Survival...................................................67
12.4. Notices....................................................67
12.5. Parties in Interest........................................68
12.6. Complete Agreement.........................................68
12.7. Counterparts...............................................68
12.8. Severability...............................................68
12.9. Governing Law..............................................68
12.10. Interpretation.............................................69
12.11. Specific Performance.......................................69
Exhibit A Form of Bank Merger Agreement
Exhibit B Form of Voting Agreement
Exhibit C Affiliates Agreement
(iii)
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "Agreement"), is dated as of
August 10, 2003, by and between First Niagara Financial Group, Inc., a Delaware
corporation ("FNFG") and its wholly owned subsidiary, First Niagara Bank, a
federally chartered stock savings bank ("First Niagara Bank"), and ▇▇▇▇
Financial Corporation, a Delaware corporation ("TFC"), and its wholly owned
subsidiary, The ▇▇▇▇ Savings Bank, a New York chartered stock savings bank
("TSB").
WHEREAS, the Board of Directors of each of the parties (i) has determined
that this Agreement and the business combination and related transactions
contemplated hereby are in the best interests of the respective parties and (ii)
has determined that this Agreement and the transactions contemplated hereby are
consistent with and in furtherance of their respective business strategies, and
(iii) has approved this Agreement at meetings of each of such Board of
Directors;
WHEREAS, as a condition to the willingness of FNFG to enter into this
Agreement, each of the directors and executive officers of TFC have entered into
a Voting Agreement, dated as of the date hereof, with FNFG (the "Voting
Agreement"), pursuant to which each such officer and director has agreed, among
other things, to vote all shares of common stock of TFC owned by such person in
favor of the approval of this Agreement and the transactions contemplated
hereby, upon the terms and subject to the conditions set forth in such Voting
Agreements;
WHEREAS, the parties intend the Merger (as defined herein) to qualify as a
reorganization within the meaning of Section 368(a) of the Internal Revenue Code
of 1986, as amended (the "Code"); and
WHEREAS, the parties desire to make certain representations, warranties
and agreements in connection with the business transactions described in this
Agreement and to prescribe certain conditions thereto.
NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties and agreements herein contained, and of other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
1.1. Certain Definitions.
As used in this Agreement, the following terms have the following meanings
(unless the context otherwise requires, references to Articles and Sections
refer to Articles and Sections of this Agreement).
"Affiliate" means any Person who directly, or indirectly, through one or
more intermediaries, controls, or is controlled by, or is under common control
with, such Person and, without limiting the generality of the foregoing,
includes any executive officer or director of such Person and any Affiliate of
such executive officer or director.
1
"Agreement" means this agreement, and any amendment hereto.
"Applications" means the applications for regulatory approval that are
required by the transactions contemplated hereby.
"BHCA" shall mean the Bank Holding Company Act of 1956, as amended.
"Bank Merger" shall mean the merger of TSB with and into First Niagara
Bank, with First Niagara Bank as the surviving institution, which merger shall
occur immediately following the Merger.
"Bank Regulator" shall mean any Federal or state banking regulator,
including but not limited to the OTS, FDIC, the Department and the FRB, which
regulates First Niagara Bank or TSB, or any of their respective holding
companies or subsidiaries, as the case may be.
"BIF" shall mean the Bank Insurance Fund as administered by the FDIC.
"Certificate" shall mean certificates evidencing shares of TFC Common
Stock.
"COBRA" shall mean the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Confidentiality Agreement" shall mean the confidentiality agreement
referred to in Section 12.1 of this Agreement.
"Deferral Plans" shall have the meaning set forth in Section 7.8.8.
"Department" shall mean the Banking Department of the State of New York,
and where appropriate shall include the Superintendent of Banks of the State of
New York and the Banking Board of the State of New York.
"DGCL" shall mean the Delaware General Corporation Law.
"Dissenting Shares" shall have the meaning set forth in Section 3.1.7.
"Dissenting Shareholder" shall have the meaning set forth in Section
3.1.7.
"Effective Time" shall mean the date and time specified pursuant to
Section 2.2 hereof as the effective time of the Merger.
"Environmental Laws" means any applicable Federal, state or local law,
statute, ordinance, rule, regulation, code, license, permit, authorization,
approval, consent, order, judgment, decree, injunction or agreement with any
governmental entity relating to (1) the protection, preservation or restoration
of the environment (including, without limitation, air, water vapor, surface
water, groundwater, drinking water supply, surface soil, subsurface soil, plant
and animal life or any other natural resource), and/or (2) the use, storage,
recycling, treatment, generation, transportation, processing, handling,
labeling, production, release or disposal of Materials of Environmental Concern.
The term Environmental Law includes without limitation (a) the Comprehensive
Environmental Response, Compensation and Liability Act, as amended, 42 U.S.C.
ss.9601, et seq; the Resource Conservation and Recovery Act, as amended, 42
U.S.C. ss.6901, et seq; the Clean Air Act, as amended, 42 U.S.C. ss.7401, et
seq; the Federal Water Pollution Control Act, as amended, 33 U.S.C. ss.1251, et
seq; the Toxic Substances Control Act, as amended, 15 U.S.C. ss.2601, et seq;
the Emergency Planning and Community Right to Know Act, 42 U.S.C. ss.11001, et
seq; the Safe Drinking Water Act, 42 U.S.C. ss.300f, et seq; and all comparable
state and local laws, and (b) any common law (including without limitation
common law that may impose strict liability) that may impose liability or
obligations for injuries or damages due to the presence of or exposure to any
Materials of Environmental Concern.
2
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"Exchange Agent" shall mean Mellon Investor Services, LLC, or such other
bank or trust company or other agent designated by FNFG, and reasonably
acceptable to TFC, which shall act as agent for FNFG in connection with the
exchange procedures for converting Certificates into the Merger Consideration.
"Exchange Fund" shall have the meaning set forth in Section 3.3.1.
"FDIA" shall mean the Federal Deposit Insurance Act, as amended.
"FDIC" shall mean the Federal Deposit Insurance Corporation or any
successor thereto.
"FHLB" shall mean the Federal Home Loan Bank of New York.
"First Niagara Bank" shall mean First Niagara Bank, a federally chartered
stock savings association, with its principal offices located at ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇, P.O. Box 514, Lockport, New York, which is a wholly owned
subsidiary of FNFG.
"FNFG" shall mean First Niagara Financial Group, Inc., a Delaware
corporation, with its principal executive offices located at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
"FNFG Common Stock" shall mean the common stock, par value $.01 per share,
of FNFG.
"FNFG DISCLOSURE SCHEDULE" shall mean a written disclosure schedule
delivered by FNFG to TFC specifically referring to the appropriate section of
this Agreement.
"FNFG Stock Benefit Plans" shall mean the 1999 Stock Option Plan, the 1999
Recognition and Retention Plan and the 2002 Long-Term Incentive Stock Benefit
Plan.
"FNFG Financial Statements" shall mean the (i) the audited consolidated
statements of financial condition (including related notes and schedules) of
FNFG as of December 31, 2002 and 2001 and the consolidated statements of income,
changes in stockholders' equity and cash flows (including related notes and
schedules, if any) of FNFG for each of the three years ended December 31, 2002,
2001 and 2000, as set forth in FNFG's annual report for the year ended December
31, 2002, and (ii) the unaudited interim consolidated financial statements of
FNFG as of the end of each calendar quarter following December 31, 2002, and for
the periods then ended, as filed by FNFG in its Securities Documents.
3
"FNFG Subsidiary" means any corporation, 50% or more of the capital stock
of which is owned, either directly or indirectly, by FNFG or First Niagara Bank,
except any corporation the stock of which is held in the ordinary course of the
lending activities of First Niagara Bank.
"FRB" shall mean the Board of Governors of the Federal Reserve System or
any successor thereto.
"GAAP" shall mean accounting principles generally accepted in the United
States of America.
"Governmental Entity" shall mean any Federal or state court,
administrative agency or commission or other governmental authority or
instrumentality.
"HOLA" shall mean the Home Owners' Loan Act, as amended.
"IRS" shall mean the United States Internal Revenue Service.
"Knowledge" as used with respect to a Person (including references to such
Person being aware of a particular matter) means those facts that are known by
the executive officers and directors of such Person, and includes any facts,
matters or circumstances set forth in any written notice from any Bank Regulator
or any other material written notice received by that Person.
"Material Adverse Effect" shall mean, with respect to FNFG or TFC,
respectively, any effect that (i) is material and adverse to the financial
condition, results of operations or business of FNFG and its Subsidiaries taken
as a whole, or TFC and its Subsidiaries taken as a whole, respectively, or (ii)
does or would materially impair the ability of either TFC, on the one hand, or
FNFG, on the other hand, to perform its obligations under this Agreement or
otherwise materially threaten or materially impede the consummation of the
transactions contemplated by this Agreement; provided that "Material Adverse
Effect" shall not be deemed to include the impact of (a) changes in laws and
regulations affecting banks or thrift institutions generally, or interpretations
thereof by courts or governmental agencies, (b) changes in GAAP or regulatory
accounting principles generally applicable to financial institutions and their
holding companies, (c) actions and omissions of a party hereto (or any of its
Subsidiaries) taken with the prior written consent of the other party, (d)
compliance with this Agreement on the business, financial condition or results
of operations of the parties and their respective subsidiaries, including the
expenses incurred by the parties hereto in consummating the transactions
contemplated by this Agreement and (e) any change in the value of the securities
portfolio of FNFG or TFC, whether held as available for sale or held to
maturity, resulting from a change in interest rates generally.
"Materials of Environmental Concern" means pollutants, contaminants,
wastes, toxic substances, petroleum and petroleum products, and any other
materials regulated under Environmental Laws.
4
"Merger" shall mean the merger of TFC with and into FNFG (or a subsidiary
thereof) pursuant to the terms hereof.
"Merger Consideration" shall mean the cash or FNFG Common Stock, or
combination thereof, in an aggregate per share amount to be paid by FNFG for
each share of TFC Common Stock, as set forth in Section 3.1.
"Merger Registration Statement" shall mean the registration statement,
together with all amendments, filed with the SEC under the Securities Act for
the purpose of registering shares of FNFG Common Stock to be offered to holders
of TFC Common Stock in connection with the Merger.
"NASD" shall mean the National Association of Securities Dealers, Inc.
"OTS" shall mean the Office of Thrift Supervision or any successor
thereto.
"PBGC" shall mean the Pension Benefit Guaranty Corporation, or any
successor thereto.
"Pension Plan" shall have the meaning set forth in Section 4.12.2.
"Person" shall mean any individual, corporation, partnership, joint
venture, association, trust or "group" (as that term is defined under the
Exchange Act).
"Proxy Statement-Prospectus" shall mean the proxy statement/prospectus, as
amended or supplemented, which is included as part of the Merger Registration
Statement, as declared effective by the SEC, and which shall be delivered to
shareholders of TFC in connection with the solicitation of their approval of
this Agreement and the transactions contemplated hereby and the offering of the
FNFG Common Stock to them as Merger Consideration.
"Rabbi Trust Shares" shall mean the 138,805 shares held by a rabbi trust
for the benefit of the participants under the Deferral Plans.
"Regulatory Agreement" shall have the meaning set forth in Section 4.11.3.
"Rights" shall mean warrants, options, rights, convertible securities,
stock appreciation rights and other arrangements or commitments which obligate
an entity to issue or dispose of any of its capital stock or other ownership
interests or which provide for compensation based on the equity appreciation of
its capital stock.
"SAIF" shall mean the Savings Association Insurance Fund administered by
the FDIC.
"SBA" shall mean the Small Business Administration or any successor
thereto.
"SEC" shall mean the Securities and Exchange Commission or any successor
thereto.
"Securities Act" shall mean the Securities Act of 1933, as amended.
5
"Securities Documents" shall mean all reports, offering circulars, proxy
statements, registration statements and all similar documents filed, or required
to be filed, pursuant to the Securities Laws.
"Securities Laws" shall mean the Securities Act; the Exchange Act; the
Investment Company Act of 1940, as amended; the Investment Advisers Act of 1940,
as amended; the Trust Indenture Act of 1939, as amended, and the rules and
regulations of the SEC promulgated thereunder.
"Stock Exchange" shall mean the Nasdaq Stock Market.
"Subsidiary" shall have the meanings set forth in Rule 1-02 of Regulation
S-X of the SEC.
"Surviving Corporation" shall have the meaning set forth in Section 2.1
hereof.
"Termination Date" shall mean April 30, 2004.
"TFC" shall mean ▇▇▇▇ Financial Corporation, a Delaware corporation, with
its principal offices located at ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇.
"TFC Common Stock" shall mean the common stock, par value $0.0001 per
share, of TFC.
"TFC DISCLOSURE SCHEDULE" shall mean a written disclosure schedule
delivered by TFC to FNFG specifically referring to the appropriate section of
this Agreement.
"TFC Financial Statements" shall mean (i) the audited consolidated
statements of financial condition (including related notes and schedules, if
any) of TFC as of September 30, 2002 and 2001 and the consolidated statements of
income, changes in stockholders' equity and cash flows (including related notes
and schedules, if any) of TFC for each of the three years ended September 30,
2002, 2001 and 2000, and (ii) the unaudited interim consolidated financial
statements of TFC as of the end of each calendar quarter following September 30,
2002 and for the periods then ended.
"TFC Option Plan" shall mean the TFC Long-Term Equity Compensation Plan
(which consists of a stock option plan and a Management Recognition Plan) and
any amendments thereto.
"TFC Option" shall mean an option to purchase shares of TFC Common Stock
granted pursuant to the TFC Option Plan and as set forth in TFC DISCLOSURE
SCHEDULE 4.3.1.
"TFC Regulatory Reports" means the Call Reports of TSB and accompanying
schedules, as filed with the FDIC, for each calendar quarter beginning with the
quarter ended December 31, 2001, through the Closing Date, and all Reports filed
with the FRB by TFC from September 30, 2001 through the Closing Date.
6
"TFC Shareholders Meeting" means the meeting of shareholders of TFC to be
held for the purpose of considering and approving this Agreement and the Merger.
"TFC Subsidiary" means any corporation, 50% or more of the capital stock
of which is owned, either directly or indirectly, by TFC or TSB, except any
corporation the stock of which is held in the ordinary course of the lending
activities of TSB.
"TSB" shall mean The ▇▇▇▇ Savings Bank, a New York chartered stock savings
bank, with its principal offices located at ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇▇▇, which is a wholly owned subsidiary of TFC.
Other terms used herein are defined in the preamble and elsewhere in this
Agreement.
ARTICLE II
THE MERGER
2.1. Merger.
Subject to the terms and conditions of this Agreement, at the Effective
Time: (a) TFC shall merge with and into FNFG, with FNFG as the resulting or
surviving corporation (the "Surviving Corporation"); and (b) the separate
existence of TFC shall cease and all of the rights, privileges, powers,
franchises, properties, assets, liabilities and obligations of TFC shall be
vested in and assumed by FNFG. As part of the Merger, each share of TFC Common
Stock will be converted into the right to receive the Merger Consideration
pursuant to the terms of Article III hereof. Immediately after the Merger, TSB
shall merge with and into First Niagara Bank, with First Niagara Bank as the
resulting institution.
2.2. Effective Time.
The Closing shall occur no later than five business days following the
latest to occur of (i) Department approval relating to the Merger, (ii) OTS
approval of the Merger, (iii) TFC stockholder approval of the Merger, (iv) the
passing of any applicable waiting periods; or (v) at FNFG's sole discretion,
January 11, 2004; or at such other date or time upon which FNFG and TFC mutually
agree (the "Closing"). The Merger shall be effected by the filing of a
certificate of merger with the Delaware Office of the Secretary of State on the
day of the Closing (the "Closing Date"), in accordance with the DGCL. The
"Effective Time" means the date and time upon which the certificate of merger is
filed with the Delaware Office of the Secretary of State, or as otherwise stated
in the certificate of merger, in accordance with the DGCL.
2.3. Certificate of Incorporation and Bylaws.
The Certificate of Incorporation and Bylaws of FNFG as in effect
immediately prior to the Effective Time shall be the Certificate of
Incorporation and Bylaws of the Surviving Corporation, until thereafter amended
as provided therein and by applicable law.
7
2.4. Directors and Officers of Surviving Corporation.
Except as provided in Section 2.5, the directors of FNFG immediately prior
to the Effective Time shall be the initial directors of the Surviving
Corporation, each to hold office in accordance with the Certificate of
Incorporation and Bylaws of the Surviving Corporation. The officers of FNFG
immediately prior to the Effective Time shall be the initial officers of
Surviving Corporation, in each case until their respective successors are duly
elected or appointed and qualified.
2.5. Additional Director of FNFG.
Effective as of the Effective Time, the number of persons constituting the
Board of Directors of FNFG and First Niagara Bank shall each be increased by one
person, and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇. shall be appointed and elected to the FNFG
and the First Niagara Bank Boards and shall serve as the Vice Chairman of each
of the Boards with a term of office expiring at the annual meeting of
stockholders to be held following the year ending December 31, 2005. In his
capacity as Vice Chairman of the Board, ▇▇. ▇▇▇▇▇▇▇ shall be provided the use of
his current office (or reasonably comparable office space) and secretarial
support through the year ending December 31, 2005.
2.6. Effects of the Merger.
At and after the Effective Time, the Merger shall have the effects as set
forth in the DGCL.
2.7. 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" as that term is used in Sections 354 and
361 of the Code. From and after the date of this Agreement and until the
Closing, each party hereto shall use its reasonable best efforts to cause the
Merger to qualify, and will not knowingly take any action, cause any action to
be taken, fail to take any action or cause any action to fail to be taken which
action or failure to act could prevent the Merger from qualifying as a
reorganization under Section 368(a) of the Code. Following the Closing, neither
FNFG, TFC nor any of their affiliates shall knowingly take any action, cause any
action to be taken, fail to take any action or cause any action to fail to be
taken, which action or failure to act could cause the Merger to fail to qualify
as a reorganization under Section 368(a) of the Code. FNFG and TFC each hereby
agrees to deliver certificates substantially in compliance with IRS published
advance ruling guidelines, with customary exceptions and modifications thereto,
to enable counsel to deliver the legal opinion contemplated by Section 9.1.6,
which certificates shall be effective as of the date of such opinion.
2.8. Possible Alternative Structures.
Notwithstanding anything to the contrary contained in this Agreement,
prior to the Effective Time FNFG shall be entitled to revise the structure of
the Merger described in Section 2.1 hereof, provided that (i) FNFG shall have
received an opinion of counsel to FNFG that there are no adverse Federal or
state income tax consequences to TFC stockholders as a result of the
modification; (ii) the consideration to be paid to the holders of TFC Common
Stock under this Agreement is not thereby changed in kind, value or reduced in
amount; (iii) such modification will not delay materially or jeopardize receipt
of any required regulatory approvals or other consents and approvals relating to
the consummation of the Merger; and (iv) TFC is consulted as to the proposed
alternative structure and the reasons therefor. The parties hereto agree to
appropriately amend this Agreement and any related documents in order to reflect
any such revised structure.
8
ARTICLE III
CONVERSION OF SHARES
3.1. Conversion of TFC Common Stock; Merger Consideration.
At the Effective Time, by virtue of the Merger and without any action on
the part of FNFG, TFC or the holders of any of the shares of TFC Common Stock,
the Merger shall be effected in accordance with the following terms:
3.1.1. Each share of FNFG Common Stock that is issued and
outstanding immediately prior to the Effective Time shall remain issued and
outstanding following the Effective Time and shall be unchanged by the Merger.
3.1.2. All shares of TFC Common Stock held in the treasury of TFC
and each share of TFC Common Stock owned by FNFG or any direct or indirect
wholly owned subsidiary of FNFG or First Niagara Bank or of TFC immediately
prior to the Effective Time (other than shares held in a fiduciary capacity or
in connection with debts previously contracted) shall, at the Effective Time,
cease to exist, and the certificates for such shares shall be canceled as
promptly as practicable thereafter, and no payment or distribution shall be made
in consideration therefor.
3.1.3. Each outstanding share of TFC Common Stock that under the
terms of Section 3.2 is subject to an All Stock Election, shall be converted
into and become the right to receive that number of shares of FNFG Common Stock
as determined in accordance with the following: (A) if the Average Closing Price
is equal to or greater than $13.82480 and less than or equal to $17.59520, such
number of shares of FNFG Common Stock as shall equal $35.50 divided by the
Average Closing Price, rounded to five decimal places; (B) if the Average
Closing Price is less than $13.82480, 2.56785 shares of FNFG Common Stock; and
(C) if the Average Closing Price is greater than $17.59520, 2.01760 shares of
FNFG Common Stock.
3.1.4. For purposes of this Section 3.1, the following terms have
the following meanings: (i) "Average Closing Price" shall mean the average of
the Closing Prices of FNFG Common Stock on the five Trading Days immediately
preceding the Determination Date; (ii) "Closing Price" shall mean the closing
sale price of FNFG Common Stock on a Trading Day as supplied by the Nasdaq
National Market; (iii) "Trading Day" shall mean a day for which a Closing Price
is so supplied; and (iv) the "Determination Date" shall mean the first date on
which all Bank Regulatory approvals (and waivers, if applicable) necessary for
consummation of the Merger have been received (disregarding any waiting period).
9
3.1.5. Each outstanding share of TFC Common Stock that under the
terms of Section 3.2 is subject to an All Cash Election, shall be converted into
the right to receive a cash payment of $35.50.
3.1.6. Each outstanding share of TFC Common Stock that under the
terms of Section 3.2 is subject to a Cash/Stock Election, shall be converted
into the right to receive (i) a cash payment of $15.26500, plus (ii) that number
of shares of FNFG Common Stock as determined in accordance with the following:
(A) if the Average Closing Price is equal to or greater than $13.82480 and less
than or equal to $17.59520, such number of shares of FNFG Common Stock as shall
equal $20.23500 divided by the Average Closing Price, rounded to five decimal
places; (B) if the Average Closing Price is less than $13.82480, 1.46367 shares
of FNFG Common Stock; and (C) if the Average Closing Price is greater than
$17.59520, 1.15003 shares of FNFG Common Stock.
3.1.7. Each outstanding share of TFC Common Stock the holder of
which has perfected his right to dissent under the DGCL and has not effectively
withdrawn or lost such right as of the Effective Time (the "Dissenting Shares")
shall not be converted into or represent a right to receive shares of FNFG
Common Stock or cash hereunder, and the holder thereof shall be entitled only to
such rights as are granted by the DGCL. TFC shall give FNFG prompt notice upon
receipt by TFC of any such demands for payment of the fair value of such shares
of TFC Common Stock and of withdrawals of such notice and any other instruments
provided pursuant to applicable law (any shareholder duly making such demand
being hereinafter called a "Dissenting Shareholder"), and FNFG shall have the
right to participate in all negotiations and proceedings with respect to any
such demands. TFC shall not, except with the prior written consent of FNFG,
voluntarily make any payment with respect to, or settle or offer to settle, any
such demand for payment, or waive any failure to timely deliver a written demand
for appraisal or the taking of any other action by such Dissenting Shareholder
as may be necessary to perfect appraisal rights under the DGCL. Any payments
made in respect of Dissenting Shares shall be made by the Surviving Company.
3.1.8. If any Dissenting Shareholder shall effectively withdraw or
lose (through failure to perfect or otherwise) his right to such payment at or
prior to the Effective Time, such holder's shares of TFC Common Stock shall be
converted into a right to receive cash or FNFG Common Stock in accordance with
the applicable provisions of this Agreement. If such holder shall effectively
withdraw or lose (through failure to perfect or otherwise) his right to such
payment after the Effective Time (or the Election Deadline), each share of TFC
Common Stock of such holder shall be converted on a share by share basis as an
All Cash Election, an All Stock Election, or a Cash/Stock Election, as FNFG
shall determine in its sole discretion.
