EXHIBIT 10
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
▇▇▇▇ FINANCIAL CORPORATION,
CHARLIE ACQUISITION CORPORATION
AND
CATSKILL FINANCIAL CORPORATION
DATED AS OF
JUNE 7, 2000
TABLE OF CONTENTS
Page
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ARTICLE I THE MERGER...........................................................................................1
1.1 The Merger......................................................................................1
1.2 Effective Time..................................................................................1
1.3 Effects of the Merger...........................................................................2
1.4 Conversion of Catskill Common Stock.............................................................2
1.5 Options.........................................................................................3
1.6 Certificate of Incorporation....................................................................3
1.7 By-Laws.........................................................................................3
1.8 Directors and Officers..........................................................................3
ARTICLE II EXCHANGE PROCEDURES.................................................................................4
2.1 ▇▇▇▇ to Make Funds Available....................................................................4
2.2 Exchange........................................................................................4
ARTICLE III REPRESENTATIONS AND WARRANTIES OF CATSKILL.........................................................5
3.1 Corporate Organization..........................................................................5
3.2 Capitalization..................................................................................6
3.3 Authority; No Violation.........................................................................7
3.4 Consents and Approvals..........................................................................8
3.5 Loan Portfolio; Reports.........................................................................8
3.6 Financial Statements; Exchange Act Filings; Books and Records...................................9
3.7 Broker's Fees...................................................................................9
3.8 Absence of Certain Changes or Events............................................................9
3.9 Legal Proceedings..............................................................................10
3.10 Taxes and Tax Returns..........................................................................10
3.11 Employee Plans.................................................................................11
3.12 Certain Contracts..............................................................................13
3.13 Agreements with Regulatory Agencies............................................................13
3.14 State Takeover Laws; Certificate of Incorporation..............................................13
3.15 Environmental Matters..........................................................................14
3.16 Reserves for Losses............................................................................14
3.17 Properties and Assets..........................................................................15
3.18 Insurance......................................................................................15
3.19 Compliance with Applicable Laws................................................................16
3.20 Loans..........................................................................................16
3.21 Affiliates.....................................................................................17
3.22 Ownership of ▇▇▇▇ Common Stock.................................................................17
3.23 Fairness Opinion...............................................................................17
3.24 Catskill Information...........................................................................17
3.25 Sale of Securities Portfolio...................................................................18
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF ▇▇▇▇.............................................................18
4.1 Corporate Organization.........................................................................18
4.2 Authority; No Violation........................................................................18
4.3 Regulatory Approvals...........................................................................19
4.4 ▇▇▇▇ Information...............................................................................20
4.5 Adequate Resources.............................................................................20
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ARTICLE V COVENANTS RELATING TO CONDUCT OF BUSINESS...........................................................20
5.1 Covenants of Catskill..........................................................................20
5.2 Merger Covenants...............................................................................23
5.3 Compliance with Antitrust Laws.................................................................23
5.4 Securities Portfolio Sale......................................................................24
ARTICLE VI ADDITIONAL AGREEMENTS..............................................................................24
6.1 Regulatory Matters.............................................................................24
6.2 Access to Information..........................................................................25
6.3 Shareholder Meeting............................................................................25
6.4 Legal Conditions to Merger.....................................................................26
6.5 Employees......................................................................................26
6.6 Indemnification................................................................................27
6.7 Subsequent Interim and Annual Financial Statements.............................................28
6.8 Additional Agreements..........................................................................29
6.9 Advice of Changes..............................................................................29
6.10 Current Information............................................................................29
6.11 Execution and Authorization of Bank Merger Agreement...........................................29
6.12 Transaction Expenses of Catskill...............................................................29
6.13 Further Actions of Catskill....................................................................30
ARTICLE VII CONDITIONS PRECEDENT..............................................................................30
7.1 Conditions to Each Party's Obligation To Effect the Merger.....................................30
7.2 Conditions to Obligations of ▇▇▇▇..............................................................31
7.3 Conditions to Obligations of Catskill..........................................................32
ARTICLE VIII TERMINATION AND AMENDMENT........................................................................33
8.1 Termination....................................................................................33
8.2 Effect of Termination..........................................................................34
8.3 Amendment......................................................................................34
8.4 Extension; Waiver..............................................................................34
ARTICLE IX GENERAL PROVISIONS.................................................................................35
9.1 Closing........................................................................................35
9.2 Nonsurvival of Representations, Warranties and Agreements......................................35
9.3 Expenses; Breakup Fee..........................................................................35
9.4 Notices........................................................................................35
9.5 Interpretation.................................................................................36
9.6 Counterparts...................................................................................36
9.7 Entire Agreement...............................................................................36
9.8 Governing Law..................................................................................37
9.9 Enforcement of Agreement.......................................................................37
9.10 Severability...................................................................................37
9.11 Publicity......................................................................................37
9.12 Assignment; Limitation of Benefits.............................................................37
9.13 Additional Definitions.........................................................................37
EXHIBITS
A Bank Plan of Merger
B Option Agreement
C Certificate of Merger
D Catskill Stockholder Agreement
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER, dated as of June 7, 2000 (this
"Agreement"), is entered into by and among ▇▇▇▇ Financial Corporation ("▇▇▇▇"),
▇▇▇▇▇▇▇ Acquisition Corporation, a Delaware corporation and wholly-owned
subsidiary of ▇▇▇▇ ("Merger Sub"), and Catskill Financial Corporation, a
Delaware corporation ("Catskill").
WHEREAS, the Boards of Directors of ▇▇▇▇, Merger Sub and Catskill have
determined that it is in the best interests of their respective companies and
shareholders to consummate the business combination transaction provided for
herein in which Merger Sub will, subject to the terms and conditions set forth
herein, merge (the "Merger") with and into Catskill, with Catskill being the
Surviving Corporation (as defined) and becoming a wholly owned subsidiary of
▇▇▇▇ and immediately following said Merger, ▇▇▇▇ intends that the Surviving
Corporation will merge with and into ▇▇▇▇ (the "Subsidiary Merger");
WHEREAS, prior to the consummation of the Merger, ▇▇▇▇ and Catskill
will respectively cause ▇▇▇▇ Savings Bank ("▇▇▇▇ Bank"), a New York-chartered
savings bank and wholly-owned subsidiary of ▇▇▇▇, and Catskill Savings Bank
("Catskill Bank"), a federally chartered stock savings bank and wholly-owned
subsidiary of Catskill, to enter into a merger agreement, in the form attached
hereto as Exhibit A (the "Bank Merger Agreement"), providing for the merger (the
"Bank Merger") of Catskill Bank with and into ▇▇▇▇ Bank, and it is intended that
the Bank Merger be consummated immediately after consummation of the Merger and
the Subsidiary Merger;
WHEREAS, as a condition and inducement to ▇▇▇▇ and Merger Sub to enter
into this Agreement, Catskill will enter into a stock option agreement in the
form attached hereto as Exhibit B (the "Catskill Option Agreement"); and
WHEREAS, the parties desire to make certain representations, warranties
and agreements in connection with the Merger and also to prescribe certain
conditions to the Merger;
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements contained herein, and intending to be
legally bound hereby, the parties agree as follows:
ARTICLE I
THE MERGER
1.1 THE MERGER.
Subject to the terms and conditions of this Agreement, in accordance
with the Delaware General Corporation Law (the "DGCL"), at the Effective Time
(as defined in Section 1.2 hereof), Merger Sub shall merge into Catskill, with
Catskill being the surviving corporation (hereinafter sometimes called the
"Surviving Corporation") in the Merger. Upon consummation of the Merger, the
corporate existence of Merger Sub shall cease and the Surviving Corporation
shall continue to exist as a Delaware corporation and a wholly-owned subsidiary
of ▇▇▇▇.
1.2 EFFECTIVE TIME.
The Merger shall become effective on the Closing Date (as defined in
Section 9.1 hereof), as set forth in the certificate of merger (the "Certificate
of Merger") in the form attached as Exhibit C hereto which shall be filed with
the Secretary of State of the State of Delaware on the Closing Date. The term
"Effective Time" shall be the date and time when the Merger becomes effective on
the Closing Date, as set forth in the Certificate of Merger.
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1.3 EFFECTS OF THE MERGER.
At and after the Effective Time, the Merger shall have the effects set
forth in Sections 259 and 261 of the DGCL.
1.4 CONVERSION OF CATSKILL COMMON STOCK.
(a) At the Effective Time, subject to Sections 1.4(b), 1.4(e)
and 2.2(c) hereof, each share of Catskill common stock, par value $.01 per share
("Catskill Common Stock") issued and outstanding prior to the Effective Time
(excluding shares held by stockholders who perfect their dissenters' rights of
appraisal as provided in Section 1.4(d) hereof) shall, by virtue of this
Agreement and without any action on the part of the holder thereof, be converted
into the right to receive an amount (the "Merger Consideration") equal to $23.00
in cash (without interest), subject to adjustment as provided in Section 1.4(e)
hereof.
(b) All of the shares of Catskill Common Stock exchanged for
the Merger Consideration pursuant to this Article I shall no longer be
outstanding and shall automatically be canceled and shall cease to exist, and
each certificate (each a "Certificate") previously representing any such shares
of Catskill Common Stock shall thereafter represent the right to receive the
Merger Consideration for each share of Common Stock represented by such
Certificate. Certificates previously representing shares of Catskill Common
Stock shall be exchanged for cash upon the surrender of such Certificates in
accordance with Section 2.2 hereof, without any interest thereon. If prior to
the Effective Time Catskill should split or combine its common stock, or pay a
dividend or other distribution in such common stock, then the Merger
Consideration shall be appropriately adjusted to reflect such split,
combination, dividend or distribution.
(c) At the Effective Time, all shares of Catskill Common Stock
that are owned by Catskill as treasury stock and all shares of Catskill Common
Stock that are owned directly or indirectly by ▇▇▇▇ or Catskill or any of their
respective Subsidiaries (other than shares of Catskill Common Stock held
directly or indirectly in trust accounts, managed accounts and the like or
otherwise held in a fiduciary capacity that are beneficially owned by third
parties (any such shares, and shares of ▇▇▇▇ Common Stock which are similarly
held, whether held directly or indirectly by ▇▇▇▇ or Catskill, as the case may
be, being referred to herein as "Trust Account Shares") and other than any
shares of Catskill Common Stock held by ▇▇▇▇ or Catskill or any of their
respective Subsidiaries in respect of a debt previously contracted (any such
shares of Catskill Common Stock, and shares of ▇▇▇▇ Common Stock which are
similarly held, whether held directly or indirectly by ▇▇▇▇ or Catskill being
referred to herein as "DPC Shares")) shall be canceled and shall cease to exist
and no cash or other consideration shall be delivered in exchange therefor. All
shares of ▇▇▇▇ Common Stock that are owned by Catskill or any of its
Subsidiaries (other than Trust Account Shares and DPC Shares) shall become
treasury stock of ▇▇▇▇.
(d) Any holder of shares of Catskill Common Stock who perfects
such holder's dissenters' rights in accordance with and as contemplated by
Section 262 of the DGCL shall be entitled to receive such payments as may be
determined pursuant to such provision of Law; provided that no such payment
shall be made to any dissenting stockholder unless and until such dissenting
stockholder has complied with the applicable provisions of the DGCL. In the
event that after the Effective Time a dissenting stockholder of Catskill fails
to perfect or effectively withdraws or loses such holder's rights to appraisal
and of payment of such holder's shares of Catskill Common Stock, the Surviving
Corporation shall issue and deliver the consideration to which such holder of
shares of Catskill Common Stock is entitled under this Section 1.4 (without
interest) upon surrender of such holder's Certificate or Certificates.
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(e) If the aggregate pre-tax net proceeds (such proceeds shall
be all cash proceeds, net of direct sales expenses, fees and commissions, as
recognized under GAAP (as defined in Section 3.6 below) and referred to herein
as the "Sale Proceeds") realized by Catskill in the Securities Portfolio Sale
(as defined in Section 3.25 below) are less than $73.2 million, then the per
share Merger Consideration shall be decreased by an amount equal to the
quotient, the numerator of which is the after-tax (using Catskill's statutory
federal and New York state tax rates) difference between $73.2 million and the
Sale Proceeds; and the denominator of which is the sum of (x) the number of
shares of Catskill Common Stock outstanding as of such date and (y) the
equivalent number of shares of Catskill Common Stock subject to options
outstanding, calculated using the "Treasury Stock Method," as of such date. For
purposes of this Section 1.4(e), "Treasury Stock Method" assumes the exercise of
each option, warrant or other right or instrument (each, an "instrument")
granted by Catskill to purchase shares of Catskill Common Stock and assumes that
the net proceeds received upon the exercise of any such instrument will be used
to purchase shares of Catskill Common Stock at the fair market value on the date
of exercise.
1.5 OPTIONS.
At the Effective Time, each option granted by Catskill to purchase
shares of Catskill Common Stock which is outstanding and unexercised immediately
prior thereto shall be converted automatically into a right to receive a payment
of cash from ▇▇▇▇ in an amount determined as provided below (and otherwise
subject to the terms of the Catskill Financial Corporation 1996 Stock Option and
Incentive Plan (the "Catskill Stock Plan"):
The cash amount payable with respect to the option
immediately after the Effective Time shall be equal to the product of the number
of shares of Catskill Common Stock subject to the option immediately before
the Effective Time, multiplied by the difference between (a) the Merger
Consideration, minus (b) the exercise price per share of Catskill Common Stock
under the option immediately before the Effective Time.
1.6 CERTIFICATE OF INCORPORATION.
At the Effective Time, the Certificate of Incorporation of Merger Sub,
as in effect at the Effective Time, shall be the Certificate of Incorporation of
the Surviving Corporation.
1.7 BY-LAWS.
At the Effective Time, the By-Laws of Merger Sub, as in effect
immediately prior to the Effective Time, shall be the By-Laws of the Surviving
Corporation.
1.8 DIRECTORS AND OFFICERS.
At the Effective Time, the directors and officers of Merger Sub
immediately prior to the Effective Time shall be the directors and officers of
the Surviving Corporation. As of the Effective Time, ▇▇▇▇ shall amend its bylaws
to increase the size of its Board of Directors by one member and cause ▇▇▇▇ Bank
to amend its bylaws to increase the size of its Board of Directors by one
member, and thereupon appoint ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President, Chief Executive
Officer, and Chairman of the Board of Catskill, to serve as an additional member
(the "New Member") of the Boards of Directors of ▇▇▇▇ and ▇▇▇▇ Bank in the class
of directors whose term expires at the 2003 annual meeting of ▇▇▇▇ stockholders;
provided, however, that if the Closing shall occur after the 2001 annual meeting
of ▇▇▇▇ stockholders, then the New Member shall be appointed to serve on the
Boards of Directors of ▇▇▇▇ and ▇▇▇▇ Bank until the
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2004 annual meeting of ▇▇▇▇ stockholders; provided, further, that neither ▇▇▇▇
nor ▇▇▇▇ Bank shall have any obligation to appoint the New Member to serve on
either Troy's or ▇▇▇▇ Bank's Board if such person is not a member in good
standing of the Catskill Board of Directors immediately prior to closing. In
addition, immediately prior to the Effective Time, subject to applicable rules
and regulations, ▇▇▇▇ Bank shall create an advisory board (the "Advisory Board")
to be comprised of the individuals identified at Section 1.8 of the Catskill
Disclosure Schedule (defined below) for a period to terminate no earlier than
two years after the Effective Time. For service on the Advisory Board, the
Advisory Board members identified at Section 1.8 of the Catskill Disclosure
schedule shall be paid an annual retainer of $10,000 per year, payable
quarterly, except that ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, as chairman of the Advisory Board, shall
be paid an annual retainer of $50,000 per year, payable quarterly, and shall be
provided with an office. Regular meetings of the Advisory Board shall be held
quarterly and at a place in the Catskill market area.
ARTICLE II
EXCHANGE PROCEDURES
2.1 ▇▇▇▇ TO MAKE FUNDS AVAILABLE.
At or prior to the Effective Time, ▇▇▇▇ shall deposit, or shall cause
to be deposited, with Troy's transfer agent, Registrar and Transfer Company, or
such other bank, trust company or transfer agent as ▇▇▇▇ may select (the
"Exchange Agent"), for the benefit of the holders of Certificates, cash
sufficient in the aggregate for the Exchange Agent to make full payment of the
Merger Consideration pursuant to Section 1.4 (the "Exchange Fund"). There shall
be a written agreement between ▇▇▇▇ and the Exchange Agent in which the Exchange
Agent expressly undertakes the obligation to pay the Merger Consideration as
provided herein. Catskill shall have the right to review the agreement with the
Exchange Agent prior to being finalized.
2.2 EXCHANGE.
(a) As soon as practicable after the Effective Time, the
Exchange Agent shall mail to each holder of record of a Certificate or
Certificates a form letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the Certificates shall pass,
only upon delivery of the Certificates to the Exchange Agent) and instructions
for use in effecting the surrender of the Certificates in exchange for payment
of the Merger Consideration pursuant to this Agreement. Upon surrender of a
Certificate for exchange and cancellation to the Exchange Agent, together with
such letter of transmittal, duly executed, the holder of such Certificate shall
be entitled to receive promptly in exchange therefor a check representing the
amount of cash to which such holder shall have become entitled pursuant to the
provisions of Article I hereof, and the Certificate so surrendered shall
forthwith be canceled. No interest will accrue or be paid to the holder of any
outstanding shares of Catskill Common Stock.
(b) As of the Effective Time, there shall be no transfers on
the stock transfer books of Catskill of the shares of Catskill Common Stock
which were issued and outstanding immediately prior to the Effective Time. If,
after the Effective Time, Certificates representing such shares are presented
for transfer to the Exchange Agent, they shall be canceled and exchanged for the
Merger Consideration as provided in this Article II.
(c) Any portion of the Exchange Fund that remains unclaimed by
the shareholders of Catskill six months after the Effective Time may be returned
to ▇▇▇▇. After such funds have been returned to ▇▇▇▇, any shareholders of
Catskill who have not theretofore complied with this Article II shall thereafter
look only to ▇▇▇▇ for payment of the Merger Consideration deliverable in respect
of each share of Catskill Common Stock such shareholder holds as determined
pursuant to this
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Agreement, in each case, without any interest thereon. Notwithstanding the
foregoing, none of ▇▇▇▇, Merger Sub, Catskill, the Exchange Agent or any other
person shall be liable to any former holder of shares of Catskill Common Stock
for any amount properly delivered to a public official pursuant to applicable
abandoned property, escheat or similar laws.
(d) 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
▇▇▇▇, the posting by such person of a bond in such amount as ▇▇▇▇ 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 a check representing the Merger Consideration
deliverable in respect thereof pursuant to this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF CATSKILL
Catskill hereby makes the following representations and warranties to
▇▇▇▇ and Merger Sub as set forth in this Article III, each of which is being
relied upon by ▇▇▇▇ and Merger Sub as a material inducement to enter into and
perform this Agreement. All of the disclosure schedules of Catskill referenced
below and thereby required of Catskill pursuant to this Agreement, which
disclosure schedules shall be cross-referenced to the specific sections and
subsections of this Agreement and delivered herewith, are referred to herein as
the "Catskill Disclosure Schedule."
3.1 CORPORATE ORGANIZATION.
(a) Catskill is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware. Catskill has the
corporate power and authority to own or lease all of its properties and assets
and to carry on its business as it is now being conducted, and is duly licensed
or qualified to do business in each jurisdiction in which the nature of any
business conducted by it or the character or location of any properties or
assets owned or leased by it makes such licensing or qualification necessary.
Catskill is duly registered as a savings and loan holding company with the
Office of Thrift Supervision ("OTS") under the Home Owners' Loan Act, as amended
("HOLA"). The Certificate of Incorporation and By-Laws of Catskill, copies of
which are attached at Section 3.1(a) of the Catskill Disclosure Schedule, are
true, correct and complete copies of such documents as in effect as of the date
of this Agreement. Catskill Bank and Catskill Financial Services, Inc. ("CFSI")
are the only subsidiaries of Catskill and Catskill Bank, respectively, that
qualify as a "Significant Subsidiary" as such term is defined in Regulation S-X
promulgated by the Securities and Exchange Commission (the "SEC").
(b) Catskill Bank is a federally chartered stock savings bank
duly organized and validly existing and in good standing under the laws of the
United States. The deposit accounts of Catskill Bank are insured by the Federal
Deposit Insurance Corporation (the "FDIC") through the Bank Insurance Fund (the
"BIF") to the fullest extent permitted by law, and all premiums and assessments
required in connection therewith have been paid by Catskill Bank. Catskill Bank
has the corporate power and authority to own or lease all of its properties and
assets and to carry on its business as it is now being conducted and is duly
licensed or qualified to do business in each jurisdiction in which the nature of
any business conducted by it or the character or the location of any properties
or assets owned or leased by it makes such licensing or qualification necessary.
The Charter and By-Laws of Catskill Bank, copies of which are attached at
Section 3.1(b) of the Catskill Disclosure Schedule, are true, correct and
complete copies of such documents as in effect as of the date of this Agreement.
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(c) CFSI is a business corporation duly organized, validly
existing and in good standing under the corporate laws of the State of New York,
and is duly licensed as an insurance agent by the New York Insurance Department.
CFSI has the corporate power and authority to own or lease all of its properties
and assets and to carry on its business as it is now being conducted, and is
duly licensed or qualified to do business in each jurisdiction in which the
nature of any material business conducted by it or the character or location of
any material properties or assets owned or leased by it makes such licensing or
qualification necessary. CFSI is not a "bank" as such term is defined in the
Bank Holding Company Act of 1956, as amended, ("BHCA"). The Certificate of
Incorporation and Bylaws of CFSI, copies of which are attached at Section 3.1(c)
of the Catskill Disclosure Schedule, are true, correct and complete copies of
such documents as in effect as of the date of this Agreement.
3.2 CAPITALIZATION.
(a) The authorized capital stock of Catskill consists of 15
million shares of Catskill Common Stock and 5 million shares of preferred stock,
par value $.01 per share (the "Catskill Preferred Stock"). As of the date
hereof, there are (x) 3,737,519 shares of Catskill Common Stock issued and
outstanding and 1,949,231 shares of Catskill Common Stock are held in Catskill's
treasury, (y) no shares of Catskill Common Stock reserved for issuance upon
exercise of outstanding stock options or otherwise, except for 519,090 shares of
Catskill Common Stock reserved for issuance pursuant to the Catskill Stock Plan
(of which options for 384,748 shares are currently outstanding); (ii) 39,488
shares of Catskill Common Stock reserved for issuance under the Catskill
Management Recognition Plan; and (iii) 743,766 shares of Catskill Common Stock
reserved for issuance upon exercise of the option to be issued to ▇▇▇▇ pursuant
to the Option Agreement, and (z) no shares of Catskill's Preferred Stock issued
or outstanding, held in Catskill's treasury or reserved for issuance upon
exercise of outstanding stock options or otherwise. All of the issued and
outstanding shares of Catskill Common Stock have been duly authorized and
validly issued and are fully paid, nonassessable and free of preemptive rights,
with no personal liability attaching to the ownership thereof. Except for the
Option Agreement, the Catskill Management Recognition Plan and the Catskill
Stock Plan, Catskill does not have and is not bound by any outstanding
subscriptions, options, warrants, calls, commitments or agreements of any
character calling for the purchase or issuance of any shares of Catskill Common
Stock or Catskill Preferred Stock or any other equity security of Catskill or
any securities representing the right to purchase or otherwise receive any
shares of Catskill Common Stock or any other equity security of Catskill. The
names of the optionees, the date of each option to purchase Catskill Common
Stock granted, the number of shares subject to each such option, the expiration
date of each such option, and the price at which each such option may be
exercised under the Catskill Stock Plan and the Catskill Management Recognition
Plan are set forth in Sections 3.2(a)(i) and 3.2(a)(ii) of the Catskill
Disclosure Schedule. Except as set forth at Section 3.2(a)(iii) of the Catskill
Disclosure Schedule, since September 30, 1999 Catskill has not issued any shares
of its capital stock, including shares under the Catskill Management Recognition
Plan, or any securities convertible into or exercisable for any shares of its
capital stock, other than pursuant to the exercise of director or employee stock
options granted under the Catskill Stock Plan.
