EXHIBIT 1.1
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
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..................................10
3.9 Legal Proceedings.....................................................10
3.10 Taxes and Tax Returns.................................................10
3.11 Employee Plans........................................................12
3.12 Certain Contracts.....................................................13
3.13 Agreements with Regulatory Agencies...................................14
3.14 State Takeover Laws; Certificate of Incorporation.....................14
3.15 Environmental Matters.................................................14
3.16 Reserves for Losses...................................................15
3.17 Properties and Assets.................................................15
3.18 Insurance.............................................................16
3.19 Compliance with Applicable Laws.......................................16
3.20 Loans.................................................................16
3.21 Affiliates............................................................17
3.22 Ownership of ▇▇▇▇ Common Stock........................................18
3.23 Fairness Opinion......................................................18
3.24 Catskill Information..................................................18
3.25 Sale of Securities Portfolio..........................................18
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF ▇▇▇▇.........................................18
4.1 Corporate Organization................................................18
4.2 Authority; No Violation...............................................19
4.3 Regulatory Approvals..................................................20
4.4 ▇▇▇▇ Information......................................................20
4.5 Adequate Resources....................................................20
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ARTICLE V COVENANTS RELATING TO CONDUCT OF BUSINESS.......................................21
5.1 Covenants of Catskill.................................................21
5.2 Merger Covenants......................................................24
5.3 Compliance with Antitrust Laws........................................24
5.4 Securities Portfolio Sale.............................................24
ARTICLE VI ADDITIONAL AGREEMENTS..........................................................25
6.1 Regulatory Matters....................................................25
6.2 Access to Information.................................................26
6.3 Shareholder Meeting...................................................26
6.4 Legal Conditions to Merger............................................26
6.5 Employees.............................................................27
6.6 Indemnification.......................................................28
6.7 Subsequent Interim and Annual Financial Statements....................29
6.8 Additional Agreements.................................................29
6.9 Advice of Changes.....................................................30
6.10 Current Information...................................................30
6.11 Execution and Authorization of Bank Merger Agreement..................30
6.12 Transaction Expenses of Catskill......................................30
6.13 Further Actions of Catskill...........................................31
ARTICLE VII CONDITIONS PRECEDENT..........................................................31
7.1 Conditions to Each Party's Obligation To Effect the Merger............31
7.2 Conditions to Obligations of ▇▇▇▇.....................................32
7.3 Conditions to Obligations of Catskill.................................33
ARTICLE VIII TERMINATION AND AMENDMENT....................................................34
8.1 Termination...........................................................34
8.2 Effect of Termination.................................................35
8.3 Amendment.............................................................35
8.4 Extension; Waiver.....................................................35
ARTICLE IX GENERAL PROVISIONS.............................................................36
9.1 Closing...............................................................36
9.2 Nonsurvival of Representations, Warranties and Agreements.............36
9.3 Expenses; Breakup Fee.................................................36
9.4 Notices...............................................................36
9.5 Interpretation........................................................37
9.6 Counterparts..........................................................37
9.7 Entire Agreement......................................................37
9.8 Governing Law.........................................................38
9.9 Enforcement of Agreement..............................................38
9.10 Severability..........................................................38
9.11 Publicity.............................................................38
9.12 Assignment; Limitation of Benefits....................................38
9.13 Additional Definitions................................................38
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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
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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.
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
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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.
(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
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(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 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
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▇▇▇▇. 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 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.
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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.
(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
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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.
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
7
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.
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.
8
(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.
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
9
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.
(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
10
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 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
11
(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 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
12
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.
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
13
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.
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
14
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 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
15
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 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.
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(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 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
17
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.
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
18
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 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,
19
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.
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.
20
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;
(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
21
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;
(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,
22
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;
(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
23
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 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.
24
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.
(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)
25
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.
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,
26
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.
(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
27
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 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
28
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.
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 ▇▇▇▇.
29
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.
(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
30
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.
31
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.
32
(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.
33
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
34
any third party proposal that is inconsistent with the transactions contemplated
by this Agreement or (iv) violates Section 5.1(e) of this Agreement;
(h) 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
35
respect to, any subsequent or other failure.
ARTICLE IX
GENERAL PROVISIONS
9.1 Closing.
Subject to the terms and conditions of this Agreement, the closing
of the Merger (the "Closing") will take place at 10:00 a.m. at the 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.: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
36
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.
37
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 ▇▇▇▇ Common
Stock may become listed), so long as this Agreement is in effect, neither ▇▇▇▇
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. ▇▇▇▇ 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.
38
"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 ▇▇▇▇ 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 ▇▇▇▇ 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 ▇▇▇▇ 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]
39
IN WITNESS WHEREOF, ▇▇▇▇, 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: /s/ ▇▇▇▇▇ ▇. ▇'▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
----------------------------------------- --------------------------------------
Name: ▇▇▇▇▇ ▇. ▇'▇▇▇▇▇ Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Title: Senior Vice President and Title: Chairman, President and Chief
Secretary Executive Officer
CATSKILL FINANCIAL CORPORATION
ATTEST:
By: /s/ ▇▇▇▇▇ ▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------------- --------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇ Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Director Title: Chairman, President and Chief
Executive Officer
CHARLIE ACQUISITION CORPORATION
ATTEST:
By: /s/ ▇▇▇▇▇ ▇. ▇'▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
----------------------------------------- --------------------------------------
Name: ▇▇▇▇▇ ▇. ▇'▇▇▇▇▇ Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Title: Secretary Title: President and Chief Executive Officer