3.1.9. After the Effective Time, shares of TFC Common Stock shall be
no longer outstanding and shall automatically be canceled and shall cease to
exist, and shall thereafter by operation of this section be the right to receive
the Merger Consideration.
3.1.10. In the event FNFG changes (or establishes a record date for
changing) the number of, or provides for the exchange of, shares of FNFG Common
Stock issued and outstanding prior to the Effective Time as a result of a stock
split, stock dividend, recapitalization, reclassification, or similar
transaction with respect to the outstanding FNFG Common Stock and the record
date therefor shall be prior to the Effective Time, the number of shares of FNFG
Common Stock issuable pursuant to the All Stock or the Cash/Stock Election shall
be proportionately and appropriately adjusted; provided, that no such adjustment
shall be made with regard to FNFG Common Stock if FNFG issues additional shares
of Common Stock and receives fair market value consideration for such shares.
10
3.1.11. The consideration that any one TFC shareholder may receive
pursuant to Article III is referred to herein as the "Merger Consideration" and
the consideration that all of the TFC shareholders are entitled to receive
pursuant to Article III (including with respect to TFC Options and the Rabbi
Trust Shares) is referred to herein as the "Aggregate Merger Consideration".
3.2. Election Procedures.
Holders of TFC Common Stock may elect to receive shares of FNFG Common
Stock or cash in exchange for their shares of TFC Common Stock in accordance
with the following procedures, provided that in the aggregate (and including
cash payments relating to TFC Options), the cash consideration payable with
respect to TFC Common Stock shall not exceed $166,504,730 (the "Cash
Consideration Amount"), subject to the following sentence as well as Section
3.2.6. The allocation of the Aggregate Merger Consideration between cash and
shares of FNFG Common Stock shall be determined pursuant to this Section 3.2,
provided that FNFG shall under no circumstance issue more than 13,800,000 shares
of FNFG common stock in this transaction (the "Maximum Share Amount").
Notwithstanding the foregoing limitation, if the number of shares of FNFG Common
Stock to be issued pursuant to this Section 3.2 would be in excess of the
Maximum Share Amount, then a sufficient number of shares subject to the All
Stock Elections shall be chosen by FNFG on a pro rata basis, by lot or other
equitable method to be treated as All Cash Election Shares pursuant to Section
3.2.8, such that the number of shares to be issued by FNFG is no more than the
Maximum Share Amount.
3.2.1. An election form, in such form as FNFG and TFC shall mutually
agree ("Election Form"), will be sent, on the date that the Proxy
Statement-Prospectus is mailed (the "Mailing Date"), to each holder of record of
TFC Common Stock permitting such holder, subject to the allocation and election
procedures set forth in this Section 3.2, (i) to elect to receive cash for all
of such shares (an "All Cash Election"), in accordance with the provision of
Section 3.1.5, (ii) to elect to receive FNFG Common Stock for all of such shares
(an "All Stock Election"), in accordance with the provision of Section 3.1.3,
(iii) elect to receive a combination of cash and shares of FNFG Common Stock for
such shares (a "Cash/Stock Election"), in accordance with the provision of
Section 3.1.6, or (iv) to indicate that such record holder has no preference as
to the receipt of cash or FNFG Common Stock for such shares (a "Non-Election").
Holders of record of shares of TFC Common Stock who hold such shares as
nominees, trustees or in other representative capacities (a "Representative")
may submit multiple Election Forms, provided that each such Election Form covers
all the shares of TFC Common Stock held by each Representative for a particular
beneficial owner. Any shares of TFC Common Stock with respect to which the
holder thereof shall not, as of the Election Deadline, have made an election by
submission to the Exchange Agent on an effective, properly completed Election
Form shall be deemed Non-Election Shares. Non-Election Shares may be converted
on a share by share basis as an All Cash Election, an All Stock Election, or a
Cash/Stock Election, as FNFG shall determine in its sole discretion. Any
Dissenting Shares shall be deemed shares subject to an All Cash Election, and
with respect to such shares the holders thereof shall in no event receive
consideration comprised of FNFG Common Stock.
11
3.2.2. The term "Election Deadline", as used below, shall mean 5:00
p.m., Eastern time, on the 20th business day following the Mailing Date, or such
other date as TFC and FNFG shall mutually agree upon. An election shall have
been properly made only if the Exchange Agent shall have actually received a
properly completed Election Form by the Election Deadline. Any Election Form may
be revoked or changed by the person submitting such Election Form to the
Exchange Agent by written notice to the Exchange Agent only if such notice of
revocation or change is actually received by the Exchange Agent at or prior to
the Election Deadline. The Certificate or Certificates relating to any revoked
Election Form shall be promptly returned without charge to the person submitting
the Election Form to the Exchange Agent. The Exchange Agent shall have
discretion to determine when any election, modification or revocation is
received and whether any such election, modification or revocation has been
properly made.
3.2.3. If the number of shares of TFC Common Stock subject to All
Cash Elections (the "All Cash Election Shares") plus the number of shares of TFC
Common Stock subject to Cash/Stock Elections in the aggregate results in cash
consideration that exceeds the Cash Consideration Amount, all shares of TFC
Common Stock covered by All Stock Elections (the "All Stock Election Shares")
and the Cash/Stock Elections (the "Mixed Election Shares") shall be converted as
requested, all shares of TFC Common Stock covered by Non-Elections (the
"Non-Election Shares") shall be treated as All Stock Election Shares, and the
All Cash Election Shares shall be converted in the following manner: (i) the
Exchange Agent will select from among the holders of All Cash Election Shares,
on a pro rata basis, a sufficient number of such shares, which shares shall be
deemed All Stock Election Shares ("Stock Designated Shares") such that the
number of All Cash Election Shares, less the Stock Designated Shares, plus the
number of shares of Mixed Election Shares, in the aggregate results in cash
merger consideration that is approximately equal to the Cash Consideration
Amount, and all such Stock Designated Shares shall be converted into the right
to receive FNFG Common Stock in accordance with Section 3.1.3; and (ii) the All
Cash Election Shares not so selected as Stock Designated Shares shall be
converted into the right to receive cash in accordance with Section 3.1.5.
3.2.4. If the number of All Cash Election Shares plus the number of
shares of Mixed Election Shares in the aggregate results in cash consideration
that is less than the Cash Consideration Amount, the All Cash Election Shares
and the Mixed Election Shares shall be converted as requested, all Non-Election
Shares shall be considered Cash Election Shares, and the All Stock Election
Shares shall be converted in the following manner: (i) the Exchange Agent will
select from among the holders of All Stock Election Shares, on a pro rata basis,
a sufficient number of such shares, which shares shall be deemed All Cash
Election Shares ("Cash Designated Shares") such that the number of Cash
Designated Shares will, when added to the number of Cash Election Shares, the
Non-Election Shares and the Mixed Election Shares, in the aggregate result in
cash merger consideration that is approximately equal to the Cash Consideration
Amount, and all such Cash Designated Shares shall be converted into the right to
receive cash in accordance with Section 3.1.5; and (ii) the All Stock Election
Shares not so selected as Cash Designated Shares shall be converted into the
right to receive FNFG Common Stock in accordance with Section 3.1.3.
12
3.2.5. In the event that neither Section 3.2.3 nor Section 3.2.4
above is applicable, the All Cash Election Shares shall be converted into the
right to receive cash in accordance with Section 3.1.5, the All Stock Election
Shares shall be converted into the right to receive FNFG Common Stock in
accordance with Section 3.1.3, the Mixed Election Shares shall be converted into
the right to receive cash and FNFG Common Stock in accordance with Section
3.1.6, and the Non-Election Shares shall be treated as All Cash Election Shares,
All Stock Election Shares, or Mixed Election Shares by the Exchange Agent so
that in the aggregate the cash merger consideration equals the Cash
Consideration Amount as closely as possible.
3.2.6. If the tax opinion referred to in Section 9.1.6 and to be
delivered at the Closing (the "Tax Opinion") cannot be rendered as a result of
the Merger's potentially failing to satisfy continuity of interest requirements
under applicable federal income tax principles relating to reorganizations under
Section 368(a) of the Code, because the aggregate value of the shares of FNFG
Common Stock to be issued in the Merger as of the Effective Time is less than
40% of the value of the Aggregate Merger Consideration, then the allocation
procedures set forth in Section 3.2.3 shall be followed to the minimum extent
necessary to satisfy the requirements of Section 368(a) of the Code.
3.2.7. No Fractional Shares. Notwithstanding anything to the
contrary contained herein, no certificates or scrip representing fractional
shares of FNFG Common Stock shall be issued upon the surrender for exchange of
Certificates, no dividend or distribution with respect to FNFG Common Stock
shall be payable on or with respect to any fractional share interest, and such
fractional share interests shall not entitle the owner thereof to vote or to any
other rights of a stockholder of FNFG. In lieu of the issuance of any such
fractional share, FNFG shall pay to each former holder of TFC Common Stock who
otherwise would be entitled to receive a fractional share of FNFG Common Stock,
an amount in cash determined by multiplying the Average Closing Price by the
fraction of a share of FNFG Common Stock which such holder would otherwise be
entitled to receive pursuant to Section 3.1.3 hereof. No interest will be paid
on the cash that the holders of such fractional shares shall be entitled to
receive upon such delivery. For purposes of determining any fractional share
interest, all shares of TFC Common Stock owned by a TFC shareholder shall be
combined so as to calculate the maximum number of whole shares of FNFG Common
Stock issuable to such TFC shareholder.
3.3. Procedures for Exchange of TFC Common Stock.
3.3.1. FNFG to Make Merger Consideration Available. After the
Election Deadline and no later than the Closing Date, FNFG shall deposit, or
shall cause to be deposited, with the Exchange Agent for the benefit of the
holders of TFC Common Stock, for exchange in accordance with this Section 3.3,
certificates representing the shares of FNFG Common Stock and an amount of cash
equal to the Cash Consideration Amount and any cash that may be payable in lieu
of any fractional shares (such cash and certificates for shares of FNFG Common
Stock, together with any dividends or distributions with respect thereto, being
hereinafter referred to as the "Exchange Fund").
13
3.3.2. Exchange of Certificates. FNFG shall take all steps necessary
to cause the Exchange Agent, within five (5) business days after the Effective
Time, to mail to each holder of a Certificate or Certificates, a form letter of
transmittal for return to the Exchange Agent and instructions for use in
effecting the surrender of the Certificates for certificates representing, as
the case may be, the shares of FNFG Common Stock, cash in respect of the Cash
Election Price, and cash in lieu of fractional shares into which the TFC Common
Stock represented by such Certificates shall have been converted as a result of
the Merger. The letter of transmittal (which shall be subject to the reasonable
approval of TFC) 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. Upon proper surrender of a Certificate for exchange and
cancellation to the Exchange Agent, together with a properly completed letter of
transmittal, duly executed, the holder of such Certificate shall be entitled to
receive in exchange therefor, as applicable, (i) a certificate representing that
number of shares of FNFG Common Stock (if any) to which such former holder of
TFC Common Stock shall have become entitled pursuant to the provisions of
Section 3.1 or 3.2 hereof, (ii) a check representing that amount of cash (if
any) to which such former holder of TFC Common Stock shall have become entitled
pursuant to the provisions of Section 3.1 or 3.2 hereof and (iii) a check
representing the amount of cash (if any) payable in lieu of fractional shares of
FNFG Common Stock, which such former holder has the right to receive in respect
of the Certificate surrendered pursuant to the provisions of this Section 3.2,
and the Certificate so surrendered shall forthwith be cancelled. No interest
will be paid or accrued on the cash payable in lieu of fractional shares.
Certificates surrendered for exchange by any person who is an "affiliate" of TFC
for purposes of Rule 145(c) under the Securities Act shall not be exchanged for
certificates representing shares of FNFG Common Stock until FNFG has received
the written agreement of such person contemplated by Section 8.4 hereof.
3.3.3. Rights of Certificate Holders after the Effective Time. The
holder of a Certificate that prior to the Merger represented issued and
outstanding TFC Common Stock shall have no rights, after the Effective Time,
with respect to such TFC Common Stock except to surrender the Certificate in
exchange for the Merger Consideration as provided in this Agreement. No
dividends or other distributions declared after the Effective Time with respect
to FNFG Common Stock shall be paid to the holder of any unsurrendered
Certificate until the holder thereof shall surrender such Certificate in
accordance with this Section 3.3. After the surrender of a Certificate in
accordance with this Section 3.3, 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 FNFG Common Stock
represented by such Certificate.
3.3.4. Surrender by Persons Other than Record Holders. If the Person
surrendering a Certificate and signing the accompanying letter of transmittal is
not the record holder thereof, then it shall be a condition of the payment of
the Merger Consideration that: (i) such Certificate is properly endorsed to such
Person or is accompanied by appropriate stock powers, in either case signed
exactly as the name of the record holder appears on such Certificate, and is
otherwise in proper form for transfer, or is accompanied by appropriate evidence
of the authority of the Person surrendering such Certificate and signing the
letter of transmittal to do so on behalf of the record holder; and (ii) the
person requesting such exchange shall pay to the Exchange Agent in advance any
transfer or other taxes required by reason of the payment to a person other than
the registered holder of the Certificate surrendered, or required for any other
reason, or shall establish to the satisfaction of the Exchange Agent that such
tax has been paid or is not payable.
14
3.3.5. Closing of Transfer Books. From and after the Effective Time,
there shall be no transfers on the stock transfer books of TFC of the TFC Common
Stock that were 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 exchanged for the Merger
Consideration and canceled as provided in this Section 3.3.
3.3.6. Return of Exchange Fund. At any time following the six (6)
month period after the Effective Time, FNFG shall be entitled to require the
Exchange Agent to deliver to it any portions of the Exchange Fund which had been
made available to the Exchange Agent and not disbursed to holders of
Certificates (including, without limitation, all interest and other income
received by the Exchange Agent in respect of all funds made available to it),
and thereafter such holders shall be entitled to look to FNFG (subject to
abandoned property, escheat and other similar laws) with respect to any Merger
Consideration that may be payable upon due surrender of the Certificates held by
them. Notwithstanding the foregoing, neither FNFG nor the Exchange Agent shall
be liable to any holder of a Certificate for any Merger Consideration delivered
in respect of such Certificate to a public official pursuant to any abandoned
property, escheat or other similar law.
3.3.7. Lost, Stolen or Destroyed Certificates. 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 FNFG, the posting by such person of a
bond in such amount as FNFG 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 Merger
Consideration deliverable in respect thereof.
3.3.8. Withholding. FNFG or the Exchange Agent will be entitled to
deduct and withhold from the consideration otherwise payable pursuant to this
Agreement or the transactions contemplated hereby to any holder of TFC Common
Stock such amounts as FNFG (or any Affiliate thereof) or the Exchange Agent are
required to deduct and withhold with respect to the making of such payment under
the Code, or any applicable provision of U.S. federal, state, local or non-U.S.
tax law. To the extent that such amounts are properly withheld by FNFG or the
Exchange Agent, such withheld amounts will be treated for all purposes of this
Agreement as having been paid to the holder of the TFC Common Stock in respect
of whom such deduction and withholding were made by FNFG or the Exchange Agent.
3.4. Treatment of TFC Options.
Prior to and effective as of the Effective Time, TFC shall take all
actions necessary to terminate the TFC Option Plan. In accordance with Section
17 of the TFC Option Plan, for a period of fifteen days prior to the Effective
Time, all issued and outstanding TFC Options not theretofore exercisable (the
"Unexercisable TFC Options"), shall become immediately exercisable and otherwise
subject to the terms of the TFC Option Plan. Holders of all TFC Options,
including Unexercisable TFC Options, will be given the opportunity to elect to
receive, in cancellation of their TFC Option, a cash payment from TFC
immediately prior to the Effective Time, in an amount equal to the product of
(x) the number of shares of TFC Common Stock provided for in such TFC Option and
(y) the excess, if any, of $35.50 over the exercise price per share provided for
in such TFC Option (the "Cash Option Election"), which cash payment shall be
treated as compensation and shall be net of any applicable federal or state
withholding tax. Subject to the foregoing, TFC Options not exercised prior to
the Effective Time shall terminate, in accordance with the provisions of Section
17.3 of the TFC Option Plan. TFC shall send a written notice to all holders of
TFC Options (in accordance with Section 17.3 of the TFC Option Plan) informing
option holders of their right to exercise, of the Cash Option Election, and of
the termination of the unexercised TFC Options as of the Effective Time.
15
3.5. Reservation of Shares.
FNFG shall reserve for issuance a sufficient number of shares of the FNFG
Common Stock for the purpose of issuing shares of FNFG Common Stock to the TFC
shareholders in accordance with this Article III.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF TFC AND TSB
TFC and TSB represent and warrant to FNFG and First Niagara Bank that the
statements contained in this Article IV are correct and complete as of the date
of this Agreement and will be correct and complete as of the Closing Date (as
though made then and as though the Closing Date were substituted for the date of
this Agreement throughout this Article IV), except as set forth in the TFC
DISCLOSURE SCHEDULE delivered by TFC to FNFG on the date hereof, and except as
to any representation or warranty which specifically relates to an earlier date.
TFC and TSB have made a good faith effort to ensure that the disclosure on each
schedule of the TFC DISCLOSURE SCHEDULE corresponds to the section referenced
herein. However, for purposes of the TFC DISCLOSURE SCHEDULE, any item disclosed
on any schedule therein is deemed to be fully disclosed with respect to all
schedules under which such item may be relevant as and to the extent that it is
reasonably clear on the face of such schedule that such item applies to such
other schedule. References to the Knowledge of TFC shall include the Knowledge
of TSB.
4.1. Standard.
No representation or warranty of TFC or TSB contained in this Article IV
shall be deemed untrue or incorrect, and neither TFC nor TSB shall be deemed to
have breached a representation or warranty, as a consequence of the existence of
any fact, circumstance or event unless such fact, circumstance or event,
individually or taken together with all other facts, circumstances or events
inconsistent with any paragraph of Article IV, has had or is reasonably expected
to have a Material Adverse Effect; provided, however, that the foregoing
standard shall not apply to representations and warranties contained in Sections
4.2.3, 4.4 and 4.13.5, which shall be deemed untrue, incorrect and breached if
they are not true and correct in all material respects.
16
4.2. Organization.
4.2.1. TFC is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware, and is duly registered as
a bank holding company under the BHCA. TFC has full corporate power and
authority to carry on its business as now conducted and is duly licensed or
qualified to do business in the states of the United States and foreign
jurisdictions where its ownership or leasing of property or the conduct of its
business requires such qualification.
4.2.2. TSB is a New York chartered savings bank duly organized,
validly existing and in good standing under the laws of the State of New York.
The deposits of TSB are insured by the FDIC to the fullest extent permitted by
law, and all premiums and assessments required to be paid in connection
therewith have been paid by TSB when due. TSB is a member in good standing of
the FHLB and owns the requisite amount of stock therein.
4.2.3. ▇▇▇▇ Commercial Bank ("▇▇▇▇ Bank") is a New York chartered
commercial bank duly organized, validly existing and in good standing under the
laws of the State of New York. The deposits of ▇▇▇▇ Bank are insured by the FDIC
to the fullest extent permitted by law, and all premiums and assessments
required to be paid in connection therewith have been paid by ▇▇▇▇ Bank when
due. The activities of ▇▇▇▇ Bank have been limited to those set forth in Section
2(a)(5)(E)(ii) of the BHCA.
4.2.4. TFC DISCLOSURE SCHEDULE 4.2.4 sets forth each TFC Subsidiary.
Each TFC Subsidiary is a corporation or limited liability company duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation or organization.
4.2.5. The respective minute books of TFC, TSB, ▇▇▇▇ Bank and each
other TFC Subsidiary accurately records, in all material respects, all material
corporate actions of their respective shareholders and boards of directors
(including committees).
4.2.6. Prior to the date of this Agreement, TFC has made available
to FNFG true and correct copies of the certificate of incorporation or charter
and bylaws of TFC, TSB, ▇▇▇▇ Bank and each other TFC Subsidiary.
4.3. Capitalization.
4.3.1. The authorized capital stock of TFC consists of 60,000,000
shares of common stock, $0.0001 par value per share, of which 9,255,705 shares
are outstanding, validly issued, fully paid and nonassessable and free of
preemptive rights, and 15,000,000 shares of preferred stock, $0.0001 par value
("TFC Preferred Stock"), none of which are outstanding. There are 2,883,316
shares of TFC Common Stock held by TFC as treasury stock. Neither TFC nor any
TFC Subsidiary has or is bound by any Rights of any character relating to the
purchase, sale or issuance or voting of, or right to receive dividends or other
distributions on any shares of TFC Common Stock, or any other security of TFC or
any securities representing the right to vote, purchase or otherwise receive any
shares of TFC Common Stock or any other security of TFC, other than shares
issuable under the TFC Option Plan. TFC DISCLOSURE SCHEDULE 4.3.1 sets forth the
name of each holder of options to purchase TFC Common Stock, the number of
shares each such individual may acquire pursuant to the exercise of such
options, the vesting dates, and the exercise price relating to the options held,
as well as the names of each holder of an outstanding restricted stock award,
the number of shares subject to each award, and the vesting dates.
17
4.3.2. TFC owns all of the capital stock of TSB, free and clear of
any lien or encumbrance. TFC owns all of the capital stock of ▇▇▇▇ Bank, free
and clear of any lien or encumbrance. Except for the TFC Subsidiaries, TFC does
not possess, directly or indirectly, any material equity interest in any
corporate entity, except for equity interests held in the investment portfolios
of TFC Subsidiaries, equity interests held by TFC Subsidiaries in a fiduciary
capacity, and equity interests held in connection with the lending activities of
TFC Subsidiaries, including stock in the FHLB.
4.3.3. To TFC's Knowledge, no Person or "group" (as that term is
used in Section 13(d)(3) of the Exchange Act), is the beneficial owner (as
defined in Section 13(d) of the Exchange Act) of 5% or more of the outstanding
shares of TFC Common Stock.
4.4. Authority; No Violation.
4.4.1. TFC and TSB each has full corporate power and authority to
execute and deliver this Agreement and, subject to receipt of the required
approvals of the Bank Regulators described in Section 8.3, to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by TFC and TSB and the completion by TFC and TSB of the transactions
contemplated hereby, up to and including the Merger, have been duly and validly
approved by the Board of Directors of TFC and TSB, respectively, and, except for
approval of the shareholders of TFC, no other corporate proceedings on the part
of TFC or TSB (except for matters related to setting the date, time, place and
record date for the TFC Shareholders Meeting) are necessary to complete the
transactions contemplated hereby, up to and including the Merger. This Agreement
has been duly and validly executed and delivered by TFC and TSB, and the Bank
Merger has been duly and validly approved by the Board of Directors of TSB, and
by TFC in its capacity as sole stockholder of TSB, and subject to approval by
the shareholders of TFC and receipt of the required approvals of the Bank
Regulators described in Section 8.3 hereof, constitutes the valid and binding
obligations of TFC and TSB, enforceable against TFC and TSB in accordance with
its terms, subject to applicable bankruptcy, insolvency and similar laws
affecting creditors' rights generally, and as to TSB, the conservatorship or
receivership provisions of the FDIA and New York Banking Law, and subject, as to
enforceability, to general principles of equity.