(b) Section 3.2(b) of the Catskill Disclosure Schedule sets
forth a true, correct and complete list of all direct or indirect Subsidiaries
of Catskill as of the date of this Agreement. Except as set forth at Section
3.2(b) of the Catskill Disclosure Schedule, Catskill owns, directly or
indirectly, all of the issued and outstanding shares of capital stock of each of
its Subsidiaries, free and clear of all liens, charges, encumbrances and
security interests whatsoever, and all of such shares are duly authorized and
validly issued and are fully paid, nonassessable and free of preemptive rights,
with no personal liability attaching to the ownership thereof. No Catskill
Subsidiary has or is bound by any outstanding subscriptions, options, warrants,
calls, commitments or agreements of any character calling for the purchase or
issuance of any shares of capital stock or any other equity security of such
Subsidiary or any securities representing the right to purchase or otherwise
receive any shares of capital stock or any other equity security of such
Subsidiary.
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3.3 AUTHORITY; NO VIOLATION.
(a) Each of Catskill and its Subsidiaries has full corporate
power and authority to execute and deliver this Agreement and the Option
Agreement and, subject to receipt of the required regulatory approvals specified
herein, to consummate the transactions contemplated hereby and thereby. The
execution and delivery of this Agreement and the Option Agreement and the
consummation of the transactions contemplated hereby and thereby have been duly
and validly approved by the Board of Directors of Catskill. The Board of
Directors of Catskill has directed that this Agreement and the transactions
contemplated hereby be submitted to Catskill's shareholders for approval at a
special meeting of such shareholders and, except for the adoption of this
Agreement by the requisite vote of Catskill's shareholders, no other corporate
proceedings on the part of Catskill (except for matters related to setting the
date, time, place and record date for the special meeting) are necessary to
approve this Agreement or the Option Agreement or to consummate the transactions
contemplated hereby or thereby. This Agreement has been, and the Option
Agreement will be, duly and validly executed and delivered by Catskill and
(assuming due authorization, execution and delivery by ▇▇▇▇ of this Agreement
and by ▇▇▇▇ of the Option Agreement) will constitute valid and binding
obligations of Catskill, enforceable against Catskill in accordance with their
terms, except as enforcement may be limited by general principles of equity
whether applied in a court of law or a court of equity and by bankruptcy,
insolvency and similar laws affecting creditors' rights and remedies generally.
(b) Catskill Bank has full corporate power and authority to
execute and deliver the Bank Merger Agreement and, subject to receipt of the
required regulatory approvals specified herein, to consummate the transactions
contemplated thereby. The execution and delivery of the Bank Merger Agreement
and the consummation of the transactions contemplated thereby have been duly and
validly approved by the Board of Directors of Catskill Bank and by Catskill as
the sole shareholder of Catskill Bank. No other corporate proceedings on the
part of Catskill Bank will be necessary to consummate the transactions
contemplated thereby. The Bank Merger Agreement, upon execution and delivery by
Catskill Bank, will be duly and validly executed and delivered by Catskill Bank
and will (assuming due authorization, execution and delivery by ▇▇▇▇ Bank)
constitute a valid and binding obligation of Catskill Bank, enforceable against
Catskill Bank in accordance with its terms, except as enforcement may be limited
by general principles of equity whether applied in a court of law or a court of
equity and by bankruptcy, insolvency and similar laws affecting creditors'
rights and remedies generally.
(c) Neither the execution and delivery of this Agreement and
the Option Agreement by Catskill or the Bank Merger Agreement by Catskill Bank,
nor the consummation by Catskill or Catskill Bank, as the case may be, of the
transactions contemplated hereby or thereby, nor compliance by Catskill or
Catskill Bank with any of the terms or provisions hereof or thereof, will (i)
violate any provision of the Certificate of Incorporation or By-Laws of Catskill
and each of its Subsidiaries or (ii) assuming that the consents and approvals
referred to in Section 3.4 hereof are duly obtained, (x) violate any Laws (as
defined in Section 9.13) applicable to Catskill and each of its Subsidiaries, or
any of their respective properties or assets, or (y) violate, conflict with,
result in a breach of any provision of or the loss of any benefit under,
constitute a default (or an event which, with notice or lapse of time, or both,
would constitute a default) under, result in the termination of or a right of
termination or cancellation under, accelerate the performance required by, or
result in the creation of any lien, pledge, security interest, charge or other
encumbrance upon any of the respective properties or assets of Catskill and each
of its Subsidiaries under, any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, deed of trust, license, lease, agreement or
other instrument or obligation to which Catskill and each of its Subsidiaries is
a party, or by which they or any of their respective properties or assets may be
bound or affected.
7
3.4 CONSENTS AND APPROVALS.
(a) Except for (i) the filing of applications, notices or
waiver requests, as applicable, as to the Merger and the Bank Merger with the
Board of Governors of the Federal Reserve System ("FRB") under the BHCA, the OTS
under HOLA and the OTS regulations, the FDIC under the Bank Merger Act, and the
New York State Banking Department ("NYSBD"), as well as any other applications
and notices to state officials related to the Merger or the Bank Merger (the
"State Banking Approvals"), and approval of the foregoing applications and
notices, (ii) the filing of any required applications or notices with the NYSBD
and the FDIC as to the subsidiaries of Catskill Bank which become subsidiaries
of ▇▇▇▇ Bank and approval of such applications and notices, (iii) the filing
with the SEC of proxy materials to be used in soliciting the approval of
Catskill's shareholders at a special meeting to be held in connection with this
Agreement and the transactions contemplated hereby (the "Proxy Materials"), (iv)
the approval of this Agreement by the requisite vote of the shareholders of
Catskill, (v) the filing of the Certificate of Merger with the Secretary of
State of Delaware pursuant to the DGCL, (vi) the filings required by the Bank
Merger Agreement, (vii) such consents, approvals, orders, authorizations,
registrations, declarations and filings as may be required under applicable
federal, foreign and state securities (or related) laws and, if applicable, the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), and the securities or antitrust laws of any foreign country, (viii) the
filing of applications or notices with the New York Insurance Department with
respect to the acquisition of CFSI and approval of such applications or notices
and (ix) such filings, authorizations or approvals as may be set forth in
Section 3.4 of the Catskill Disclosure Schedule, no consents or approvals of or
filings or registrations with any court, administrative agency or commission or
other governmental authority or instrumentality (each a "Governmental Entity"),
or with any third party are necessary in connection with (1) the execution and
delivery by Catskill of this Agreement and the Option Agreement, (2) the
consummation by Catskill of the Merger and the other transactions contemplated
hereby, (3) the execution and delivery by Catskill Bank of the Bank Merger
Agreement, (4) the consummation by Catskill of the Option Agreement, and (5) the
consummation by Catskill Bank of the Bank Merger and the transactions
contemplated thereby, except in each case, for such consents, approvals or
filings, the failure of which to obtain will not have a Material Adverse Effect
on the ability of ▇▇▇▇ to consummate the transactions contemplated hereby.
(b) Catskill hereby represents to ▇▇▇▇ that it has no
knowledge of any reason why approval or effectiveness of any of the
applications, notices or filings referred to in Section 3.4(a) cannot be
obtained or granted on a timely basis.
3.5 LOAN PORTFOLIO; REPORTS.
(a) Except as set forth at Section 3.5(a) of the Catskill
Disclosure Schedule, as of September 30, 1999 and thereafter through and
including the date of this Agreement, none of Catskill, nor any of its
Subsidiaries is a party to any written or oral loan agreement, note or borrowing
arrangement (including, without limitation, leases, credit enhancements,
commitments, guarantees and interest-bearing assets) (collectively, "Loans"),
with any director, officer or five percent or greater shareholder of Catskill or
any of its Subsidiaries, or any Affiliated Person (as defined in Section 9.13)
of the foregoing.
(b) Catskill, Catskill Bank and CFSI have timely filed all
reports, registrations and statements, together with any amendments required to
be made with respect thereto, that they were required to file since September
30, 1999 with (i) the OTS; (ii) the FDIC, (iii) the NYSBD (iv) the New York
Insurance Department and any other state banking commissions or any other state
regulatory authority (each a "State Regulator"), (v) the SEC and (vi) any other
self-regulatory organization ("SRO") (collectively "Regulatory Agencies").
Except for normal examinations conducted by a Regulatory Agency in the regular
course of the business of Catskill and its Subsidiaries, to Catskill's knowledge
no Governmental Entity is conducting, or has conducted, any proceeding or
investigation into the business or operations of Catskill or any of its
Subsidiaries since September 30, 1999.
8
3.6 FINANCIAL STATEMENTS; EXCHANGE ACT FILINGS; BOOKS AND RECORDS.
Catskill has previously delivered to ▇▇▇▇ true, correct and complete
copies of the consolidated statements of condition of Catskill and its
Subsidiaries as of September 30 for the fiscal years 1998 and 1999 and the
related consolidated statements of income, shareholders' equity and cash flows
for the fiscal years 1997 through 1999, inclusive, as reported in Catskill's
Annual Report on Form 10-K for the fiscal year ended September 30, 1999 filed
with the SEC under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), in each case accompanied by the audit report of KPMG LLP,
independent public accountants with respect to Catskill, and the interim
financial statements of Catskill as of and for the six months ended March 31,
2000 and 1999, as included in the Catskill quarterly report on Form 10-Q for the
period ended March 31, 2000 as filed with the SEC. The financial statements
referred to in this Section 3.6 (including the related notes, where applicable)
fairly present, and the financial statements referred to in Section 6.7 hereof
will fairly present (subject, in the case of the unaudited statements, to
recurring audit adjustments normal in nature and amount), the results of the
consolidated operations and consolidated financial condition of Catskill and its
Subsidiaries for the respective fiscal periods or as of the respective dates
therein set forth; each of such statements (including the related notes, where
applicable) comply, and the financial statements referred to in Section 6.7
hereof will comply, with applicable accounting requirements and with the
published rules and regulations of the SEC with respect thereto and each of such
statements (including the related notes, where applicable) has been, and the
financial statements referred to in Section 6.7 hereof will be prepared in
accordance with generally accepted accounting principles consistently applied
during the periods involved ("GAAP"), except in each case as indicated in such
statements or in the notes thereto or, in the case of unaudited statements, as
permitted by Form 10-Q. Catskill's Annual Report on Form 10-K for the fiscal
year ended September 30, 1999 and all reports filed under Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act since September 30, 1999 comply in all material
respects with the appropriate requirements for such reports under the Exchange
Act, and Catskill has previously delivered or made available to ▇▇▇▇ true,
correct and complete copies of such reports. The books and records of Catskill
and Catskill Bank have been, and are being, maintained in all material respects
in accordance with GAAP and any other applicable legal and accounting
requirements.
3.7 BROKER'S FEES.
Neither Catskill nor any Catskill Subsidiary nor any of their
respective officers or directors has employed any broker or finder or incurred
any liability for any broker's fees, commissions or finder's fees in connection
with any of the transactions contemplated by this Agreement or the Option
Agreement, except that Catskill has engaged, and will pay a fee or commission to
▇▇▇▇, ▇▇▇▇ & Co. ("▇▇▇▇ ▇▇▇▇") in accordance with the terms of a letter
agreement between ▇▇▇▇ ▇▇▇▇ and Catskill, dated March 23, 2000, a true, complete
and correct copy of which is attached at Section 3.7 of the Catskill Disclosure
Schedule.
3.8 ABSENCE OF CERTAIN CHANGES OR EVENTS.
(a) Except as set forth at Section 3.8 of the Catskill
Disclosure Schedule, or as disclosed in Catskill's Annual Report on Form 10-K
for the fiscal year ended September 30, 1999, since September 30, 1999 (i)
neither Catskill nor any of its Subsidiaries has incurred any material
liability, except as contemplated by the Agreement or in the ordinary course of
their business consistent with their past practices, and (ii) no event has
occurred which has had, or is likely to have, individually or in the aggregate,
a Material Adverse Effect (as defined in Section 9.13) on Catskill.
9
(b) Since September 30, 1999 Catskill and its Subsidiaries
have carried on their respective businesses in the ordinary and usual course
consistent with their past practices.
3.9 LEGAL PROCEEDINGS.
(a) Except as set forth at Section 3.9 of the Catskill
Disclosure Schedule, neither Catskill nor any of its Subsidiaries is a party to
any, and there are no pending or to the knowledge of Catskill, threatened,
legal, administrative, arbitration or other proceedings, claims, actions or
governmental or regulatory investigations of any nature against Catskill or any
of its Subsidiaries in which, to the knowledge of Catskill, there is a
reasonable probability of any material recovery against or other material effect
upon Catskill or any of its Subsidiaries or which challenge the validity or
propriety of the transactions contemplated by this Agreement, the Bank Merger
Agreement or the Option Agreement.
(b) There is no injunction, order, judgment, decree, or
regulatory restriction imposed upon Catskill, any of its Subsidiaries or the
assets of Catskill or any of its Subsidiaries.
3.10 TAXES AND TAX RETURNS.
(a) Each of Catskill and its Subsidiaries has duly filed all
Tax Returns required to be filed by it on or prior to the date hereof (all such
returns being accurate and complete in all material respects) and has duly paid
or made provision on the financial statements referred to in Sections 3.6 and
6.7 hereof in accordance with GAAP for the payment of all material Taxes which
have been incurred or are due or claimed to be due from it by Taxing Authorities
on or prior to the date hereof other than Taxes (a) which (x) are not yet
delinquent or (y) are being contested in good faith and set forth in Section
3.10 of the Catskill Disclosure Schedule and (b) which have not been finally
determined. All liability with respect to the Tax Returns of Catskill and its
Subsidiaries has been satisfied for all years to and including 1998. The
Internal Revenue Service ("IRS") has not notified Catskill of, or otherwise
asserted, that there are any material deficiencies with respect to the federal
income Tax Returns of Catskill. There are no material disputes pending, or
claims asserted for, Taxes or assessments upon Catskill or any of its
Subsidiaries, nor has Catskill or any of its Subsidiaries been requested to give
any currently effective waivers extending the statutory period of limitation
applicable to any federal or state income Tax Return for any period. In
addition, Tax Returns which are accurate and complete in all material respects
have been filed by Catskill and its Subsidiaries for all periods for which
returns were due with respect to income tax withholding, Social Security and
unemployment taxes and the amounts shown on such Tax Returns to be due and
payable have been paid in full or adequate provision therefor in accordance with
GAAP has been included by Catskill in the financial statements referred to in
Sections 3.6 and 6.7 hereto. All Catskill Tax Returns have been examined by the
relevant Taxing Authorities, or closed without audit by applicable statutes of
limitations, and all deficiencies proposed as a result of such examinations have
been paid or settled, for all periods before and including the taxable year
ended 1995. Neither Catskill nor any of its Subsidiaries has consented to any
waiver or extension of any statute of limitations with respect to any Tax.
Neither Catskill nor any Catskill Subsidiary has made an election under Section
341(f) of the Internal Revenue Code of 1986, as amended (the "Code" or "IRC").
Catskill has provided or made available to ▇▇▇▇ complete and correct copies of
its Tax Returns and all material correspondence and documents, if any, relating
directly or indirectly to taxes for each taxable year or other relevant period
as to which the applicable statute of limitations has not run on the date
hereof. For this purpose, "correspondence and documents" include, without
limitation, amended Tax Returns, claims for refunds, notices from Taxing
Authorities of proposed changes or adjustments to Taxes or Tax Returns, consents
to assessment or collection of Taxes, acceptances of proposed adjustments,
closing agreements, rulings and determination letters and requests therefor, and
all other written communications to or from Taxing Authorities relating to any
material Tax liability of Catskill or any Catskill Subsidiary. Catskill will not
be a "foreign person" as that term is used in ss. 1.1445-2 of the Treasury
Regulations
10
promulgated under the IRC. Catskill Bank is not a "United States real property
holding corporation" within meaning of ss. 897 of the IRC and was not a "United
States real property holding corporation" on any "determination date" (as
defined in ss. 1.897-2(c) of such Regulations) that occurred during any relevant
period.
(b) For purposes of this Agreement:
"Tax" means any tax (including any income tax, capital gains
tax, payroll tax, value-added tax, sales tax, property tax, gift tax, or estate
tax), levy, assessment, tariff, duty (including any customs duty), deficiency,
or other fee, and any related charge or amount (including any fine, penalty,
interest, or addition to tax), imposed, assessed, or collected by or under the
authority of any Taxing Authority or payable pursuant to any tax-sharing
agreement or any other contract relating to the sharing or payment of any such
tax, levy, assessment, tariff, duty, deficiency, or fee.
"Tax Return" means any return (including any information
return), report, statement, schedule, notice, form, or other document or
information filed with or submitted to, or required to be filed with or
submitted to, any Taxing Authority in connection with the determination,
assessment, collection, or payment of any Tax or in connection with the
administration, implementation, or enforcement of or compliance with any law,
regulation or other legal requirement relating to any Tax.
"Taxing Authority" means any:
(i) nation, state, county, city, town, village,
district, or other jurisdiction of any nature;
(ii) federal, state, local, municipal, foreign, or
other government;
(iii) governmental or quasi-governmental authority of
any nature (including any governmental agency, branch, department, official, or
entity and any court or other tribunal);
(iv) multi-national organization or body; or
(v) body exercising, or entitled to exercise, any
administrative, executive, judicial, legislative, police, regulatory, or taxing
authority or power of any nature.
3.11 EMPLOYEE PLANS.
(a) Section 3.11(a) of the Catskill Disclosure Schedule sets
forth a true and complete list of each employee benefit plan (within the meaning
of Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA")), arrangement or agreement that is maintained or contributed
to as of the date of this Agreement, or that has within the last six years been
maintained or contributed to, by Catskill or any of its Subsidiaries or any
other entity which together with Catskill would be deemed a "single employer"
within the meaning of Section 4001 of ERISA or Code Sections 414(b), (c) or (m)
or under which Catskill or any such Subsidiary has any liability (collectively,
the "Plans").
(b) Catskill has heretofore delivered or made available to
▇▇▇▇ true, correct and complete copies of each of the Plans and all related
documents, including but not limited to (i) the actuarial report for such Plan
(if applicable) for each of the last five years, (ii) the most recent
determination letter from the IRS (if applicable) for such Plan, (iii) the
current summary plan description and any summaries of material modification,
(iv) all annual reports (Form 5500 series) for each Plan filed for the preceding
five plan years, (v) all agreements with fiduciaries and service
11
providers relating to the Plan, and (vi) all substantive correspondence relating
to any such Plan addressed to or received from the Internal Revenue Service, the
Department of Labor, the Pension Benefit Guaranty Corporation or any other
governmental agency.
(c) Except as set forth at Section 3.11(c) of the Catskill
Disclosure Schedule, (i) Each of the Plans has been operated and administered in
all material respects in compliance with applicable Laws, including but not
limited to ERISA and the Code, (ii) each of the Plans intended to be "qualified"
within the meaning of Section 401(a) of the Code is so qualified, any trust
created pursuant to any such Plan is exempt from federal income tax under
Section 501(a) of the Code, each such Plan has received from the Internal
Revenue Service a favorable determination letter to such effect upon which
Catskill or a Subsidiary is entitled to rely as to such matters and which is
currently applicable, and neither Catskill nor any Subsidiary is aware of any
circumstance or event which would jeopardize the tax-qualified status of any
such Plan or the tax-exempt status of any related trust, or which would cause
the imposition of any liability, penalty or tax under ERISA or the Code with
respect to any Plan, (iii) with respect to each Plan which is subject to Title
IV of ERISA, the present value of accrued benefits under such Plan, based upon
the actuarial assumptions used for funding purposes in the most recent actuarial
report prepared by such Plan's actuary with respect to such Plan, did not, as of
its latest valuation date, exceed the then current value of the assets of such
Plan allocable to such accrued benefits, (iv) no Plan provides benefits,
including, without limitation, death or medical benefits (whether or not
insured), with respect to current or former employees of Catskill or any
Catskill Subsidiary beyond their retirement or other termination of service,
other than (w) coverage mandated by applicable Law, (x) death benefits or
retirement benefits under a Plan that is an "employee pension plan," as that
term is defined in Section 3(2) of ERISA, (y) deferred compensation benefits
under a Plan that are accrued as liabilities on the books of Catskill or any
Catskill Subsidiary, or (z) benefits the full cost of which is borne by the
current or former employee (or his beneficiary), (v) no liability under Title IV
of ERISA has been incurred by Catskill or any Catskill Subsidiary that has not
been satisfied in full, and no condition exists that presents a material risk of
Catskill or any Catskill Subsidiary incurring a material liability thereunder,
(vi) no Plan is a "multiemployer pension plan," as such term is defined in
Section 3(37) of ERISA, (vii) all contributions or other amounts payable by
Catskill or any Catskill Subsidiary as of the Effective Time with respect to
each Plan and all other liabilities of each such entity with respect to each
Plan, in respect of current or prior plan years have been paid or accrued in
accordance with generally accepted accounting practices and Section 412 of the
Code, (viii) neither Catskill nor any Catskill Subsidiary has engaged in a
transaction in connection with which Catskill or any Catskill Subsidiary could
be subject to either a civil penalty assessed pursuant to Section 409 or 502(i)
of ERISA or a tax imposed pursuant to Section 4975 or 4976 of the Code, (ix) to
the knowledge of Catskill, there are no pending, threatened or anticipated
claims (other than routine claims for benefits) by, on behalf of or against any
of the plans or any trusts related thereto, and (x) all Plans could be
terminated as of the Effective Time without material liability in excess of the
amount accrued with respect to such Plan in the financial statements referred to
in Sections 3.6 and 6.8 hereto; (xi) no Plan, program, agreement or other
arrangement, either individually or collectively, provides for any payment by
Catskill or any Catskill Subsidiary that would not be deductible under Code
Sections 162(a)(1), 162(m) or 404 or that would constitute a "parachute payment"
within the meaning of Code Section 280G after giving effect to the transactions
contemplated by this Agreement nor would the transactions contemplated by this
Agreement accelerate the time of payment or vesting, or increase the amount of
compensation due to any employee; (xii) no "accumulated funding deficiency" as
defined in Section 302(a)(2) of ERISA or Section 412 of the Code, whether or not
waived, and no "unfunded current liability" as determined under Section 412(l)
of the Code exists with respect to any Plan; and (xiii) no Plan has experienced
a "reportable event" (as such term is defined in Section 4043(b) of ERISA) that
is not subject to an administrative or statutory waiver from the reporting
requirement; (xiv) all reports and information required to be filed with the
Department of Labor, IRS and Pension Benefit Guaranty Corporation or provided to
plan participants and their beneficiaries with respect to each Plan have been
filed or provided, as applicable, and all annual reports (including Form 5500
series) of such Plans were certified without qualification by each Plan's
accountants and actuaries; and (xv) any bond required under ERISA with respect
to any Plan has been obtained and is in full force and effect and no funds held
by or under the control of Catskill or any Subsidiary are plan assets of any
Plan.