4.4.2. (A) The execution and delivery of this Agreement by TFC and
TSB, (B) subject to receipt of approvals from the Bank Regulators referred to in
Section 8.3 hereof, and TFC's and FNFG `s compliance with any conditions
contained therein, and subject to the receipt of the approval of TFC's
stockholders, the consummation of the transactions contemplated hereby, and (C)
compliance by TFC and TSB with any of the terms or provisions hereof will not
(i) conflict with or result in a breach of any provision of the certificate of
incorporation or bylaws of TFC or any TFC Subsidiary or the charter and bylaws
of TSB; (ii) violate any statute, code, ordinance, rule, regulation, judgment,
order, writ, decree or injunction applicable to TFC or any TFC Subsidiary or any
of their respective properties or assets; or (iii) violate, conflict with,
result in a breach of any provisions of, 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, accelerate the performance required by, or
result in a right of termination or acceleration or the creation of any lien,
security interest, charge or other encumbrance upon any of the properties or
assets of TFC or TSB under any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, deed of trust, license, lease, agreement or
other investment or obligation to which TFC or TSB is a party, or by which they
or any of their respective properties or assets may be bound or affected, except
for such violations, conflicts, breaches or defaults under clause (ii) or (iii)
hereof which, either individually or in the aggregate, will not have a Material
Adverse Effect on TFC and the TFC Subsidiaries taken as a whole.
18
4.5. Consents.
Except for the consents, waivers, approvals, filings and registrations
from or with the Bank Regulators referred to in Section 8.3 hereof and
compliance with any conditions contained therein, the filing of applications or
notices with the NASD and the SBA as to change in control of TSB's broker-dealer
and small business investment corporation subsidiaries, and the approval of this
Agreement by the requisite vote of the shareholders of TFC, no consents, waivers
or approvals of, or filings or registrations with, any Governmental Entity are
necessary, and, to TFC's Knowledge, no consents, waivers or approvals of, or
filings or registrations with, any other third parties are necessary, in
connection with (a) the execution and delivery of this Agreement by TFC and TSB,
and (b) the completion by TFC and TSB of the Merger and the Bank Merger. TFC and
TSB have no reason to believe that (i) any required approvals from a Bank
Regulator or other required consents or approvals will not be received, or that
(ii) any public body or authority, the consent or approval of which is not
required or to which a filing is not required, will object to the completion of
the transactions contemplated by this Agreement.
4.6. Financial Statements.
4.6.1. TFC has previously made available to FNFG the TFC Regulatory
Reports. The TFC Regulatory Reports have been prepared in all material respects
in accordance with applicable regulatory accounting principles and practices
throughout the periods covered by such statements, and fairly present in all
material respects, the consolidated financial position, results of operations
and changes in shareholders' equity of TFC as of and for the periods ended on
the dates thereof, in accordance with applicable regulatory accounting
principles applied on a consistent basis.
4.6.2. TFC has previously made available to FNFG the TFC Financial
Statements. The TFC Financial Statements have been prepared in accordance with
GAAP, and (including the related notes where applicable) fairly present in each
case in all material respects (subject in the case of the unaudited interim
statements to normal year-end adjustments), the consolidated financial position,
results of operations and cash flows of TFC and the TFC Subsidiaries on a
consolidated basis as of and for the respective periods ending on the dates
thereof, in accordance with GAAP during the periods involved, except as
indicated in the notes thereto, or in the case of unaudited statements, as
permitted by Form 10-Q.
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4.6.3. At the date of each balance sheet included in the TFC
Financial Statements or the TFC Regulatory Reports, TFC did not have any
liabilities, obligations or loss contingencies of any nature (whether absolute,
accrued, contingent or otherwise) of a type required to be reflected in such TFC
Financial Statements or TFC Regulatory Reports or in the footnotes thereto which
are not fully reflected or reserved against therein or fully disclosed in a
footnote thereto, except for liabilities, obligations and loss contingencies
which are not material individually or in the aggregate or which are incurred in
the ordinary course of business, consistent with past practice, and except for
liabilities, obligations and loss contingencies which are within the subject
matter of a specific representation and warranty herein and subject, in the case
of any unaudited statements, to normal, recurring audit adjustments and the
absence of footnotes.
4.7. Taxes.
Except as set forth in TFC DISCLOSURE SCHEDULE 4.7, TFC and the TFC
Subsidiaries that are at least 80 percent owned by TFC are members of the same
affiliated group within the meaning of Code Section 1504(a). TFC has duly filed
all federal, state and material local tax returns required to be filed by or
with respect to TFC and every TFC Subsidiary on or prior to the Closing Date,
taking into account any extensions (all such returns, to TFC's Knowledge, being
accurate and correct in all material respects) and has duly paid or made
provisions for the payment of all material federal, state and local taxes which
have been incurred by or are due or claimed to be due from TFC and any TFC
Subsidiary by any taxing authority or pursuant to any written tax sharing
agreement on or prior to the Closing Date other than taxes or other charges
which (i) are not delinquent, (ii) are being contested in good faith, or (iii)
have not yet been fully determined. Except as set forth in TFC DISCLOSURE
SCHEDULE 4.7, as of the date of this Agreement, TFC has received no written
notice of, and to TFC's Knowledge there is no audit examination, deficiency
assessment, tax investigation or refund litigation with respect to any taxes of
TFC or any of its Subsidiaries, and no claim has been made by any authority in a
jurisdiction where TFC or any of its Subsidiaries do not file tax returns that
TFC or any such Subsidiary is subject to taxation in that jurisdiction. Except
as set forth in TFC DISCLOSURE SCHEDULE 4.7, TFC and its Subsidiaries have not
executed an extension or waiver of any statute of limitations on the assessment
or collection of any material tax due that is currently in effect. TFC and each
of its Subsidiaries has withheld and paid all taxes required to have been
withheld and paid in connection with amounts paid or owing to any employee,
independent contractor, creditor, stockholder or other third party, and TFC and
each of its Subsidiaries, to TFC's Knowledge, has timely complied with all
applicable information reporting requirements under Part III, Subchapter A of
Chapter 61 of the Code and similar applicable state and local information
reporting requirements.
4.8. No Material Adverse Effect.
TFC and the TFC Subsidiaries, taken as a whole, have not suffered any
Material Adverse Effect since September 30, 2002 and no event has occurred or
circumstance arisen since that date which, in the aggregate, has had or is
reasonably likely to have a Material Adverse Effect on TFC and the TFC
Subsidiaries, taken as a whole.
20
4.9. Material Contracts; Leases; Defaults.
4.9.1. Except as set forth in TFC DISCLOSURE SCHEDULE 4.9.1, neither
TFC nor any TFC Subsidiary is a party to or subject to: (i) any employment,
consulting or severance contract or material arrangement with any past or
present officer, director or employee of TFC or any TFC Subsidiary, except for
"at will" arrangements; (ii) any plan, material arrangement or contract
providing for bonuses, pensions, options, deferred compensation, retirement
payments, profit sharing or similar material arrangements for or with any past
or present officers, directors or employees of TFC or any TFC Subsidiary; (iii)
any collective bargaining agreement with any labor union relating to employees
of TFC or any TFC Subsidiary; (iv) any agreement which by its terms limits the
payment of dividends by TFC or any TFC Subsidiary; (v) any instrument evidencing
or related to material indebtedness for borrowed money whether directly or
indirectly, by way of purchase money obligation, conditional sale, lease
purchase, guaranty or otherwise, in respect of which TFC or any TFC Subsidiary
is an obligor to any person, which instrument evidences or relates to
indebtedness other than deposits, repurchase agreements, bankers' acceptances,
and "treasury tax and loan" accounts established in the ordinary course of
business and transactions in "federal funds" or which contains financial
covenants or other restrictions (other than those relating to the payment of
principal and interest when due) which would be applicable on or after the
Closing Date to FNFG or any FNFG Subsidiary; (vi) any other agreement, written
or oral, that obligates TFC or any TFC Subsidiary for the payment of more than
$75,000 annually; or (vii) any agreement (other than this Agreement), contract,
arrangement, commitment or understanding (whether written or oral) that
restricts or limits in any material way the conduct of business by TFC or any
TFC Subsidiary (it being understood that any non-compete or similar provision
shall be deemed material).
4.9.2. Each real estate lease that requires the consent of the
lessor or its agent resulting from the Merger or the Bank Merger by virtue of
the terms of any such lease, is listed in TFC DISCLOSURE SCHEDULE 4.9.2
identifying the section of the lease that contains such prohibition or
restriction. Subject to any consents that may be required as a result of the
transactions contemplated by this Agreement, to its Knowledge, neither TFC nor
any TFC Subsidiary is in default in any material respect under any material
contract, agreement, commitment, arrangement, lease, insurance policy or other
instrument to which it is a party, by which its assets, business, or operations
may be bound or affected, or under which it or its assets, business, or
operations receive benefits, and there has not occurred any event that, with the
lapse of time or the giving of notice or both, would constitute such a default.
4.9.3. True and correct copies of agreements, contracts,
arrangements and instruments referred to in Section 4.9.1 and 4.9.2 have been
made available to FNFG on or before the date hereof, are listed on TFC
DISCLOSURE SCHEDULE 4.9.1 and are in full force and effect on the date hereof
and neither TFC nor any TFC Subsidiary (nor, to the Knowledge of TFC, any other
party to any such contract, arrangement or instrument) has materially breached
any provision of, or is in default in any respect under any term of, any such
contract, arrangement or instrument. Except as listed on TFC DISCLOSURE SCHEDULE
4.9.3, no party to any material contract, arrangement or instrument will have
the right to terminate any or all of the provisions of any such contract,
arrangement or instrument as a result of the execution of, and the transactions
contemplated by, this Agreement. Except as set forth in TFC DISCLOSURE SCHEDULE
4.9.3, no plan, contract, employment agreement, termination agreement, or
similar agreement or arrangement to which TFC or any TFC Subsidiary is a party
or under which TFC or any TFC Subsidiary may be liable contains provisions which
permit an employee or independent contractor to terminate it without cause and
continue to accrue future benefits thereunder. Except as set forth in TFC
DISCLOSURE SCHEDULE 4.9.3, no such agreement, plan, contract, or arrangement (x)
provides for acceleration in the vesting of benefits or payments due thereunder
upon the occurrence of a change in ownership or control of TFC or any TFC
Subsidiary or upon the occurrence of a subsequent event; or (y) requires TFC or
any TFC Subsidiary to provide a benefit in the form of TFC Common Stock or
determined by reference to the value of TFC Common Stock.
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4.10. Ownership of Property; Insurance Coverage.
4.10.1. Except as set forth in TFC DISCLOSURE SCHEDULE 4.10, TFC and
each TFC Subsidiary has good and, as to real property, marketable title to all
material assets and properties owned by TFC or each TFC Subsidiary in the
conduct of its businesses, whether such assets and properties are real or
personal, tangible or intangible, including assets and property reflected in the
balance sheets contained in the TFC Regulatory Reports and in the TFC Financial
Statements or acquired subsequent thereto (except to the extent that such assets
and properties have been disposed of in the ordinary course of business, since
the date of such balance sheets), subject to no material encumbrances, liens,
mortgages, security interests or pledges, except (i) those items which secure
liabilities for public or statutory obligations or any discount with, borrowing
from or other obligations to FHLB, inter-bank credit facilities, or any
transaction by an TFC Subsidiary acting in a fiduciary capacity, and (ii)
statutory liens for amounts not yet delinquent or which are being contested in
good faith. TFC and the TFC Subsidiaries, as lessee, have the right under valid
and existing leases of real and personal properties used by TFC and its
Subsidiaries in the conduct of their businesses to occupy or use all such
properties as presently occupied and used by each of them. Such existing leases
and commitments to lease constitute or will constitute operating leases for both
tax and financial accounting purposes and the lease expense and minimum rental
commitments with respect to such leases and lease commitments are as disclosed
in all material respects in the notes to the TFC Financial Statements.
4.10.2. With respect to all material agreements pursuant to which
TFC or any TFC Subsidiary has purchased securities subject to an agreement to
resell, if any, TFC or such TFC Subsidiary, as the case may be, has a lien or
security interest (which to TFC's Knowledge is a valid, perfected first lien) in
the securities or other collateral securing the repurchase agreement, and the
value of such collateral equals or exceeds the amount of the debt secured
thereby.
4.10.3. TFC and each TFC Subsidiary currently maintain insurance
considered by each of them to be reasonable for their respective operations.
Neither TFC nor any TFC Subsidiary, except as disclosed in TFC DISCLOSURE
SCHEDULE 4.10.3, has received notice from any insurance carrier that (i) such
insurance will be canceled or that coverage thereunder will be reduced or
eliminated, or (ii) premium costs with respect to such policies of insurance
will be substantially increased. There are presently no material claims pending
under such policies of insurance and no notices have been given by TFC or any
TFC Subsidiary under such policies. All such insurance is valid and enforceable
and in full force and effect, and within the last three years TFC and each TFC
Subsidiary has received each type of insurance coverage for which it has applied
and during such periods has not been denied indemnification for any material
claims submitted under any of its insurance policies. TFC DISCLOSURE SCHEDULE
4.10.3 identifies all policies of insurance maintained by TFC and each TFC
Subsidiary as well as the other matters required to be disclosed under this
Section.
22
4.10.4. The Declaration Establishing A Plan For Condominium
Ownership Of Premises Located At ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇, ▇▇▇ ▇▇▇▇, Pursuant To
Article 9-B Of The Real Property Law Of The State Of New York, dated September
30th, 1999 (the "Declaration") and the Bylaws of The ▇▇▇▇ Savings Bank
condominium (Part II of the Declaration) (the "Condominium Bylaws") (a copy of
each being attached to TFC DISCLOSURE SCHEDULE 4.10.4), are valid and binding
and accurately reflect all agreements and obligations between the Bank Unit
Owner and the Music Hall Unit Owner (as such terms are defined in the
Declaration), including but not limited to those relating to the operation,
maintenance and other costs. Within thirty days of the date hereof, TSB shall
obtain an acknowledgment and agreement of the Music Hall Unit Owner to the
foregoing in form and substance reasonably acceptable to FNFG.
4.11. Legal Proceedings.
Except as set forth in TFC DISCLOSURE SCHEDULE 4.11, neither TFC nor any
TFC Subsidiary is a party to any, and there are no pending or, to TFC's
Knowledge, threatened legal, administrative, arbitration or other proceedings,
claims (whether asserted or unasserted), actions or governmental investigations
or inquiries of any nature (i) against TFC or any TFC Subsidiary, (ii) to which
TFC or any TFC Subsidiary's assets are or may be subject, (iii) challenging the
validity or propriety of any of the transactions contemplated by this Agreement,
or (iv) which could adversely affect the ability of TFC or TSB to perform under
this Agreement.
4.12. Compliance With Applicable Law.
4.12.1. To TFC's knowledge, each of TFC and each TFC Subsidiary is
in compliance in all material respects with all applicable federal, state, local
and foreign statutes, laws, regulations, ordinances, rules, judgments, orders or
decrees applicable to it, its properties, assets and deposits, its business, and
its conduct of business and its relationship with its employees, including,
without limitation, the USA Patriot Act, the Equal Credit Opportunity Act, the
Fair Housing Act, the Community Reinvestment Act of 1977, the Home Mortgage
Disclosure Act, and all other applicable fair lending laws and other laws
relating to discriminatory business practices and neither TFC nor any TFC
Subsidiary has received any written notice to the contrary.
4.12.2. Each of TFC and each TFC Subsidiary has all material
permits, licenses, authorizations, orders and approvals of, and has made all
filings, applications and registrations with, all Bank Regulators that are
required in order to permit it to own or lease its properties and to conduct its
business as presently conducted; all such permits, licenses, certificates of
authority, orders and approvals are in full force and effect and, to the
Knowledge of TFC, no suspension or cancellation of any such permit, license,
certificate, order or approval is threatened or will result from the
consummation of the transactions contemplated by this Agreement, subject to
obtaining the approvals set forth in Section 8.3.
23
4.12.3. For the period beginning January 1, 2000, neither TFC nor
any TFC Subsidiary has received any written notification or to TFC's Knowledge
any other communication from any Bank Regulator (i) asserting that TFC or any
TFC Subsidiary is not in material compliance with any of the statutes,
regulations or ordinances which such Bank Regulator enforces; (ii) threatening
to revoke any license, franchise, permit or governmental authorization which is
material to TFC or any TFC Subsidiary; (iii) requiring or threatening to require
TFC or any TFC Subsidiary, or indicating that TFC or any TFC Subsidiary may be
required, to enter into a cease and desist order, agreement or memorandum of
understanding or any other agreement with any federal or state governmental
agency or authority which is charged with the supervision or regulation of banks
or engages in the insurance of bank deposits restricting or limiting, or
purporting to restrict or limit, in any material respect the operations of TFC
or any TFC Subsidiary, including without limitation any restriction on the
payment of dividends; or (iv) directing, restricting or limiting, or purporting
to direct, restrict or limit, in any manner the operations of TFC or any TFC
Subsidiary, including without limitation any restriction on the payment of
dividends (any such notice, communication, memorandum, agreement or order
described in this sentence is hereinafter referred to as a "Regulatory
Agreement"). Neither TFC nor any TFC Subsidiary has consented to or entered into
any Regulatory Agreement that is currently in effect or that was in effect since
January 1, 1998. The most recent regulatory rating given to TSB as to compliance
with the Community Reinvestment Act ("CRA") is satisfactory or better.
4.13. Employee Benefit Plans.
4.13.1. TFC DISCLOSURE SCHEDULE 4.13.1 includes a list of all
existing bonus, incentive, deferred compensation, pension, retirement,
profit-sharing, thrift, savings, employee stock ownership, stock bonus, stock
purchase, restricted stock, stock option, stock appreciation, phantom stock,
severance, welfare benefit plans, fringe benefit plans, employment, severance
and change in control agreements and all other material benefit practices,
policies and arrangements maintained by TFC or any TFC Subsidiary in which any
employee or former employee, consultant or former consultant or director or
former director of TFC or any TFC Subsidiary participates or to which any such
employee, consultant or director is a party or is otherwise entitled to receive
benefits (the "Compensation and Benefit Plans"). Except as set forth in TFC
DISCLOSURE SCHEDULE 4.13.1, neither TFC nor any of its Subsidiaries has any
commitment to create any additional Compensation and Benefit Plan or to
materially modify, change or renew any existing Compensation and Benefit Plan
(any modification or change that increases the cost of such plans would be
deemed material), except as required to maintain the qualified status thereof,
TFC has made available to FNFG true and correct copies of the Compensation and
Benefit Plans.
4.13.2. To the Knowledge of TFC or TFC Subsidiary and except as
disclosed in TFC DISCLOSURE SCHEDULE 4.13.2, each Compensation and Benefit Plan
has been operated and administered in all material respects in accordance with
its terms and with applicable law, including, but not limited to, ERISA, the
Code, the Securities Act, the Exchange Act, the Age Discrimination in Employment
Act, COBRA, the Health Insurance Portability and Accountability Act and any
regulations or rules promulgated thereunder, and all material filings,
disclosures and notices required by ERISA, the Code, the Securities Act, the
Exchange Act, the Age Discrimination in Employment Act and any other applicable
law have been timely made or any interest, fines, penalties or other impositions
for late filings have been paid in full. Each Compensation and Benefit Plan
which is an "employee pension benefit plan" within the meaning of Section 3(2)
of ERISA (a "Pension Plan") and which is intended to be qualified under Section
401(a) of the Code has received a favorable determination letter from the IRS,
and TFC is not aware of any circumstances which are reasonably likely to result
in revocation of any such favorable determination letter. There is no material
pending or, to the Knowledge of TFC, threatened action, suit or claim relating
to any of the Compensation and Benefit Plans (other than routine claims for
benefits). Neither TFC nor any TFC Subsidiary has engaged in a transaction, or
omitted to take any action, with respect to any Compensation and Benefit Plan
that would reasonably be expected to subject TFC or any TFC Subsidiary to an
unpaid tax or penalty imposed by either Section 4975 of the Code or Section 502
of ERISA.
24
4.13.3. Except as set forth in TFC DISCLOSURE SCHEDULE 4.13.3, no
liability, other than PBGC premiums arising in the ordinary course of business,
has been or is expected by TFC or any of its Subsidiaries to be incurred with
respect to any TFC Compensation and Benefit Plan which is a defined benefit plan
subject to Title IV of ERISA ("TFC Defined Benefit Plan"), or with respect to
any "single-employer plan" (as defined in Section 4001(a) of ERISA) currently or
formerly maintained by TFC or any entity which is considered one employer with
TFC under Section 4001(b)(1) of ERISA or Section 414 of the Code (an "ERISA
Affiliate") (such plan hereinafter referred to as an "ERISA Affiliate Plan"). To
the Knowledge of TFC and any TFC Subsidiary, except as set forth in TFC
DISCLOSURE SCHEDULE 4.13.3, no TFC Defined Benefit Plan had an "accumulated
funding deficiency" (as defined in Section 302 of ERISA), whether or not waived,
as of the last day of the end of the most recent plan year ending prior to the
date hereof. Except as set forth in TFC DISCLOSURE SCHEDULE 4.13.3, the fair
market value of the assets of each TFC Defined Benefit Plan exceeds the present
value of the benefits guaranteed under Section 4022 of ERISA under such TFC
Defined Benefit Plan as of the end of the most recent plan year with respect to
the respective TFC Defined Benefit Plan ending prior to the date hereof,
calculated on the basis of the actuarial assumptions used in the most recent
actuarial valuation for such TFC Defined Benefit Plan as of the date hereof; and
no notice of a "reportable event" (as defined in Section 4043 of ERISA) for
which the 30-day reporting requirement has not been waived has been required to
be filed for any TFC Defined Benefit Plan within the 12-month period ending on
the date hereof. Except as set forth in TFC DISCLOSURE SCHEDULE 4.13.3, neither
TFC nor any of its Subsidiaries has provided, or is required to provide,
security to any TFC Defined Benefit Plan or to any single-employer plan of an
ERISA Affiliate pursuant to Section 401(a)(29) of the Code or has taken any
action, or omitted to take any action, that has resulted, or would reasonably be
expected to result in the imposition of a lien under Section 412(n) of the Code
or pursuant to ERISA. Neither TFC, its Subsidiaries, nor any ERISA Affiliate has
contributed to any "multiemployer plan," as defined in Section 3(37) of ERISA,
on or after January 1, 1998. To the Knowledge of TFC, and except as set forth in
TFC DISCLOSURE SCHEDULE 4.13.3, there is no pending investigation or enforcement
action by any Bank Regulator with respect to any Compensation and Benefit Plan
or any ERISA Affiliate Plan.
4.13.4. Except as set forth in TFC DISCLOSURE SCHEDULE 4.13.4, all
material contributions required to be made under the terms of any Compensation
and Benefit Plan or ERISA Affiliate Plan or any employee benefit arrangements to
which TFC or any TFC Subsidiary is a party or a sponsor have been timely made,
and all anticipated contributions and funding obligations are accrued on TFC's
consolidated financial statements to the extent required by GAAP. TFC and its
Subsidiaries have expensed and accrued as a liability the present value of
future benefits under each applicable Compensation and Benefit Plan for
financial reporting purposes as required by GAAP.
25
4.13.5. Except as set forth in TFC DISCLOSURE SCHEDULE 4.13.5,
neither TFC nor any TFC Subsidiary has any obligations to provide retiree
health, life insurance, disability insurance, or other retiree death benefits
under any Compensation and Benefit Plan, other than benefits mandated by Section
4980B of the Code. Except as set forth in TFC DISCLOSURE SCHEDULE 4.13.5, there
has been no communication to employees by TFC or any TFC Subsidiary that would
reasonably be expected to promise or guarantee such employees retiree health,
life insurance, disability insurance, or other retiree death benefits.
4.13.6. Except as set forth in TFC DISCLOSURE SCHEDULE 4.13.6, TFC
and its Subsidiaries do not maintain any Compensation and Benefit Plans covering
employees who are not United States residents.
4.13.7. With respect to each Compensation and Benefit Plan, if
applicable, TFC has provided or made available to FNFG copies of the: (A) trust
instruments and insurance contracts; (B) two most recent Forms 5500 filed with
the IRS; (C) most recent actuarial report and financial statement; (D) most
recent summary plan description; (E) most recent determination letter issued by
the IRS; (F) any Form 5310 or Form 5330 filed with the IRS within the last two
years; and (G) most recent nondiscrimination tests performed under ERISA and the
Code (including 401(k) and 401(m) tests).
4.13.8. Except as disclosed in TFC DISCLOSURE SCHEDULE 4.13.8, the
consummation of the Merger will not, directly or indirectly (including, without
limitation, as a result of any termination of employment or service at any time
prior to or following the Effective Time) (A) entitle any employee, consultant
or director to any payment or benefit (including severance pay, change in
control benefit, or similar compensation) or any increase in compensation, (B)
result in the vesting or acceleration of any benefits under any Compensation and
Benefit Plan or (C) result in any material increase in benefits payable under
any Compensation and Benefit Plan.
4.13.9. Except as disclosed in TFC DISCLOSURE SCHEDULE 4.13.9,
neither TFC nor any TFC Subsidiary maintains any compensation plans, programs or
arrangements under which any payment is reasonably likely to become
non-deductible, in whole or in part, for tax reporting purposes as a result of
the limitations under Section 162(m) of the Code and the regulations issued
thereunder.
4.13.10. To the Knowledge of TFC, the consummation of the Mergers
will not, directly or indirectly (including without limitation, as a result of
any termination of employment or service at any time prior to or following the
Effective Time), entitle any current or former employee, director or independent
contractor of TFC or any TFC Subsidiary to any actual or deemed payment (or
benefit) which could constitute a "parachute payment" (as such term is defined
in Section 280G of the Code), except as set forth in TFC DISCLOSURE SCHEDULE
4.13.10.
26
4.13.11. Except as disclosed in TFC DISCLOSURE SCHEDULE 4.13.11,
there are no stock appreciation or similar rights, earned dividends or dividend
equivalents, or shares of restricted stock, outstanding under any of the
Compensation and Benefit Plans or otherwise as of the date hereof and none will
be granted, awarded, or credited after the date hereof.
4.13.12. TFC DISCLOSURE SCHEDULE 4.13.12 sets forth, as of the
payroll date immediately preceding the date of this Agreement, a list of the
full names of all employees of TSB or TFC, their title and rate of salary, and
their date of hire. TFC DISCLOSURE SCHEDULE 4.13.12 also sets forth any changes
to any TFC Compensation and Benefit Plan since September 30, 2002.
4.14. Brokers, Finders and Financial Advisors.
Neither TFC nor any TFC Subsidiary, nor any of their respective officers,
directors, employees or agents, has employed any broker, finder or financial
advisor in connection with the transactions contemplated by this Agreement, or,
except for its commitments including to those it has professionally engaged and
disclosed in TFC DISCLOSURE SCHEDULE 4.14, incurred any liability or commitment
for any fees or commissions to any such person in connection with the
transactions contemplated by this Agreement, which has not been reflected in the
TFC Financial Statements.
4.15. Environmental Matters.
4.15.1. Except as may be set forth in TFC DISCLOSURE SCHEDULE 4.15
and any Phase I Environmental Report identified therein, with respect to TFC and
each TFC Subsidiary:
(A) Each of TFC and the TFC Subsidiaries, the Participation
Facilities, and, to TFC's Knowledge, the Loan Properties are, and have been, in
substantial compliance with, and are not liable under, any Environmental Laws;
(B) TFC has received no written notice that there is any suit,
claim, action, demand, executive or administrative order, directive,
investigation or proceeding pending and, to TFC's Knowledge, no such action is
threatened, before any court, governmental agency or other forum against it or
any of the TFC Subsidiaries or any Participation Facility (x) for alleged
noncompliance (including by any predecessor) with, or liability under, any
Environmental Law or (y) relating to the presence of or release (as defined
herein) into the environment of any Materials of Environmental Concern (as
defined herein), whether or not occurring at or on a site owned, leased or
operated by it or any of the TFC Subsidiaries or any Participation Facility;
(C) TFC has received no written notice that there is any suit,
claim, action, demand, executive or administrative order, directive,
investigation or proceeding pending and, to TFC's Knowledge no such action is
threatened, before any court, governmental agency or other forum relating to or
against any Loan Property (or TFC or any of the TFC Subsidiaries in respect of
such Loan Property) (x) relating to alleged noncompliance (including by any
predecessor) with, or liability under, any Environmental Law or (y) relating to
the presence of or release into the environment of any Materials of
Environmental Concern, whether or not occurring at or on a site owned, leased or
operated by a Loan Property;
27
(D) To TFC's Knowledge, the properties currently owned or
operated by TFC or any TFC Subsidiary (including, without limitation, soil,
groundwater or surface water on, or under the properties, and buildings thereon)
are not contaminated with and do not otherwise contain any Materials of
Environmental Concern other than as permitted under applicable Environmental
Law;
(E) Neither TFC nor any TFC Subsidiary has received any
written notice, demand letter, executive or administrative order, directive or
request for information from any federal, state, local or foreign governmental
entity or any third party indicating that it may be in violation of, or liable
under, any Environmental Law;
(F) To TFC's Knowledge, there are no underground storage tanks
on, in or under any properties owned or operated by TFC or any of the TFC
Subsidiaries or any Participation Facility, and to TFC's Knowledge, no
underground storage tanks have been closed or removed from any properties owned
or operated by TFC or any of the TFC Subsidiaries or any Participation Facility;
and
(G) To TFC's Knowledge, during the period of (s) TFC's or any
of the TFC Subsidiaries' ownership or operation of any of their respective
current properties or (t) TFC's or any of the TFC Subsidiaries' participation in
the management of any Participation Facility, there has been no contamination by
or release of Materials of Environmental Concerns in, on, under or affecting
such properties that could reasonably be expected to result in material
liability under the Environmental Laws. To TFC's Knowledge, prior to the period
of (x) TFC's or any of the TFC Subsidiaries' ownership or operation of any of
their respective current properties or (y) TFC's or any of the TFC Subsidiaries'
participation in the management of any Participation Facility, there was no
contamination by or release of Materials of Environmental Concern in, on, under
or affecting such properties that could reasonably be expected to result in
material liability under the Environmental Laws.
4.15.2. "Loan Property" means any property in which the applicable
party (or a Subsidiary of it) holds a security interest, and, where required by
the context, includes the owner or operator of such property, but only with
respect to such property. "Participation Facility" means any facility in which
the applicable party (or a Subsidiary of it) participates in the management
(including all property held as trustee or in any other fiduciary capacity) and,
where required by the context, includes the owner or operator of such property,
but only with respect to such property.
4.16. Loan Portfolio.
4.16.1. The allowance for loan losses reflected in TFC's audited
consolidated statement of financial condition at September 30, 2002 was, and the
allowance for loan losses shown on the balance sheets in TFC's Securities
Documents for periods ending after September 30, 2002 will be, adequate, as of
the dates thereof, under GAAP.
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4.16.2. TFC DISCLOSURE SCHEDULE 4.16.2 sets forth a listing, as of
the most recently available date (and in no event later than March 31, 2003), by
account, of: (A) all loans (including loan participations) of TSB or any other
TFC Subsidiary that have been accelerated during the past twelve months; (B) all
loan commitments or lines of credit of TSB or any other TFC Subsidiary which
have been terminated by TSB or any other TFC Subsidiary during the past twelve
months by reason of a default or adverse developments in the condition of the
borrower or other events or circumstances affecting the credit of the borrower;
(C) all loans, lines of credit and loan commitments as to which TSB or any other
TFC Subsidiary has given written notice of its intent to terminate during the
past twelve months; (D) with respect to all commercial loans (including
commercial real estate loans), all notification letters and other written
communications from TSB or any other TFC Subsidiary to any of their respective
borrowers, customers or other parties during the past twelve months wherein TSB
or any other TFC Subsidiary has requested or demanded that actions be taken to
correct existing defaults or facts or circumstances which may become defaults;
(E) each borrower, customer or other party which has notified TSB or any other
TFC Subsidiary during the past twelve months of, or has asserted against TSB or
any other TFC Subsidiary, in each case in writing, any "lender liability" or
similar claim, and, to the knowledge of TSB, each borrower, customer or other
party which has given TSB or any other TFC Subsidiary any oral notification of,
or orally asserted to or against TSB or any other TFC Subsidiary, any such
claim; (F) all loans, (1) that are contractually past due 90 days or more in the
payment of principal and/or interest, (2) that are on non-accrual status, (3)
that as of the date of this Agreement are classified as "Other Loans Specially
Mentioned", "Special Mention", "Substandard", "Doubtful", "Loss", "Classified",
"Criticized", "Watch list" or words of similar import, together with the
principal amount of and accrued and unpaid interest on each such Loan and the
identity of the obligor thereunder, (4) where a reasonable doubt exists as to
the timely future collectability of principal and/or interest, whether or not
interest is still accruing or the loans are less than 90 days past due, (5)
where the interest rate terms have been reduced and/or the maturity dates have
been extended subsequent to the agreement under which the loan was originally
created due to concerns regarding the borrower's ability to pay in accordance
with such initial terms, or (6) where a specific reserve allocation exists in
connection therewith, and (G) all assets classified by TSB or any TSB Subsidiary
as real estate acquired through foreclosure or in lieu of foreclosure, including
in-substance foreclosures, and all other assets currently held that were
acquired through foreclosure or in lieu of foreclosure. DISCLOSURE SCHEDULE
4.16.2 may exclude any individual loan with a principal outstanding balance of
less than $100,000, provided that DISCLOSURE SCHEDULE 4.16.2 includes, for each
category described, the aggregate amount of individual loans with a principal
outstanding balance of less than $100,000 that have been excluded.
4.16.3. All loans receivable (including discounts) and accrued
interest entered on the books of TFC and the TFC Subsidiaries arose out of bona
fide arm's-length transactions, were made for good and valuable consideration in
the ordinary course of TFC's or the appropriate TFC Subsidiary's respective
business, and the notes or other evidences of indebtedness with respect to such
loans (including discounts) are true and genuine and are what they purport to
be, except as set forth in TFC DISCLOSURE SCHEDULE 4.16.3. To the Knowledge of
TFC, the loans, discounts and the accrued interest reflected on the books of TFC
and the TFC Subsidiaries are subject to no defenses, set-offs or counterclaims
(including, without limitation, those afforded by usury or truth-in-lending
laws), except as may be provided by bankruptcy, insolvency or similar laws
affecting creditors' rights generally or by general principles of equity. Except
as set forth in TFC DISCLOSURE SCHEDULE 4.16.3, all such loans are owned by TFC
or the appropriate TFC Subsidiary free and clear of any liens.
29
4.16.4. The notes and other evidences of indebtedness evidencing the
loans described above, and all pledges, mortgages, deeds of trust and other
collateral documents or security instruments relating thereto are, in all
material respects, valid, true and genuine, and what they purport to be.
4.17. Securities Documents.
TFC has made available to FNFG copies of its (i) annual reports on Form
10-K for the years ended September 30, 2002, 2001 and 2000, (ii) quarterly
report on Form 10-Q for the quarter ended March 31, 2003, and (iii) proxy
materials used or for use in connection with its meetings of shareholders held
in 2003, 2002 and 2001. Such reports, prospectus and proxy materials complied,
at the time filed with the SEC, in all material respects, with the Securities
Laws.
4.18. Related Party Transactions.
Except as described in TFC's Proxy Statement distributed in connection
with the annual meeting of shareholders held in January 2003 (which has
previously been provided to FNFG), or as set forth in TFC DISCLOSURE SCHEDULE
4.18, neither TFC nor any TFC Subsidiary is a party to any transaction
(including any loan or other credit accommodation) with any Affiliate of TFC or
any TFC Affiliate. All such transactions (a) were made in the ordinary course of
business, (b) were made on substantially the same terms, including interest
rates and collateral, as those prevailing at the time for comparable
transactions with other Persons, and (c) did not involve more than the normal
risk of collectability or present other unfavorable features. No loan or credit
accommodation to any Affiliate of TFC or any TFC Subsidiary is presently in
default or, during the three year period prior to the date of this Agreement,
has been in default or has been restructured, modified or extended. Neither TFC
nor any TFC Subsidiary has been notified that principal and interest with
respect to any such loan or other credit accommodation will not be paid when due
or that the loan grade classification accorded such loan or credit accommodation
by TFC is inappropriate.
4.19. Deposits.
Except as set forth in TFC DISCLOSURE SCHEDULE 4.20, none of the deposits
of TFC or any TFC Subsidiary is a "brokered deposit" as defined in 12 CFR
Section 337.6(a)(2).
4.20. Antitakeover Provisions Inapplicable; Required Vote.
The Board of Directors of TFC has, to the extent such statute is
applicable, taken all action (including appropriate approvals of the Board of
Directors of TFC) necessary to exempt FNFG, the Merger, the Merger Agreement and
the transactions contemplated hereby from Section 203 of the DGCL. The Merger is
not a "Control Share Acquisition" for purposes of Section 9 of the TFC
Certificate of Incorporation by reason of Section 9.7 thereof. The affirmative
vote of a majority of the issued and outstanding shares of TFC Common Stock is
required to approve this Agreement and the Merger under TFC's certificate of
incorporation and the DGCL.
30
4.21. Registration Obligations.
Neither TFC nor any TFC Subsidiary is under any obligation, contingent or
otherwise, which will survive the Effective Time by reason of any agreement to
register any transaction involving any of its securities under the Securities
Act.
4.22. Risk Management Instruments.
All material interest rate swaps, caps, floors, option agreements, futures
and forward contracts and other similar risk management arrangements, whether
entered into for TFC's own account, or for the account of one or more of TFC's
Subsidiaries or their customers (all of which are set forth in TFC DISCLOSURE
SCHEDULE 4.23), were in all material respects entered into in compliance with
all applicable laws, rules, regulations and regulatory policies, and to the
Knowledge of TFC and each TFC Subsidiary, with counterparties believed to be
financially responsible at the time; and to TFC's and TFC Subsidiary's Knowledge
each of them constitutes the valid and legally binding obligation of TFC or one
of its Subsidiaries, enforceable in accordance with its terms (except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and similar laws of general
applicability relating to or affecting creditors' rights or by general equity
principles), and is in full force and effect. Neither TFC nor any TFC
Subsidiary, nor to the Knowledge of TFC any other party thereto, is in breach of
any of its obligations under any such agreement or arrangement in any material
respect.
4.23. Fairness Opinion.
TFC has received a written opinion from ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc.
("KBW") to the effect that, subject to the terms, conditions and qualifications
set forth therein, as of the date hereof, the Merger Consideration to be
received by the stockholders of TFC pursuant to this Agreement is fair to such
stockholders from a financial point of view. Such opinion has not been amended
or rescinded as of the date of this Agreement.
4.24. Trust Accounts
TSB and each of its subsidiaries has properly administered all accounts
for which it acts as a fiduciary, including but not limited to accounts for
which it serves as trustee, agent, custodian, personal representative, guardian,
conservator or investment advisor, in accordance with the terms of the governing
documents and applicable laws and regulations. Neither TSB nor any other TFC
Subsidiary, and to their Knowledge, nor has any of their respective directors,
officers or employees, committed any breach of trust with respect to any such
fiduciary account and the records for each such fiduciary account.
31
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF FNFG AND FIRST NIAGARA BANK
FNFG and First Niagara Bank represent and warrant to TFC and TSB that the
statements contained in this Article V are correct and complete as of the date
of this Agreement and will be correct and complete as of the Closing Date (as
though made then and as though the Closing Date were substituted for the date of
this Agreement throughout this Article V), except as set forth in the FNFG
DISCLOSURE SCHEDULE delivered by FNFG to TFC on the date hereof. FNFG First
Niagara Bank have made a good faith effort to ensure that the disclosure on each
schedule of the FNFG DISCLOSURE SCHEDULE corresponds to the section referenced
herein. However, for purposes of the FNFG DISCLOSURE SCHEDULE, any item
disclosed on any schedule therein is deemed to be fully disclosed with respect
to all schedules under which such item may be relevant as and to the extent that
it is reasonably clear on the face of such schedule that such item applies to
such other schedule. References to the Knowledge of FNFG shall include the
Knowledge of First Niagara Bank.
5.1. Standard.
No representation or warranty of FNFG or First Niagara Bank contained in
this Article V shall be deemed untrue or incorrect, and neither FNFG nor First
Niagara Bank shall be deemed to have breached a representation or warranty, as a
consequence of the existence of any fact, circumstance or event unless such
fact, circumstance or event, individually or taken together with all other
facts, circumstances or events inconsistent with any paragraph of Article V, has
had or is reasonably expected to have a Material Adverse Effect; provided,
however, that the foregoing standard shall not apply to representations and
warranties contained in Section 5.4, which shall be deemed untrue, incorrect and
breached if they are not true and correct in all material respects.
5.2. Organization.
5.2.1. FNFG is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware, and is duly registered as
a savings and loan holding company under the HOLA. FNFG has full corporate power
and authority to carry on its business as now conducted and is duly licensed or
qualified to do business in the states of the United States and foreign
jurisdictions where its ownership or leasing of property or the conduct of its
business requires such qualification.
5.2.2. First Niagara Bank is a savings bank duly organized, validly
existing and in good standing under federal law. The deposits of First Niagara
Bank are insured by the FDIC to the fullest extent permitted by law, and all
premiums and assessments required to be paid in connection therewith have been
paid when due. First Niagara Bank is a member in good standing of the FHLB and
own the requisite amount of stock therein.
5.2.3. FNFG DISCLOSURE SCHEDULE 5.2.3 sets forth each FNFG
Subsidiary. Each FNFG Subsidiary (other than First Niagara Bank) is a
corporation or limited liability company duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation or
organization.
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5.2.4. The respective minute books of FNFG and each FNFG Subsidiary
accurately records, in all material respects, all material corporate actions of
their respective shareholders and boards of directors (including committees).
5.2.5. Prior to the date of this Agreement, FNFG has made available
to TFC true and correct copies of the articles or certificate of incorporation
and bylaws of FNFG and First Niagara Bank and the FNFG Subsidiaries.
5.3. Capitalization.
5.3.1. The authorized capital stock of FNFG consists of 250,000,000
shares of common stock, $0.01 par value, of which 70,793,452 shares are
outstanding, validly issued, fully paid and nonassessable and free of preemptive
rights, and 50,000,000 shares of preferred stock, $0.01 par value ("FNFG
Preferred Stock"), none of which are outstanding. There are no shares of FNFG
Common Stock held by FNFG as treasury stock. Neither FNFG nor any FNFG
Subsidiary has or is bound by any Rights of any character relating to the
purchase, sale or issuance or voting of, or right to receive dividends or other
distributions on any shares of FNFG Common Stock, or any other security of FNFG
or any securities representing the right to vote, purchase or otherwise receive
any shares of FNFG Common Stock or any other security of FNFG, other than shares
issuable under the FNFG Stock Benefit Plans.
5.3.2. FNFG owns all of the capital stock of First Niagara Bank free
and clear of any lien or encumbrance.
5.3.3. To the Knowledge of FNFG, no Person or "group" (as that term
is used in Section 13(d)(3) of the Exchange Act), is the beneficial owner (as
defined in Section 13(d) of the Exchange Act) of 5% or more of the outstanding
shares of FNFG Common Stock.
5.4. Authority; No Violation.
5.4.1. FNFG and First Niagara Bank each has full corporate power and
authority to execute and deliver this Agreement and, subject to receipt of the
required approvals of the Bank Regulators described in Section 8.3, to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by FNFG and First Niagara Bank and the completion by FNFG and
First Niagara Bank of the transactions contemplated hereby, up to and including
the Merger, have been duly and validly approved by the Board of Directors of
FNFG, and First Niagara Bank, respectively, no other corporate proceedings on
the part of FNFG or First Niagara Bank are necessary to complete the
transactions contemplated hereby, up to and including the Merger. This Agreement
has been duly and validly executed and delivered by FNFG and First Niagara Bank,
and the Bank Merger has been duly and validly approved by the Board of Directors
of First Niagara Bank, and by FNFG in its capacity as sole stockholder of First
Niagara Bank, and subject to the required approvals of Bank Regulators described
in Section 8.3 hereof, constitutes the valid and binding obligations of FNFG and
First Niagara Bank, enforceable against FNFG and First Niagara Bank in
accordance with its terms, subject to applicable bankruptcy, insolvency and
similar laws affecting creditors' rights generally, and as to First Niagara
Bank, the conservatorship or receivership provisions of the FDIA, and subject,
as to enforceability, to general principles of equity.
33
5.4.2. (A) The execution and delivery of this Agreement by FNFG and
First Niagara Bank, (B) subject to receipt of approvals from the Bank Regulators
referred to in Section 8.3 hereof, and compliance by FNFG and First Niagara Bank
with any conditions contained therein, the consummation of the transactions
contemplated hereby, and (C) compliance by FNFG and First Niagara Bank with any
of the terms or provisions hereof will not (i) conflict with or result in a
breach of any provision of the certificate of incorporation or bylaws of FNFG or
any FNFG Subsidiary or the charter and bylaws of First Niagara Bank; (ii)
violate any statute, code, ordinance, rule, regulation, judgment, order, writ,
decree or injunction applicable to FNFG or any FNFG Subsidiary or any of their
respective properties or assets; or (iii) violate, conflict with, result in a
breach of any provisions of, 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, accelerate the performance required by, or result in a right
of termination or acceleration or the creation of any lien, security interest,
charge or other encumbrance upon any of the properties or assets of FNFG, First
Niagara Bank or any FNFG Subsidiary under any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, deed of trust, license,
lease, agreement or other investment or obligation to which any of them is a
party, or by which they or any of their respective properties or assets may be
bound or affected, except for such violations, conflicts, breaches or defaults
under clause (ii) or (iii) hereof which, either individually or in the
aggregate, will not have a Material Adverse Effect on FNFG taken as a whole.
5.5. Consents.
Except for the consents, waivers, approvals, filings and registrations
from or with the Bank Regulators referred to in Section 8.3 hereof and
compliance with any conditions contained therein, the filing of applications or
notices with the NASD and the SBA as to change in control of TSB's broker-dealer
and small business investment corporation subsidiaries, and the requisite vote
of the shareholders of TFC, no consents, waivers or approvals of, or filings or
registrations with, any Governmental Entity are necessary, and, to the Knowledge
of FNFG, no consents, waivers or approvals of, or filings or registrations with,
any other third parties are necessary, in connection with (a) the execution and
delivery of this Agreement by FNFG and First Niagara Bank, and (b) the
completion by FNFG and First Niagara Bank of the Merger and the Bank Merger.
FNFG has no reason to believe that (i) any required approvals from a Bank
Regulator or other required consents or approvals will not be received, or that
(ii) any public body or authority, the consent or approval of which is not
required or to which a filing is not required, will object to the completion of
the transactions contemplated by this Agreement.