12
3.12 CERTAIN CONTRACTS.
(a) Except as set forth at Section 3.12 of the Catskill
Disclosure Schedule, neither Catskill nor any of its Subsidiaries is a party to
or bound by any contract, arrangement or commitment (i) with respect to the
employment of any directors, officers, employees or consultants, (ii) which,
upon the consummation of the transactions contemplated by this Agreement or the
Bank Merger Agreement will (either alone or upon the occurrence of any
additional acts or events) result in any payment (whether of severance pay or
otherwise) becoming due from ▇▇▇▇, Catskill, or any of their respective
Subsidiaries to any director, officer or employee thereof, (iii) which
materially restricts the conduct of any line of business by Catskill or any of
its Subsidiaries, (iv) with or to a labor union or guild (including any
collective bargaining agreement) or (v) except as set forth on Section
3.12(a)(v) of the Catskill Disclosure Schedule, any of the benefits of which
will be increased, or the vesting of the benefits of which will be accelerated
by the occurrence of any of the transactions contemplated by this Agreement, or
the value of any of the benefits of which will be calculated on the basis of any
of the transactions contemplated by this Agreement (including as to this clause
(v), any stock option plan, stock appreciation rights plan, restricted stock
plan or stock purchase plan). Except as set forth at Section 3.12 of the
Catskill Disclosure Schedule, there are no employment, consulting and deferred
compensation agreements to which Catskill or any of its Subsidiaries is a party.
Section 3.12(a) of the Catskill Disclosure Schedule sets forth a list of all
material contracts (as defined in Item 601(b)(10) of Regulation S-K) of Catskill
and its Subsidiaries. Each contract, arrangement or commitment of the type
described in this Section 3.12(a), whether or not set forth in Section 3.12(a)
of the Catskill Disclosure Schedule, is referred to herein as a "Catskill
Contract," and neither Catskill nor any of its Subsidiaries has received notice
of, nor do any executive officers of such entities know of, any violation of any
Catskill Contract.
(b) (i) Each Catskill Contract is valid and binding and in
full force and effect, (ii) Catskill and each of its Subsidiaries has in all
material respects performed all obligations required to be performed by it to
date under each Catskill Contract, and (iii) no event or condition exists which
constitutes or, after notice or lapse of time or both, would constitute, a
material default on the part of Catskill or any of its Subsidiaries under any
such Catskill Contract.
3.13 AGREEMENTS WITH REGULATORY AGENCIES.
None of Catskill, CFSI, or Catskill Bank is subject to any
cease-and-desist or other order issued by, or is a party to any written
agreement, consent agreement or memorandum of understanding with, or has adopted
any board resolutions at the request of (each, whether or not set forth on
Section 3.13 of the Catskill Disclosure Schedule, a "Regulatory Agreement"), any
Governmental Entity that restricts the conduct of its business or that in any
manner relates to its capital adequacy, its credit policies, its management or
its business, nor has Catskill, CFSI, or Catskill Bank been advised by any
Governmental Entity that it is considering issuing or requesting any Regulatory
Agreement.
3.14 STATE TAKEOVER LAWS; CERTIFICATE OF INCORPORATION.
The Board of Directors of Catskill has approved the offer of ▇▇▇▇ to
enter into this Agreement, the Bank Merger Agreement and the Option Agreement,
and has approved Catskill entering into this Agreement, the Bank Merger
Agreement and the Option Agreement, and the transactions contemplated thereby,
such that under applicable law and Catskill's Certificate of Incorporation the
only vote of Catskill shareholders necessary to consummate the transactions
contemplated hereby is the approval of at least a majority of the outstanding
shares of Catskill Common Stock entitled to vote.
13
3.15 ENVIRONMENTAL MATTERS.
(a) Each of Catskill and the Subsidiaries is in compliance
with all applicable federal and state laws and regulations relating to pollution
or protection of the environment (including without limitation, laws and
regulations relating to emissions, discharges, releases and threatened releases
of Hazardous Materials (as hereinafter defined), or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials;
(b) There is no suit, claim, action, proceeding, investigation
or notice pending or, to the knowledge of Catskill, CFSI and Catskill Bank,
threatened (or past or present actions or events that could form the basis of
any such suit, claim, action, proceeding, investigation or notice), in which
Catskill or any Catskill Subsidiary has been or, with respect to threatened
suits, claims, actions, proceedings, investigations or notices may be, named as
a defendant (x) for alleged material noncompliance (including by any
predecessor), with any environmental law, rule or regulation or (y) relating to
any material release or threatened release into the environment of any Hazardous
Material, occurring at or on a site owned, leased or operated by Catskill or any
Catskill Subsidiary, or to the knowledge of Catskill, relating to any material
release or threatened release into the environment of any Hazardous Material,
occurring at or on a site not owned, leased or operated by Catskill or any
Catskill Subsidiary;
(c) During the period of Catskill's or any Catskill
Subsidiary's ownership or operation of any of its properties, there has not been
any material release of Hazardous Materials in, on, under or affecting any such
property.
(d) To the knowledge of Catskill, CFSI and Catskill Bank,
neither Catskill nor any Catskill Subsidiary has made or participated in any
loan to any person who is subject to any suit, claim, action, proceeding,
investigation or notice, pending or threatened, with respect to (i) any alleged
material noncompliance as to any property securing such loan with any
environmental law, rule or regulation, or (ii) the release or the threatened
release into the environment of any Hazardous Material at a site owned, leased
or operated by such person on any property securing such loan.
(e) For purposes of this section 3.15, the term "Hazardous
Material" means any hazardous waste, petroleum product, polychlorinated
biphenyl, chemical, pollutant, contaminant, pesticide, radioactive substance, or
other toxic material, or other material or substance (in each such case, other
than small quantities of such substances in retail containers) regulated under
any applicable environmental or public health statute, law, ordinance, rule or
regulation.
3.16 RESERVES FOR LOSSES.
All reserves or other allowances for possible losses reflected in
Catskill's most recent financial statements referred to in Section 3.6 complied
with all Laws and are adequate under GAAP. None of Catskill, CFSI or Catskill
Bank has been notified by the FDIC, the OTS, the NYSBD the New York Insurance
Department or Catskill's independent auditor, in writing or otherwise, that such
reserves are inadequate or that the practices and policies of Catskill, CFSI or
Catskill Bank in establishing such reserves and in accounting for delinquent and
classified assets generally fail to comply with applicable accounting or
regulatory requirements, or that the FDIC, the OTS, the NYSBD or Catskill's
independent auditor believes such reserves to be inadequate or inconsistent with
the historical loss experience of Catskill, CFSI or Catskill Bank. Catskill has
previously furnished ▇▇▇▇ with a complete list of all extensions of credit and
other real estate owned ("OREO") that have been classified by any bank or trust
examiner (regulatory or internal) as other loans specially mentioned, special
mention, substandard, doubtful, loss, classified or criticized, credit risk
assets, concerned loans or words of similar import. Catskill agrees to update
such list no less frequently than monthly after the date of this
14
Agreement until the earlier of the Closing Date or the date that this Agreement
is terminated in accordance with Section 8.1. All OREO held by Catskill, CFSI or
Catskill Bank is being carried net of reserves at the lower of cost or net
realizable value.
3.17 PROPERTIES AND ASSETS.
Section 3.17 of the Catskill Disclosure Schedule lists (i) all real
property owned by Catskill and each Catskill Subsidiary; (ii) each real property
lease, sublease or installment purchase arrangement to which Catskill or any
Catskill Subsidiary is a party; (iii) a description of each contract for the
purchase, sale, or development of real estate to which Catskill or any Catskill
Subsidiary is a party; and (iv) all items of Catskill's or any Catskill
Subsidiary's tangible personal property and equipment with a book value of
$25,000 or more or having any annual lease payment of $10,000 or more. Except
for (a) items reflected in Catskill's consolidated financial statements as of
September 30, 1999 referred to in Section 3.6 hereof, (b) exceptions to title
that do not interfere materially with Catskill's or any Catskill Subsidiary's
use and enjoyment of owned or leased real property (other than OREO), (c) liens
for current real estate taxes not yet delinquent, or being contested in good
faith, properly reserved against (and reflected on the financial statements
referred to in Section 3.6 above), and (d) items listed in Section 3.17 of the
Catskill Disclosure Schedule, Catskill and each Catskill Subsidiary have good
and, as to owned real property, marketable and insurable title to all their
properties and assets, free and clear of all liens, claims, charges and other
encumbrances. Catskill and each Catskill Subsidiary, as lessees, have the right
under valid and subsisting leases to occupy, use and possess all property leased
by them, and neither Catskill nor any Catskill Subsidiary has experienced any
material uninsured damage or destruction with respect to such properties since
September 30, 1999. All properties and assets used by Catskill and each Catskill
Subsidiary are in good operating condition and repair suitable for the purposes
for which they are currently utilized and comply in all material respects with
all Laws relating thereto now in effect or scheduled to come into effect.
Catskill and each Catskill Subsidiary enjoy peaceful and undisturbed possession
under all leases for the use of all property under which they are the lessees,
and all leases to which Catskill or any Catskill Subsidiary is a party are valid
and binding obligations in accordance with the terms thereof. Neither Catskill
nor any Catskill Subsidiary is in material default with respect to any such
lease, and there has occurred no default by Catskill or any Catskill Subsidiary
or event which with the lapse of time or the giving of notice, or both, would
constitute a material default under any such lease. There are no Laws,
conditions of record, or other impediments which interfere with the intended use
by Catskill or any Catskill Subsidiary of any of the property owned, leased, or
occupied by them.
3.18 INSURANCE.
Section 3.18 of the Catskill Disclosure Schedule contains a true,
correct and complete list of all insurance policies and bonds maintained by
Catskill and any Catskill Subsidiary, including the name of the insurer, the
policy number, the type of policy and any applicable deductibles, and all such
insurance policies and bonds (or other insurance policies and bonds that have,
from time to time, in respect of the nature of the risks insured against and
amount of coverage provided, been substantially similar in kind and amount to
that customarily carried by parties similarly situated who own properties and
engage in businesses substantially similar to that of Catskill and any Catskill
Subsidiary) are in full force and effect and have been in full force and effect
since their respective dates of inception. As of the date hereof, neither
Catskill nor any Catskill Subsidiary has received any notice of cancellation or
amendment of any such policy or bond or is in default under any such policy or
bond, no coverage thereunder is being disputed and all material claims
thereunder have been filed in a timely fashion. The existing insurance carried
by Catskill and Catskill Subsidiaries is and will continue to be, in respect of
the nature of the risks insured against and the amount of coverage provided,
sufficient for compliance by Catskill and the Catskill Subsidiaries with all
requirements of Law and agreements to which Catskill or any of the Catskill
Subsidiaries is subject or is party, and is, to Catskill's knowledge,
substantially similar in kind and amount to that customarily carried by parties
similarly situated who
15
own properties and engage in businesses substantially similar to that of
Catskill and the Catskill Subsidiaries. True, correct and complete copies of all
such policies and bonds reflected at Section 3.18 of the Catskill Disclosure
Schedule, as in effect on the date hereof, have been delivered to ▇▇▇▇.
3.19 COMPLIANCE WITH APPLICABLE LAWS.
Each of Catskill and any Catskill Subsidiary has complied in all
material respects with all Laws applicable to it or to the operation of its
business. Neither Catskill nor any Catskill Subsidiary has received any notice
of any material alleged or threatened claim, violation, or liability under any
such Laws that has not heretofore been cured and for which there is no remaining
liability.
3.20 LOANS.
As of the date hereof:
(a) All loans owned by Catskill or any Catskill Subsidiary, or
in which Catskill or any Catskill Subsidiary has an interest, comply in all
material respects with all Laws, including, but not limited to, applicable usury
statutes, underwriting and recordkeeping requirements and the Truth in Lending
Act, the Equal Credit Opportunity Act, and the Real Estate Settlement Procedures
Act, and other applicable consumer protection statutes and the regulations
thereunder.
(b) All loans owned by Catskill or any Catskill Subsidiary, or
in which Catskill or any Catskill Subsidiary has an interest, have been made or
acquired by Catskill in accordance with board of director-approved loan policies
and all of such loans are collectable, except to the extent reserves have been
made against such loans in Catskill's consolidated financial statements at March
31, 2000 referred to in Section 3.6 hereof. Each of Catskill and each Catskill
Subsidiary holds mortgages contained in its loan portfolio for its own benefit
to the extent of its interest shown therein; such mortgages evidence liens
having the priority indicated by the terms of such mortgages, including the
associated loan documents, subject, as of the date of recordation or filing of
applicable security instruments, only to such exceptions as are discussed in
attorneys' opinions regarding title or in title insurance policies in the
mortgage files relating to the loans secured by real property or are not
material as to the collectability of such loans; and all loans owned by Catskill
and each Catskill Subsidiary are with full recourse to the borrowers (except as
set forth at Section 3.20(b) of the Catskill Disclosure Schedule), and each of
Catskill and any Catskill Subsidiary has taken no action which would result in a
waiver or negation of any rights or remedies available against the borrower or
guarantor, if any, on any loan. All applicable remedies against all borrowers
and guarantors are enforceable except as may be limited by bankruptcy,
insolvency, moratorium or other similar laws affecting creditors' rights and
except as may be limited by the exercise of judicial discretion in applying
principles of equity. Except as set forth at Section 3.20(b) of the Catskill
Disclosure Schedule, all loans purchased or originated by Catskill or any
Catskill Subsidiary and subsequently sold by Catskill or any Catskill Subsidiary
have been sold without recourse to Catskill or any Catskill Subsidiary and
without any liability under any yield maintenance or similar obligation. True,
correct and complete copies of loan delinquency reports as of April 30, 2000
prepared by Catskill and each Catskill Subsidiary, which reports include all
loans delinquent or otherwise in default, have been furnished to ▇▇▇▇. True,
correct and complete copies of the currently effective lending policies and
practices of Catskill and each Catskill Subsidiary also have been furnished to
▇▇▇▇.
(c) Except as set forth at Schedule 3.20(c) each outstanding
loan participation sold by Catskill or any Catskill Subsidiary was sold with the
risk of non-payment of all or any portion of that underlying loan to be shared
by each participant (including Catskill or any Catskill Subsidiary)
proportionately to the share of such loan represented by such participation
without any recourse of such other lender or participant to Catskill or any
Catskill Subsidiary for payment or repurchase of the amount of such loan
represented by the participation or liability under any yield maintenance or
16
similar obligation. Catskill and any Catskill Subsidiary have properly fulfilled
in all material respects its contractual responsibilities and duties in any loan
in which it acts as the lead lender or servicer and has complied in all material
respects with its duties as required under applicable regulatory requirements.
(d) Catskill and each Catskill Subsidiary have properly
perfected or caused to be properly perfected all security interests, liens, or
other interests in any collateral securing any loans made by it.
(e) Section 3.20(e) of the Catskill Disclosure Schedule sets
forth a list of all loans or other extensions of credit to all directors,
officers and employees, or any other person covered by Regulation O of the FRB.
3.21 AFFILIATES.
Each director, executive officer and other person who is an "affiliate"
(for purposes of Rule 145 under the Securities Act of 1933, as amended (the
"Securities Act")) of Catskill is listed at Section 3.21 of the Catskill
Disclosure Schedule, and except as indicated thereon each such person has
delivered to ▇▇▇▇, concurrently with the execution of this Agreement, a
stockholder agreement in the form of Exhibit D hereto (the "Catskill Stockholder
Agreement"). The Catskill Stockholder Agreement has been duly and validly
executed and delivered by each person that is a party thereto and, assuming due
authorization, execution and delivery by ▇▇▇▇, constitutes the valid and binding
obligation of such person, enforceable against such person in accordance with
their terms, except as enforcement may be limited by general principles of
equity whether applied in a court of law or a court of equity and by bankruptcy,
insolvency and similar laws affecting creditors' rights and remedies generally.
3.22 OWNERSHIP OF ▇▇▇▇ COMMON STOCK.
Except as set forth at Section 3.22 of the Catskill Disclosure
Schedule, neither Catskill nor any of its directors, executive officers or
affiliates (as used above in Section 3.21) (i) beneficially own, directly or
indirectly, or (ii) is a party to any agreement, arrangement or understanding
for the purpose of acquiring, holding, voting or disposing of, in each case, any
shares of outstanding capital stock of ▇▇▇▇ (other than those agreements,
arrangements or understandings specifically contemplated hereby).
3.23 FAIRNESS OPINION.
Catskill has received an opinion from ▇▇▇▇ ▇▇▇▇ to the effect that, in
its opinion, the consideration to be paid to shareholders of Catskill hereunder
is fair to such shareholders from a financial point of view (the "Fairness
Opinion"), and ▇▇▇▇ ▇▇▇▇ has consented to the inclusion of the Fairness Opinion
in the Proxy Materials.
3.24 CATSKILL INFORMATION.
The information relating to Catskill and its Subsidiaries provided by
Catskill herein and to be provided by Catskill to be contained in the Proxy
Materials do not and will not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements herein or
therein, in light of the circumstances in which they are made, not misleading.
The Proxy Materials (except for the portions thereof relating solely to ▇▇▇▇ or
any of its Subsidiaries, as to which Catskill makes no representation or
warranty) will comply in all material respects with the provisions of the
Exchange Act and the rules and regulations thereunder.
17
3.25 SALE OF SECURITIES PORTFOLIO.
Catskill Bank has determined to sell the portfolio of securities listed
on Schedule 3.25 hereto (the "Securities Portfolio Sale").
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF ▇▇▇▇
▇▇▇▇, on behalf of itself and its wholly-owned subsidiary, ▇▇▇▇ Bank
hereby makes the following representations and warranties to Catskill as set
forth in this Article IV, each of which is being relied upon by Catskill as a
material inducement to enter into and perform this Agreement.
4.1 CORPORATE ORGANIZATION.
(a) ▇▇▇▇ is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware. ▇▇▇▇ has the corporate
power and authority to own or lease all of its properties and assets and to
carry on its business as it is now being conducted, and is duly licensed or
qualified to do business in each jurisdiction in which the nature of the
business conducted by it or the character or location of the properties and
assets owned or leased by it makes such licensing or qualification necessary.
▇▇▇▇ is duly registered as a bank holding company under the BHCA. The
Certificate of Incorporation and By-Laws of ▇▇▇▇, copies of which have
previously been made available to Catskill, are true, correct and complete
copies of such documents as in effect as of the date of this Agreement.
(b) ▇▇▇▇ Bank is a New York-chartered savings bank duly
organized and validly existing and in good standing under the laws of the State
of New York. ▇▇▇▇ Bank has the corporate power and authority to own or lease all
of its properties and assets and to carry on business as is now being conducted,
and is duly licensed or qualified to do business in each jurisdiction in which
the nature of the business conducted by it or the character or location of the
properties and assets owned or leased by it makes such licensing or
qualification necessary. The Charter and By-Laws of ▇▇▇▇ Bank, copies of which
have previously been made available to Catskill, are true, correct and complete
copies of such documents as in effect as of the date of this Agreement.
4.2 AUTHORITY; NO VIOLATION.
(a) ▇▇▇▇ has full corporate power and authority to execute and
deliver this Agreement and the Option Agreement and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of this
Agreement and the Option Agreement, subject to receipt of the required
regulatory approvals specified herein, and the consummation of the transactions
contemplated hereby have been duly and validly approved by the Board of
Directors of ▇▇▇▇. No other corporate proceedings on the part of ▇▇▇▇ are
necessary to approve this Agreement or the Option Agreement or to consummate the
transactions contemplated hereby or thereby. This Agreement has been, and the
Option Agreement will be, duly and validly executed and delivered by ▇▇▇▇ and
(assuming due authorization, execution and delivery by Catskill) will constitute
valid and binding obligations of ▇▇▇▇, enforceable against ▇▇▇▇ in accordance
with their terms, except as enforcement may be limited by general principles of
equity whether applied in a court of law or a court of equity and by bankruptcy,
insolvency and similar law affecting creditors' rights and remedies generally.
(b) ▇▇▇▇ Bank has full corporate power and authority to
execute and deliver the Bank Merger Agreement and, subject to receipt of the
required regulatory approvals specified herein, to consummate the transactions
contemplated thereby. The execution and delivery of the Bank Merger Agreement
and the consummation of the transactions contemplated thereby have been duly and
validly approved by the Board of Directors of ▇▇▇▇ Bank and by ▇▇▇▇ as the sole
shareholder of ▇▇▇▇ Bank. All
18
corporate proceedings on the part of ▇▇▇▇ Bank necessary to consummate the
transactions contemplated thereby have been taken. The Bank Merger Agreement,
upon execution and delivery by ▇▇▇▇ Bank, will be duly and validly executed and
delivered by ▇▇▇▇ Bank and will (assuming due authorization, execution and
delivery by Catskill Bank) constitute a valid and binding obligation of ▇▇▇▇
Bank, enforceable against ▇▇▇▇ Bank in accordance with its terms, except as
enforcement may be limited by general principles of equity whether applied in a
court of law or a court of equity and by bankruptcy, insolvency and similar laws
affecting creditors' rights and remedies generally.
(c) Neither the execution and delivery of this Agreement or
the Option Agreement by ▇▇▇▇ or the Bank Merger Agreement by ▇▇▇▇ Bank, nor the
consummation by ▇▇▇▇, of the transactions contemplated hereby or thereby, nor
compliance by ▇▇▇▇ or ▇▇▇▇ Bank with any of the terms or provisions hereof or
thereof, will (i) violate any provision of the Certificate of Incorporation or
Bylaws of ▇▇▇▇ or the Charter or By-Laws of ▇▇▇▇ Bank, as the case may be, or
(ii) assuming that the consents and approvals referred to in Section 4.3 are
duly obtained, (x) violate any Laws applicable to ▇▇▇▇, ▇▇▇▇ Bank or any of
their respective properties or assets, or (y) violate, conflict with, result in
a breach of any provision of or the loss of any benefit under, constitute a
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, result in the termination of or a right of
termination or cancellation under, accelerate the performance required by, or
result in the creation of any lien, pledge, security interest, charge or other
encumbrance upon any of the respective properties or assets of ▇▇▇▇ or ▇▇▇▇ Bank
under any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, deed of trust, license, lease, agreement or other instrument or
obligation to which ▇▇▇▇ or ▇▇▇▇ Bank is a party, or by which they or any of
their respective properties or assets may be bound or affected.