5.6. Financial Statements.
5.6.1. FNFG has previously made available to TFC the FNFG Financial
Statements. The FNFG Financial Statements have been prepared in accordance with
GAAP, and (including the related notes where applicable) fairly present in each
case in all material respects (subject in the case of the unaudited interim
statements to normal year-end adjustments) the consolidated financial position,
results of operations and cash flows of FNFG and the FNFG Subsidiaries on a
consolidated basis as of and for the respective periods ending on the dates
thereof, in accordance with GAAP during the periods involved, except as
indicated in the notes thereto, or in the case of unaudited statements, as
permitted by Form 10-Q.
34
5.6.2. At the date of each balance sheet included in the FNFG
Financial Statements, FNFG did not have any liabilities, obligations or loss
contingencies of any nature (whether absolute, accrued, contingent or otherwise)
of a type required to be reflected in such FNFG Financial Statements or in the
footnotes thereto which are not fully reflected or reserved against therein or
fully disclosed in a footnote thereto, except for liabilities, obligations and
loss contingencies which are not material individually or in the aggregate or
which are incurred in the ordinary course of business, consistent with past
practice, and except for liabilities, obligations and loss contingencies which
are within the subject matter of a specific representation and warranty herein
and subject, in the case of any unaudited statements, to normal, recurring audit
adjustments and the absence of footnotes.
5.7. Taxes.
FNFG and the FNFG Subsidiaries that are at least 80 percent owned by FNFG
are members of the same affiliated group within the meaning of Code Section
1504(a). FNFG has duly filed all federal, state and material local tax returns
required to be filed by or with respect to FNFG and each FNFG Subsidiary on or
prior to the Closing Date, taking into account any extensions (all such returns,
to the Knowledge of FNFG, being accurate and correct in all material respects)
and has duly paid or made provisions for the payment of all material federal,
state and local taxes which have been incurred by or are due or claimed to be
due from FNFG and any FNFG Subsidiary by any taxing authority or pursuant to any
written tax sharing agreement on or prior to the Closing Date other than taxes
or other charges which (i) are not delinquent, (ii) are being contested in good
faith, or (iii) have not yet been fully determined. As of the date of this
Agreement, FNFG has received no notice of, and to the Knowledge of FNFG, there
is no audit examination, deficiency assessment, tax investigation or refund
litigation with respect to any taxes of FNFG or any of its Subsidiaries, and no
claim has been made by any authority in a jurisdiction where FNFG or any of its
Subsidiaries do not file tax returns that FNFG or any such Subsidiary is subject
to taxation in that jurisdiction. Except as set forth in FNFG DISCLOSURE
SCHEDULE 5.7, FNFG and its Subsidiaries have not executed an extension or waiver
of any statute of limitations on the assessment or collection of any material
tax due that is currently in effect. FNFG and each of its Subsidiaries has
withheld and paid all taxes required to have been withheld and paid in
connection with amounts paid or owing to any employee, independent contractor,
creditor, stockholder or other third party, and FNFG and each of its
Subsidiaries, to the Knowledge of FNFG, has timely complied with all applicable
information reporting requirements under Part III, Subchapter A of Chapter 61 of
the Code and similar applicable state and local information reporting
requirements.
5.8. No Material Adverse Effect.
FNFG, taken as a whole, has not suffered any Material Adverse Effect since
December 31, 2002 and no event has occurred or circumstance arisen since that
date which, in the aggregate, has had or is reasonably likely to have a Material
Adverse Effect on FNFG and the FNFG Subsidiaries, taken as a whole.
35
5.9. Ownership of Property; Insurance Coverage.
5.9.1. FNFG and each FNFG Subsidiary has good and, as to real
property, marketable title to all material assets and properties owned by FNFG
or each FNFG Subsidiary in the conduct of their businesses, whether such assets
and properties are real or personal, tangible or intangible, including assets
and property reflected in the balance sheets contained in the FNFG Financial
Statements or acquired subsequent thereto (except to the extent that such assets
and properties have been disposed of in the ordinary course of business, since
the date of such balance sheets), subject to no material encumbrances, liens,
mortgages, security interests or pledges, except (i) those items which secure
liabilities for public or statutory obligations or any discount with, borrowing
from or other obligations to FHLB, inter-bank credit facilities, or any
transaction by a FNFG Subsidiary acting in a fiduciary capacity, and (ii)
statutory liens for amounts not yet delinquent or which are being contested in
good faith. FNFG and the FNFG Subsidiaries, as lessee, have the right under
valid and subsisting leases of real and personal properties used by FNFG and its
Subsidiaries in the conduct of their businesses to occupy or use all such
properties as presently occupied and used by each of them.
5.9.2. FNFG and each FNFG Subsidiary currently maintain insurance
considered by FNFG to be reasonable for their respective operations.
5.10. Legal Proceedings.
Except as disclosed in FNFG DISCLOSURE SCHEDULE 5.10, neither FNFG nor any
FNFG Subsidiary is a party to any, and there are no pending or, to the Knowledge
of FNFG, threatened legal, administrative, arbitration or other proceedings,
claims (whether asserted or unasserted), actions or governmental investigations
or inquiries of any nature (i) against FNFG or any FNFG Subsidiary, (ii) to
which FNFG or any FNFG Subsidiary's assets are or may be subject, (iii)
challenging the validity or propriety of any of the transactions contemplated by
this Agreement, or (iv) which could adversely affect the ability of FNFG to
perform under this Agreement.
5.11. Compliance With Applicable Law.
5.11.1. To the Knowledge of FNFG, each of FNFG and each FNFG
Subsidiary is in compliance in all material respects with all applicable
federal, state, local and foreign statutes, laws, regulations, ordinances,
rules, judgments, orders or decrees applicable to it, its properties, assets and
deposits, its business, and its conduct of business and its relationship with
its employees, including, without limitation, the USA Patriot Act, the Equal
Credit Opportunity Act, the Fair Housing Act, the Community Reinvestment Act of
1977, the Home Mortgage Disclosure Act, and all other applicable fair lending
laws and other laws relating to discriminatory business practices, and neither
FNFG nor any FNFG Subsidiary has received any written notice to the contrary.
5.11.2. Each of FNFG and each FNFG Subsidiary has all material
permits, licenses, authorizations, orders and approvals of, and has made all
filings, applications and registrations with, all Bank Regulators that are
required in order to permit it to own or lease its properties and to conduct its
business as presently conducted; all such permits, licenses, certificates of
authority, orders and approvals are in full force and effect and, to the
Knowledge of FNFG, no suspension or cancellation of any such permit, license,
certificate, order or approval is threatened or will result from the
consummation of the transactions contemplated by this Agreement, subject to
obtaining the approvals set forth in Section 8.3.
36
5.11.3. For the period beginning January 1, 2000, neither FNFG nor
any FNFG Subsidiary has received any written notification or, to the Knowledge
of FNFG, any other communication from any Bank Regulator (i) asserting that FNFG
or any FNFG Subsidiary is not in material compliance with any of the statutes,
regulations or ordinances which such Bank Regulator enforces; (ii) threatening
to revoke any license, franchise, permit or governmental authorization which is
material to FNFG ; (iii) requiring or threatening to require FNFG or any FNFG
Subsidiary, or indicating that FNFG or any FNFG Subsidiary may be required, to
enter into a cease and desist order, agreement or memorandum of understanding or
any other agreement with any federal or state governmental agency or authority
which is charged with the supervision or regulation of banks or engages in the
insurance of bank deposits restricting or limiting, or purporting to restrict or
limit, in any material respect the operations of FNFG or any FNFG Subsidiary,
including without limitation any restriction on the payment of dividends; or
(iv) directing, restricting or limiting, or purporting to direct, restrict or
limit, in any manner the operations of FNFG or any FNFG Subsidiary, including
without limitation any restriction on the payment of dividends (any such notice,
communication, memorandum, agreement or order described in this sentence is
hereinafter referred to as a "Regulatory Agreement"). Neither FNFG nor any FNFG
Subsidiary has consented to or entered into any currently effective Regulatory
Agreement. The most recent regulatory rating given to First Niagara Bank as to
compliance with the Community Reinvestment Act CRA is satisfactory or better.
5.12. Employee Benefit Plans.
5.12.1. FNFG DISCLOSURE SCHEDULE 5.12 includes a list of all
existing bonus, incentive, deferred compensation, pension, retirement,
profit-sharing, thrift, savings, employee stock ownership, stock bonus, stock
purchase, restricted stock, stock option, stock appreciation, phantom stock,
severance, welfare benefit plans, fringe benefit plans, employment, severance
and change in control agreements and all other benefit practices, policies and
arrangements maintained by FNFG or any FNFG Subsidiary and in which employees in
general may participate (the "FNFG Compensation and Benefit Plans"). Each FNFG
Compensation and Benefit Plan has been administered in form and in operation, in
all material respects with its terms and all applicable requirements of law and
no notice has been issued by any Governmental Authority questioning or
challenging such compliance. With respect to each of the FNFG Compensation and
Benefit Plans, if applicable, FNFG has provided or made available to TFC copies
of the most recent summary plan description (or other such summary of the terms
of the plan).
5.12.2. To the Knowledge of FNFG and except as disclosed in FNFG
DISCLOSURE SCHEDULE 5.12.2, each FNFG Compensation and Benefit Plan has been
operated and administered in all material respects in accordance with its terms
and with applicable law, including, but not limited to, ERISA, the Code, the
Securities Act, the Exchange Act, the Age Discrimination in Employment Act,
COBRA, the Health Insurance Portability and Accountability Act and any
regulations or rules promulgated thereunder, and all material filings,
disclosures and notices required by ERISA, the Code, the Securities Act, the
Exchange Act, the Age Discrimination in Employment Act and any other applicable
law have been timely made or any interest, fines, penalties or other impositions
for late filings have been paid in full. Each FNFG Compensation and Benefit Plan
which is an "employee pension benefit plan" within the meaning of Section 3(2)
of ERISA (a "Pension Plan") and which is intended to be qualified under Section
401(a) of the Code has received a favorable determination letter from the IRS,
and FNFG is not aware of any circumstances which are reasonably likely to result
in revocation of any such favorable determination letter. There is no material
pending or, to the Knowledge of FNFG, threatened action, suit or claim relating
to any of the FNFG Compensation and Benefit Plans (other than routine claims for
benefits). Neither FNFG nor any FNFG Subsidiary has engaged in a transaction, or
omitted to take any action, with respect to any Compensation and Benefit Plan
that would reasonably be expected to subject FNFG or any FNFG Subsidiary to an
unpaid tax or penalty imposed by either Section 4975 of the Code or Section 502
of ERISA.
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5.12.3. No liability, other than PBGC premiums arising in the
ordinary course of business, has been or is expected by FNFG or any of its
Subsidiaries to be incurred with respect to any FNFG Compensation and Benefit
Plan which is a defined benefit plan subject to Title IV of ERISA ("FNFG Defined
Benefit Plan"), or with respect to any "single-employer plan" (as defined in
Section 4001(a) of ERISA) currently or formerly maintained by FNFG or any entity
which is considered one employer with FNFG under Section 4001(b)(1) of ERISA or
Section 414 of the Code (an "ERISA Affiliate") (such plan hereinafter referred
to as an "ERISA Affiliate Plan"). To the Knowledge of FNFG, except as set forth
in FNFG DISCLOSURE SCHEDULE 5.12.3, no FNFG Defined Benefit Plan had an
"accumulated funding deficiency" (as defined in Section 302 of ERISA), whether
or not waived, as of the last day of the end of the most recent plan year ending
prior to the date hereof. Except as set forth in FNFG DISCLOSURE SCHEDULE
5.12.3, the fair market value of the assets of each FNFG Defined Benefit Plan
exceeds the present value of the benefits guaranteed under Section 4022 of ERISA
under such FNFG Defined Benefit Plan as of the end of the most recent plan year
with respect to the respective FNFG Defined Benefit Plan ending prior to the
date hereof, calculated on the basis of the actuarial assumptions used in the
most recent actuarial valuation for such FNFG Defined Benefit Plan as of the
date hereof; and no notice of a "reportable event" (as defined in Section 4043
of ERISA) for which the 30-day reporting requirement has not been waived has
been required to be filed for any FNFG Defined Benefit Plan within the 12-month
period ending on the date hereof. Neither FNFG nor any of its Subsidiaries has
provided, or is required to provide, security to any FNFG Defined Benefit Plan
or to any single-employer plan of an ERISA Affiliate pursuant to Section
401(a)(29) of the Code or has taken any action, or omitted to take any action,
that has resulted, or would reasonably be expected to result in the imposition
of a lien under Section 412(n) of the Code or pursuant to ERISA. Neither FNFG,
its Subsidiaries, nor any ERISA Affiliate has contributed to any "multiemployer
plan," as defined in Section 3(37) of ERISA, on or after January 1, 1998. To the
Knowledge of FNFG, there is no pending investigation or enforcement action by
any Bank Regulator with respect to any FNFG Compensation and Benefit Plan or any
ERISA Affiliate Plan.
5.12.4. All material contributions required to be made under the
terms of any FNFG Compensation and Benefit Plan or ERISA Affiliate Plan or any
employee benefit arrangements to which FNFG or any FNFG Subsidiary is a party or
a sponsor have been timely made, and all anticipated contributions and funding
obligations are accrued on FNFG's consolidated financial statements to the
extent required by GAAP. FNFG and its Subsidiaries have expensed and accrued as
a liability the present value of future benefits under each applicable FNFG
Compensation and Benefit Plan for financial reporting purposes as required by
GAAP.
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5.13. Environmental Matters.
5.13.1. To the Knowledge of FNFG, neither the conduct nor operation
of their business nor any condition of any property currently or previously
owned or operated by any of them (including, without limitation, in a fiduciary
or agency capacity), or on which any of them holds a lien, results or resulted
in a violation of any Environmental Laws that is reasonably likely to impose a
material liability (including a material remediation obligation) upon FNFG or
any of FNFG Subsidiary. To the Knowledge of FNFG, no condition has existed or
event has occurred with respect to any of them or any such property that, with
notice or the passage of time, or both, is reasonably likely to result in any
material liability to FNFG or any FNFG Subsidiary by reason of any Environmental
Laws. Neither FNFG nor any FNFG Subsidiary has received any written notice from
any Person that FNFG or any FNFG Subsidiary or the operation or condition of any
property ever owned, operated, or held as collateral or in a fiduciary capacity
by any of them are currently in violation of or otherwise are alleged to have
financial exposure under any Environmental Laws or relating to Materials of
Environmental Concern (including, but not limited to, responsibility (or
potential responsibility) for the cleanup or other remediation of any Materials
of Environmental Concern at, on, beneath, or originating from any such property)
for which a material liability is reasonably likely to be imposed upon FNFG or
any FNFG Subsidiary.
5.13.2. There is no suit, claim, action, demand, executive or
administrative order, directive, investigation or proceeding pending or, to the
FNFG `s Knowledge, threatened, before any court, governmental agency or other
forum against FNFG or any FNFG Subsidiary (x) for alleged noncompliance
(including by any predecessor) with, or liability under, any Environmental Law
or (y) relating to the presence of or release (defined herein) into the
environment of any Materials of Environmental Concern (as defined herein),
whether or not occurring at or on a site owned, leased or operated by any of the
FNFG .
5.14. Loan Portfolio.
5.14.1. The allowance for credit losses reflected in FNFG's audited
statement of condition at December 31, 2002 was, and the allowance for credit
losses shown on the balance sheets in FNFG's Securities Documents for periods
ending after December 31, 2002 will be, adequate, as of the dates thereof, under
GAAP.
5.14.2. FNFG DISCLOSURE SCHEDULE 5.14 sets forth a listing, as of
the most recently available date (and in no event later than March 31, 2003),
all loans of FNFG and any FNFG Subsidiary, (1) that are contractually past due
90 days or more in the payment of principal and/or interest, (2) that are on
non-accrual status, (3) that as of the date of this Agreement are classified as
"Other Loans Specially Mentioned", "Special Mention", "Substandard", "Doubtful",
"Loss", "Classified", "Criticized", "Watch list" or words of similar import,
together with the principal amount of and accrued and unpaid interest on each
such Loan and the identity of the obligor thereunder, (4) where a reasonable
doubt exists as to the timely future collectability of principal and/or
interest, whether or not interest is still accruing or the loans are less than
90 days past due, (5) where the interest rate terms have been reduced and/or the
maturity dates have been extended subsequent to the agreement under which the
loan was originally created due to concerns regarding the borrower's ability to
pay in accordance with such initial terms, or (6) where a specific reserve
allocation exists in connection therewith; and all assets classified by of FNFG
and any FNFG Subsidiary as real estate acquired through foreclosure or in lieu
of foreclosure, including in-substance foreclosures, and all other assets
currently held that were acquired through foreclosure or in lieu of foreclosure.
DISCLOSURE SCHEDULE 5.14 may exclude any individual loan with a principal
outstanding balance of less than $100,000.
39
5.14.3. All loans receivable (including discounts) and accrued
interest entered on the books of FNFG and the each FNFG Subsidiary arose out of
bona fide arm's-length transactions, were made for good and valuable
consideration in the ordinary course of business, and the notes or other
evidences of indebtedness with respect to such loans (including discounts) are
true and genuine and are what they purport to be.
5.14.4. The notes and other evidences of indebtedness evidencing the
loans described above, and all pledges, mortgages, deeds of trust and other
collateral documents or security instruments relating thereto are, in all
material respects, valid, true and genuine, and what they purport to be.
5.15. Securities Documents.
FNFG has made available to TFC copies of its (i) annual reports on Form
10-K for the years ended December 31, 2002, 2001 and 2000, (ii) quarterly report
on Form 10-Q for the quarter ended March 31, 2003 and (iii) proxy materials used
or for use in connection with its meetings of shareholders held in 2003, 2002
and 2001. Such reports and such proxy materials complied, at the time filed with
the SEC, in all material respects, with the Securities Laws.
5.16. Deposits.
None of the deposits of any FNFG Subsidiary is a "brokered deposit" as
defined in 12 CFR Section 337.6(a)(2).
5.17. Antitakeover Provisions Inapplicable.
The transactions contemplated by this Agreement are not subject to the
requirements of any "moratorium," "control share," "fair price," "affiliate
transactions," "business combination" or other antitakeover laws and regulations
of any state, including the provisions of Section 203 of the DGCL applicable to
FNFG or any FNFG Subsidiary.
5.18. Risk Management Instruments.
All material interest rate swaps, caps, floors, option agreements, futures
and forward contracts and other similar risk management arrangements, whether
entered into for FNFG's own account, or for the account of one or more of FNFG's
Subsidiaries or their customers, were in all material respects entered into in
compliance with all applicable laws, rules, regulations and regulatory policies,
and to the Knowledge of FNFG, with counterparties believed to be financially
responsible at the time; and each of them constitutes the valid and legally
binding obligation of FNFG or one of its Subsidiaries, enforceable in accordance
with its terms (except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and
similar laws of general applicability relating to or affecting creditors' rights
or by general equity principles), and is in full force and effect. Neither FNFG
nor any of its Subsidiaries, nor to the Knowledge of FNFG any other party
thereto, is in breach of any of its obligations under any such agreement or
arrangement in any material respect.
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5.19. Brokers, Finders and Financial Advisors.
Neither FNFG nor any FNFG Subsidiary, nor any of their respective
officers, directors, employees or agents, has employed any broker, finder or
financial advisor in connection with the transactions contemplated by this
Agreement, or incurred any liability or commitment for any fees or commissions
to any such person in connection with the transactions contemplated by this
Agreement, except for the retention of ▇▇▇▇, ▇▇▇▇ & Co. by FNFG and the fee
payable pursuant thereto.
ARTICLE VI
COVENANTS OF TFC AND TSB
6.1. Conduct of Business.
6.1.1. Affirmative Covenants. During the period from the date of
this Agreement to the Effective Time, except with the written consent of FNFG,
which consent will not be unreasonably withheld, conditioned or delayed, TFC and
TSB will operate their business, and it will cause each of the TFC Subsidiaries
to operate its business, only in the usual, regular and ordinary course of
business; use reasonable efforts to preserve intact its business organization
and assets and maintain its rights and franchises; and voluntarily take no
action which would (i) adversely affect the ability of the parties to obtain any
necessary approvals of governmental authorities required for the transactions
contemplated hereby or materially increase the period of time necessary to
obtain such approvals, or (ii) adversely affect their ability to perform its
covenants and agreements under this Agreement.
6.1.2. Negative Covenants. Each of TFC and TSB agree that from the
date of this Agreement to the Effective Time, except as otherwise specifically
permitted or required by this Agreement, set forth in TFC DISCLOSURE SCHEDULE
6.1.2, or consented to by FNFG in writing (which consent shall not be
unreasonably withheld, conditioned or delayed), it will not, and it will cause
each of the TFC Subsidiaries not to:
(A) change or waive any provision of its Certificate of
Incorporation, Charter or Bylaws, except as required by law;
(B) change the number of authorized or issued shares of its
capital stock, issue any shares of TFC Common Stock that are held as "treasury
shares" as of the date of this Agreement, or issue or grant any Right or
agreement of any character relating to its authorized or issued capital stock or
any securities convertible into shares of such stock, make any grant or award
under the TFC Option Plan, or split, combine or reclassify any shares of capital
stock, or declare, set aside or pay any dividend or other distribution in
respect of capital stock, or redeem or otherwise acquire any shares of capital
stock, except that (A) TFC may issue shares of TFC Common Stock upon the valid
exercise, in accordance with the information set forth in TFC DISCLOSURE
SCHEDULE 4.2.1, of presently outstanding TFC Options issued under the TFC Option
Plan, (B) TFC may continue to pay its regular quarterly cash dividend of $0.16
per share with payment and record dates consistent with past practice (provided
the declaration of the last quarterly dividend by TFC prior to the Effective
Time and the payment thereof shall be coordinated with FNFG so that holders of
TFC Common Stock do not receive dividends on both TFC Common Stock and FNFG
Common Stock received in the Merger in respect of such quarter or fail to
receive a dividend on at least one of the TFC Common Stock or FNFG Common Stock
received in the Merger in respect of such quarter), and (C) any TFC Subsidiary
may pay dividends to its parent company (as permitted under applicable law or
regulations).
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(C) enter into, amend in any material respect or terminate any
contract or agreement (including without limitation any settlement agreement
with respect to litigation) except in the ordinary course of business;
(D) other than as set forth in TFC DISCLOSURE SCHEDULE
6.1.2(D), make application for the opening or closing of any, or open or close
any, branch or automated banking facility;
(E) grant or agree to pay any bonus, severance or termination
to, or enter into, renew or amend any employment agreement, severance agreement
and/or supplemental executive agreement with, or increase in any manner the
compensation or fringe benefits of, any of its directors, officers or employees,
except (i) as may be required pursuant to commitments existing on the date
hereof and set forth on TFC DISCLOSURE SCHEDULES 4.9.1 and 4.13.1 or (ii) as to
non-executive employees, merit pay increases or bonuses consistent with past
practice; and, (iii) TSB may hire at-will, non-officer employees to fill
vacancies that may from time to time arise in the ordinary course of business.
In addition, TFC may agree to pay employees of TFC or TSB, who are identified by
TFC and agreed to by FNFG, a retention bonus in an individual amount to be
agreed to by TFC and FNFG and in an aggregate amount as to all retention bonuses
not in excess of $100,000 or such other amount as the parties may agree.