4.3 REGULATORY APPROVALS.
(a) Except for (i) the filing of applications, notices or
waiver requests, as applicable, as to the Merger and the Bank Merger with the
FRB under the BHCA, the OTS under HOLA and the OTS regulations, the FDIC under
the Bank Merger Act, the NYSBD and approval of such applications and notices,
(ii) the filing of any required applications or notices with the NYSBD and the
FDIC as to the subsidiaries of Catskill Bank which become subsidiaries of ▇▇▇▇
Bank and approval of such applications and notices, (iii) the State Banking
Approvals, (iv) the filing of the Proxy Materials with the SEC, (v) the approval
of this Agreement by the requisite vote of the shareholders of Catskill, (vi)
the filing of the Certificate of Merger with the Secretary of State of Delaware
pursuant to the DGCL, (vii) such consents, approvals, orders, authorizations,
registrations, declarations and filings as may be required under applicable
federal, foreign and state securities (or related) laws and, if applicable, the
HSR Act, and the securities or antitrust laws of any foreign country, (viii) the
filing of applications or notices with the New York Insurance Department with
respect to the acquisition of CFSI and approval of such applications or notices
and (ix) the filings required by the Bank Merger Agreement, no consents or
approvals of or filings or registrations with any Governmental Entity or with
any third party are necessary in connection with (1) the execution and delivery
by ▇▇▇▇ of this Agreement and the Option Agreement, (2) the consummation by ▇▇▇▇
of the Merger and the other transactions contemplated hereby, (3) the execution
and delivery by ▇▇▇▇ Bank of the Bank Merger Agreement, and (4) the consummation
by ▇▇▇▇ Bank of the transactions contemplated by the Bank Merger Agreement
except for such consents, approvals or filings the failure of which to obtain
will not have a material adverse effect on the ability of Catskill to consummate
the transactions contemplated thereby.
(b) ▇▇▇▇ hereby represents to Catskill that it has no
knowledge of any reason why approval or effectiveness of any of the
applications, notices or filings referred to in Section 4.3(a) cannot be
obtained or granted on a timely basis.
19
4.4 ▇▇▇▇ INFORMATION.
The information relating to ▇▇▇▇ and its Subsidiaries to be provided by
▇▇▇▇ to be contained in the Proxy Materials will not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in light of the circumstances in which they are made,
not misleading. The Proxy Materials (except for the portions thereof relating
solely to Catskill or any of its Subsidiaries, as to which ▇▇▇▇ makes no
representation or warranty) will comply in all material respects with the
provisions of the Securities Act, Exchange Act and the rules and regulations
thereunder.
4.5 ADEQUATE RESOURCES.
As of the Closing Date, ▇▇▇▇ will have the funds available and will be
able to meet its financial obligations under, and to timely consummate the
transactions contemplated by, this Agreement.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 COVENANTS OF CATSKILL
During the period from the date of this Agreement and continuing until
the Effective Time, except as expressly contemplated or permitted by this
Agreement, the Bank Merger Agreement or the Option Agreement or with the prior
written consent of ▇▇▇▇, Catskill and each Catskill Subsidiary shall carry on
their respective businesses in the ordinary course consistent with past
practices and consistent with prudent banking practices. Catskill will use its
best efforts to (x) preserve its business organization and that of each Catskill
Subsidiary intact, (y) keep available to itself and ▇▇▇▇ the present services of
the employees of Catskill and each Catskill Subsidiary and (z) preserve for
itself and ▇▇▇▇ the goodwill of the customers of Catskill and each Catskill
Subsidiary and others with whom business relationships exist. Without limiting
the generality of the foregoing, and except as set forth in the Catskill
Disclosure Schedule or as otherwise contemplated by this Agreement or consented
to by ▇▇▇▇ in writing, Catskill shall not, and shall not permit any Catskill
Subsidiary to:
(a) declare or pay any dividends on, or make other
distributions in respect of, any of its capital stock (except for the payment of
regular quarterly cash dividends by Catskill not to exceed $.1325 per share on
the Catskill Common Stock with declaration, record and payment dates
corresponding to the quarterly dividends paid by Catskill during its fiscal year
ended September 30, 1999 and except that any Catskill Subsidiary may declare and
pay dividends and distributions to Catskill); provided, however, that under no
circumstances shall Catskill declare, set aside or pay any dividends if it would
result in the holders of Catskill Common Stock receiving more than four cash
dividend payments in fiscal 2000;
(b) (i) split, combine or reclassify any shares of its
capital stock or issue, authorize or propose the issuance of any other
securities in respect of, in lieu of or in substitution for shares of its
capital stock except upon the exercise or fulfillment of rights or options
issued or existing pursuant to the Catskill Stock Plan in accordance with their
present terms, all to the extent outstanding and in existence on the date of
this Agreement, and except pursuant to the Option Agreement, or (ii) repurchase,
redeem or otherwise acquire (except for the acquisition of Trust Account Shares
and DPC Shares, as such terms are defined in Section 1.4(c) hereof), any shares
of the capital stock of Catskill or any Catskill Subsidiary, or any securities
convertible into or exercisable for any shares of the capital stock of Catskill
or any Catskill Subsidiary;
20
(c) issue, deliver or sell, or authorize or propose the
issuance, delivery or sale of, any shares of its capital stock or any securities
convertible into or exercisable for, or any rights, warrants or options to
acquire, any such shares, or enter into any agreement with respect to any of the
foregoing, other than (i) the issuance of Catskill Common Stock pursuant to
stock options or similar rights to acquire Catskill Common Stock granted
pursuant to the Catskill Stock Plan and outstanding prior to the date of this
Agreement, in each case in accordance with their present terms and (ii) pursuant
to the Option Agreement;
(d) amend its Certificate of Incorporation, By-Laws or other
similar governing documents;
(e) directly or indirectly, and will instruct its officers,
directors, employees, accountants, consultants, legal counsel, investment
bankers, advisors, agents and other representatives, (collectively,
"Representatives") not to, directly or indirectly, initiate, solicit or
encourage (including by way of furnishing information or assistance), or take
any other action to facilitate, any inquiries or the making of any proposal that
constitutes, or reasonably may be expected to lead to, any Competing Proposal
(as defined in Section 9.13 hereof), or enter into or maintain discussions or
negotiate with any person in furtherance of or relating to such inquiries or to
obtain a Competing Proposal, or agree to or endorse any Competing Proposal, or
authorize or permit any Representative of Catskill or any of its subsidiaries to
take any such action, and Catskill shall use its reasonable best efforts to
cause the Representatives of Catskill and the Catskill Subsidiaries not to take
any such action, and Catskill shall promptly notify ▇▇▇▇ if any such inquiries
or proposals are made regarding a Competing Proposal, and Catskill shall keep
▇▇▇▇ informed, on a current basis, of the status and terms of any such
proposals; provided, however, that prior to such time as the stockholders of
Catskill shall have adopted and approved this Agreement in accordance with
Delaware Law, nothing contained in this Section 5.1(e) shall prohibit the Board
of Directors of Catskill from (i), in connection with a Superior Competing
Transaction (as defined in Section 9.13 hereof), furnishing information to, or
entering into discussions or negotiations with, any person that makes an
unsolicited bona fide proposal to acquire Catskill pursuant to a merger,
consolidation, share exchange, business combination or other similar
transaction, if, and only to the extent that, (A) the Board of Directors of
Catskill, after consultation with and based upon the advice of independent legal
counsel, determines in good faith that such action is required for the Board of
Directors of Catskill to comply with its fiduciary duties to stockholders
imposed by Delaware Law, (B) prior to furnishing such information to, or
entering into discussions or negotiations with, such person, Catskill provides
written notice to ▇▇▇▇ to the effect that it is furnishing information to, or
entering into discussions or negotiations with, such person, (C) prior to
furnishing such information to such person, Catskill receives from such person
an executed confidentiality agreement with terms no less favorable to Catskill
than those contained in the Confidentiality Agreement by and between ▇▇▇▇ and
Catskill, dated as of March 27, 2000 (the Confidentiality Agreement"), and (D)
Catskill keeps ▇▇▇▇ informed, on a current basis, of the status and details of
any such discussions or negotiations; or (ii) complying with Rule 14e-2
promulgated under the Exchange Act;
(f) make capital expenditures aggregating in excess of
$20,000;
(g) enter into any new line of business;
(h) acquire or agree to acquire, by merging or consolidating
with, or by purchasing an equity interest in or the assets of, or by any other
manner, any business or any corporation, partnership, association or other
business organization or division thereof or otherwise acquire any assets, other
than in connection with foreclosures, settlements in lieu of foreclosure or
troubled loan or debt restructurings, or in the ordinary course of business
consistent with prudent banking practices;
21
(i) take any action that is intended or may reasonably be
expected to result in any of its representations and warranties set forth in
this Agreement being or becoming untrue or in any of the conditions to the
Merger set forth in Article VII not being satisfied, or in a violation of any
provision of this Agreement or the Bank Merger Agreement, except, in every case,
as may be required by applicable law;
(j) change its methods of accounting in effect at September 30,
1999 except as required by changes in GAAP or regulatory accounting principles;
(k) (i) except as required by applicable law or this Agreement or
to maintain qualification pursuant to the Code, adopt, amend, renew or terminate
any Plan or any agreement, arrangement, plan or policy between Catskill or any
Catskill Subsidiary and one or more of its current or former directors or
officers, (ii) increase in any manner the compensation of any director,
executive officer or other employee who is a party to a contract relating to
employment or severance referenced in Section 3.12 of this Agreement, or pay any
benefit not required by any plan or agreement as in effect as of the date hereof
(including, without limitation, the granting of stock options, stock
appreciation rights, restricted stock, restricted stock units or performance
units or shares), (iii) enter into, modify or renew any contract, agreement,
commitment or arrangement providing for the payment to any director, executive
officer or employee who is a party to a contract relating to employment or
severance referenced in Section 3.12 of this Agreement of compensation or
benefits, (iv) enter into, modify or renew any contract, agreement, commitment
or arrangement providing for the payment to any employee who is not a director
or executive officer or who is not a party to a contract relating to employment
or severance referenced in Section 3.12 of this Agreement of compensation or
benefits, other than normal annual cash increases in pay, consistent with past
practice and not exceeding 4% of such employee's base salary or wage, (v) hire
any new employee at an annual compensation in excess of $24,000, (v) pay
expenses of any employees or directors for attending conventions or similar
meetings which conventions or meetings are held after the date hereof, (vi)
promote to a rank of vice president or more senior any employee, or (vii) pay
any retention or other bonuses to any employees;
(l) except for short-term borrowings with a maturity of six
months or less in the ordinary course of business consistent with past
practices, incur any indebtedness for borrowed money (other than deposit
liabilities), assume, guarantee, endorse or otherwise as an accommodation become
responsible for the obligations of any other individual, corporation or other
entity, except for accepting, negotiating and paying checks and payment orders
in the ordinary course of its banking business;
(m) sell, purchase, enter into a lease, relocate, open or close
any banking or other office, or file an application pertaining to such action
with any Governmental Entity;
(n) make any equity investment or commitment to make such an
investment in real estate or in any real estate development project, other than
in connection with foreclosure, settlements in lieu of foreclosure, or troubled
loan or debt restructuring, in the ordinary course of business consistent with
past banking practices;
(o) make any new loans to, modify the terms of any existing loan
to, or engage in any other transactions (other than routine banking
transactions) with, any Affiliated Person of Catskill or any Catskill
Subsidiary;
(p) incur deposit liabilities, other than in the ordinary course
of business consistent with past practices, including deposit pricing policies,
and which would not change the risk profile of Catskill Bank based on its
existing deposit and lending policies;
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(q) purchase any loans or sell, purchase or lease any real
property, except for the sale of real estate that is the subject of a casualty
loss or condemnation or the sale of OREO on a basis consistent with past
practices;
(r) originate (i) any loans except in accordance with existing
Catskill Bank lending policies, (ii) residential mortgage loans in excess of
$150,000, (iii) 30 year residential mortgage loans whose interest rate, terms,
appraisal, and underwriting do not make them immediately available for sale in
the secondary market, (iv) unsecured consumer loans in excess of $20,000, (v)
commercial business loans in excess of $50,000 as to any loan or $100,000 in the
aggregate as to related loans or loans to related persons, (vi) commercial real
estate first mortgage loans in excess of $150,000 as to any loans or $300,000 in
the aggregate as to related loans or loans to related borrowers, (vii)
modifications and/or extensions of any commercial business or commercial real
estate loans in the amounts set forth in (v) and (vi) above, or (viii) loans,
the outstanding principal balance of which, in the aggregate, exceed the lesser
of (1) the cash flow received from prepayment and repayment, sale or interest
and penalties paid on any other loans or (2) $1 million per month.
(s) make any investments other than in [Federal Funds and US
Treasuries] that have a maturity date that does not exceed three months;
provided, however, the maturity date shall not extend beyond January 31, 2001
or, with respect to investments made or committed to after the parties have
agreed on the Closing Date (as defined in Section 9.1 hereof), beyond such
Closing Date.
(t) sell or purchase any mortgage loan servicing rights; or
(u) agree or commit to do any of the actions set forth in (a) -
(t) above.
The consent of ▇▇▇▇ to any action by Catskill or any Catskill Subsidiary that is
not permitted by any of the preceding paragraphs shall be evidenced by a writing
signed by the President or any Senior Vice President of ▇▇▇▇.
5.2 MERGER COVENANTS.
Notwithstanding that Catskill believes that it has established all
reserves and taken all provisions for possible loan losses required by GAAP and
applicable laws, rules and regulations, Catskill recognizes that ▇▇▇▇ may have
adopted different loan, accrual and reserve policies (including loan
classifications and levels of reserves for possible loan losses). In that
regard, and in general, from and after the date of this Agreement to the
Effective Time, Catskill and ▇▇▇▇ shall consult and cooperate with each other in
order to formulate the plan of integration for the Merger, including, among
other things, with respect to conforming, based upon such consultation,
Catskill's loan, accrual and reserve policies to those policies of ▇▇▇▇ to the
extent appropriate.
5.3 COMPLIANCE WITH ANTITRUST LAWS.
Each of ▇▇▇▇ and Catskill shall use its reasonable best efforts to
resolve objections, if any, which may be asserted with respect to the Merger
under antitrust laws, including, without limitation, the HSR Act. In the event a
suit is threatened or instituted challenging the Merger as violative of
antitrust laws, each of ▇▇▇▇ and Catskill shall use its reasonable best efforts
to avoid the filing of, or resist or resolve such suit. ▇▇▇▇ and Catskill shall
use their reasonable best efforts to take such action as may be required: (a) by
the Antitrust Division of the Department of Justice or the Federal Trade
Commission in order to resolve such objections as either of them may have to the
Merger under antitrust laws, or (b) by any federal or state court of the United
States, in any suit brought by a private party or governmental entity
challenging the Merger as violative of antitrust laws, in order to avoid the
entry of, or to effect the dissolution of, any injunction, temporary
23
restraining order, or other order which has the effect of preventing the
consummation of the Merger. Reasonable best efforts shall not include, among
other things and to the extent ▇▇▇▇ so desires, the willingness of ▇▇▇▇ to
accept an order agreeing to the divestiture, or the holding separate, of any
assets of ▇▇▇▇ or Catskill.
5.4 SECURITIES PORTFOLIO SALE.
Catskill shall complete the Securities Portfolio Sale as soon as
practical after the date hereof, but in no event later than 30 days after the
date of this Agreement.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 REGULATORY MATTERS.
(a) Within 30 calendar days from the date hereof, Catskill
shall prepare and file, subject to the review and consent of ▇▇▇▇, with the SEC,
Proxy Materials for soliciting the approval of this Agreement and the Merger by
the shareholders of Catskill. Catskill will use its reasonable best efforts to
have the Proxy Materials approved for use by the SEC as soon as possible after
the filing. The parties shall cooperate in responding to and considering any
questions or comments from the SEC staff regarding the information contained in
the Proxy Materials. If at any time after the Proxy Materials are filed with the
SEC, and prior to the Closing Date, any event relating to Catskill is discovered
by Catskill which should be set forth in an amendment of, or a supplement to,
the Proxy Materials, Catskill shall promptly cause an appropriate amendment to
the Proxy Materials to be filed with the SEC. Upon the approval of such
amendment, Catskill (if prior to the meeting of shareholders pursuant to Section
6.3 hereof) will take all necessary action as promptly as practicable to permit
an appropriate amendment or supplement to be transmitted to its shareholders
entitled to vote at such meeting. If at any time after the Proxy Materials are
filed with the SEC, and prior to the Closing Date, any event relating to ▇▇▇▇ is
discovered by ▇▇▇▇ which should be set forth in an amendment of, or a supplement
to, the Proxy Materials, ▇▇▇▇ shall promptly inform Catskill, and Catskill shall
promptly cause an appropriate amendment to the Proxy Materials to be filed with
the SEC. Upon the approval of such amendment, each of ▇▇▇▇ and Catskill (if
prior to the meeting of shareholders pursuant to Section 6.3 hereof) will take
all necessary action as promptly as practicable to permit an appropriate
amendment or supplement to be transmitted to its shareholders entitled to vote
at such meeting.
(b) ▇▇▇▇ will prepare and file all necessary documentation, to
effect all applications, notices, petitions and filings, and to obtain as
promptly as practicable all permits, consents, approvals and authorizations of
all third parties and Governmental Entities which are necessary or advisable to
consummate the transactions contemplated by this Agreement (including without
limitation the Merger and the Bank Merger). Catskill shall cooperate with ▇▇▇▇
to effect the foregoing. Catskill and ▇▇▇▇ shall have the right to review in
advance, and to the extent practicable each will consult the other on, in each
case subject to applicable laws relating to the exchange of information, all the
information relating to Catskill or ▇▇▇▇, as the case may be, which appears in
any filing made with, or written materials submitted to, any third party or any
Governmental Entity in connection with the transactions contemplated by this
Agreement; provided, however, that nothing contained herein shall be deemed to
provide either party with a right to review any information provided to any
Governmental Entity on a confidential basis in connection with the transactions
contemplated hereby. In exercising the foregoing right, each of the parties
hereto shall act reasonably and as promptly as practicable. The parties hereto
agree that they will consult with each other with respect to the obtaining of
all permits, consents, approvals and authorizations of all third parties and
Governmental Entities necessary or advisable to consummate the transactions
contemplated by this Agreement and each party will keep the other apprised of
the status of matters relating to contemplation of the transactions contemplated
herein.
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(c) ▇▇▇▇ shall, upon request, furnish Catskill with all
information concerning Catskill and its directors, officers and shareholders and
such other matters as may be reasonably necessary in connection with the Proxy
Materials or any other statement, filing, notice or application made by or on
behalf of Catskill to any Governmental Entity in connection with the Merger or
the other transactions contemplated by this Agreement.
(d) ▇▇▇▇ and Catskill shall promptly advise each other upon
receiving any communication from any Governmental Entity whose consent or
approval is required for consummation of the transactions contemplated by this
Agreement which causes such party to believe that there is a reasonable
likelihood that any Requisite Regulatory Approval (defined in Section 7.1(c)
hereof) will not be obtained or that the receipt of any such approval will be
materially delayed.
6.2 ACCESS TO INFORMATION.
(a) Upon reasonable notice and subject to applicable Laws
relating to the exchange of information, Catskill shall accord to the officers,
employees, accountants, counsel and other representatives of ▇▇▇▇, access,
during normal business hours during the period prior to the Effective Time, to
all its, CFSI's and Catskill Bank's properties, books, contracts, commitments
and records and, during such period, Catskill shall make available to ▇▇▇▇ (i) a
copy of each report, schedule, registration statement and other document filed
or received by it (including CFSI and Catskill Bank) during such period pursuant
to the requirements of federal securities laws or federal or state banking laws
and (ii) all other information concerning its (including CFSI and Catskill Bank)
business, properties and personnel as ▇▇▇▇ may reasonably request. ▇▇▇▇ shall
receive notice of all meetings of the Catskill, CFSI and Catskill Bank Board of
Directors and any committees thereof, and of any management committees (in all
cases, at least as timely as all Catskill, CFSI and Catskill Bank, as the case
may be, representatives to such meetings are required to be provided notice). A
representative of ▇▇▇▇ shall be permitted to attend all meetings of the Board of
Directors (except for the portion of such meetings which relate to the Merger or
a Superior Competing Transaction ("Confidential Matters") of Catskill, CFSI or
Catskill Bank, as the case may be) and such meetings of committees of the Board
of Directors and management of Catskill, CFSI and Catskill Bank which ▇▇▇▇
desires. ▇▇▇▇ will hold all such information in confidence to the extent
required by, and in accordance with, the provisions of the Confidentiality
Agreement.
(b) No investigation by either of the parties or their
respective representatives shall affect the representations and warranties of
the other set forth herein.
(c) Catskill shall provide ▇▇▇▇ with true, correct and
complete copies of all financial and other information provided to directors of
Catskill, CFSI and Catskill Bank in connection with meetings of their Boards of
Directors or committees thereof.
6.3 SHAREHOLDER MEETING.
Catskill shall take all steps necessary to duly call, give
notice of, convene and hold a meeting of its shareholders within 35 days after
the Proxy Materials are approved for use for the purpose of voting upon the
approval of this Agreement and the Merger (the "Special Meeting"). Management
and the Board of Directors of Catskill shall recommend to Catskill's
shareholders approval of this Agreement, including the Merger, and the
transactions contemplated hereby, together with any matters incident thereto,
and shall oppose any third party proposal or other action that is inconsistent
with this Agreement or the consummation of the transactions contemplated hereby;
provided, however, that Catskill shall not be obligated to recommend or oppose,
as the case may be, if the Board of Directors of Catskill determines in
accordance with the terms of this Agreement to enter into a Superior Competing
Transaction; provided further, however, that notwithstanding anything to the
contrary in the foregoing, Catskill shall hold its Special Meeting in accordance
with the time period specified in the first sentence of this Section 6.3.
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6.4 LEGAL CONDITIONS TO MERGER.
Each of ▇▇▇▇ and Catskill shall use their reasonable best efforts (a)
to take, or cause to be taken, all actions necessary, proper or advisable to
comply promptly with all legal requirements which may be imposed on such party
with respect to the Merger and, subject to the conditions set forth in Article
VII hereof, to consummate the transactions contemplated by this Agreement and
(b) to obtain (and to cooperate with the other party to obtain) any consent,
authorization, order or approval of, or any exemption by, any Governmental
Entity and any other third party which is required to be obtained by Catskill or
▇▇▇▇ in connection with the Merger and the other transactions contemplated by
this Agreement.
6.5 EMPLOYEES.
(a) To the extent permissible under the applicable provisions
of the Code and ERISA, for purposes of crediting periods of service for
eligibility to participate, entitlement to benefits and vesting, but not for
pension benefit accrual purposes, under employee pension benefit plans (within
the meaning of ERISA Section 3(2)) and employee welfare plans (within the
meaning of ERISA Section 3(1) maintained by ▇▇▇▇ or ▇▇▇▇ Bank, as applicable
(other than Troy's Employee Stock Ownership Plan), individuals who are employees
of Catskill or any Catskill Subsidiary at the Effective Time and who become
eligible to participate in such plans will be credited with periods of service
with Catskill or any Catskill Subsidiary (or with any predecessor to Catskill or
any Catskill Subsidiary, to the extent such service is credited for such
purposes under the corresponding Plan) before the Effective Time as if such
service had been with ▇▇▇▇ or ▇▇▇▇ Bank, as applicable.