(F) enter into or, except as may be required by law,
materially modify any pension, retirement, stock option, stock purchase, stock
appreciation right, stock grant, savings, profit sharing, deferred compensation,
supplemental retirement, consulting, bonus, group insurance or other employee
benefit, incentive or welfare contract, plan or arrangement, or any trust
agreement related thereto, in respect of any of its directors, officers or
employees; or make any contributions to any defined contribution or defined
benefit plan not in the ordinary course of business consistent with past
practice;
(G) merge or consolidate TFC or any TFC Subsidiary with any
other corporation; sell or lease all or any substantial portion of the assets or
business of TFC or any TFC Subsidiary; make any acquisition of all or any
substantial portion of the business or assets of any other person, firm,
association, corporation or business organization other than in connection with
foreclosures, settlements in lieu of foreclosure, troubled loan or debt
restructuring, or the collection of any loan or credit arrangement between TFC,
or any TFC Subsidiary, and any other person; enter into a purchase and
assumption transaction with respect to deposits and liabilities; permit the
revocation or surrender by any TFC Subsidiary of its certificate of authority to
maintain, or file an application for the relocation of, any existing branch
office, or file an application for a certificate of authority to establish a new
branch office;
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(H) sell or otherwise dispose of the capital stock of TFC or
sell or otherwise dispose of any asset of TFC or of any TFC Subsidiary other
than in the ordinary course of business consistent with past practice; except
for transactions with the FHLB, subject any asset of TFC or of any TFC
Subsidiary to a lien, pledge, security interest or other encumbrance (other than
in connection with deposits, repurchase agreements, bankers acceptances,
"treasury tax and loan" accounts established in the ordinary course of business
and transactions in "federal funds" and the satisfaction of legal requirements
in the exercise of trust powers) other than in the ordinary course of business
consistent with past practice; incur any indebtedness for borrowed money (or
guarantee any indebtedness for borrowed money), except in the ordinary course of
business consistent with past practice;
(I) take any action which would result in any of the
representations and warranties of TFC or TSB set forth in this Agreement
becoming untrue as of any date after the date hereof or in any of the conditions
set forth in Article IX hereof not being satisfied, except in each case as may
be required by applicable law;
(J) change any method, practice or principle of accounting,
except as may be required from time to time by GAAP (without regard to any
optional early adoption date) or any Bank Regulator responsible for regulating
TFC or TSB;
(K) waive, release, grant or transfer any material rights of
value or modify or change in any material respect any existing material
agreement or indebtedness to which TFC or any TFC Subsidiary is a party, other
than in the ordinary course of business, consistent with past practice;
(L) purchase any equity securities, or purchase any security
for its investment portfolio inconsistent with TFC's or any TFC Subsidiary's
current investment policy, or otherwise alter, in any material respect, the mix,
maturity, credit or interest rate risk profile of its portfolio of investment
securities or its portfolio of mortgage-backed securities;
(M) except for commitments issued prior to the date of this
Agreement which have not yet expired and which have been disclosed on the TFC
DISCLOSURE SCHEDULE 6.12(M), and the renewal of existing lines of credit, make
any new loan or other credit facility commitment (including without limitation,
lines of credit and letters of credit) in an amount in excess of $5,000,000 for
a commercial real estate loan or $4,000,000 for a commercial business loan, or
in excess of $500,000 for a residential loan. In addition, the prior approval of
FNFG is required with respect to the foregoing: (i) any new loan or credit
facility commitment in an amount of $500,000 or greater to any borrower or group
of affiliated borrowers whose credit exposure with TSB, TFC or any TFC
Subsidiary, in the aggregate, exceeds $5,000,000 prior thereto or as a result
thereof; and (ii) any new loan or credit facility commitment in excess of
$500,000 to any person residing, or any property located, outside of New York
State.
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(N) except as set forth on the TFC DISCLOSURE SCHEDULE
6.12(N), enter into, renew, extend or modify any other transaction (other than a
deposit transaction) with any Affiliate;
(O) enter into any futures contract, option, interest rate
caps, interest rate floors, interest rate exchange agreement or other agreement
or take any other action for purposes of hedging the exposure of its
interest-earning assets and interest-bearing liabilities to changes in market
rates of interest;
(P) except for the execution of this Agreement, and actions
taken or which will be taken in accordance with this Agreement and performance
thereunder, take any action that would give rise to a right of payment to any
individual under any employment agreement;
(Q) make any change in policies in existence on the date of
this Agreement with regard to: the extension of credit, or the establishment of
reserves with respect to the possible loss thereon or the charge off of losses
incurred thereon; investments; asset/liability management; or other material
banking policies in any material respect except as may be required by changes in
applicable law or regulations or by a Bank Regulator;
(R) except for the execution of this Agreement, and the
transactions contemplated therein, take any action that would give rise to an
acceleration of the right to payment to any individual under any TFC Employee
Plan;
(S) except as set forth in TFC DISCLOSURE SCHEDULE 6.12(S),
make any capital expenditures in excess of $50,000 individually or $100,000 in
the aggregate, other than pursuant to binding commitments existing on the date
hereof and other than expenditures necessary to maintain existing assets in good
repair;
(T) except as set forth in TFC DISCLOSURE SCHEDULE 6.12(T),
purchase or otherwise acquire, or sell or otherwise dispose of, any assets or
incur any liabilities other than in the ordinary course of business consistent
with past practices and policies;
(U) without prior consent sell any participation interest in
any loan (other than sales of loans secured by one- to four-family real estate
that are consistent with past practice) (and provided that First Niagara Bank
will be given the first opportunity to purchase any loan participation being
sold) or OREO properties (other than sales of OREO which generate a net book
loss of not more than $20,000 per property);
(V) undertake or enter into any lease, contract or other
commitment for its account, other than in the normal course of providing credit
to customers as part of its banking business, involving a payment by TFC or TSB
of more than $50,000 annually, or containing any financial commitment extending
beyond 12 months from the date hereof; or
(W) agree to do any of the foregoing.
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6.2. Current Information.
6.2.1. During the period from the date of this Agreement to the
Effective Time, TFC and TSB will cause one or more of its representatives to
confer with representatives of FNFG and report the general status of its ongoing
operations at such times as FNFG may reasonably request. TFC will promptly
notify FNFG of any material change in the normal course of its business or in
the operation of its properties and, to the extent permitted by applicable law,
of any governmental complaints, investigations or hearings (or communications
indicating that the same may be contemplated), or the institution or the threat
of material litigation involving TFC or any TFC Subsidiary.
6.2.2. TSB and First Niagara Bank shall meet on a regular basis to
discuss and plan for the conversion of TSB's data processing and related
electronic informational systems to those used by First Niagara Bank, which
planning shall include, but not be limited to, discussion of the possible
termination by TSB of third-party service provider arrangements effective at the
Effective Time or at a date thereafter, non-renewal of personal property leases
and software licenses used by TSB in connection with its systems operations,
retention of outside consultants and additional employees to assist with the
conversion, and outsourcing, as appropriate, of proprietary or self-provided
system services, it being understood that TSB shall not be obligated to take any
such action prior to the Effective Time and, unless TSB otherwise agrees, no
conversion shall take place prior to the Effective Time. In the event that TSB
takes, at the request of First Niagara Bank, any action relative to third
parties to facilitate the conversion that results in the imposition of any
termination fees or charges, First Niagara Bank shall indemnify TSB for any such
fees and charges, and the costs of reversing the conversion process, if for any
reason the Merger is not consummated for any reason other than a breach of this
Agreement by TFC, or a termination of this Agreement under Section 11.1.8 or
11.1.9.
6.2.3. TSB shall provide First Niagara Bank, within ten (10)
business days of the end of each calendar month, a written list of nonperforming
assets (the term "nonperforming assets," for purposes of this subsection, means
(i) loans that are "troubled debt restructuring" as defined in Statement of
Financial Accounting Standards No. 15, "Accounting by Debtors and Creditors for
Troubled Debt Restructuring," (ii) loans on nonaccrual, (iii) real estate owned,
(iv) all loans ninety (90) days or more past due) as of the end of such month
and (iv) and impaired loans. On a monthly basis, TFC shall provide First Niagara
Bank with a schedule of all loan approvals, which schedule shall indicate the
loan amount, loan type and other material features of the loan.
6.3. Access to Properties and Records.
Subject to Section 12.1 hereof, TFC shall permit FNFG reasonable access
upon reasonable notice to its properties and those of the TFC Subsidiaries, and
shall disclose and make available to FNFG during normal business hours all of
its books, papers and records relating to the assets, properties, operations,
obligations and liabilities, including, but not limited to, all books of account
(including the general ledger), tax records, minute books of directors' (other
than minutes that discuss any of the transactions contemplated by this Agreement
or any other subject matter TFC reasonably determines should be treated as
confidential) and stockholders' meetings, organizational documents, Bylaws,
material contracts and agreements, filings with any regulatory authority,
litigation files, plans affecting employees, and any other business activities
or prospects in which FNFG may have a reasonable interest; provided, however,
that TFC shall not be required to take any action that would provide access to
or to disclose information where such access or disclosure would violate or
prejudice the rights or business interests or confidences of any customer or
other person or would result in the waiver by it of the privilege protecting
communications between it and any of its counsel. TFC shall provide and shall
request its auditors to provide FNFG with such historical financial information
regarding it (and related audit reports and consents) as FNFG may reasonably
request for securities disclosure purposes. FNFG shall use commercially
reasonable efforts to minimize any interference with TFC's regular business
operations during any such access to TFC's property, books and records. TFC and
each TFC Subsidiary shall permit FNFG, at its expense, to cause a "phase I
environmental audit" and a "phase II environmental audit" to be performed at any
physical location owned or occupied by TFC or any TFC Subsidiary.
45
6.4. Financial and Other Statements.
6.4.1. Promptly upon receipt thereof, TFC will furnish to FNFG
copies of each annual, interim or special audit of the books of TFC and the TFC
Subsidiaries made by its independent accountants and copies of all internal
control reports submitted to TFC by such accountants in connection with each
annual, interim or special audit of the books of TFC and the TFC Subsidiaries
made by such accountants.
6.4.2. As soon as reasonably available, but in no event later than
the date such documents are filed with the SEC, TFC will deliver to FNFG the
Securities Documents filed by it with the SEC under the Securities Laws. TFC
will furnish to FNFG copies of all documents, statements and reports as it or
any TFC Subsidiary shall send to its stockholders, the FDIC, the FRB, the
Department or any other regulatory authority, except as legally prohibited
thereby. Within 25 days after the end of each month, TFC will deliver to FNFG a
consolidated balance sheet and a consolidated statement of operations, without
related notes, for such month prepared in accordance with current financial
reporting practices.
6.4.3. TFC will advise FNFG promptly of the receipt of any
examination report of any Bank Regulator with respect to the condition or
activities of TFC or any of the TFC Subsidiaries.
6.4.4. With reasonable promptness, TFC will furnish to FNFG such
additional financial data that TFC possesses and as FNFG may reasonably request,
including without limitation, detailed monthly financial statements and loan
reports.
6.5. Maintenance of Insurance.
TFC and TSB shall maintain, and cause their respective Subsidiaries to
maintain, insurance in such amounts as are reasonable to cover such risks as are
customary in relation to the character and location of its properties and the
nature of its business
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6.6. Disclosure Supplements.
From time to time prior to the Effective Time, TFC and TSB will promptly
supplement or amend the TFC DISCLOSURE SCHEDULE delivered in connection herewith
with respect to any matter hereafter arising which, if existing, occurring or
known at the date of this Agreement, would have been required to be set forth or
described in such TFC DISCLOSURE SCHEDULE or which is necessary to correct any
information in such TFC DISCLOSURE SCHEDULE which has been rendered materially
inaccurate thereby. No supplement or amendment to such TFC DISCLOSURE SCHEDULE
shall have any effect for the purpose of determining satisfaction of the
conditions set forth in Article IX.
6.7. Consents and Approvals of Third Parties.
TFC and TSB shall use all commercially reasonable efforts to obtain as
soon as practicable all consents and approvals of any other persons necessary or
desirable for the consummation of the transactions contemplated by this
Agreement. Without limiting the generality of the foregoing, TFC shall utilize
the services of a professional proxy soliciting firm to provide assistance in
obtaining the shareholder vote required to be obtained by it hereunder.
6.8. All Reasonable Efforts.
Subject to the terms and conditions herein provided, TFC and TSB agree to
use all commercially reasonable 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
transactions contemplated by this Agreement.
6.9. Failure to Fulfill Conditions.
In the event that TFC or TSB determines that a condition to its obligation
to complete the Merger cannot be fulfilled and that it will not waive that
condition, it will promptly notify FNFG.
6.10. No Solicitation.
From and after the date hereof until the termination of this Agreement,
neither TFC, nor any TFC Subsidiary, nor any of their respective officers,
directors, employees, representatives, agents or affiliates (including, without
limitation, any investment banker, attorney or accountant retained by TFC or any
of its Subsidiaries), will, directly or indirectly, initiate, solicit or
knowingly encourage (including by way of furnishing non-public information or
assistance) any inquiries or the making of any proposal that constitutes, or may
reasonably be expected to lead to, any Acquisition Proposal (as defined below),
or enter into or maintain or continue discussions or negotiate with any person
or entity in furtherance of such inquiries or to obtain an Acquisition Proposal
or agree to or endorse any Acquisition Proposal, or authorize or permit any of
its officers, directors, or employees or any of its subsidiaries or any
investment banker, financial advisor, attorney, accountant or other
representative retained by any of its subsidiaries to take any such action, and
TFC shall notify FNFG orally (within one business day) and in writing (as
promptly as practicable) of all of the relevant details relating to all
inquiries and proposals which it or any of its Subsidiaries or any such officer,
director, employee, investment banker, financial advisor, attorney, accountant
or other representative may receive relating to any of such matters, provided,
however, that nothing contained in this Section 6.10 shall prohibit the Board of
Directors of TFC from furnishing information to, or entering into discussions or
negotiations with any person or entity that makes an unsolicited written
proposal to acquire TFC pursuant to a merger, consolidation, share exchange,
business combination, tender or exchange offer or other similar transaction, if,
and only to the extent that, (A) the Board of Directors of TFC receives an
opinion from its independent financial advisor that such proposal may be or
could be superior to the Merger from a financial point-of-view to TFC's
stockholders, (B) the Board of Directors of TFC, after consultation with and
after considering the advice of independent legal counsel, determines in good
faith that the failure to furnish information to or enter into discussions with
such person may cause the Board of Directors of TFC to breach its fiduciary
duties to stockholders under applicable law (such proposal that satisfies (A)
and (B) being referred to herein as a "Superior Proposal"); (C) TFC promptly
notifies FNFG of such inquiries, proposals or offers received by, any such
information requested from, or any such discussions or negotiations sought to be
initiated or continued with TFC or any of its representatives indicating, in
connection with such notice, the name of such person and the material terms and
conditions of any inquiries, proposals or offers, and receives from such person
or entity an executed confidentiality agreement in form and substance identical
in all material respects to the confidentiality agreement that TFC and FNFG
entered into; and (D) the TFC Stockholders Meeting has not occurred. For
purposes of this Agreement, "Acquisition Proposal" shall mean any proposal or
offer as to any of the following (other than the transactions contemplated
hereunder) involving TFC or any of its subsidiaries: (i) any merger,
consolidation, share exchange, business combination, or other similar
transactions; (ii) any sale, lease, exchange, mortgage, pledge, transfer or
other disposition of 25% or more of the assets of TFC, taken as a whole, in a
single transaction or series of transactions; (iii) any tender offer or exchange
offer for 25% or more of the outstanding shares of capital stock of TFC or the
filing of a registration statement under the Securities Act in connection
therewith; or (iv) any public announcement of a proposal, plan or intention to
do any of the foregoing or any agreement to engage in any of the foregoing.
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6.11. Reserves and Merger-Related Costs.
On or before the Effective Time, TFC shall establish such additional
accruals and reserves as may be necessary to conform the accounting reserve
practices and methods (including credit loss practices and methods) of TFC to
those of FNFG (as such practices and methods are to be applied to TFC from and
after the Closing Date) and FNFG's plans with respect to the conduct of the
business of TFC following the Merger and otherwise to reflect Merger-related
expenses and costs incurred by TFC, provided, however, that TFC shall not be
required to take such action unless FNFG agrees in writing that all conditions
to closing set forth in Article IX have been satisfied or waived (except for the
expiration of any applicable waiting periods); prior to the delivery by FNFG of
the writing referred to in the preceding clause, TFC shall provide FNFG a
written statement, certified without personal liability by the chief executive
officer of TFC and dated the date of such writing, that the representation made
in Section 4.15.1 hereof is true as of such date or, alternatively, setting
forth in detail the circumstances that prevent such representation from being
true as of such date; and no accrual or reserve made by TFC or any TFC
Subsidiary pursuant to this subsection, or any litigation or regulatory
proceeding arising out of any such accrual or reserve, shall constitute or be
deemed to be a breach or violation of any representation, warranty, covenant,
condition or other provision of this Agreement or to constitute a termination
event within the meaning of Section 11.1.2 hereof. No action shall be required
to be taken by TFC pursuant to this Section 6.11 if, in the opinion of TFC's
independent auditors, such action would contravene GAAP.
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6.12. Board of Directors and Committee Meetings.
TFC and TSB shall permit a representative of FNFG to attend any meeting of
the Board of Directors of TFC and/or TSB or the Executive Committees thereof as
an observer (the "Observer"), provided that neither TFC nor TSB shall be
required to permit the FNFG representative to remain present during any
confidential discussion of this Agreement and the transactions contemplated
hereby or any third party proposal to acquire control of TFC or TSB or during
any other matter that the respective Board of Directors has reasonably
determined to be confidential with respect to FNFG's participation.
ARTICLE VII
COVENANTS OF FNFG AND FIRST NIAGARA BANK
7.1. Conduct of Business.
During the period from the date of this Agreement to the Effective Time,
except with the written consent of TFC, which consent will not be unreasonably
withheld, conditioned or delayed, each of FNFG and First Niagara Bank will
conduct its business in the ordinary course consistent with past practices and
will not take any action that would: (i) adversely affect the ability of any
party to obtain the approvals from the Bank Regulators required for the
transactions contemplated hereby or materially increase the period of time
necessary to obtain such approvals; (ii) adversely affect its ability to perform
its covenants and agreements under this Agreement; or (iii) result in the
representations and warranties contained in Article V of this Agreement not
being true and correct on the date of this Agreement or at any future date on or
prior to the Closing Date.
7.2. Current Information.
During the period from the date of this Agreement to the Effective Time,
FNFG will cause one or more of its representatives to confer with
representatives of TFC and report the general status of its financial condition,
operations and business and matters relating to the completion of the
transactions contemplated hereby, at such times as TFC may reasonably request.
FNFG will promptly notify TFC, to the extent permitted by applicable law, of any
governmental complaints, investigations or hearings (or communications
indicating that the same may be contemplated), or the institution of material
litigation involving FNFG and any FNFG Subsidiary.
7.3. Financial and Other Statements.
As soon as reasonably available, but in no event later than the date such
documents are filed with the SEC, FNFG will deliver to TFC the Securities
Documents filed by it with the SEC under the Securities Laws. FNFG will furnish
to TFC copies of all documents, statements and reports as it or FNFG file with
the OTS or any other regulatory authority with respect to the Merger.
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7.4. Disclosure Supplements.
From time to time prior to the Effective Time, FNFG and First Niagara Bank
will promptly supplement or amend the FNFG DISCLOSURE SCHEDULE delivered in
connection herewith with respect to any material matter hereafter arising which,
if existing, occurring or known at the date of this Agreement, would have been
required to be set forth or described in such FNFG DISCLOSURE SCHEDULE or which
is necessary to correct any information in such FNFG DISCLOSURE SCHEDULE which
has been rendered inaccurate thereby. No supplement or amendment to such FNFG
DISCLOSURE SCHEDULE shall have any effect for the purpose of determining
satisfaction of the conditions set forth in Article IX.
7.5. Consents and Approvals of Third Parties.
FNFG and First Niagara Bank shall use all commercially reasonable efforts
to obtain as soon as practicable all consents and approvals of any other
Persons, including the Depositors and stockholders of FNFG necessary or
desirable for the consummation of the transactions contemplated by this
Agreement.
7.6. All Reasonable Efforts. Subject to the terms and conditions herein
provided, FNFG and First Niagara Bank agree to use all commercially reasonable
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 transactions contemplated by
this Agreement.
7.7. Failure to Fulfill Conditions.
In the event that FNFG or First Niagara Bank determine that a condition to
its obligation to complete the Merger cannot be fulfilled and that it will not
waive that condition, it will promptly notify TFC.
7.8. Employee Benefits; Advisory Board.
7.8.1. FNFG will review all other TFC Compensation and Benefit Plans
to determine whether to maintain, terminate or continue such plans. In the event
employee compensation and/or benefits as currently provided by TFC and TSB are
changed or terminated by FNFG, in whole or in part, FNFG shall provide
Continuing Employees (as defined below) with compensation and benefits that are,
in the aggregate, substantially similar to the compensation and benefits
provided to similarly situated FNFG employees (as of the date any such
compensation or benefit is provided). All TFC Employees who become participants
in an FNFG Compensation and Benefit Plan shall, for purposes of determining
eligibility for and for any applicable vesting periods of such employee benefits
only (and not for pension benefit accrual purposes) be given credit for meeting
eligibility and vesting requirements in such plans for service as an employee of
TFC or TSB or any predecessor thereto prior to the Effective Time, provided,
however, that credit for prior service shall not be given under the FNFG ESOP.
This Agreement shall not be construed to limit the ability of FNFG or First
Niagara Bank to terminate the employment of any employee or to review employee
benefits programs from time to time and to make such changes as they deem
appropriate.
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7.8.2. The TFC Employee Stock Ownership Plan (the "TFC ESOP") shall
be terminated as of, or prior to, the Effective Time (all shares held by the
ESOP shall be converted into the right to receive the Merger Consideration, as
elected by the ESOP participants), all outstanding TFC ESOP indebtedness shall
be repaid, and the balance shall be allocated and distributed to TFC ESOP
participants (subject to the receipt of a favorable determination letter from
the IRS), as provided for in the TFC ESOP and unless otherwise required by
applicable law. Prior to the Effective Time, TFC and TSB, and following the
Effective Time, FNFG and First Niagara Bank shall use their respective best
efforts in good faith to obtain such favorable determination letter (including,
but not limited to, making such changes to the ESOP and the proposed allocations
as may be requested by the IRS as a condition to its issuance of a favorable
determination letter). TFC and TSB, and following the Effective Time, FNFG and
First Niagara Bank, will adopt such amendments to the TFC ESOP as may be
reasonably required by the IRS as a condition to granting such favorable
determination letter on termination. Neither TFC or TSB, or following the
Effective Time, FNFG or First Niagara Bank shall make any distribution from the
TFC ESOP except as may be required by applicable law until receipt of such
favorable determination letter. In the case of a conflict between the terms of
this Section and the terms of the TFC ESOP, the terms of the TFC ESOP shall
control, however, in the event of any such conflict, TFC and TSB before the
Merger, and FNFG and First Niagara, after the Merger, shall use their best
efforts to cause the ESOP to be amended to conform to the requirements of this
Section.
7.8.3. The payments required to be made under the employment
agreements between (i) TFC and TSB and (ii) each of the following individuals,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇"), Jr., ▇▇▇▇▇ ▇. ▇'▇▇▇▇▇ ("▇'▇▇▇▇▇"), ▇▇▇▇▇ ▇.