(b) If required by ▇▇▇▇ in writing delivered to Catskill not
less than five business days before the Closing Date, Catskill and each Catskill
Subsidiary, as applicable, shall, on or before the day immediately preceding the
Closing Date, terminate the Catskill Bank 401(k) Plan and any other Plan that
includes a qualified cash or deferred arrangement within the meaning of Code
Section 401(k) (collectively, the "401(k) Plans") and no further contributions
shall be made to any 401(k) Plan after such termination. Catskill shall provide
to ▇▇▇▇ (i) certified copies of resolutions adopted by the Board of Directors of
Catskill or such Catskill Subsidiary, as applicable, authorizing such
termination and (ii) an executed amendment to each 401(k) Plan in form and
substance reasonably satisfactory to ▇▇▇▇ to conform the plan document for such
Plan with all applicable requirements of the Code and regulations thereunder
relating to the tax-qualified status of such Plan. ▇▇▇▇ and ▇▇▇▇ Bank will not
be obligated to make any matching or other employer contributions to any 401(k)
Plan after the Merger.
(c) Promptly following the Effective Time, as a result of the
transactions contemplated hereby, the Catskill Employee Stock Ownership Plan
(the "Catskill ESOP") will be terminated and the obligations of ▇▇▇▇ or any of
its Subsidiaries shall be limited to those actions which are necessary to
terminate the ESOP. ▇▇▇▇ or its Subsidiaries, as applicable, will take
commercially reasonable actions consistent with the Catskill ESOP (i) to cause
the trustee of the Catskill ESOP to repay the outstanding balance of its stock
acquisition loan with the proceeds received by the Catskill ESOP hereunder with
respect to unallocated shares of Catskill Common Stock and (ii) to terminate the
Catskill ESOP, subject to receipt of a favorable determination letter from the
IRS concerning the qualified status of the Catskill ESOP and the adoption of any
amendments to the Catskill ESOP that may be necessary in order to obtain such
determination letter. No employee of Catskill or any Catskill Subsidiary shall
be eligible to become a participant in the Catskill ESOP after the Effective
Time.
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(d) After the Effective Time, except to the extent that ▇▇▇▇
or its Subsidiaries continues Plans in effect, employees of Catskill or its
Subsidiaries who become employed by ▇▇▇▇ or any of its Subsidiaries will be
eligible for employee benefits that ▇▇▇▇ or such Subsidiary, as the case may be,
provides to its employees generally and, except as otherwise required by this
Agreement, on substantially the same basis as is applicable to such employees,
provided that nothing in this Agreement shall require any duplication of
benefits. ▇▇▇▇ will or will cause ▇▇▇▇ Bank to (i) give credit to employees of
Catskill and its Subsidiaries, with respect to the satisfaction of the
limitations as to pre-existing condition exclusions, evidence of insurability
requirements and waiting periods for participation and coverage that are
applicable under the employee welfare benefit plans (within the meaning of
Section 3(1) of ERISA) of ▇▇▇▇ or ▇▇▇▇ Bank, equal to the credit that any such
employee had received as of the Effective Time towards the satisfaction of any
such limitations and waiting periods under the comparable employee welfare
benefit plans of Catskill or its Subsidiaries and to waive preexisting condition
limitations to the same extent waived under the corresponding Plan.
(e) After the Subsidiary Merger and the Bank Merger, ▇▇▇▇ and
each relevant ▇▇▇▇ Subsidiary will honor, without modification, and perform the
obligations of Catskill and Catskill Bank under, the contracts, plans and
arrangements listed in Section 6.5(e) of the Catskill Disclosure Schedule.
(f) After the Effective Time, ▇▇▇▇ and each relevant ▇▇▇▇
Subsidiary will provide a severance benefit to each full-time employee of
Catskill or any Catskill Subsidiary immediately before the Effective Time (other
than any such employee who is a party to any written agreement relating to
employment or severance described in Section 3.12(a) hereof) and whose
employment is terminated involuntarily, other than for "Cause" (as defined
below), by ▇▇▇▇ or such ▇▇▇▇ Subsidiary as of the Effective Time or within three
months thereafter. The severance benefit shall consist of continuation of such
employee's base salary or wages for a period equal to (i) two weeks multiplied
by (ii) the number of full years of continuous service completed by such
employee with Catskill or any Catskill Subsidiary, up to a maximum of 26 weeks,
as if such employee had continued to be employed on a full-time basis by ▇▇▇▇ or
such ▇▇▇▇ Subsidiary during such period, subject to applicable tax withholding.
For purposes of this Section 6.5(f), "Cause" shall mean the employee's personal
dishonesty, willful misconduct, breach of fiduciary duty involving personal
profit, failure to perform stated duties, violation of any law, rule, or
regulation (other than traffic violations or similar offenses) or final
cease-and-desist order.
6.6 INDEMNIFICATION.
(a) In the event of any threatened or actual claim, action,
suit, proceeding or investigation, whether civil, criminal or administrative, in
which any person who is now, or has been at any time prior to the date of this
Agreement, or who becomes prior to the Effective Time, a director or officer or
employee of Catskill (the "Indemnified Parties") is, or is threatened to be,
made a party based in whole or in part on, or arising in whole or in part out
of, or pertaining to (i) the fact that he is or was a director, officer or
employee of Catskill or any of their respective predecessors or (ii) this
Agreement or any of the transactions contemplated hereby, whether in any case
asserted or arising before or after the Effective Time, the parties hereto agree
to cooperate and defend against and respond thereto to the extent permitted by
applicable law and the Certificate of Incorporation and Bylaws of Catskill as in
effect on the date hereof. It is understood and agreed that after the Effective
Time, ▇▇▇▇ shall indemnify and hold harmless, as and to the fullest extent
permitted by applicable law and the Certificate of Incorporation and Bylaws of
▇▇▇▇ as in effect on the date hereof (subject to change as required by law),
each such Indemnified Party against any losses, claims, damages, liabilities,
costs, expenses (including reasonable attorney's fees and expenses in advance of
the final disposition of any claim, suit, proceeding or investigation to each
Indemnified Party to the fullest extent permitted by law upon receipt of any
undertaking required by applicable law), judgments, fines and amounts paid in
settlement in connection with any such threatened or actual claim, action, suit,
proceeding or investigation, and in the event of any such threatened or actual
claim, action, suit, proceeding or
27
investigation (whether asserted or arising before or after the Effective Time),
the Indemnified Parties may retain counsel reasonably satisfactory to ▇▇▇▇;
provided, however, that (1) ▇▇▇▇ shall have the right to assume the defense
thereof and upon such assumption ▇▇▇▇ 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 ▇▇▇▇ elects not to assume such defense or counsel for the Indemnified
Parties reasonably advises the Indemnified Parties that there are issues which
raise conflicts of interest between ▇▇▇▇ and the Indemnified Parties, the
Indemnified Parties may retain counsel reasonably satisfactory to ▇▇▇▇, and ▇▇▇▇
shall pay the reasonable fees and expenses of such counsel for the Indemnified
Parties, (2) ▇▇▇▇ shall be obligated pursuant to this paragraph to pay for only
one firm of counsel for each Indemnified Party, (3) ▇▇▇▇ shall not be liable for
any settlement effected without its prior written consent (which consent shall
not be unreasonably withheld or delayed), and (4) ▇▇▇▇ shall not be obligated
pursuant to this paragraph to the extent that a final judgment determines that
any such losses, claims, damages, liabilities, costs, expenses, judgments, fines
and amounts paid in settlement are as a result of the gross negligence, willful
misconduct or malfeasance of the Indemnified Party. ▇▇▇▇ shall have no
obligation to advance expenses incurred in connection with a threatened or
pending action, suit or preceding in advance of final disposition of such
action, suit or proceeding, unless (i) ▇▇▇▇ would be permitted to advance such
expenses pursuant to the DGCL and Troy's Certificate of Incorporation or Bylaws,
and (ii) ▇▇▇▇ receives an undertaking by the Indemnified Party to repay such
amount if it is determined that such party is not entitled to be indemnified by
▇▇▇▇ pursuant to the DGCL and Troy's Certificate of Incorporation or Bylaws. Any
Indemnified Party wishing to claim indemnification under this Section 6.6, upon
learning of any such claim, action, suit, proceeding or investigation, shall
notify ▇▇▇▇ thereof; provided, however, that the failure to so notify shall not
affect the obligations of ▇▇▇▇ under this Section 6.6 except to the extent such
failure to notify materially prejudices ▇▇▇▇. Troy's obligations under this
Section 6.6 continue in full force and effect for a period of six years from the
Effective Time; provided, however, that all rights to indemnification in respect
of any claim asserted or made within such period shall continue until the final
disposition of such claim. ▇▇▇▇ shall require any successor to expressly assume
its obligations under this Section 6.6(a).
(b) ▇▇▇▇ shall purchase for the benefit of the persons serving
as executive officers and directors of Catskill immediately prior to the
Effective Time and who are, as of the date of this Agreement, individually
covered by a directors' and officers' liability insurance policy, a similar
directors' and officers' liability insurance coverage for at least two years
after the Effective Time, under either Catskill's policy in existence on the
date hereof, or under a policy of similar coverage and amounts containing terms
and conditions which are generally not less advantageous than Troy's current
policy, and in either case, with respect to acts or omissions occurring prior to
the Effective Time which were committed by such executive officers and directors
in their capacity as such ("Tail Insurance"); provided however, that in no event
shall ▇▇▇▇ be required to expend pursuant to this Section 6.6(b) more than the
amount equal to 150% of the current annual amount expended by Catskill to
maintain or procure insurance coverage pursuant hereto. In connection with the
foregoing, Catskill agrees to provide such insurer or substitute insurer with
such representations as such insurer may reasonably request with respect to the
reporting of any prior claims.
6.7 SUBSEQUENT INTERIM AND ANNUAL FINANCIAL STATEMENTS.
As soon as reasonably available, but in no event more than 45 days
after the end of each fiscal quarter (other than the fourth fiscal quarter, as
to which the time period shall be 90 days), Catskill will deliver to ▇▇▇▇ its
Quarterly Reports on Form 10-Q and Annual Reports on Form 10-K, as filed with
the SEC under the Exchange Act. Catskill shall also deliver to ▇▇▇▇ any Current
Reports on Form 8-K promptly after filing such reports with the SEC.
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6.8 ADDITIONAL AGREEMENTS.
In case at any time after the Effective Time any further action is
necessary or desirable to carry out the purposes of this Agreement, or to vest
the Surviving Corporation or the Surviving Bank with full title to all
properties, assets, rights, approvals, immunities and franchises of any of the
parties to the Merger, or the constituent banks to the Bank Merger, as the case
may be, the proper officers and directors of each party to this Agreement and
Troy's and Catskill's Subsidiaries shall take all such necessary action as may
be reasonably requested by ▇▇▇▇.
6.9 ADVICE OF CHANGES.
▇▇▇▇ and Catskill shall promptly advise the other party of any change
or event that, individually or in the aggregate, has or would be reasonably
likely to have a Material Adverse Effect on it or to cause or constitute a
material breach of any of its representations, warranties or covenants contained
herein. From time to time prior to the Effective Time, each party will promptly
supplement or amend its disclosure schedule delivered in connection with the
execution of this Agreement to reflect any matter which, if existing, occurring
or known at the date of this Agreement, would have been required to be set forth
or described in such disclosure schedule or which is necessary to correct any
information in such disclosure schedule which has been rendered inaccurate
thereby. No supplement or amendment to such disclosure schedule shall have any
effect for the purpose of determining satisfaction of the conditions set forth
in Sections 7.2(a) or 7.3(a) hereof, as the case may be, or the compliance by
Catskill with the covenants set forth in Section 5.1 hereof.
6.10 CURRENT INFORMATION.
During the period from the date of this Agreement to the Effective
Time, Catskill will cause one or more of its designated representatives to
confer on a regular and frequent basis (not less than monthly) with
representatives of ▇▇▇▇ and to report the general status of the ongoing
operations of Catskill. Catskill will promptly notify ▇▇▇▇ of any material
change in the normal course of business or in the operation of the properties of
Catskill and of any governmental complaints, investigations or hearings (or
communications indicating that the same may be contemplated), or the institution
or the threat of litigation involving Catskill, and will keep ▇▇▇▇ fully
informed of such events.
6.11 EXECUTION AND AUTHORIZATION OF BANK MERGER AGREEMENT.
Prior to the Effective Time, (a) ▇▇▇▇ and Catskill each shall
execute and deliver the Certificate of Merger substantially in the form at
Exhibit C, and (b) ▇▇▇▇ and Catskill each shall cause ▇▇▇▇ Bank and Catskill
Bank, respectively, to execute and deliver the Bank Merger Agreement, in
substantially the form at Exhibit A.
6.12 TRANSACTION EXPENSES OF CATSKILL.
(a) For Troy's planning purposes, Catskill shall, within 15
days from the date hereof, provide ▇▇▇▇ with its estimated budget of
transaction-related expenses reasonably anticipated to be payable by Catskill in
connection with this transaction, including the fees and expenses of counsel,
accountants, investment bankers and other professionals. Catskill shall promptly
notify ▇▇▇▇ if or when it determines that it will expect to exceed its budget.
(b) Promptly after the execution of this Agreement, Catskill
shall ask all of its attorneys and other professionals to render current and
correct invoices for all unbilled time and disbursements. Catskill shall accrue
and/or pay all of such amounts which are actually due and owing as soon as
possible.
29
(c) Catskill shall advise ▇▇▇▇ monthly of all out-of-pocket
expenses which Catskill has incurred in connection with this transaction.
(d) Catskill, in reasonable consultation with ▇▇▇▇, shall make
all arrangements with respect to the printing and mailing of the Proxy
Materials. Catskill shall, if ▇▇▇▇ reasonably deems necessary, also engage a
proxy solicitation firm to assist in the solicitation of proxies for its Special
Meeting. Catskill agrees to cooperate as to such matters.
6.13 FURTHER ACTIONS OF CATSKILL.
Upon the written request of ▇▇▇▇, Catskill shall, within 5 business
days of the date of such written request, demand payment of, or cause Catskill
Bank to demand payment of, any and all loans (to the extent identified by ▇▇▇▇)
of Catskill or Catskill Bank, as the case may be, which loans are (or should
have been) set forth at Sections 3.5(a) or 3.20(e) of the Catskill Disclosure
Schedule, and which loans are secured or collateralized in any way by Catskill
Common Stock.
ARTICLE VII
CONDITIONS PRECEDENT
7.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER.
The respective obligation of each party to effect the Merger shall be
subject to the satisfaction at or prior to the Effective Time of the following
conditions:
(A) SHAREHOLDER APPROVALS.
This Agreement, including the Certificate of Merger, and the
Merger shall have been approved and adopted by the affirmative vote of the
holders of at least a majority of the outstanding shares of Catskill Common
Stock entitled to vote thereon.
(B) OTHER APPROVALS.
All regulatory approvals required to consummate the
transactions contemplated hereby shall have been obtained and shall remain in
full force and effect and all statutory waiting periods in respect thereof shall
have expired (all such approvals and the expiration of all such waiting periods
being referred to herein as the "Requisite Regulatory Approvals"). No Requisite
Regulatory Approval shall contain a non-customary condition that ▇▇▇▇ reasonably
determines to be burdensome or otherwise alter the benefits for which it
bargained in this Agreement.
(C) PROXY MATERIALS.
The Proxy Materials shall have approved for use under the
Exchange Act, and no stop order suspending the approval of the Proxy Materials
shall have been issued and no proceedings for that purpose shall have been
initiated or threatened by the SEC.
(D) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY.
No order, injunction or decree issued by any court or agency
of competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Merger or any of the other transactions (an "Injunction")
contemplated by this Agreement or the Certificate of Merger shall be in effect.
No statute, rule, regulation, order, injunction or decree shall have been
enacted, entered, promulgated or enforced by any Governmental Entity which
prohibits, restricts or makes illegal consummation of the Merger.
30
7.2 CONDITIONS TO OBLIGATIONS OF ▇▇▇▇.
The obligation of ▇▇▇▇ to effect the Merger is also subject to the
satisfaction or waiver by ▇▇▇▇ at or prior to the Effective Time of the
following conditions:
(A) REPRESENTATIONS AND WARRANTIES.
The representations and warranties of Catskill set forth in
this Agreement shall be true and correct in all material respects as of the date
of this Agreement and (except to the extent such representations and warranties
speak as of an earlier date) as of the Closing Date as though made on and as of
the Closing Date. ▇▇▇▇ shall have received a certificate signed on behalf of
Catskill by each of the President and Chief Executive Officer and the Chief
Financial Officer of Catskill to the foregoing effect.
(B) PERFORMANCE OF COVENANTS AND AGREEMENTS OF CATSKILL
Catskill shall have performed in all material respects all
covenants and agreements required to be performed by it under this Agreement at
or prior to the Closing Date. ▇▇▇▇ shall have received a certificate signed on
behalf of Catskill by each of the President and Chief Executive Officer and the
Chief Financial Officer of Catskill to such effect.
(C) CONSENTS UNDER AGREEMENTS.
(i) The consent, approval or waiver of each person (other
than the Governmental Entities referred to in Section 7.1(b) hereof) whose
consent or approval shall be required in order to permit the succession by the
Surviving Corporation pursuant to the Merger to any obligation, right or
interest of Catskill under any loan or credit agreement, note, mortgage,
indenture, lease, license or other agreement or instrument shall have been
obtained except for those, the failure of which to obtain, will not result in a
Material Adverse Effect on Catskill or the Surviving Corporation.
(ii) The consent, approval or waiver of each person (other
than the Governmental Entities referred to in Section 7.1(b) hereof) whose
consent or approval shall be required in order to permit the succession by the
Surviving Bank pursuant to the Bank Merger to any obligation, right or interest
of Catskill Bank under any loan or credit agreement, note, mortgage, indenture,
lease, license or other agreement or instrument shall have been obtained except
for those, the failure of which to obtain, will not result in a Material Adverse
Effect on Catskill Bank or the Surviving Bank.
(D) NO PENDING GOVERNMENTAL ACTIONS.
No proceeding initiated by any Governmental Entity seeking an
Injunction shall be pending.
(E) NO MATERIAL ADVERSE CHANGE.
There shall have been no changes, other than changes
contemplated by this Agreement, in the business, operations, condition
(financial or otherwise), assets or liabilities of Catskill or any Catskill
Subsidiary (regardless of whether or not such events or changes are inconsistent
with the representations and warranties given herein) that individually or in
the aggregate has had or would have a Material Adverse Effect on Catskill.
31
(F) ACCOUNTANT'S COMFORT LETTER.
Catskill shall have caused to be delivered on the respective
dates thereof to ▇▇▇▇ "comfort letters" from KPMG L.L.P., Catskill's independent
public accountants, dated the date on which the Proxy Materials or last
amendment thereto shall be approved for use, and dated the date of the Closing
(defined in Section 9.1 hereof), and addressed to ▇▇▇▇ and Catskill, with
respect to Catskill's financial data presented in the Proxy Materials, which
letters shall be based upon Statements on Auditing Standards Nos. 72 and 76.
(G) REPAYMENT OF LOANS.
Any and all loans of Catskill and Catskill Bank as to which
▇▇▇▇ has requested that Catskill or Catskill Bank make demand for payment in
accordance with Section 6.13 above, shall have been paid in full, with no waiver
or negation of any rights or remedies available against the borrower thereunder.
7.3 CONDITIONS TO OBLIGATIONS OF CATSKILL
The obligation of Catskill to effect the Merger is also subject to the
satisfaction or waiver by Catskill at or prior to the Effective Time of the
following conditions:
(A) REPRESENTATIONS AND WARRANTIES.
The representations and warranties of ▇▇▇▇ set forth in this
Agreement shall be true and correct as of the date of this Agreement and (except
to the extent such representations and warranties speak as of an earlier date)
as of the Closing Date as though made on and as of the Closing Date. Catskill
shall have received a certificate signed on behalf of ▇▇▇▇ by each of the
President and the Chief Financial Officer of ▇▇▇▇ to the foregoing effect.
(B) PERFORMANCE OF COVENANTS AND AGREEMENTS OF ▇▇▇▇.
▇▇▇▇ shall have performed in all material respects all
covenants and agreements required to be performed by it under this Agreement at
or prior to the Closing Date. Catskill shall have received a certificate signed
on behalf of ▇▇▇▇ by each of the President and the Chief Financial Officer of
▇▇▇▇ to such effect.
(C) CONSENTS UNDER AGREEMENTS.
The consent or approval or waiver of each person (other than
the Governmental Entities referred to in Section 7.1(b)) whose consent or
approval shall be required in connection with the transactions contemplated
hereby under any loan or credit agreement, note, mortgage, indenture, lease,
license or other agreement or instrument to which ▇▇▇▇ is a party or is
otherwise bound shall have been obtained.
(D) NO PENDING GOVERNMENTAL ACTIONS.
No proceeding initiated by any Governmental Entity seeking an
Injunction shall be pending.
32
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1 TERMINATION.
This Agreement may be terminated at any time prior to the Effective
Time, whether before or after approval of the matters presented in connection
with the Merger by the shareholders of Catskill:
(a) by mutual consent of ▇▇▇▇ and Catskill in a written
instrument, if the Board of Directors of each so determines by a vote of a
majority of the members of its entire Board;
(b) by either ▇▇▇▇ or Catskill upon written notice to the
other party (i) 30 days after the date on which any request or application for a
Regulatory Approval shall have been denied or withdrawn at the request or
recommendation of the Governmental Entity which must grant such Regulatory
Approval, unless within the 30-day period following such denial or withdrawal
the parties agree to file, and have filed with the applicable Governmental
Entity, a petition for rehearing or an amended application, provided, however,
that no party shall have the right to terminate this Agreement pursuant to this
Section 8.1(b), if such denial or request or recommendation for withdrawal shall
be due to the failure of the party seeking to terminate this Agreement to
perform or observe the covenants and agreements of such party set forth herein;
(c) by either ▇▇▇▇ or Catskill if the Merger shall not have
been consummated on or before January 31, 2001, unless the failure of the
Closing to occur by such date shall be due to the failure of the party seeking
to terminate this Agreement to perform or observe the covenants and agreements
of such party set forth herein;
(d) by either ▇▇▇▇ or Catskill (provided that the terminating
party is not in breach of its obligations under Section 6.3 hereof) if the
approval of the shareholders of Catskill hereto required for the consummation of
the Merger shall not have been obtained by reason of the failure to obtain the
required vote at a duly held meeting of shareholders or at any adjournment or
postponement thereof;
(e) by either ▇▇▇▇ or Catskill (provided that the terminating
party is not then in breach of any representation, warranty, covenant or other
agreement contained herein that, individually or in the aggregate, would give
the other party the right to terminate this Agreement) if there shall have been
a breach of any of the representations or warranties set forth in this Agreement
on the part of the other party, if such breach, individually or in the
aggregate, has had or is likely to have a Material Adverse Effect on the
breaching party, and such breach shall not have been cured within 30 days
following receipt by the breaching party of written notice of such breach from
the other party hereto or such breach, by its nature, cannot be cured prior to
the Closing;
(f) by either ▇▇▇▇ or Catskill (provided that the terminating
party is not then in breach of any representation, warranty, covenant or other
agreement contained herein that, individually or in the aggregate, would give
the other party the right to terminate this Agreement) if there shall have been
a material breach of any of the covenants or agreements set forth in this
Agreement on the part of the other party, and such breach shall not have been
cured within 30 days following receipt by the breaching party of written notice
of such breach from the other party hereto or such breach, by its nature, cannot
be cured prior to the Closing;
(g) by ▇▇▇▇, if the management of Catskill or its Board of
Directors, for any reason, (i) fails to call and hold within 35 days of the
approval for use of the Proxy Materials a special meeting of Catskill's
shareholders to consider and approve this Agreement and the transactions
contemplated hereby, (ii) fails to recommend to shareholders the approval of
this Agreement and the transactions contemplated hereby, (iii) fails to oppose
any third party proposal that is inconsistent with the transactions contemplated
by this Agreement or (iv) violates Section 5.1(e) of this Agreement;
33
(h) by ▇▇▇▇ if Catskill has complied with Section 5.1(e)
above, and has given written notice to ▇▇▇▇ that Catskill has agreed to enter
into a Superior Competing Transaction; provided, however, that such termination
under this Section 8.1(h) shall not be effective unless and until Catskill shall
have complied with the expense and breakup fee provisions of Section 9.3 below,
and shall have acknowledged in the written notice to be provided in accordance
herewith that the Option granted pursuant to the Option Agreement shall then be
exercisable in accordance with terms thereof.
(i) by Catskill in the event of a Catastrophic Market Event
(as defined below) and that, if the Securities Portfolio Sale has not been
completed, results in Catskill's inability to obtain Sale Proceeds in excess of
$73.2 million. For purposes of this subsection (i), "Catastrophic Market Event"
shall mean (i) a decline of more than 10% in the Bond Buyer 20 Index and a
decline of more than 10% in the ▇▇▇▇▇▇▇ ▇▇▇▇▇ Corporate Bond Index, as quoted in
the Wall Street Journal from the level on the date hereof until 30 days after
the date hereof or (ii) if the values for the Bond Buyer 20 Index and ▇▇▇▇▇▇▇
▇▇▇▇▇ Corporate Bond Index are not published for 3 consecutive business days
because of financial market conditions in the United States.
8.2 EFFECT OF TERMINATION.
In the event of termination of this Agreement by either ▇▇▇▇ or
Catskill as provided in Section 8.1 hereof, this Agreement shall forthwith
become void and have no effect except (i) the last sentence of Section 6.2(a)
and Sections 8.2, 9.2 and 9.3 hereof shall survive any termination of this
Agreement, and (ii) notwithstanding anything to the contrary contained in this
Agreement, no party shall be relieved or released from any liabilities or
damages arising out of its willful or intentional breach of any provision of
this Agreement.
8.3 AMENDMENT.
Subject to compliance with applicable law, this Agreement may be
amended by the parties hereto, by action taken or authorized by their respective
Board of Directors, at any time before or after approval of the matters
presented in connection with the Merger by the shareholders of Catskill;
provided, however, that after any approval of the transactions contemplated by
this Agreement by Catskill's shareholders, there may not be, without further
approval of such shareholders, any amendment of this Agreement which reduces the
amount or changes the form of the consideration to be delivered to Catskill
shareholders hereunder other than as contemplated by this Agreement. This
Agreement may not be amended except by an instrument in writing signed on behalf
of each of the parties hereto.
8.4 EXTENSION; WAIVER.
At any time prior to the Effective Time, the parties hereto, by action
taken or authorized by their respective Boards of Directors, may, to the extent
legally allowed, (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto, and (c) waive compliance with any of the
agreements or conditions contained herein. Any agreement on the part of a party
hereto to any such extension or waiver shall be valid only if set forth in a
written instrument signed on behalf of such party, but such extension or waiver
or failure to insist on strict compliance with an obligation, covenant,
agreement or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure.
34
ARTICLE IX
GENERAL PROVISIONS
9.1 CLOSING.
Subject to the terms and conditions of this Agreement, the closing of
the Merger (the "Closing") will take place at 10:00 a.m. at the offices of ▇▇▇▇▇
& ▇▇▇▇▇▇▇ L.L.P., counsel to ▇▇▇▇, on a date and place specified by the Parties,
which shall be no later than three business days after the satisfaction or
waiver (subject to applicable law) of all conditions precedent specified under
Article VII hereof (other than those conditions that by their nature are to be
satisfied at the Closing, but subject to the fulfillment or waiver of those
conditions), or on such other date, place and time as the parties may agree in
writing (the "Closing Date").
9.2 NONSURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
None of the representations, warranties, covenants and agreements in
this Agreement or in any instrument delivered pursuant to this Agreement (other
than pursuant to the Option Agreement, which shall terminate in accordance with
its terms) shall survive the Effective Time, except for those covenants and
agreements contained herein and therein which by their terms apply in whole or
in part after the Effective Time.
9.3 EXPENSES; BREAKUP FEE.
All costs and expenses incurred in connection with this Agreement and
the transactions contemplated hereby shall be paid by the party incurring such
expense. Except as set forth herein, in the event that this Agreement is
terminated by either ▇▇▇▇ or Catskill by reason of a material breach pursuant to
Sections 8.1(e) or (f) hereof or by ▇▇▇▇ pursuant to Section 8.1(g) hereof, ▇▇▇▇
or Catskill, as applicable, shall pay all documented, reasonable costs and
expenses up to $500,000 incurred by the terminating party in connection with
this Agreement and the transactions contemplated hereby. In the event that this
Agreement is terminated by ▇▇▇▇ under Section 8.1(d) by reason of Catskill
shareholders not having given any required approval, or in the event this
Agreement is terminated by ▇▇▇▇ by reason of a willful material breach pursuant
to Sections 8.1(e) or (f) hereof, Catskill shall pay all documented, reasonable
costs and expenses up to $500,000 incurred by ▇▇▇▇ in connection with this
Agreement and the transactions contemplated hereby, plus a breakup fee of $1.5
million. In the event that this Agreement is terminated by Catskill by reason of
a willful material breach pursuant to Sections 8.1(e) or (f) hereof, ▇▇▇▇ shall
pay all documented, reasonable costs and expenses up to $500,000 incurred by
Catskill in connection with this Agreement and the transactions contemplated
hereby, plus a breakup fee of $2.5 million. In the event that this Agreement is
terminated by ▇▇▇▇ under Section 8.1(h) by reason of Catskill having agreed to
enter into an Superior Competing Transaction, Catskill shall pay all documented,
reasonable costs and expenses up to $500,000 incurred by ▇▇▇▇ in connection with
this Agreement and the transactions contemplated hereby, plus a breakup fee of
$1.5 million.
9.4 NOTICES.
All notices and other communications hereunder shall be in writing and
shall be deemed given if delivered personally, mailed by registered or certified
mail (return receipt requested) or delivered by an express courier (with
confirmation) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(a) if to Troy, to:
▇▇▇▇ Financial Corporation
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn.: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
35
with a copy (which shall not constitute notice) to:
▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P.
Columbia Square
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn.: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
and
(b) if to Catskill, to:
Catskill Financial Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn.: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
with a copy (which shall not constitute notice) to:
▇▇▇▇▇▇, ▇▇▇▇▇▇ & Kattell, LLP
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn.: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
9.5 INTERPRETATION.
When a reference is made in this Agreement to Sections, Exhibits or
Schedules, such reference shall be to a Section of or an Exhibit or Schedule to
this Agreement unless otherwise indicated. The table of contents and headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. Whenever the words
"include", "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation".
9.6 COUNTERPARTS.
This Agreement may be executed in counterparts, all of which shall be
considered one and the same agreement and shall become effective when
counterparts have been signed by each of the parties and delivered to the other
parties, it being understood that all parties need not sign the same
counterpart.
9.7 ENTIRE AGREEMENT.
This Agreement (including the disclosure schedules, documents and the
instruments referred to herein) constitutes the entire agreement and supersedes
all prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter hereof, other than the
Confidentiality Agreement, the Certificate of Merger, the Option Agreement and
the Catskill Stockholder Agreement.
36
9.8 GOVERNING LAW.
This Agreement shall be governed and construed in accordance with the
laws of the State of Delaware, without regard to any applicable conflicts of law
rules.
9.9 ENFORCEMENT OF AGREEMENT.
The parties hereto agree that irreparable damage would occur in the
event that the provisions of this Agreement were not performed in accordance
with its specific terms or were otherwise breached. It is accordingly agreed
that the parties shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
thereof in any court of the United States or any state having jurisdiction, this
being in addition to any other remedy to which they are entitled at law or in
equity.
9.10 SEVERABILITY.
Any term or provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective
to the extent of such invalidity or unenforceability without rendering invalid
or unenforceable the remaining terms and provisions of this Agreement or
affecting the validity or enforceability of any of the terms or provisions of
this Agreement in any other jurisdiction. If any provision of this Agreement is
so broad as to be unenforceable, the provision shall be interpreted to be only
so broad as is enforceable.
9.11 PUBLICITY.
Except as otherwise required by law or the rules of the Nasdaq Stock
Market National Market System (or such other exchange on which the Troy Common
Stock may become listed), so long as this Agreement is in effect, neither Troy
nor Catskill shall, or shall permit any of Troy's or Catskill's Subsidiaries to,
issue or cause the publication of any press release or other public announcement
with respect to, or otherwise make any public statement concerning, the
transactions contemplated by this Agreement, the Certificate of Merger, the
Option Agreement or the Catskill Stockholder Agreement without the consent of
the other party, which consent shall not be unreasonably withheld. Troy and
Catskill shall cooperate to prepare a joint press release announcing the signing
of this Agreement and the transactions contemplated hereunder.
9.12 ASSIGNMENT; LIMITATION OF BENEFITS.
Neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by any of the parties hereto (whether by operation
of law or otherwise) without the prior written consent of the other parties.
Subject to the preceding sentence, this Agreement will be binding upon, inure to
the benefit of and be enforceable by the parties and their respective successors
and assigns. Except as otherwise specifically provided in Section 6.6 hereof,
this Agreement (including the documents and instruments referred to herein) is
not intended to confer upon any person other than the parties hereto any rights
or remedies hereunder, and the covenants, undertakings and agreements set out
herein shall be solely for the benefit of, and shall be enforceable only by, the
parties hereto and their permitted assigns.
9.13 ADDITIONAL DEFINITIONS.
In addition to any other definitions contained in this Agreement, the
following words, terms and phrases shall have the following meanings when used
in this Agreement.
37
"Affiliated Person": any director, officer or 5% or greater
shareholder, spouse or other person living in the same household of such
director, officer or shareholder, or any company, partnership or trust in which
any of the foregoing persons is an officer, 5% or greater shareholder, general
partner or 5% or greater trust beneficiary.
"Competing Proposal": any of the following involving Catskill or any
Catskill Subsidiary: any inquiry, proposal or offer from any person relating to
any direct or indirect acquisition or purchase by such person of Catskill, any
Catskill Subsidiary or any business line of Catskill that constitutes 15% or
more of the net revenues, net income or assets of Catskill and its subsidiaries,
taken as a whole, or 15% or more of any class of equity securities of Catskill
or any of its subsidiaries, any tender offer or exchange offer that if
consummated would result in any person beneficially owning 15% or more of any
class of equity securities of Catskill or any of its subsidiaries, any merger,
consolidation, business combination, recapitalization, liquidation, dissolution
or similar transaction involving Catskill or any of its subsidiaries, other than
the transactions contemplated by this Agreement.
"Knowledge": with respect to any entity, refers to the actual knowledge
of such entity's directors and officers in the ordinary course of their duties
in such positions.
"Laws": any and all statutes, laws, ordinances, rules, regulations,
orders, permits, judgments, injunctions, decrees, case law and other rules of
law enacted, promulgated or issued by any Governmental Entity.
"Material Adverse Effect": with respect to Troy or Catskill, as the
case may be, means a condition, event, change or occurrence, other than the
Securities Portfolio Sale, that is reasonably likely to have a material adverse
effect upon (A) the financial condition, results of operations, loans,
securities, deposit accounts, business or properties of Troy or Catskill (other
than as a result of (i) changes in laws or regulations or accounting rules of
general applicability or interpretations thereof, or (ii) decreases in capital
under Financial Accounting Standards No. 115 attributable to general changes in
interest rates), or (B) the ability of Troy or Catskill to perform its
obligations under, and to consummate the transactions contemplated by, this
Agreement, the Certificate of Merger and, in the case of Catskill, the Option
Agreement, but shall not include Catskill's obligations under the Catskill Stock
Plan, the Catskill Management Recognition Plan or any employment or severance
agreement set forth in Section 3.12 of the Catskill Disclosure Schedule.
"Subsidiary": with respect to any party means any corporation,
partnership or other organization, whether incorporated or unincorporated, which
is consolidated with such party for financial reporting purposes.
"Superior Competing Transaction": any of the following involving
Catskill or any Catskill Subsidiary: any proposal made by a third party to
acquire, directly or indirectly, including pursuant to a tender offer, exchange
offer, merger, consolidation, business combination, recapitalization,
liquidation, dissolution or similar transaction, for consideration consisting of
cash and/or securities, more than 50% of the combined voting power of the shares
of Catskill Common Stock then outstanding or all or substantially all the assets
of Catskill, and otherwise on terms which the Board of Directors of Catskill,
determines in its good faith judgment (based on the opinion of ▇▇▇▇, ▇▇▇▇ & Co.,
or another financial advisor of nationally recognized reputation) to be more
favorable to its stockholders than the Merger and for which financing, to the
extent required, is then committed or which if not committed is, in the good
faith judgment of its Board of Directors, reasonably capable of being obtained
by such third party.
[SIGNATURES PAGE FOLLOWS]
38
IN WITNESS WHEREOF, Troy, Merger Sub and Catskill have caused this
Agreement to be executed and delivered by their respective officers thereunto
duly authorized as of the date first above written.
▇▇▇▇ FINANCIAL CORPORATION
ATTEST:
By: By:
----------------------------------- ------------------------------------
Name: ▇▇▇▇▇ ▇. ▇'▇▇▇▇▇ Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Title: Senior Vice President and Title: Chairman, President and Chief
Secretary Executive Officer
CATSKILL FINANCIAL CORPORATION
ATTEST:
By: By:
----------------------------------- ------------------------------------
Name: Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Title: Chairman, President and Chief
Executive Officer
CHARLIE ACQUISITION CORPORATION
ATTEST:
By: By:
----------------------------------- ------------------------------------
Name: ▇▇▇▇▇ ▇. ▇'▇▇▇▇▇ Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Title: Secretary Title: President and Chief Executive
Officer
Exhibit A
BANK PLAN OF MERGER
This Bank Plan of Merger (this "Plan of Merger") is made and
entered into this __ day of _______, 2000 between The ▇▇▇▇ Savings Bank, a New
York-chartered savings bank ("▇▇▇▇ Bank") and Catskill Savings Bank, a federally
chartered stock savings bank ("Catskill Bank").
WITNESSETH
WHEREAS, ▇▇▇▇ Financial Corporation, a Delaware corporation
("Troy"), Charlie Acquisition Corporation, a Delaware corporation ("Merger Sub")
and Catskill Financial Corporation, a Delaware corporation ("Catskill"), have
entered into an Agreement and Plan of Merger, dated as of June 7, 2000 (the
"Agreement");
WHEREAS, pursuant to the Agreement, Merger Sub will merge (the
"Merger") with and into Catskill, with Catskill being the surviving corporation
(the "Surviving Corporation") and becoming a wholly owned subsidiary of Troy and
immediately following said Merger, the Surviving Corporation will merge with and
into Troy (the "Subsidiary Merger").
WHEREAS, immediately following the Merger and the Subsidiary
Merger, Catskill Bank will merge with and into ▇▇▇▇ Bank pursuant to this Plan
of Merger, with ▇▇▇▇ Bank being the Surviving Bank (as defined); and
WHEREAS, ▇▇▇▇ Bank has issued and has outstanding 1,000 shares of
common stock, par value $1.00 per share ("▇▇▇▇ Bank Common Stock"), and Catskill
Bank has issued and outstanding 5,686,750 shares of common stock, par value $.01
per share (the "Catskill Bank Common Stock").
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein and in the Agreement, the parties
hereto do mutually agree, intending to be legally bound, as follows:
ARTICLE 1
DEFINITIONS
Except as otherwise provided herein, the capitalized terms set
forth below shall have the following meanings:
1.1 "BANK MERGER" shall mean the merger of Catskill Bank with and into
▇▇▇▇ Bank as provided in Section 2.1 of this Plan of Merger.
1.2 "EFFECTIVE TIME" shall mean the date and time at which the merger
contemplated by this Plan of Merger becomes effective as provided in Section 2.2
hereof.
1.3 "MERGING BANKS" shall mean, collectively, Catskill Bank and Troy
Bank.
1.4 "NEW YORK SUPERINTENDENT" shall mean the Superintendent of Banks
of New York State.
1.5 "SURVIVING BANK" shall refer to ▇▇▇▇ Bank as the surviving bank in
the Bank Merger.
ARTICLE 2
TERMS OF THE BANK MERGER
2.1 THE BANK MERGER
(a) Subject to the terms and conditions set forth in the
Agreement, and in accordance with the New York Banking Law and the rules and
regulations of the Banking Board of New York State, the Home Owner's Loan Act
and file regulations of the Office of Thrift Supervision, and the Federal Bank
Merger Act and the regulations of the Federal Deposit Insurance Corporation, at
the Effective Time, Catskill Bank shall be merged with and into ▇▇▇▇ Bank
pursuant to and upon the terms set forth in this Plan of Merger. ▇▇▇▇ Bank shall
continue as the Surviving Bank in the Bank Merger and the separate existence of
Catskill Bank shall cease.
(b) As a result of the Bank Merger, (i) each share of common
stock, par value $.01per share, of Catskill Bank issued and outstanding
immediately prior to the Effective Time shall be canceled, and (ii) each share
of capital stock, par value $1.00 per share, of ▇▇▇▇ Bank issued and outstanding
immediately prior to the Effective Time shall remain issued and outstanding and
shall constitute the only shares of capital stock of the Surviving Bank issued
and outstanding immediately after the Effective Time.
(c) On and after the Effective Time, the Bank Merger shall have
the effects set forth in Section 602 of the New York Banking Law.
(d) Without limiting the terms and provisions of section 2.1(c)
above, as a result of the Bank Merger, the Surviving Bank shall assume and
succeed, in accordance with 12 C.F.R. Part 563b, to all of the rights and
obligations of Catskill Bank relating to its liquidation account which was
established in connection with the conversion of Catskill Bank from the mutual
to stock form of organization.
2.2 EFFECTIVE TIME
The Bank Merger shall become effective (the "Effective Time")
at ____________ ____, 2000.
2.3 NAME OF THE SURVIVING BANK
The name of the Surviving Bank shall be "The ▇▇▇▇ Savings Bank."
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2.4 CHARTER
On and after the Effective Time, the organization certificate of
▇▇▇▇ Bank shall be the organization certificate of the Surviving Bank, unless
and until amended in accordance with applicable law.
2.5 BYLAWS
On and after the Effective Time, the bylaws of ▇▇▇▇ Bank shall be
the bylaws of the Surviving Bank, unless and until amended in accordance with
applicable law.
2.6 DIRECTORS AND OFFICERS
On and after the Effective Time, until changed in accordance with
the organization certificate and bylaws of the Surviving Bank, the directors of
the Surviving Bank shall be the directors of ▇▇▇▇ Bank immediately prior to the
Effective Time plus one additional director, ▇▇▇▇▇▇ ▇ .▇▇▇▇▇. On and after the
Effective Time, until changed in accordance with the organization certificate
and bylaws of the Surviving Bank, the officers of the Surviving Bank shall be
the officers of ▇▇▇▇ Bank immediately prior to the Effective Time.
2.7 CORPORATE ACTION
This Plan of Merger and the consummation of the transactions
contemplated hereby have been duly and validly adopted and approved by the Board
of Directors and the sole shareholder of each of the Merging Banks.
2.8 OFFICES OF THE SAVINGS BANK
▇▇▇▇ Bank, as the Surviving Bank, shall continue to maintain after
the Bank Merger its principal and branch offices and shall maintain as branch
offices the home office and branch offices of Catskill Bank. The location of the
principal office and other offices of the Surviving Bank shall be as set forth
at Annex 1 hereto.
ARTICLE 3
MISCELLANEOUS
3.1 SUCCESSORS
This Plan of Merger shall be binding on the successors of ▇▇▇▇
Bank and Catskill Bank.
3.2 COUNTERPARTS
This Plan of Merger may be executed in two counterparts, each of
which shall be deemed an original, but which taken together shall constitute one
and the same document.
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IN WITNESS WHEREOF, each of the parties has caused this Plan
of Merger to be duly executed on its behalf by an officer thereunto duly
authorized, all as of the day and year first above written.
THE ▇▇▇▇ SAVINGS BANK
ATTEST:
By: By:
----------------------------------- ------------------------------------
Name: ▇▇▇▇▇ ▇. ▇'▇▇▇▇▇ Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Title: Secretary Title: President and Chief Executive
Officer
CATSKILL SAVINGS BANK
ATTEST:
By: By:
----------------------------------- ------------------------------------
Name: Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Title: Chairman, President and
Chief Executive Officer
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ANNEX 1
OFFICES OF ▇▇▇▇ BANK AFTER THE BANK MERGER
At the Effective Time of the Bank Merger, ▇▇▇▇ Bank will have the
following offices:
Location of Principal Office
----------------------------
Location of Branch Offices
--------------------------
Exhibit B
CATSKILL FINANCIAL CORPORATION STOCK OPTION AGREEMENT
THE TRANSFER OF THE OPTION GRANTED
BY THIS AGREEMENT IS SUBJECT TO RESALE RESTRICTIONS.
This STOCK OPTION AGREEMENT, dated as of June __, 2000 (this
"Agreement"), is entered into between Catskill Financial Corporation, a Delaware
corporation ("Issuer"), and ▇▇▇▇ Financial Corporation, a Delaware corporation
("Grantee").
WITNESSETH:
WHEREAS, Grantee, Charlie Acquisition Corporation, a Delaware
corporation, and Issuer have entered into an Agreement and Plan of Merger, dated
as of even date with this Agreement (the "Plan"), which was executed by the
parties thereto prior to the execution of this Agreement; and
WHEREAS, as a condition and inducement to Grantee's entering into
the Plan and in consideration therefor, Issuer has agreed to grant Grantee the
Option (as defined below).
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth herein and in the Plan, the parties hereto
agree as follows:
SECTION 1. Issuer hereby grants to Grantee an irrevocable option (the
"Option") to purchase, subject to the terms hereof, up to a number of fully paid
and nonassessable shares of common stock, par value $0.01 per share of Issuer
("Issuer Common Stock") equal to 19.9% of the total of the number of issued and
outstanding shares of Issuer Common Stock as of the first date that the Option
becomes exercisable, at a price per share equal to $19.00 (the "Option Price").