▇▇▇▇▇▇ ("▇▇▇▇▇▇"), ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ("▇▇▇▇▇") and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ("▇▇▇▇▇"),
shall be made, unless otherwise set forth herein, immediately prior to the
Effective Time, and in accordance with the following principles: In the
calculation of the payment to be made under Section 8(a)(iii)(B) for ▇▇▇▇▇▇▇,
▇'▇▇▇▇▇, ▇▇▇▇▇▇ and ▇▇▇▇▇, no bonus was paid or payable during the 12 month
period preceding the termination. In the calculation of the payment to be made
under Section 8(a)(iii)(1)(B) for ▇▇▇▇▇, no bonus was paid or payable during the
24 month period preceding the termination, except as set forth in TFC DISCLOSURE
SCHEDULE 7.8.3. In the calculation of the payment of benefits under Section
8(a)(iv) of such agreements: (a) the actuarial assumptions to be used in the
calculation of benefits shall be those utilized in the Actuarial Valuation
Report for the year ending September 30, 2003, for The Retirement Plan Of The
▇▇▇▇ Savings Bank In RSI Retirement Trust, including, but not limited to, a
Discount Rate of 6.625%; (b) that there is no stock bonus plan, no matching
contribution under any 401(k) plan, and no profit sharing plan. Set forth in TFC
DISCLOSURE SCHEDULE 7.8.3 is an explanation of the method for calculating the
payments required to be made under the employment agreements referenced in this
Section 7.8.3 (based upon the assumptions set forth in this Section 7.8.3). Each
of the executives referenced in this Section 7.8.3 entitled to a payment under
the employment agreements shall sign an acknowledgement in connection with the
execution of this Agreement, which shall be included in TFC DISCLOSURE SCHEDULE
7.8.3, agreeing to the application of the principles set forth in this Section.
If requested by FNFG no earlier than December 1, 2003, TFC shall take such
action under its Long Term Equity Compensation Plan to accelerate the vesting of
such outstanding stock awards and to such individuals as specified in the FNFG
request, to a date that is on or prior to December 31, 2003, provided, however,
that the acceleration of restricted stock shall not be considered compensation,
annual compensation or base cash compensation for purposes of increasing any
payment made under any such employment, severance or change in control agreement
to which such person is a party. In addition, if requested by FNFG prior to
December 1, 2003, all or a portion of the cash payment to be made pursuant to
Section 8(a)(iii) and 8(a)(iv) of one or more of the employment agreements
referenced in this Section 7.8.3 shall be accelerated and paid by TSB prior to
December 31, 2003, provided, however, that the acceleration of such amounts
shall not be considered compensation, annual compensation or base cash
compensation for purposes of increasing any payment made under any such
employment, severance or change in control agreement to which such person is a
party. At the time of payment of the amounts set forth in Sections 8(a)(iii) and
8(a)(iv) of the employment agreements referenced in this Section 7.8.3, each
executive shall enter into an acknowledgment and release, satisfactory in form
to FNFG, acknowledging that no further payments are due under such sections and
releasing TFC, TSB, FNFG and First Niagara from any and all claims arising
thereunder.
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7.8.4. FNFG shall honor in accordance with its terms the TSB
Employee Change in Control Severance Plan.
7.8.5. In the event of any termination or consolidation of any TFC
health plan with any FNFG health plan, FNFG shall make available to employees of
TFC or an TSB who continue employment with FNFG or a FNFG Subsidiary
("Continuing Employees") and their dependents employer-provided health coverage
on the same basis as it provides such coverage to FNFG employees. Unless a
Continuing Employee affirmatively terminates coverage under a TFC health plan
prior to the time that such Continuing Employee becomes eligible to participate
in the FNFG health plan, no coverage of any of the Continuing Employees or their
dependents shall terminate under any of the TFC health plans prior to the time
such Continuing Employees and their dependents become eligible to participate in
the health plans, programs and benefits common to all employees of FNFG and
their dependents. In the event of a termination or consolidation of any TFC
health plan, terminated TFC employees and qualified beneficiaries will have the
right to continued coverage under group health plans of FNFG in accordance with
Code Section 4980B(f), consistent with the provisions below. In the event of any
termination of any TFC health plan, or consolidation of any TFC health plan with
any FNFG health plan, any coverage limitation under the FNFG health plan due to
any pre-existing condition shall be waived by the FNFG health plan to the degree
that such condition was covered by the TFC health plan and such condition would
otherwise have been covered by the FNFG health plan in the absence of such
coverage limitation. All TFC Employees who cease participating in an TFC health
plan and become participants in a comparable FNFG health plan shall receive
credit for any co-payment and deductibles paid under TFC's health plan for
purposes of satisfying any applicable deductible or out-of-pocket requirements
under the FNFG health plan, upon substantiation, in a form satisfactory to FNFG
that such co-payment and/or deductible has been satisfied.
7.8.6. The payments required to be made pursuant to the TSB
Supplemental Retirement and Benefit Restoration Plan shall made be in accordance
with the following principles: (a) the actuarial assumptions to be used in the
calculation of benefits shall be those utilized in the Actuarial Valuation
Report for the year ending September 30, 2003, for the Retirement Plan of the
▇▇▇▇ Savings Bank, including, but not limited to, a Discount Rate of 6.625%; (b)
no payments shall be made under Article VI, `Savings Benefit', of such plan; and
(c) no payments shall be made under Article V, `ESOP Benefit', of such plan.
Immediately before the Effective Time, TFC and/or TSB shall take such action as
is necessary to cause First Niagara to become the administrator of the TSB
Supplemental Retirement and Benefit Restoration Plan at the Effective Time. Each
of the executives entitled to a payment under the TSB Supplemental Retirement
and Benefit Restoration Plan shall sign an acknowledgement in connection with
the execution of this Agreement, which shall be included in TFC DISCLOSURE
SCHEDULE 7.8.6, agreeing to the application of the principles set forth in this
Section.
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7.8.7. Effective as of the Closing Date, FNFG shall establish the
Capital Region Advisory Board (the "Advisory Board"). Each person who serves on
the Board of Directors of TFC or TSB (except for the director who join the FNFG
Board of Directors pursuant to Section 2.5 of this Agreement) both on the date
of this Agreement and immediately prior to the Effective Time, shall be
appointed to the Advisory Board effective immediately following the Effective
Time. The Advisory Board shall meet quarterly, and each advisory board member
shall receive a fee of $2,500.00 for each quarterly meeting attended. The
Advisory Board shall be continued for a period of one year, unless extended by
FNFG.
7.8.8. The TSB Executive Deferred Compensation Plan ("Executive
Deferral Plan"), effective as of December 1, 1997, shall be terminated effective
immediately prior to the Effective Time, and the benefits thereunder shall be
paid, in cash, in accordance with the terms of the Executive Deferral Plan. The
TSB Board of Trustees Amended Deferred Trustees Fees Arrangement ("Trustee
Deferral Plan") (collectively, the "Deferral Plans") shall also be terminated,
effective immediately prior to the Effective Time. TSB shall designate, in
accordance with Section 9.10 of the Trustee Deferral Plan, that benefits payable
thereunder shall be paid in a single sum, at the Effective Time. Prior to the
Effective Time, TFC and/or TSB shall take such action as is necessary to cause
First Niagara to become the administrator of the Deferral Plans as of the
Effective Time.
7.9. Directors and Officers Indemnification and Insurance.
7.9.1. FNFG shall maintain, or shall cause First Niagara Bank to
maintain, in effect for three years following the Effective Time, the current
directors' and officers' liability insurance policies maintained by TFC
(provided, that FNFG may substitute therefor policies of at least the same
coverage containing terms and conditions which are not materially less
favorable) with respect to matters occurring prior to the Effective Time;
provided, however, that in no event shall FNFG be required to expend pursuant to
this Section 7.9.1 more than 135% of the annual cost currently expended by TFC
with respect to such insurance. In connection with the foregoing, TFC agrees in
order for FNFG to fulfill its agreement to provide directors and officers
liability insurance policies for three years to provide such insurer or
substitute insurer with such representations as such insurer may request with
respect to the reporting of any prior claims.
7.9.2. In addition to 7.9.1, for a period of six years after the
Effective Time, FNFG shall indemnify, defend and hold harmless each person who
is now, or who has been at any time before the date hereof or who becomes before
the Effective Time, an officer or director of TFC or a TFC Subsidiary (the
"Indemnified Parties") against all losses, claims, damages, costs, expenses
(including attorney's fees), liabilities or judgments or amounts that are paid
in
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settlement (which settlement shall require the prior written consent of FNFG,
which consent shall not be unreasonably withheld) of or in connection with any
claim, action, suit, proceeding or investigation, whether civil, criminal, or
administrative (each a "Claim"), in which an Indemnified Party is, or is
threatened to be made, a party or witness in whole or in part on or arising in
whole or in part out of the fact that such person is or was a director, officer
or employee of TFC or a TFC Subsidiary if such Claim pertains to any matter of
fact arising, existing or occurring before the Effective Time (including,
without limitation, the Merger and the other transactions contemplated hereby),
regardless of whether such Claim is asserted or claimed before, or after, the
Effective Time (the "Indemnified Liabilities"), to the fullest extent permitted
under applicable state or Federal law, FNFG's Certificate of Incorporation and
Bylaws, and under TFC's Certificate of Incorporation or Charter and Bylaws. FNFG
shall pay expenses in advance of the final disposition of any such action or
proceeding to each Indemnified Party to the full extent permitted by applicable
state or Federal law upon receipt of an undertaking to repay such advance
payments if he shall be adjudicated or determined to be not entitled to
indemnification in the manner set forth below. Any Indemnified Party wishing to
claim indemnification under this Section 7.9.2 upon learning of any Claim, shall
notify FNFG (but the failure so to notify FNFG shall not relieve it from any
liability which it may have under this Section 7.9.2, except to the extent such
failure materially prejudices FNFG) and shall deliver to FNFG the undertaking
referred to in the previous sentence. In the event of any such Claim (whether
arising before or after the Effective Time) (1) FNFG shall have the right to
assume the defense thereof (in which event the Indemnified Parties will
cooperate in the defense of any such matter) and upon such assumption FNFG 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 FNFG elects not to assume
such defense, or counsel for the Indemnified Parties reasonably advises the
Indemnified Parties that there are or may be (whether or not any have yet
actually arisen) issues which raise conflicts of interest between FNFG and the
Indemnified Parties, the Indemnified Parties may retain counsel reasonably
satisfactory to them, and FNFG shall pay the reasonable fees and expenses of
such counsel for the Indemnified Parties, (2) except to the extent otherwise
required due to conflicts of interest, FNFG shall be obligated pursuant to this
paragraph to pay for only one firm of counsel for all Indemnified Parties whose
reasonable fees and expenses shall be paid promptly as statements are received
unless there is a conflict of interest that necessitates more than one law firm,
(3) FNFG shall not be liable for any settlement effected without its prior
written consent (which consent shall not be unreasonably withheld, conditioned
or delayed), and (4) no Indemnified Party shall be entitled to indemnification
hereunder with respect to a matter as to which (x) he shall have been
adjudicated in any proceeding not to have acted in good faith and in a manner he
reasonably believed to be in, or not opposed to, the best interests of TFC or
any TFC Subsidiary, or (y) in the event that a proceeding is compromised or
settled so as to impose any liability or obligation upon an Indemnified Party,
if there is a determination that with respect to said matter said Indemnified
Party did not act in good faith and in a manner he reasonably believed to be in,
or not opposed to, the best interests of TFC or any TFC Subsidiary. The
determination shall be made by a majority vote of a quorum consisting of the
Directors of FNFG who are not involved in such proceeding.
7.9.3. In the event that either FNFG or any of its successors or
assigns (i) consolidates with or merges into any other person and shall not be
the continuing or surviving bank or entity of such consolidation or merger or
(ii) transfers all or substantially all of its properties and assets to any
person, then, and in each such case, proper provision shall be made so that the
successors and assigns of FNFG shall assume the obligations set forth in this
Section 7.9.
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7.9.4. The obligations of FNFG provided under this Section 7.9 are
intended to be enforceable against FNFG directly by the Indemnified Parties and
shall be binding on all respective successors and permitted assigns of FNFG.
7.10. Stock Listing.
FNFG agrees to list on the Stock Exchange (or such other national
securities exchange on which the shares of the FNFG Common Stock shall be listed
as of the date of consummation of the Merger), subject to official notice of
issuance, the shares of FNFG Common Stock to be issued in the Merger.
7.11. Stock and Cash Reserve.
FNFG agrees at all times from the date of this Agreement until the Merger
Consideration has been paid in full to reserve a sufficient number of shares of
its common stock and to maintain sufficient liquid accounts or borrowing
capacity to fulfill its obligations under this Agreement.
ARTICLE VIII
REGULATORY AND OTHER MATTERS
8.1. TFC Special Meeting.
8.1.1. TFC will (i) as promptly as practicable after the Merger
Registration Statement is declared effective by the SEC, take all steps
necessary to duly call, give notice of, convene and hold a meeting of its
stockholders (the "TFC Stockholders Meeting"), for the purpose of considering
this Agreement and the Merger, and for such other purposes as may be, in TFC's
reasonable judgment, necessary or desirable, (ii) subject to the next sentence,
have its Board of Directors recommend approval of this Agreement to the TFC
stockholders. The Board of Directors of TFC may fail to make such a
recommendation, or withdraw, modify or change any such recommendation only in
connection with a Superior Proposal, as set forth in Section 6.10 of this
Agreement, and only if such Board of Directors, after having consulted with and
considered the advice of outside counsel to such Board, has determined that the
making of such recommendation, or the failure so to withdraw, modify or change
its recommendation, would constitute a breach of the fiduciary duties of such
directors under applicable law; and (iii) cooperate and consult with FNFG with
respect to each of the foregoing matters.
8.2. Proxy Statement-Prospectus.
8.2.1. For the purposes (x) of registering FNFG Common Stock to be
offered to holders of TFC Common Stock in connection with the Merger with the
SEC under the Securities Act and (y) of holding the TFC Stockholders Meeting,
FNFG shall draft and prepare, and TFC shall cooperate in the preparation of, the
Merger Registration Statement, including a combined proxy statement and
prospectus satisfying all applicable requirements of applicable state securities
and banking laws, and of the Securities Act and the Exchange Act, and the rules
and regulations thereunder (such proxy statement/prospectus in the form mailed
by TFC to the TFC stockholders, together with any and all amendments or
supplements thereto, being herein referred to as the "Proxy
Statement-Prospectus"). FNFG shall provide TFC and its counsel with appropriate
opportunity to review and comment on the Proxy Statement-Prospectus prior to the
time it is initially filed with the SEC or any amendments are filed with the
SEC. FNFG shall file the Merger Registration Statement, including the Proxy
Statement-Prospectus, with the SEC. Each of FNFG and TFC shall use their best
efforts to have the Merger Registration Statement declared effective under the
Securities Act as promptly as practicable after such filing, and each of TFC and
FNFG shall thereafter promptly mail the Proxy Statement-Prospectus to its
stockholders. FNFG shall also use its best 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 TFC shall furnish all
information concerning TFC and the holders of TFC Common Stock as may be
reasonably requested in connection with any such action.
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8.2.2. TFC shall provide FNFG with any information concerning itself
that FNFG may reasonably request in connection with the drafting and preparation
of the Proxy Statement-Prospectus, and FNFG shall notify TFC promptly of the
receipt of any comments of the SEC with respect to the Proxy
Statement-Prospectus and of any requests by the SEC for any amendment or
supplement thereto or for additional information and shall provide to TFC
promptly copies of all correspondence between FNFG or any of their
representatives and the SEC. FNFG shall give TFC and its counsel the opportunity
to review and comment on the Proxy Statement-Prospectus prior to its being filed
with the SEC and shall give TFC and its counsel the opportunity to review and
comment on all amendments and supplements to the Proxy Statement-Prospectus and
all responses to requests for additional information and replies to comments
prior to their being filed with, or sent to, the SEC. Each of FNFG and TFC
agrees to use all reasonable efforts, after consultation with the other party
hereto, to respond promptly to all such comments of and requests by the SEC and
to cause the Proxy Statement-Prospectus and all required amendments and
supplements thereto to be mailed to the holders of TFC Common Stock entitled to
vote at the TFC Stockholders Meeting hereof at the earliest practicable time.
8.2.3. TFC and FNFG shall promptly notify the other party if at any
time it becomes aware that the Proxy Statement-Prospectus or the Merger
Registration Statement contains any untrue statement of a material fact or omits
to state a material fact required to be stated therein or necessary to make the
statements contained therein, in light of the circumstances under which they
were made, not misleading. In such event, TFC shall cooperate with FNFG in the
preparation of a supplement or amendment to such Proxy Statement-Prospectus that
corrects such misstatement or omission, and FNFG shall file an amended Merger
Registration Statement with the SEC, and each of TFC and FNFG shall mail an
amended Proxy Statement-Prospectus to TFC's stockholders. If requested by FNFG,
TFC shall obtain a "comfort" letter from its independent certified public
accountant, dated as of the date of the Proxy Statement-Prospectus and updated
as of the date of consummation of the Merger, with respect to certain financial
information regarding TFC, in form and substance that is customary in
transactions such as the Merger.
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8.3. Regulatory Approvals.
Each of TFC and FNFG will cooperate with the other and use all reasonable
efforts to promptly prepare all necessary documentation, to effect all necessary
filings and to obtain all necessary permits, consents, waivers, approvals and
authorizations of the SEC, the OTS, the FRB, FDIC and the Department and any
other third parties (including the NASD and the SBA) and governmental bodies
necessary to consummate the transactions contemplated by this Agreement. TFC and
FNFG will furnish each other and each other's counsel with all information
concerning themselves, their subsidiaries, directors, officers and stockholders
and such other matters as may be necessary or advisable in connection with the
Proxy Statement-Prospectus and any application, petition or any other statement
or application made by or on behalf of TFC, FNFG to any Bank Regulatory or
governmental body in connection with the Merger, and the other transactions
contemplated by this Agreement. TFC shall have the right to review and approve
in advance all characterizations of the information relating to TFC and any of
its Subsidiaries, which appear in any filing made in connection with the
transactions contemplated by this Agreement with any governmental body. In
addition, TFC and FNFG shall each furnish to the other for review a copy of each
such filing made in connection with the transactions contemplated by this
Agreement with any governmental body prior to its filing.
8.4. Affiliates.
8.4.1. TFC shall use all reasonable efforts to cause each director,
executive officer and other person who is an "affiliate" (for purposes of Rule
145 under the Securities Act) of TFC to deliver to FNFG, as soon as practicable
after the date of this Agreement, and at least thirty (30) days prior to the
date of the shareholders meeting called by TFC to approve this Agreement, a
written agreement, in the form of Exhibit B hereto, providing that such person
will not sell, pledge, transfer or otherwise dispose of any shares of FNFG
Common Stock to be received by such "affiliate," as a result of the Merger
otherwise than in compliance with the applicable provisions of the Securities
Act and the rules and regulations thereunder.
ARTICLE IX
CLOSING CONDITIONS
9.1. Conditions to Each Party's Obligations under this Agreement.
The respective obligations of each party under this Agreement shall be
subject to the fulfillment at or prior to the Closing Date of the following
conditions, none of which may be waived:
9.1.1. Stockholder Approval. This Agreement and the transactions
contemplated hereby shall have been approved by the requisite vote of the
stockholders of TFC.
9.1.2. Injunctions. None of the parties hereto shall be subject to
any order, decree or injunction of a court or agency of competent jurisdiction
that enjoins or prohibits the consummation of the transactions contemplated by
this Agreement.
9.1.3. Regulatory Approvals. All necessary approvals, authorizations
and consents of all Bank Regulators and Governmental Entities required to
consummate the transactions contemplated by this Agreement shall have been
obtained and shall remain in full force and effect and all waiting periods
relating to such approvals, authorizations or consents shall have expired; and
no such approval, authorization or consent shall include any condition or
requirement, excluding standard conditions that are normally imposed by the
regulatory authorities in bank merger transactions, that would, in the good
faith reasonable judgment of the Board of Directors of FNFG, materially and
adversely affect the business, operations, financial condition, property or
assets of the combined enterprise of TFC, TSB and FNFG or otherwise materially
impair the value of TFC or TSB to FNFG .
57
9.1.4. Effectiveness of Merger Registration Statement. The Merger
Registration Statement shall have become effective under the Securities Act and
no stop order suspending the effectiveness of the Merger Registration Statement
shall have been issued, and no proceedings for that purpose shall have been
initiated or threatened by the SEC and, if the offer and sale of FNFG Common
Stock in the Merger is subject to the blue sky laws of any state, shall not be
subject to a stop order of any state securities commissioner.
9.1.5. Stock Exchange Listing. The shares of FNFG Common Stock to be
issued in the Merger shall have been authorized for listing on the Stock
Exchange, subject to official notice of issuance.
9.1.6. Tax Opinion. On the basis of facts, representations and
assumptions which shall be consistent with the state of facts existing at the
Closing date, FNFG and TFC shall have received an opinion of ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.C. reasonably acceptable in form and substance to FNFG and
TFC dated as of the Closing Date, substantially to the effect that, for Federal
income tax purposes:
(A) The Merger, when consummated in accordance with the terms
hereof, either will constitute a reorganization within the meaning of Section
368(a) of the Code or will be treated as part of a reorganization within the
meaning of Section 368(a) of the Code;
(B) The merger of TSB into First Niagara Bank will not
adversely affect the Merger qualifying as a Reorganization within the meaning of
Section 368(A) of the Code.
(C) No gain or loss will be recognized by FNFG, First Niagara
Bank, TFC or TSB by reason of the Merger;
(D) The exchange of TFC Common Stock to the extent exchanged
for FNFG Common Stock will not give rise to recognition of gain or loss for
Federal income tax purposes to the shareholders of TFC;
(E) The basis of the FNFG Common Stock to be received
(including any fractional shares deemed received for tax purposes) by a TFC
shareholder will be the same as the basis of the TFC Common Stock surrendered
pursuant to the Merger in exchange therefore, increased by any gain recognized
by such TFC shareholder as a result of the Merger and decreased by any cash
received by such TFC shareholder in the Merger; and
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(F) The holding period of the shares of FNFG Common Stock to
be received by a shareholder of TFC will include the period during which the
shareholder held the shares of TFC Common Stock surrendered in exchange
therefor, provided the TFC Common Stock surrendered is held as a capital asset
at the Effective Time.
If ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.C. cannot or will not render this
opinion, FNFG shall accept the opinion of ▇▇▇▇▇ & ▇▇▇▇▇▇▇, L.L.P. if it is to
the effect of the foregoing. Each of FNFG, First Niagara Bank and TFC and TSB
shall provide a letter setting forth the facts, assumptions and representations
on which such counsel may rely in rendering its opinion.
9.2. Conditions to the Obligations of FNFG and First Niagara Bank under
this Agreement.
The obligations of FNFG and First Niagara Bank under this Agreement shall
be further subject to the satisfaction of the conditions set forth in Sections
9.2.1 through 9.2.6 at or prior to the Closing Date:
9.2.1. Representations and Warranties. Each of the representations
and warranties of TFC and TSB set forth in this Agreement shall be true and
correct as of the date of this Agreement and upon the Effective Time with the
same effect as though all such representations and warranties had been made on
the Effective Time (except to the extent such representations and warranties
speak as of an earlier date), in any case subject to the standard set forth in
Section 4.1; and TFC shall have delivered to FNFG a certificate to such effect
signed by the Chief Executive Officer and the Chief Financial Officer of TFC and
TSB as of the Effective Time.
9.2.2. Agreements and Covenants. TFC, TSB and each TFC Subsidiary
shall have performed in all material respects all obligations and complied in
all material respects with all agreements or covenants to be performed or
complied with by each of them at or prior to the Effective Time, and FNFG shall
have received a certificate signed on behalf of TFC by the Chief Executive
Officer and Chief Financial Officer of TFC and TSB to such effect dated as of
the Effective Time.