SECTION 2. (a) Grantee may exercise the Option, in whole or part, at
any time and from time to time following the occurrence of a Purchase Event (as
defined below); provided, however, that the Option shall terminate and be of no
further force and effect upon the earliest to occur of the following events
(which are collectively referred to as an "Exercise Termination Event"):
(i) The time immediately prior to the Effective Time (as
defined in the Plan);
(ii) 18 months after the first occurrence of a Purchase
Event;
(iii) 18 months after the termination of the Plan following
the occurrence of a Preliminary Purchase Event (as defined
below);
(iv) upon the valid termination of the Plan, if no Purchase
Event or Preliminary Purchase Event has occurred prior to such
termination, by Issuer pursuant to Sections 8.1(e) or 8.1(f)
of the Plan as a result of a breach by Grantee, both parties
pursuant to Section 8.1(a) of the Plan, or by either party
pursuant to Sections 8.1(b) or 8.1(c) of the Plan;
(v) 18 months after the termination of the Plan, by either
party pursuant to Section 8.1(d) of the Plan based on the
required vote of Issuer's stockholders not being obtained at a
duly called meeting of the stockholders of the Issuer, if no
Purchase Event or Preliminary Purchase Event has occurred
prior to the meeting of Issuer's stockholders (or any
adjournment or postponement thereof) held to vote on the Plan;
or
(vi) 18 months after the termination of the Plan, by Grantee
pursuant to Sections 8.1(e) or 8.1(f) thereof as a result of a
breach by Issuer, or by Grantee pursuant to Sections 8.1(g) or
(h) of the Plan.
(b) The term "Preliminary Purchase Event" shall mean any of
the following events or transactions occurring on or after the date hereof and
prior to an Exercise Termination Event:
(i) Issuer without having received Grantee's prior
written consent, shall have entered into any letter of intent or
definitive agreement to engage in an Acquisition Transaction (as
defined below) with any person (as defined below) other than Grantee or
any of its subsidiaries (each a "Grantee Subsidiary") or the Board of
Directors of Issuer shall have recommended that the stockholders of
Issuer approve or accept any Acquisition Transaction with any Person
(as the term "person" is defined in Sections 3(a)9 and 13(d)(3) of the
Exchange Act and the rules and regulations thereunder) other than
Grantee or any Grantee Subsidiary. For purposes of this Agreement,
"Acquisition Transaction" shall mean (x) a merger, consolidation or
other business combination involving Issuer, (y) a purchase, lease or
other acquisition of all or substantially all of the assets of Issuer,
(z) a purchase or other acquisition (including by way of merger,
consolidation, share exchange or otherwise) of Beneficial Ownership (as
the term "beneficial ownership" is defined in Regulation 13d-3(a) of
the Exchange Act) of securities representing 20% or more of the voting
power of Issuer; provided, however, that "Acquisition Transaction"
shall not include a transaction entered into after the termination of
the Plan in which the Issuer is the surviving entity, if in connection
with such transaction, no person acquires Beneficial Ownership of 20%
or more of the total voting power of the Issuer to be outstanding after
giving effect to such transaction and in which the aggregate voting
power of Issuer acquired by all persons is less than 33% of the total
voting power of Issuer;
(ii) Any Person (other than Grantee, any Grantee
Subsidiary or any current affiliate of Issuer) shall have acquired
Beneficial Ownership of 20% or more of the outstanding shares of Issuer
Common Stock;
(iii) (a) Any Person (other than Grantee or any Grantee
Subsidiary) shall have made a bona fide proposal to Issuer or, by a
public announcement or written communication that is or becomes the
subject of public disclosure, to Issuer's stockholders prior to the
Catskill Stockholders' Meeting to engage in an Acquisition Transaction
(including, without limitation, any situation in which any Person other
than Grantee or any Grantee Subsidiary shall have commenced (as such
term is defined in Rule 14d-2 promulgated under the Exchange Act of
1934, as amended (the "Exchange Act"), or shall have filed a
registration statement under the Securities Act of 1933, as amended
(the "Securities Act"), with respect to a tender offer or exchange
offer to purchase any shares of Issuer Common Stock such that, upon
consummation of such offer, such person would have Beneficial Ownership
of 20% or more of the then outstanding shares of Issuer Common Stock
(such an offer being referred to herein as a "Tender Offer" or an
"Exchange Offer", respectively) and (b) the stockholders of Issuer do
not approve the Merger, as defined in the Plan, at a meeting of the
Issuer's stockholders;
(iv) There shall exist a willful or intentional breach
under the Plan by Issuer and such breach would entitle Grantee to
terminate the Plan; or
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(v) The meeting of the Issuer's stockholders to be held
for the purpose of voting on the Plan shall not have been held pursuant
to the Plan or shall have been canceled prior to termination of the
Plan, or for any reason whatsoever Issuer's Board of Directors shall
have failed to recommend, or shall have withdrawn or modified in a
manner adverse to Grantee the recommendation of Issuer's Board of
Directors, that Issuer's stockholders approve the Plan, or if Issuer or
Issuer's Board of Directors fails to oppose any proposal of the type
described at Section 2(b)(iii)(a) above by any Person (other than
Grantee or any Grantee Subsidiary).
(c) The term "Purchase Event" shall mean any of the
following events or transactions occurring on or after the date hereof and prior
to an Exercise Termination Event:
(i) The acquisition by any Person (other than Grantee or
any Grantee Subsidiary) of Beneficial Ownership (other than on behalf
of the Issuer) of 20% or more of the then outstanding Issuer Common
Stock;
(ii) The occurrence of a Preliminary Purchase Event
described in Section 2(b)(i); or
(iii) The termination of the Plan by Grantee pursuant to
Section 8.1(h) thereof.
(d) Issuer shall notify Grantee promptly in writing of
the occurrence of any Preliminary Purchase Event or Purchase Event known to
Issuer; provided, however, that the giving of such notice by Issuer shall not be
a condition to the right of Grantee to exercise the Option.
(e) In the event that Grantee is entitled to and wishes
to exercise the Option, it shall send to Issuer a written notice (the "Option
Notice," the date of which being hereinafter referred to as the "Notice Date")
specifying (i) the total number of shares of Issuer Common Stock it will
purchase pursuant to such exercise and (ii) the time (which shall be on a
business day that is not less than three nor more than 10 business days from the
Notice Date) on which the closing of such purchase shall take place (the
"Closing Date"); such closing to take place at the principal office of the
Issuer; provided, however, that if prior notification to or approval of the
Board of Governors of the Federal Reserve System ("FRB"), Office of the
Comptroller of the Currency ("OCC"), the Office of Thrift Supervision ("OTS"),
the New York State Banking Department ("NYSBD"), the Federal Trade Commission
(the "FTC"), the Antitrust Division of the Department of Justice ("DOJ") or any
other Governmental Authority is required in connection with such purchase (each,
a "Notification" or an "Approval," as the case may be), at Grantee's sole
expense, (a) Grantee shall promptly file the required notice or application for
approval ("Notice/Application"), (b) Grantee shall expeditiously process the
Notice/Application and (c) for the purpose of determining the Closing Date
pursuant to clause (ii) of this sentence, the period of time that otherwise
would run from the Notice Date shall instead run from the later of (x) in
connection with any Notification, the date on which any required notification
periods have expired or been terminated and (y) in connection with any Approval,
the date on which such approval has been obtained and any requisite waiting
period or periods shall have expired. For purposes of Section 2(a) hereof, any
exercise of the Option shall be deemed to occur on the Notice Date relating
thereto. Prior to the Closing Date, Grantee shall have the right to revoke its
exercise of the Option by written notice to the Issuer given not less than three
business days prior to the Closing Date.
(f) At the closing referred to in Section 2(e) hereof,
Grantee shall pay to Issuer the aggregate purchase price for the number of
shares of Issuer Common Stock specified in the Option Notice in immediately
available funds by wire transfer to a bank account designated by Issuer;
provided, however, that failure or refusal of Issuer to designate such a bank
account shall not preclude Grantee from exercising the Option.
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(g) At such closing, simultaneously with the delivery of
immediately available funds as provided in Section 2(f) hereof, Issuer shall
deliver to Grantee a certificate or certificates representing the number of
shares of Issuer Common Stock specified in the Option Notice and, if the Option
should be exercised in part only, a new Option evidencing the rights of Grantee
thereof to purchase the balance of the shares of Issuer Common Stock purchasable
hereunder.
(h) Certificates for Issuer Common Stock delivered at a
closing hereunder shall be endorsed with a restrictive legend substantially as
follows:
THE TRANSFER OF THE SHARES REPRESENTED BY THIS
CERTIFICATE IS SUBJECT TO RESALE RESTRICTIONS ARISING UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE STATE
SECURITIES LAWS.
It is understood and agreed that the reference to the resale restrictions of the
Securities Act in the above legend shall be removed by delivery of substitute
certificate(s) without such reference if Grantee shall have delivered to Issuer
a copy of a letter from the staff of the Securities and Exchange Commission (the
"SEC") or Governmental Authority responsible for administering any applicable
state securities laws or an opinion of counsel to the effect that such legend is
not required for purposes of the Securities Act or applicable state securities
laws. In addition such certificates shall bear any other legend as may be
required by law.
(i) Upon the giving by Grantee to Issuer of an Option Notice
and the tender of the applicable purchase price in immediately available funds
on the Closing Date, unless prohibited by applicable law, Grantee shall be
deemed to be the holder of record of the number of shares of Issuer Common Stock
specified in the Option Notice, notwithstanding that the stock transfer books of
Issuer shall then be closed or that certificates representing such shares of
Issuer Common Stock shall not then actually be delivered to Grantee. Issuer
shall pay all expenses and other charges that may be payable in connection with
the preparation, issuance and delivery of stock certificates under this Section
2 in the name of Grantee.
SECTION 3. Issuer agrees: (i) that it shall at all times until
the termination of this Agreement have reserved for issuance upon the exercise
of the Option that number of authorized and reserved shares of Issuer Common
Stock equal to the maximum number of shares of Issuer Common Stock at any time
and from time to time issuable hereunder, all of which shares will, upon
issuance pursuant hereto, be duly authorized, validly issued, fully paid,
non-assessable, and delivered free and clear of all claims, liens, encumbrances
and security interests and not subject to any preemptive rights; (ii) that it
will not, by amendment of its certificate of incorporation or through
reorganization, consolidation, merger, dissolution or sale of assets, or by any
other voluntary act, avoid or seek to avoid the observance or performance of any
of the covenants, stipulations or conditions to be observed or performed
hereunder by Issuer; (iii) promptly to take all reasonable action as may from
time to time be requested by Grantee, at Grantee's expense (including (x)
complying with all premerger notification, reporting and waiting period
requirements specified in 15 U.S.C. ss. 18a and regulations promulgated
thereunder and (y) in the event prior approval of or notice to the FRB, OCC,
FTC, DOJ or any other Governmental Authority, under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
Antitrust Improvements Act of 1976, as amended, the Bank Holding Company Act,
the Change in Bank Control Act, the Home Owners' Loan Act of 1933, as amended,
or any other applicable federal or state law, is necessary before the Option may
be exercised), cooperating with Grantee in preparing such applications or
notices and providing such information to each such Governmental Authority as it
may require in order to permit Grantee to exercise the Option and Issuer duly
and effectively to issue shares of Issuer Common Stock pursuant hereto; and (iv)
to take all action provided herein to protect the rights of Grantee against
dilution.
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SECTION 4. This Agreement (and the Option granted hereby) are
exchangeable, without expense, at the option of Grantee, upon presentation and
surrender of this Agreement at the principal office of Issuer, for other
agreements providing for Options of different denominations entitling the holder
thereof to purchase, on the same terms and subject to the same conditions as are
set forth herein, in the aggregate the same number of shares of Issuer Common
Stock purchasable hereunder. The terms "Agreement" and "Option" as used herein
include any agreements and related options for which this Agreement (and the
Option granted hereby) may be exchanged. Upon receipt by Issuer of evidence
reasonably satisfactory to it of the loss, theft, destruction or mutilation of
this Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer will execute and deliver a new Agreement of like
tenor and date.
SECTION 5. The number of shares of Issuer Common Stock purchasable upon
the exercise of the Option shall be subject to adjustment from time to time as
follows:
(a) In the event of any change in the type or number of shares
of Issuer Common Stock by reason of stock dividends, split-ups, mergers,
recapitalizations, combinations, subdivisions, conversions, exchanges of shares
or other issuances of additional shares (other than pursuant to the exercise of
the Option), the type and number of shares of Issuer Common Stock purchasable
upon exercise hereof shall be appropriately adjusted and proper provision shall
be made so that, in the event that any additional shares of Issuer Common Stock
are to be issued or otherwise become outstanding as a result of any such change
(other than pursuant to an exercise of the Option), the number of shares of
Issuer Common Stock that remain subject to the Option shall be increased or
decreased (as applicable) so that, after such issuance and together with the
shares of Issuer Common Stock previously issued pursuant to the prior partial
exercise of the Option (as adjusted on account of any of the foregoing changes
in the Issuer Common Stock), such number of shares shall equal the sum of 19.9%
of the total of the number of shares of Issuer Common Stock issued and
outstanding on the date the Option first becomes exercisable.
(b) Whenever the number of shares of Issuer Common Stock
purchasable upon exercise hereof is adjusted as provided in this Section 5, the
Option Price shall be adjusted by multiplying the Option Price by a fraction,
the numerator of which shall be equal to the number of shares of Issuer Common
Stock purchasable prior to the adjustment and the denominator of which shall be
equal to the number of shares of Issuer Common Stock purchasable after the
adjustment.
SECTION 6. (a) Upon the occurrence of a Purchase Event that occurs
prior to an Exercise Termination Event, Issuer shall, at the request of Grantee
(whether on its own behalf or on behalf of any subsequent holder of the Option
(or part thereof) or of any of the shares of Issuer Common Stock issued pursuant
hereto), promptly prepare, file and keep current a shelf registration statement
with the SEC, under the Securities Act covering any shares issued and issuable
pursuant to the Option and shall use its reasonable best efforts to cause such
registration statement to become effective, and to remain current and effective
for a period not in excess of 180 days from the day such registration statement
first becomes effective, in order to permit the sale or other disposition of any
shares of Issuer Common Stock issued upon total or partial exercise of the
Option ("Option Shares") in accordance with any plan of disposition requested by
Grantee. Grantee shall have the right to demand two such registrations, which
demand right shall be transferable but in no event shall Issuer be required to
effect more than two registrations in the aggregate pursuant to this Option or
any subdivision hereof. Grantee shall provide all information reasonably
requested by Issuer for
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inclusion in any registration statement to be filed hereunder. In connection
with any such registration statement, Issuer and Grantee shall provide each
other with representations, warranties, indemnities and other agreements
customarily given in connection with such registration. If requested by Grantee
in connection with such registration, Issuer and Grantee shall become a party to
any underwriting agreement relating to the sale of such shares, but only to the
extent of obligating themselves in respect of representations, warranties,
indemnities and other agreements customarily included in such underwriting
agreements and reasonably acceptable to Issuer. Notwithstanding the foregoing,
if Grantee revokes any exercise notice or fails to exercise any Option with
respect to any exercise notice pursuant to Section 2(e) hereof, Issuer shall not
be obligated to continue any registration process with respect to the sale of
Option Shares issuable upon the exercise of such Option and Grantee shall not be
deemed to have demanded registration of Option Shares. If Issuer withdraws a
registration statement which has been declared effective at the request of
Grantee, or any subsequent holder, then such filing shall be deemed an effective
registration for all purposes hereunder. The Issuer will not be required to file
any such registration statement during any period of time (not to exceed 30 days
in the case of clauses (A) or (C) below or 45 days in the case of clause (B)
below) when (A) the Issuer is in possession of material non-public information
which it reasonably believes would be detrimental to be disclosed at such time
and such information would have to be disclosed if a registration statement were
filed at that time; (B) the Issuer is required under the Securities Act and the
rules and regulations thereunder to include audited financial statements for any
period in such registration statement and such financial statements are not yet
available for inclusion in such registration statement; or (C) the Issuer
reasonably determines that such registration would interfere with any financing,
acquisition or material transaction involving the Issuer. The registration
rights set forth in this Section 6 are subject to the condition that the Grantee
or subsequent holder shall provide the Issuer with such information with respect
to the holder's securities, the plan for distribution thereof, and such other
information with respect to the holder that is required under applicable
securities laws to enable the Issuer to include in a registration statement all
material facts required to be disclosed with respect to a registration
thereunder, including the identity of the holder and the holder's plan of
distribution. The Grantee shall not be able to exercise its registration rights
hereunder if Grantee can rely on Rule 144 promulgated under the Securities Act
to sell such number of shares of Issuer Common Stock that the Grantee otherwise
would seek to register.
(b) Concurrently with the preparation and filing of a
registration statement under Section 6(a) hereof, Issuer shall also make all
filings required to comply with state securities laws in such number of states
as Grantee may reasonably request; provided, that Issuer shall not be required
to qualify to do business in, or consent to service of process in, any
jurisdiction by reason of this provision.
SECTION 7. (a) Upon the occurrence of a Purchase Event that occurs
prior to an Exercise Termination Event, at the request (the date of such request
being the "Option Repurchase Request Date") of Grantee, Issuer shall repurchase,
subject to compliance with applicable law and out of funds legally available
therefor, the Option from Grantee at a price (the "Option Repurchase Price")
equal to the amount by which (A) the market/offer price (as defined below)
exceeds (B) the Option Price, multiplied by the number of shares for which the
Option may then be exercised. The term "market/offer price" shall mean the
highest of (i) the price per share of Issuer Common Stock at which a tender
offer or exchange offer therefor has been made after the date hereof and on or
prior to the Option Repurchase Request Date (ii) the price per share of Issuer
Common Stock paid or to be paid by any third party pursuant to an agreement with
Issuer (whether by way of a merger, consolidation or otherwise), (iii) the
average of the 20 highest last sale prices for shares of Issuer Common Stock as
reported within the 90-day period ending on the Option Repurchase Request Date,
and (iv) in the event of a sale of all or substantially all of Issuer's assets,
the sum of the price paid in such sale for such assets and the current market
value of the remaining assets of Issuer as
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determined by an investment banking firm selected by Grantee and reasonably
acceptable to Issuer, divided by the number of shares of Issuer Common Stock
outstanding at the time of such sale. In determining the market/offer price, the
value of consideration other than cash shall be the value determined by an
investment banking firm selected by Grantee and reasonably acceptable to Issuer.
The investment banking firm's determination shall be conclusive and binding on
all parties.
(b) Grantee may exercise its right to require Issuer to
repurchase the Option pursuant to this Section 7 by surrendering for such
purpose to Issuer, at its principal office, a copy of this Agreement,
accompanied by a written notice or notices stating that Grantee elects to
require Issuer to repurchase the Option in accordance with the provisions of
this Section 7. As promptly as practicable, and in any event within 30 business
days after the surrender of the Option and the receipt of such notice or notices
relating thereto, Issuer shall deliver or cause to be delivered to Grantee the
Option Repurchase Price.
(c) Issuer hereby undertakes to use its reasonable best
efforts to obtain all required regulatory, shareholder and legal approvals and
to file any required notices as promptly as practicable in order to accomplish
any repurchase contemplated by this Section 7. Nonetheless, to the extent that
Issuer is prohibited under applicable law or regulation from repurchasing the
Option in full, Issuer shall promptly so notify Grantee and thereafter deliver
or cause to be delivered, from time to time, to Grantee the portion of the
Option Repurchase Price that it is no longer prohibited from delivering, within
five business days after the date on which Issuer is no longer so prohibited;
provided, however, that if Issuer at any time after delivery of a notice of
repurchase pursuant to Section 7(b) hereof is prohibited as referred to above,
from delivering to Grantee the Option Repurchase Price in full, Grantee may
revoke its notice of repurchase of the Option either in whole or in part
whereupon, in the case of a revocation in part, Issuer shall promptly (i)
deliver to Grantee that portion of the Option Purchase Price that Issuer is not
prohibited from delivering after taking into account any such revocation and
(ii) deliver, as appropriate, to Grantee, a new Agreement evidencing the right
of Grantee to purchase that number of shares of Issuer Common Stock equal to the
number of shares of Issuer Common Stock purchasable immediately prior to the
delivery of the notice of repurchase less the number of shares of Issuer Common
Stock covered by the portion of the Option repurchased.
(d) Issuer shall not enter into any agreement with any Person
(other than Grantee or a Grantee Subsidiary) for an Acquisition Transaction
unless the other Person assumes all the obligations of Issuer pursuant to this
Section 7 in the event that Grantee elects, in its sole discretion, to require
such other Person to perform such obligations.
SECTION 8. Notwithstanding Sections 2 and 6 hereof, if Grantee has
given the notice referred to in one or more of such Sections, the exercise of
the rights specified in any such Section shall be extended (a) if the exercise
of such rights requires obtaining regulatory approvals (including any required
waiting periods) to the extent necessary to obtain all regulatory approvals for
the exercise of such rights, and (b) to the extent necessary to avoid liability
under Section 16(b) of the Exchange Act by reason of such exercise; provided,
that in no event shall any closing date occur more than 12 months after the
related notice date, and, if the closing date shall not have occurred within
such period due to the failure to obtain any required approval by the FRB, OCC,
OTS, FTC, DOJ or any other Governmental Authority despite the reasonable best
efforts of Grantee and Issuer to obtain such approvals, the exercise of the
rights shall be deemed to have been rescinded as of the related notice date. In
the event (a) Grantee receives official notice that an approval of the FRB, OCC,
FTC, DOJ or any other Governmental Authority required for the purchase and sale
of the Option Shares will not be issued or granted or (b) a closing date has not
occurred within 12 months after the related notice date due to the failure to
obtain any such required approval, Grantee shall be entitled to exercise the
Option in connection with the concurrent resale of the Option Shares pursuant to
a registration statement as provided in Section 6 hereof.
-7-
SECTION 9. Issuer hereby represents and warrants to Grantee as follows:
(a) Issuer has the requisite corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly approved by
the Board of Directors of Issuer and no other corporate proceedings on the part
of Issuer are necessary to authorize this Agreement or to consummate the
transactions so contemplated. This Agreement has been duly executed and
delivered by, and constitutes a valid and binding obligation of, Issuer,
enforceable against Issuer in accordance with its terms, subject to any required
Governmental Approval, and except as enforceability thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium and other similar
laws affecting the enforcement of creditors' rights generally and general
principles of equity.
(b) Issuer has taken all necessary corporate action to
authorize and reserve and to permit it to issue, and at all times from the date
hereof through the termination of this Agreement in accordance with its terms
will have reserved for issuance upon the exercise of the Option, that number of
shares of Issuer Common Stock equal to the maximum number of shares of Issuer
Common Stock at any time and from time to time issuable hereunder, and all such
shares, upon issuance pursuant hereto, will be duly authorized, validly issued,
fully paid, non-assessable, and will be delivered free and clear of all claims,
liens, encumbrances and security interests and not subject to any preemptive
rights.
SECTION 10. (a) Neither of the parties hereto may assign any of its
rights or delegate any of its obligations under this Agreement or the Option
created hereunder to any other Person without the express written consent of the
other party, except that Grantee may assign this Agreement to a wholly owned
subsidiary of Grantee and Grantee may assign its rights hereunder in whole or in
part after the occurrence of a Preliminary Purchase Event. The term "Grantee" as
used in this Agreement shall also be deemed to refer to Grantee's permitted
assigns.
(b) Any assignment of rights of Grantee to any permitted
assignee of Grantee hereunder shall bear the restrictive legend at the beginning
thereof substantially as follows:
THE TRANSFER OF THE OPTION REPRESENTED BY THIS ASSIGNMENT AND THE
RELATED OPTION AGREEMENT IS SUBJECT TO RESALE RESTRICTIONS ARISING UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE STATE
SECURITIES LAWS AND TO CERTAIN PROVISIONS OF AN AGREEMENT BETWEEN
CATSKILL FINANCIAL CORPORATION AND ▇▇▇▇ FINANCIAL CORPORATION ("▇▇▇▇"),
DATED AS OF JUNE __, 2000. A COPY OF SUCH AGREEMENT IS ON FILE AT THE
PRINCIPAL OFFICE OF ▇▇▇▇, AND WILL BE PROVIDED TO ANY PERMITTED
ASSIGNEE OF THE OPTION WITHOUT CHARGE UPON RECEIPT OF A WRITTEN REQUEST
THEREFOR.
SECTION 11. Each of Grantee and Issuer will use its reasonable efforts
to make all filings with, and to obtain consents of, all third parties
including, if applicable, the FRB, OCC, FTC, DOJ and other Governmental
Authorities necessary to the consummation of the transactions contemplated by
this Agreement.
SECTION 12. The parties hereto acknowledge that damages would be an
inadequate remedy for a breach of this Agreement by either party hereto and that
the obligations of the parties
-8-
hereto shall be enforceable by either party hereto through injunctive or other
equitable relief. Both parties further agree to waive any requirement for the
securing or posting of any bond in connection with the obtaining of any such
equitable relief and that this provision is without prejudice to any other
rights that the parties hereto may have for any failure to perform this
Agreement.
SECTION 13. If any term, provision, covenant or restriction contained
in this Agreement is held by a court or a federal or state regulatory agency of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions and covenants and restrictions contained in this Agreement
shall remain in full force and effect, and shall in no way be affected, impaired
or invalidated. If for any reason such court or regulatory agency determines
that Grantee is not permitted to acquire or Issuer is not permitted to
repurchase pursuant to Section 7 hereof, the full number of shares of Issuer
Common Stock provided in Section 1 hereof (as adjusted pursuant hereto), it is
the express intention of Issuer to allow Grantee to acquire or to require Issuer
to repurchase such lesser number of shares as may be permissible without any
amendment or modification hereof.
SECTION 14. All notices, requests, claims, demands and other
communications hereunder shall be deemed to have been duly given when delivered
in the manner and at the respective addresses of the parties set forth in the
Plan.
SECTION 15. This Agreement, the rights and obligations of the parties
hereto, and any claims or disputes relating thereto shall be governed by and
construed in accordance with the laws of the State of Delaware (but not
including the choice of law rules thereof).
SECTION 16. This Agreement may be executed in counterparts, each of
which shall be deemed to be an original, but all of which shall constitute one
and the same agreement and shall be effective at the time of execution and
delivery.
SECTION 17. Except as otherwise expressly provided herein, each of the
parties hereto shall bear and pay all costs and expenses incurred by it or on
its behalf in connection with the transactions contemplated hereunder.
SECTION 18. Except as otherwise expressly provided herein or in the
Plan, this Agreement contains the entire agreement between the parties with
respect to the transactions contemplated hereunder and supersedes all prior
arrangements or understandings with respect thereof, written or oral. The terms
and conditions of this Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective successors and permitted assigns.
Nothing in this Agreement, expressed or implied, is intended to confer upon any
party, other than the parties hereto, and their respective successors except as
assigns, any rights, remedies, obligations or liabilities under or by reason of
this Agreement, except as expressly provided herein.
SECTION 19. Capitalized terms used in this Agreement and not defined
herein but defined in the Plan shall have the meanings assigned therein.
SECTION 20. Nothing contained in this Agreement shall be deemed to
authorize or require Issuer or Grantee to breach any provision of the Plan or
any provision of law applicable to the Grantee or Issuer.
SECTION 21. In the event that any selection or determination is to be
made by Grantee or a subsequent holder hereunder and at the time of such
selection or determination there is more than one Grantee or holders, such
selection shall be made by a majority in interest of such Grantees or holders.
-9-
SECTION 22. In the event of any exercise of the option by Grantee,
Issuer and such Grantee shall execute and deliver all other documents and
instruments and take all other action that may be reasonably necessary in order
to consummate the transactions provided for by such exercise.
SECTION 23. Except to the extent Grantee exercises the Option, Grantee
shall have no rights to vote or receive dividends or have any other rights as a
shareholder with respect to shares of Issuer Common Stock covered hereby.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, each of the parties has caused this Option
Agreement to be executed and delivered on its behalf by their respective
officers thereunto duly authorized, all as of the date first above written.
CATSKILL FINANCIAL CORPORATION
By:
------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chairman, President and Chief Executive
Officer
▇▇▇▇ FINANCIAL CORPORATION
By:
------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Title: Chairman, President and Chief Executive
Officer
-11-
Exhibit C
CERTIFICATE OF MERGER
CHARLIE ACQUISITION CORPORATION
INTO
CATSKILL FINANCIAL CORPORATION
Pursuant to Title 8, Section 251 of the General Corporation Law of the
State of Delaware, Charlie Acquisition Corporation, a corporation organized and
existing under the law of the State of Delaware ("Acquisition Corp."), and
Catskill Financial Corporation, a corporation organized and existing under the
law of the State of Delaware ("Catskill"), do hereby certify to the following
facts relating to the merger of Acquisition Corp. with and into Catskill:
FIRST: The name and state of incorporation of each constituent entity
that is a party to the Merger is as follows:
Name State of Incorporation
---- ----------------------
Charlie Acquisition Corporation Delaware
Catskill Financial Corporation Delaware
SECOND: An Agreement and Plan of Merger, dated as of June ___, 2000, by
and among ▇▇▇ Financial Corporation, Acquisition Corporation and Catskill (the
"Agreement and Plan of Merger"), has been approved, adopted, certified, executed
and acknowledged by each of the constituent corporations in accordance with the
requirements of Section 251 of the General Corporation Law of the State of
Delaware.
THIRD: Pursuant to the Agreement and Plan of Merger, the surviving
corporation of the Merger is Catskill. Catskill shall continue its existence
under its present name pursuant to the provisions of the General Corporation Law
of the State of Delaware.
FOURTH: The Merger shall be effective as of ____________ __, 2000 (the
"Effective Time").
FIFTH: At the Effective Time, the certificate of incorporation, as
amended, of Catskill shall be amended to read in its entirety as set forth in
Exhibit I hereto.
SIXTH: The executed Agreement and Plan of Merger is on file at the
office of Catskill at the following address:
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
SEVENTH: A copy of the Agreement and Plan of Merger will be furnished
by Catskill, on request and without cost, to any shareholder of any constituent
corporation.
IN WITNESS WHEREOF, Catskill has caused this Certificate of Merger to
be duly executed as of this ___ day of ___________, ____.
CATSKILL FINANCIAL CORPORATION
By:
---------------------------------------
Name:
Title:
EXHIBIT I
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
CATSKILL FINANCIAL CORPORATION
ARTICLE 1. NAME
The name of this corporation is Catskill Financial Corporation (the
"CORPORATION").
ARTICLE 2. REGISTERED OFFICE AND AGENT
The registered office of the Corporation shall be located at ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ in the County of New Castle. The registered
agent of the Corporation at such address shall be Corporation Trust Company.
ARTICLE 3. PURPOSE AND POWERS
The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware (the "DELAWARE GENERAL CORPORATION LAW"). The
Corporation shall have all power necessary or convenient to the conduct,
promotion or attainment of such acts and activities.
ARTICLE 4. CAPITAL STOCK
4.1. AUTHORIZED SHARES
The total number of shares of all classes of stock that the
Corporation Corporation shall have the authority to issue is 1,000. All of such
shares shall be common stock having a par value of $.01 per share ("Common
Stock").
4.2. COMMON STOCK
4.2.1. RELATIVE RIGHTS
Each share of Common Stock shall have the same relative rights as and
be identical in all respects to all the other shares of Common Stock.
4.2.2. DIVIDENDS
Dividends may be paid or funds may be set aside for payment only out
of any assets legally available for the payment of dividends, when and as
declared by the Board of Directors of the Corporation.
4.2.3. DISSOLUTION, LIQUIDATION, WINDING UP
In the event of any dissolution, liquidation, or winding up of the
Corporation, whether voluntary or involuntary, the holders of the Common Stock
shall become entitled to participate in the distribution of any assets of the
Corporation remaining after the Corporation shall have paid, or provided for
payment of, all debts and liabilities of the Corporation.
4.2.4. VOTING RIGHTS
Each holder of shares of Common Stock shall be entitled to attend all
special and annual meetings of the stockholders of the Corporation and to cast
one vote for each outstanding share of Common Stock so held upon any matter or
thing (including, without limitation, the election of one or more directors)
properly considered and acted upon by the stockholders.
ARTICLE 5. BOARD OF DIRECTORS
5.1. NUMBER; ELECTION
The number of directors of the Corporation shall be such number as
from time to time shall be fixed by, or in the manner provided in, the bylaws of
the Corporation. Unless and except to the extent that the bylaws of the
Corporation shall otherwise require, the election of directors of the
Corporation need not be by written ballot. Except as otherwise provided in this
Certificate of Incorporation, each director of the Corporation shall be entitled
to one vote per director on all matters voted or acted upon by the Board of
Directors.
5.2. MANAGEMENT OF BUSINESS AND AFFAIRS OF THE CORPORATION
The business and affairs of the Corporation shall be managed by or
under the direction of the Board of Directors.
5.3. LIMITATION OF LIABILITY
No director of the Corporation shall be liable to the Corporation or
its stockholders for monetary damages for breach of fiduciary duty as a
director, provided that this provision shall not eliminate or limit the
liability of a director (a) for any breach of the director's duty of loyalty to
the Corporation or its stockholders; (b) for acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation of law; (c) under
Section 174 of the Delaware General Corporation Law; or (d) for any transaction
from which the director derived an improper personal benefit. Any repeal or
modification of
this ARTICLE 5.3 shall be prospective only and shall not adversely affect any
right or protection of, or any limitation of the liability of, a director of the
Corporation existing at, or arising out of facts or incidents occurring prior
to, the effective date of such repeal or modification.
ARTICLE 6. COMPROMISE OR ARRANGEMENTS
Whenever a compromise or arrangement is proposed between the
Corporation and its creditors or any class of them and/or between the
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of the Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for the Corporation under the
provisions of Section 291 of Title 8 of the Delaware Code or on the application
of trustees in dissolution or of any receiver or receivers appointed for the
Corporation under the provisions of Section 279 of Title 8 of the Delaware Code
order a meeting of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of the Corporation, as the case may be, to
be summoned in such manner as the said court directs. If a majority in number
representing three-fourths in value of the creditors or class of creditors,
and/or of the stockholders or class of stockholders of the Corporation, as the
case may be, agree to any compromise or arrangement and to any reorganization of
the Corporation as a consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders or class of
stockholders, of the Corporation, as the case may be, and also on the
Corporation.
ARTICLE 7. AMENDMENT OF BYLAWS
In furtherance and not in limitation of the powers conferred by the
Delaware General Corporation Law, the Board of Directors of the Corporation is
expressly authorized and empowered to adopt, amend and repeal the bylaws of the
Corporation.
ARTICLE 8. RESERVATION OF RIGHT TO AMEND CERTIFICATE OF INCORPORATION
The Corporation reserves the right at any time, and from time to
time, to amend, alter, change, or repeal any provision contained in this
Certificate of Incorporation, and other provisions authorized by the laws of the
State of Delaware at the time in force may be added or inserted, in the manner
now or hereafter prescribed by law; and all rights, preferences, and privileges
of any nature conferred upon stockholders, directors, or any other persons by
and pursuant to this Certificate of Incorporation in its present form or as
hereafter amended are granted subject to the rights reserved in this ARTICLE 8.
Exhibit D
CATSKILL FINANCIAL CORPORATION
STOCKHOLDER AGREEMENT
This STOCKHOLDER AGREEMENT, dated as of June __, 2000, is entered
into by and among ▇▇▇▇ Financial Corporation, a Delaware corporation ("▇▇▇▇"),
and the stockholders of Catskill Financial Corporation, a Delaware corporation
("Catskill"), identified on Schedule I hereto (collectively, the
"Stockholders"), who are directors, executive officers or other affiliates of
Catskill (for purposes of Rule 145 under the Securities Act of 1933, as
amended).
WHEREAS, Troy, Charlie Acquisition Corporation, a Delaware
corporation ("Merger Sub") and Catskill have entered into an Agreement and Plan
of Merger, dated as of June __, 2000 (the "Agreement"), which is conditioned
upon the execution of this Stockholder Agreement and which provides for, among
other things, the merger of Merger Sub with and into Catskill, with Catskill
being the surviving corporation and becoming a wholly owned subsidiary of ▇▇▇▇,
in a cash transaction (the "Merger"); and
WHEREAS, in order to induce ▇▇▇▇ to enter into and consummate the
Agreement, each of the Stockholders agrees to, among other things, vote in favor
of the Agreement, the Merger and the other transactions contemplated by the
Agreement in his or her capacity as a stockholder of Catskill;
NOW, THEREFORE in consideration of the premises, the mutual
covenants and agreements set forth herein and other good and valuable
consideration, the sufficiency of which is hereby acknowledged, the parties
hereto agree as follows:
1. OWNERSHIP OF CATSKILL COMMON STOCK. Each Stockholder represents and
warrants that the number of shares of Catskill common stock, par value $0.01 per
share ("Catskill Common Stock"), set forth opposite such Stockholder's name on
Schedule I hereto is the total number of shares of Catskill Common Stock over
which such person has "beneficial ownership" within the meaning of Rule 13d-3
under the Securities Exchange Act of 1934, as amended, except that the
provisions of Rule 13d-3(d)(1)(i) shall be considered without any limit as to
time.
2. AGREEMENTS OF THE STOCKHOLDERS. Each Stockholder covenants and
agrees that:
(a) Such Stockholder shall, at any meeting of the holders of
Catskill Common Stock called for the purpose (or in connection with any action
taken by written consent), vote or cause to be voted all shares of Catskill
Common Stock with respect to which such Stockholder has voting power (including
the power to vote or to direct the voting of) whether owned as of the date
hereof or hereafter acquired (the "Shares") (i) in favor of the Agreement, the
Merger and the other transactions contemplated by the Agreement and (ii) against
any plan or proposal pursuant to which Catskill is to be acquired by or merged
with, or pursuant to which Catskill proposes to sell all or substantially all of
its assets and liabilities to, any person, entity or group (other than ▇▇▇▇ or
any affiliate thereof) or any other action that is inconsistent with the
Agreement or the transactions contemplated thereby.
(b) Stockholder hereby agrees to timely deliver to ▇▇▇▇ a duly
executed proxy in the form attached hereto as Exhibit A (the "Proxy"), such
Proxy to cover all of the Shares. In the event that Stockholder is unable to
provide any such Proxy in a timely manner, Stockholder hereby
grants ▇▇▇▇ a power of attorney to execute and deliver such Proxy for and on
behalf of Stockholder, such power of attorney, which being coupled with an
interest, shall survive any death, disability, bankruptcy, or any other such
impediment of Stockholder. Upon execution of this Stockholder Agreement by
Stockholder, Stockholder hereby revokes any and all prior proxies or powers of
attorney given by Stockholder with respect to the Shares and agrees not grant
any subsequent proxies or powers of attorney with respect to the Shares until
the earlier of (i) such date and time as the Merger shall become effective in
accordance with the terms and provisions of the Agreement or (ii) the date of
termination of this Stockholder Agreement pursuant to Section 4 hereto.
(c) Except as otherwise expressly permitted hereby, such Stockholder
shall not sell, pledge, transfer or otherwise dispose of his or her shares of
Catskill Common Stock.
(d) Such Stockholder shall not in his or her capacity as a
stockholder of Catskill directly or indirectly encourage or solicit, initiate or
hold discussions or negotiations with, or provide any information to, any
person, entity or group (other than ▇▇▇▇ or an affiliate thereof) concerning any
merger, sale of all or substantially all of the assets or liabilities not in the
ordinary course of business, sale of shares of capital stock or similar
transaction involving Catskill or otherwise inconsistent with the Agreement or
the transactions contemplated thereby. Nothing herein shall impair such
Stockholder's fiduciary obligations as a director of Catskill.
(e) Stockholder shall use his or her best efforts to take or cause
to be taken all action, and to do or cause to be done all things necessary,
proper or advisable under applicable laws and regulations to consummate and make
effective the Merger contemplated by the Agreement.
3. SUCCESSORS AND ASSIGNS. A Stockholder may sell, pledge, transfer or
otherwise dispose of his or her shares of Catskill Common Stock only with the
prior written consent of ▇▇▇▇ and if the acquirer of such Catskill Common Stock
agrees in writing to be bound by this Stockholder Agreement.
4. TERMINATION. The parties agree and intend that this Stockholder
Agreement be a valid and binding agreement enforceable against the parties
hereto and that damages and other remedies at law for the breach of this
Stockholder Agreement are inadequate. This Stockholder Agreement may be
terminated at any time prior to the consummation of the Merger by the written
consent of the parties hereto and shall be automatically terminated in the event
that the Agreement is terminated in accordance with its terms; provided,
however, that if the holders of Catskill Common Stock fail to approve the
Agreement or Catskill fails to hold a stockholders' meeting to vote on the
Agreement, then (i) Section 2(a) clause (ii) hereof shall continue in effect as
to any plan or proposal received by Catskill from any person, entity or group
(other than ▇▇▇▇ or any affiliate thereof) prior to the termination of the
Agreement or within 240 days after such termination ("Plan or Proposal") and
(ii) Section 2(c) hereof shall continue in effect to preclude a sale (other than
pursuant to normal brokers transactions on the Nasdaq Stock Market), pledge
(other than to a bona fide financial institution or recognized securities
dealer), transfer or other disposition directly or indirectly to any such
person, entity or group in connection with any such Plan or Proposal, except
upon consummation of such Plan or Proposal.
5. NOTICES. Notices may be provided to ▇▇▇▇ and the Stockholders in
the manner specified in the Agreement, with all notices to the Stockholders
being provided to them at the addresses set forth at Schedule I.
6. GOVERNING LAW. This Stockholder Agreement shall be governed by the
laws of the State of Delaware, without giving effect to the principles of
conflicts of laws thereof.
-2-
7. COUNTERPARTS. This Stockholder Agreement may be executed in one
or more counterparts, all of which shall be considered one and the same and each
of which shall be deemed an original.
8. HEADINGS. The Section headings contained herein are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Stockholder Agreement.
9. REGULATORY APPROVAL. If any provision of this Stockholder Agreement
requires the approval of any regulatory authority in order to be enforceable,
then such provision shall not be effective until such approval is obtained;
provided, however, that the foregoing shall not affect the enforceability of any
other provision of this Stockholder Agreement.
SIGNATURE PAGE FOLLOWS
-3-
IN WITNESS WHEREOF, ▇▇▇▇, by a duly authorized officer, and each of the
Stockholders have caused this Stockholder Agreement to be executed and delivered
as of the day and year first above written.
▇▇▇▇ FINANCIAL CORPORATION
By:
-----------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Chairman, President and Chief Executive Officer
STOCKHOLDERS:
----------------------------------------- -----------------------------------
----------------------------------------- -----------------------------------
----------------------------------------- -----------------------------------
----------------------------------------- -----------------------------------
----------------------------------------- -----------------------------------
----------------------------------------- -----------------------------------
----------------------------------------- -----------------------------------
----------------------------------------- -----------------------------------
SCHEDULE I
Number of Shares of Catskill Common
Name and Address of Stockholder Stock Beneficially Owned
------------------------------- -----------------------------------
IRREVOCABLE PROXY
TO VOTE STOCK OF
CATSKILL FINANCIAL CORPORATION
The undersigned stockholder of Catskill Financial Corporation,
a Delaware corporation ("Catskill"), hereby irrevocably (to the full extent
permitted by the Delaware General Corporation Law) appoints the members of the
Board of Directors of ▇▇▇▇ Financial Corporation, a Delaware corporation
("▇▇▇▇"), and each of them, or any other designee of ▇▇▇▇, as the sole and
exclusive attorneys and proxies of the undersigned, with full power of
substitution and resubstitution, to vote and exercise all voting and related
rights (to the full extent that the undersigned is entitled to do so) with
respect to all of the shares of capital stock of Catskill that now are or
hereafter may be beneficially owned by the undersigned, and any and all other
shares or securities of Catskill issued or issuable in respect thereof on or
after the date hereof (collectively, the "Shares") in accordance with the terms
of this Irrevocable Proxy. The Shares beneficially owned by the undersigned
stockholder of Catskill as of the date of this Irrevocable Proxy are listed on
the final page of this Irrevocable Proxy. Upon the undersigned's execution of
this Irrevocable Proxy, any and all prior proxies given by the undersigned with
respect to any Shares are hereby revoked and the undersigned agrees not to grant
any subsequent proxies with respect to the Shares until after the Expiration
Date (as defined below).
This Irrevocable Proxy is irrevocable (to the extent provided
in the Delaware General Corporation Law), is coupled with an interest,
including, but not limited to that certain Agreement and Plan of Merger dated as
of even date herewith by and among Troy, Charlie Acquisition Corporation
("Merger Sub") and Catskill ("Merger Agreement") and is granted in consideration
of ▇▇▇▇ entering into the Merger Agreement for the merger of Merger Sub into
Catskill, with Catskill being the surviving corporation and becoming a wholly
owned subsidiary of ▇▇▇▇ (the "Merger"). As used herein, the term "Expiration
Date" shall mean the earlier to occur of (i) such date and time as the Merger
shall become effective in accordance with the terms and provisions of the Merger
Agreement, and (ii) the date of termination of the Merger Agreement.
The attorneys and proxies named above, and each of them are
hereby authorized and empowered by the undersigned, at any time prior to the
Expiration Date, to act as the undersigned's attorney and proxy to vote the
Shares, and to exercise all voting and other rights of the undersigned with
respect to the Shares (including, without limitation, the power to execute and
deliver written consents pursuant to the Delaware General Corporation Law), at
every annual, special or adjourned meeting of the stockholders of Catskill and
in every written consent in lieu of such meeting:
in favor of approval and adoption of the Merger Agreement and
of the transactions contemplated thereby.
The attorneys and proxies named above may not exercise this
Irrevocable Proxy on any other matter except as provided above. The undersigned
stockholder may vote the Shares on all other matters.
All authority herein conferred shall survive the death or
incapacity of the undersigned and any obligation of the undersigned hereunder
shall be binding upon the heirs, personal representatives, successors and
assigns of the undersigned.
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This Irrevocable Proxy shall terminate on, and be of no
further force or effect after, the Expiration Date.
(SIGNATURE PAGE FOLLOWS)
-2-
This Irrevocable Proxy is coupled with an interest as
aforesaid and is irrevocable.
Dated: June __, 2000
-------------------------------------
(Signature of Stockholder)
-------------------------------------
(Print Name of Stockholder)
Shares beneficially owned:
-------------------------------------
SIGNATURE PAGE TO IRREVOCABLE PROXY
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