9.2.3. Permits, Authorizations, Etc. TFC and the TFC Subsidiaries
shall have obtained any and all material permits, authorizations, consents,
waivers, clearances or approvals required for the lawful consummation of the
Merger and the Bank Merger.
9.2.4. Accountants' Letter. If requested by FNFG, FNFG shall have
received a "comfort" letter from the independent certified public accountants
for TFC, dated (i) the effective date of the Merger Registration Statement and
(ii) a date within five days of the Closing Date, with respect to certain
financial information regarding TFC, each in form and substance which is
customary in transactions of the nature contemplated by this Agreement.
9.2.5. No Material Adverse Effect. Since September 30, 2002, no
event has occurred or circumstance arisen that, individually or in the
aggregate, has had or is reasonably likely to have a Material Adverse Effect on
TFC.
59
TFC will furnish FNFG with such certificates of its officers or others and
such other documents to evidence fulfillment of the conditions set forth in this
Section 9.2 as FNFG may reasonably request.
9.3. Conditions to the Obligations of TFC and TSB under this Agreement.
The obligations of TFC under this Agreement shall be further subject to
the satisfaction of the conditions set forth in Sections 9.3.1 through 9.3.5 at
or prior to the Closing Date:
9.3.1. Representations and Warranties. Each of the representations
and warranties of FNFG and First Niagara Bank set forth in this Agreement shall
be true and correct as of the date of this Agreement and upon the Effective Time
with the same effect as though all such representations and warranties had been
made on the Effective Time (except to the extent such representations and
warranties speak as of an earlier date), in any case subject to the standard set
forth in Section 5.1; and FNFG shall have delivered to TFC a certificate to such
effect signed by the Chief Executive Officer and the Chief Financial Officer of
FNFG and First Niagara Bank as of the Effective Time.
9.3.2. Agreements and Covenants. FNFG and First Niagara Bank shall
have performed in all material respects all obligations and complied in all
material respects with all agreements or covenants to be performed or complied
with by each of them at or prior to the Effective Time, and TFC shall have
received a certificate signed on behalf of FNFG by the Chief Executive Officer
and Chief Financial Officer to such effect dated as of the Effective Time.
9.3.3. Permits, Authorizations, Etc. FNFG and its Subsidiaries shall
have obtained any and all material permits, authorizations, consents, waivers,
clearances or approvals required for the lawful consummation of the Merger and
the Bank Merger, the failure to obtain which would have a Material Adverse
Effect on FNFG and its Subsidiaries, taken as a whole.
9.3.4. Payment of Merger Consideration. FNFG shall have delivered
the Exchange Fund to the Exchange Agent on or before the Closing Date and the
Exchange Agent shall provide TFC with a certificate evidencing such delivery.
9.3.5. No Material Adverse Effect. Since December 31, 2002, no event
has occurred or circumstance arisen that, individually or in the aggregate, has
had or is reasonably likely to have a Material Adverse Effect on FNFG.
FNFG will furnish TFC with such certificates of their officers or others
and such other documents to evidence fulfillment of the conditions set forth in
this Section 9.3 as TFC may reasonably request.
ARTICLE X
THE CLOSING
10.1. Time and Place.
Subject to the provisions of Articles IX and XI hereof, the Closing of the
transactions contemplated hereby shall take place at the offices of ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇.▇. at 10:00
a.m., or at such other place or time upon which FNFG and TFC mutually agree. A
pre-closing of the transactions contemplated hereby (the "Pre-Closing") shall
take place at the offices of ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇.▇. at 10:00 a.m. on the day prior to the
Closing Date.
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10.2. Deliveries at the Pre-Closing and the Closing.
At the Pre-Closing there shall be delivered to FNFG and TFC the opinions,
certificates, and other documents and instruments required to be delivered at
the Pre-Closing under Article IX hereof. At or prior to the Closing, FNFG shall
deliver the Merger Consideration as set forth under Section 9.3.4 hereof.
ARTICLE XI
TERMINATION, AMENDMENT AND WAIVER
11.1. Termination.
This Agreement may be terminated at any time prior to the Closing Date,
whether before or after approval of the Merger by the stockholders of TFC:
11.1.1. At any time by the mutual written agreement of FNFG and TFC;
11.1.2. By either TFC and TSB, on the one hand, or FNFG and First
Niagara Bank on the other (provided, that the terminating party or its is not
then in material breach of any representation, warranty, covenant or other
agreement contained herein) if there shall have been a material breach of any of
the representations or warranties set forth in this Agreement on the part of the
other party, which breach by its nature cannot be cured prior to the Closing
Date or shall not have been cured within 30 business days after written notice
by FNFG to TFC (or by TFC to FNFG) of such breach, conditioned upon the
defaulting party promptly commencing to cure the default and thereafter
continuing to cure the default;
11.1.3. By either TFC and TSB, on the one hand, or FNFG and First
Niagara Bank on the other (provided, that the terminating party is not then in
material breach of any representation, warranty, covenant or other agreement
contained herein) if there shall have been a material failure to perform or
comply with any of the covenants or agreements set forth in this Agreement on
the part of the other party, which failure by its nature cannot be cured prior
to the Closing Date or shall not have been cured within 30 business days after
written notice by FNFG to TFC (or by TFC to FNFG) of such failure, conditioned
upon the defaulting party promptly commencing to cure the default and thereafter
continuing to cure;
11.1.4. At the election of either TFC and TSB, on the one hand, or
FNFG and First Niagara Bank on the other, if the Closing shall not have occurred
by the Termination Date, or such later date as shall have been agreed to in
writing by FNFG and TFC; provided, that no party may terminate this Agreement
pursuant to this Section 11.1.4 if the failure of the Closing to have occurred
on or before said date was due to such party's material breach of any
representation, warranty, covenant or other agreement contained in this
Agreement;
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11.1.5. By either TFC and TSB, on the one hand, or FNFG and First
Niagara Bank on the other if the stockholders of TFC shall have voted at the TFC
stockholders meeting on the transactions contemplated by this Agreement and such
vote shall not have been sufficient to approve such transactions;
11.1.6. By either TFC and TSB, on the one hand, or FNFG and First
Niagara Bank on the other if (i) final action has been taken by a Bank Regulator
whose approval is required in connection with this Agreement and the
transactions contemplated hereby, which final action (x) has become unappealable
and (y) does not approve this Agreement or the transactions contemplated hereby,
(ii) any Bank Regulator whose approval or nonobjection is required in connection
with this Agreement and the transactions contemplated hereby has stated in
writing that it will not issue the required approval or nonobjection, or (iii)
any court of competent jurisdiction or other governmental authority shall have
issued an order, decree, ruling or taken any other action restraining, enjoining
or otherwise prohibiting the Merger and such order, decree, ruling or other
action shall have become final and nonappealable;
11.1.7. By the Board of Directors of either party (provided, that
the terminating party is not then in material breach of any representation,
warranty, covenant or other agreement contained herein) in the event that any of
the conditions precedent to the obligations of such party to consummate the
Merger cannot be satisfied or fulfilled by the date specified in Section 11.1.4
of this Agreement.
11.1.8. By the Board of Directors of FNFG if TFC has received a
Superior Proposal, and in accordance with Section 6.10 of this Agreement, the
Board of Directors of TFC has entered into an acquisition agreement with respect
to the Superior Proposal, terminated this Agreement, or withdraws its
recommendation of this Agreement, fails to make such recommendation or modifies
or qualifies its recommendation in a manner adverse to FNFG.
11.1.9. By the Board of Directors of TFC if TFC has received a
Superior Proposal, and in accordance with Section 6.10 of this Agreement, the
Board of Directors of TFC has made a determination to accept such Superior
Proposal; provided that TFC shall not terminate this Agreement pursuant to this
Section 11.1.9 and enter in a definitive agreement with respect to the Superior
Proposal until the expiration of three (3) business days following FNFG receipt
of written notice advising FNFG that TFC has received a Superior Proposal,
specifying the material terms and conditions of such Superior Proposal (and
including a copy thereof with all accompanying documentation, if in writing)
identifying the person making the Superior Proposal and stating whether TFC
intends to enter into a definitive agreement with respect to the Superior
Proposal. After providing such notice, TFC shall provide a reasonable
opportunity to FNFG during the three-day period to make such adjustments in the
terms and conditions of this Agreement as would enable TFC to proceed with the
Merger on such adjusted terms.
11.1.10. By TFC, if its Board of Directors so determines by a
majority vote of the members of its entire Board, at any time during the
five-day period commencing on the Determination Date, such termination to be
effective on the 30th day following such Determination Date ("Effective
Termination Date"), if both of the following conditions are satisfied:
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(i) The FNFG Market Value on the Determination Date is less than
$12.56800; and
(ii) (A) the number obtained by dividing the FNFG Market Value on
the Determination Date by the Initial FNFG Market Value ("FNFG Ratio") shall be
less than the quotient obtained by dividing the Final Index Price by the Initial
Index Price minus 0.20;
subject, however, to the following three sentences. If TFC elects to exercise
its termination right pursuant to this Section 11.1.10, it shall give prompt
written notice thereof to FNFG; provided, that such notice of election to
terminate may be withdrawn at any time prior to the Effective Termination Date.
During the five-day period commencing with its receipt of such notice, FNFG
shall have the option to increase the consideration to be received by the
holders of TFC Common Stock hereunder by adjusting the exchange ratios
referenced in Section 3.1.3 and 3.1.6. As to the exchange ratio referenced in
Section 3.1.3, FNFG may adjust the All Stock Election ratio to one of the
following quotients at its sole discretion: (i) a quotient, the numerator of
which is equal to the product of the Initial FNFG Market Value, 2.56785, and the
Index Ratio minus 0.20, and the denominator of which is equal to FNFG Market
Value on the Determination Date; or (ii) a quotient determined by dividing
$12.56800 by the FNFG Market Value on the Determination Date, and multiplying
the quotient by 2.56785. As to the exchange ratio referenced in Section 3.1.6,
FNFG may adjust the Cash/Stock Election ratio to one of the following quotients
at its sole discretion: (i) a quotient, the numerator of which is equal to the
product of the Initial FNFG Market Value, 1.46367, and the Index Ratio minus
0.20, and the denominator of which is equal to FNFG Market Value on the
Determination Date; or (ii) a quotient determined by dividing $12.56800 by the
FNFG Market Value on the Determination Date, and multiplying the quotient by
1.46367. If FNFG so elects, it shall give, within such five-day period, written
notice to TFC of such election and the Revised Exchange Ratios, whereupon no
termination shall be deemed to have occurred pursuant to this Section 11.1.10
and this Agreement shall remain in full force and effect in accordance with its
terms (except as the Revised Exchange Ratios shall have been so modified).
For purposes of this Section 11.1.10, the following terms shall have the
meanings indicated below:
"Acquisition Transaction" shall mean (i) a merger or consolidation, or any
similar transaction, involving the relevant companies, (ii) a purchase, lease or
other acquisition of all or substantially all of the assets of the relevant
companies, (iii) a purchase or other acquisition (including by way of merger,
consolidation, share exchange or otherwise) of securities representing 10% or
more of the voting power of the relevant companies; or (iv) agree or commit to
take any action referenced above.
"Final Index Price" means the sum of the Final Prices for each company
comprising the Index Group multiplied by the weighting set forth opposite such
company's name in the definition of Index Group below.
"Final Price," with respect to any company belonging to the Index Group,
means the average of the daily closing sales prices of a share of common stock
of such company (and if there is no closing sales price on any such day, then
the mean between the closing bid and the closing asked prices on that day), as
reported on the consolidated transaction reporting system for the market or
exchange on which such common stock is principally traded, for the five
consecutive trading days immediately preceding the Determination Date.
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"FNFG Market Value" shall be the average of the daily closing sales prices
of a share of FNFG Common Stock as reported on the Nasdaq National Market for
the five consecutive trading days immediately preceding the Determination Date.
"Index Group" means the financial institution holding companies listed
below, the common stock of all of which shall be publicly traded and as to which
there shall not have been an Acquisition Transaction involving such company
publicly announced at any time during the period beginning on the date of this
Agreement and ending on the Determination Date. In the event that the common
stock of any such company ceases to be publicly traded or an Acquisition
Proposal for such company to be acquired, or for such company to acquire another
company in transaction with a value exceeding 25% of the acquiror's market
capitalization as reflected in the table below, is announced at any time during
the period beginning on the date of this Agreement and ending on the
Determination Date, such company will be removed from the Index Group, and the
weights attributed to the remaining companies will be adjusted proportionately
for purposes of determining the Final Index Price and the Initial Index Price.
The financial institution holding companies and the weights attributed to them
are as follows:
Index
Weighting Index
Company Name (%) Price
----------------------------------------------- --------- -------
Berkshire Hills Bancorp 2.89 0.88
BostonFed Bancorp, Inc 2.08 0.60
Brookline Bancorp, Inc 13.91 2.07
ESB Financial Corporation 2.53 0.38
First Sentinel Bancorp, Inc. 7.05 1.11
FIRSTFED AMERICA BANCORP, INC 5.38 1.04
FMS Financial Corporation 1.39 0.18
▇▇▇▇▇▇ River Bancorp, Inc 6.83 1.90
MASSBANK Corp. 2.31 0.75
OceanFirst Financial Corp. 5.53 1.38
Parkvale Financial Corporation 2.14 0.51
PennFed Financial Services, Inc. 3.19 0.91
Progress Financial Corporation 1.79 0.28
Provident Financial Services, Inc. 19.73 3.90
Seacoast Financial Services Corporation 8.83 1.81
TrustCo Bank Corp NY 14.43 1.73
------ ------
100.00 19.42
"Initial FNFG Market Value" means the closing sales price of a share of
FNFG Common Stock, as reported on the Nasdaq National Market, on the five
trading days immediately preceding the public announcement of this Agreement,
adjusted as indicated in the last sentence of this Section 11.1.10.
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"Initial Index Price" means the sum of the per share closing sales price
of the common stock of each company comprising the Index Group multiplied by the
applicable weighting, as such prices are reported on the consolidated
transaction reporting system for the market or exchange on which such common
stock is principally traded on the trading day immediately preceding the public
announcement of this Agreement.
If FNFG or any company belonging to the Index Group declares or effects a
stock dividend, reclassification, recapitalization, split-up, combination,
exchange of shares or similar transaction between the date of this Agreement and
the Determination Date, the prices for the common stock of such company shall be
appropriately adjusted for the purposes of applying this Section 11.1.11.
"Index Ratio" shall be the Final Index Price divided by the Initial Index
Price.
11.2. Effect of Termination.
11.2.1. In the event of termination of this Agreement pursuant to
any provision of Section 11.1, this Agreement shall forthwith become void and
have no further force, except that (i) the provisions of Sections 11.2, 12.1,
12.2, 12.6, 12.9, 12.10, and any other Section which, by its terms, relates to
post-termination rights or obligations, shall survive such termination of this
Agreement and remain in full force and effect.
11.2.2. If this Agreement is terminated, expenses and damages of the
parties hereto shall be determined as follows:
(A) Except as provided below, whether or not the Merger is
consummated, all costs and expenses incurred in connection with this Agreement
and the transactions contemplated by this Agreement shall be paid by the party
incurring such expenses.
(B) In the event of a termination of this Agreement because of
a willful breach of any representation, warranty, covenant or agreement
contained in this Agreement, the breaching party shall remain liable for any and
all damages, costs and expenses, including all reasonable attorneys' fees,
sustained or incurred by the non-breaching party as a result thereof or in
connection therewith or with respect to the enforcement of its rights hereunder.
(C) As a condition of FNFG's willingness, and in order to
induce FNFG to enter into this Agreement, and to reimburse FNFG for incurring
the costs and expenses related to entering into this Agreement and consummating
the transactions contemplated by this Agreement, TFC and TSB hereby agrees to
pay FNFG, and FNFG shall be entitled to payment of a fee of $17,500,000 (the
"Fee"), within three business days after written demand for payment is made by
FNFG, following the occurrence of any of the events set forth below:
(i) TFC terminates this Agreement pursuant to Section 11.1.9 or FNFG
or FNFG terminates this Agreement pursuant to Section 11.1.8; or
(ii) The entering into a definitive agreement by TFC relating to an
Acquisition Proposal or the consummation of an Acquisition Proposal involving
TFC within six months after the occurrence of any of the following: (i) the
termination of the Agreement by FNFG pursuant to Section 11.1.2 or 11.1.3
because of a willful breach by TFC, TSB or any TFC Subsidiary; or (ii) the
failure of the stockholders of TFC to approve this Agreement after the
occurrence of an Acquisition Proposal.
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(D) If demand for payment of the Fee is made pursuant to
Section 11.2.2(C) and payment is timely made, then FNFG will not have any other
rights or claims against TFC or TSB, their Subsidiaries, and their respective
officers and directors, under this Agreement, it being agreed that the
acceptance of the Fee under Section 11.2.2(C) will constitute the sole and
exclusive remedy of FNFG against TFC and TSB, their Subsidiaries and their
respective officers and directors.
11.3. Amendment, Extension and Waiver.
Subject to applicable law, at any time prior to the Effective Time
(whether before or after approval thereof by the stockholders of TFC), the
parties hereto by action of their respective Boards of Directors, may (a) amend
this Agreement, (b) extend the time for the performance of any of the
obligations or other acts of any other party hereto, (c) waive any inaccuracies
in the representations and warranties contained herein or in any document
delivered pursuant hereto, or (d) waive compliance with any of the agreements or
conditions contained herein; provided, however, that after any approval of this
Agreement and the transactions contemplated hereby by the stockholders of TFC,
there may not be, without further approval of such stockholders, any amendment
of this Agreement which reduces the amount, value or changes the form of
consideration to be delivered to TFC's stockholders pursuant to this Agreement.
This Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties hereto. Any agreement on the part of a party
hereto to any extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party, but such waiver or failure
to insist on strict compliance with such obligation, covenant, agreement or
condition shall not operate as a waiver of, or estoppel with respect to, any
subsequent or other failure.
ARTICLE XII
MISCELLANEOUS
12.1. Confidentiality.
Except as specifically set forth herein, FNFG and TFC mutually agree to be
bound by the terms of the confidentiality agreements dated July 11, 2003 (the
"Confidentiality Agreement") previously executed by the parties hereto, which
Confidentiality Agreement is hereby incorporated herein by reference. The
parties hereto agree that such Confidentiality Agreements shall continue in
accordance with their respective terms, notwithstanding the termination of this
Agreement. Notwithstanding the foregoing, the parties (and each employee,
representative, or other agent of the parties) may disclose to any and all
persons, without limitation of any kind, the tax treatment and any facts that
may be relevant to the tax structure of the transaction beginning on the
earliest of (i) the date of public announcement of discussions relating to the
transaction, (ii) the date of public announcement of the transaction or (iii)
the date of the execution of an agreement (with or without conditions) to enter
into the transaction; provided, however, that neither party (nor any employee,
representative or other agent thereof) may disclose any other information that
is not relevant to understanding the tax treatment and tax structure of the
transaction (including the identity of any party and any information that could
lead another to determine the identity of any party), or any other information
to the extent that such disclosure could result in a violation of any federal or
state securities law.
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12.2. Public Announcements.
TFC and FNFG shall cooperate with each other in the development and
distribution of all news releases and other public disclosures with respect to
this Agreement, and except as may be otherwise required by law, neither TFC nor
FNFG shall issue any news release, or other public announcement or communication
with respect to this Agreement unless such news release, public announcement or
communication has been mutually agreed upon by the parties hereto.
12.3. Survival.
All representations, warranties and covenants in this Agreement or in any
instrument delivered pursuant hereto or thereto shall expire on and be
terminated and extinguished at the Effective Time, except for those covenants
and agreements contained herein which by their terms apply in whole or in part
after the Effective Time.
12.4. Notices.
All notices or other communications hereunder shall be in writing and
shall be deemed given if delivered by receipted hand delivery or mailed by
prepaid registered or certified mail (return receipt requested) or by recognized
overnight courier addressed as follows:
If to TFC or TSB, to: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
President and Chief Executive
Officer
The ▇▇▇▇ Savings Bank
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With required copies to: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esquire
▇▇▇▇▇ & ▇▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to FNFG or First Niagara Bank, to: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Chairman of the Board, President
and Chief Executive Officer
First Niagara Financial Group, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
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With required copies to: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.C.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.,
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
or such other address as shall be furnished in writing by any party, and any
such notice or communication shall be deemed to have been given: (a) as of the
date delivered by hand; (b) three (3) business days after being delivered to the
U.S. mail, postage prepaid; or (c) one (1) business day after being delivered to
the overnight courier.
12.5. Parties in Interest.
This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and assigns; provided, however,
that neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by any party hereto without the prior written
consent of the other party, and that (except as provided in Article III and
Section 7.9 of this Agreement) nothing in this Agreement is intended to confer
upon any other person any rights or remedies under or by reason of this
Agreement.
12.6. Complete Agreement.
This Agreement, including the Exhibits and Disclosure Schedules hereto and
the documents and other writings referred to herein or therein or delivered
pursuant hereto, and the Confidentiality Agreement, referred to in Section 12.1,
contains the entire agreement and understanding of the parties with respect to
its subject matter. There are no restrictions, agreements, promises, warranties,
covenants or undertakings between the parties other than those expressly set
forth herein or therein. This Agreement supersedes all prior agreements and
understandings (other than the Confidentiality Agreements referred to in Section
12.1 hereof) between the parties, both written and oral, with respect to its
subject matter.
12.7. Counterparts.
This Agreement may be executed in one or more counterparts all of which
shall be considered one and the same agreement and each of which shall be deemed
an original.
12.8. Severability.
In the event that any one or more provisions of this Agreement shall for
any reason be held invalid, illegal or unenforceable in any respect, by any
court of competent jurisdiction, such invalidity, illegality or unenforceability
shall not affect any other provisions of this Agreement and the parties shall
use their reasonable efforts to substitute a valid, legal and enforceable
provision which, insofar as practical, implements the purposes and intents of
this Agreement.
12.9. Governing Law.
This Agreement shall be governed by the laws of Delaware, without giving
effect to its principles of conflicts of laws.
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12.10. Interpretation.
When a reference is made in this Agreement to Sections or Exhibits, such
reference shall be to a Section of or Exhibit to this Agreement unless otherwise
indicated. The recitals hereto constitute an integral part of this Agreement.
References to Sections include subsections, which are part of the related
Section (e.g., a section numbered "Section 5.5.1" would be part of "Section 5.5"
and references to "Section 5.5" would also refer to material contained in the
subsection described as "Section 5.5.1"). The table of contents, index 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". The phrases
"the date of this Agreement", "the date hereof" and terms of similar import,
unless the context otherwise requires, shall be deemed to refer to the date set
forth in the Recitals to this Agreement.
12.11. Specific Performance.
The parties hereto agree that irreparable damage would occur in the event
that the provisions contained in this Agreement were not performed in accordance
with its specific terms or was 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.
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IN WITNESS WHEREOF, FNFG, First Niagara Bank, TFC and TSB have caused this
Agreement to be executed under seal by their duly authorized officers as of the
date first set forth above.
First Niagara Financial Group, Inc.
Dated: August 10, 2003 By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Chairman, President
and Chief Executive Officer
First Niagara Bank
Dated: August 10, 2003 By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Chairman, President
and Chief Executive Officer
▇▇▇▇ Financial Corporation
Dated: August 10, 2003 By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Title: Chairman, President
and Chief Executive Officer
The ▇▇▇▇ Savings Bank
Dated: August 10, 2003 By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Title: President and Chief
Executive Officer
70