Exhibit 10.1
AGREEMENT AND PLAN OF MERGER
By and Between
ONEIDA FINANCIAL CORP.
THE ONEIDA SAVINGS BANK
and
▇▇▇▇▇▇ BANK CORPORATION
THE NATIONAL BANK OF ▇▇▇▇▇▇
DATED AS OF SEPTEMBER 12, 2006
v
AGREEMENT AND PLAN OF MERGER
TABLE OF CONTENTS
Page
ARTICLE I-CERTAIN DEFINITIONS.................................................................................4
Section 1.01 Definitions.................................................................................4
ARTICLE II-THE MERGER AND EXCHANGE OF SHARES.................................................................10
Section 2.01 The Merger; Effects of Merger; Surviving Corporation.......................................10
Section 2.02 Conversion of Shares.......................................................................11
Section 2.03 Exchange Procedures........................................................................12
Section 2.04 Closing....................................................................................13
ARTICLE III-REPRESENTATIONS AND WARRANTIES OF VBC AND ▇▇▇▇▇▇ BANK............................................13
Section 3.01 Organization...............................................................................13
Section 3.02 Capitalization.............................................................................14
Section 3.03 Authority; No Violation....................................................................15
Section 3.04 Consents...................................................................................16
Section 3.05 Regulatory Reports; Financial Statements...................................................16
Section 3.06 Taxes......................................................................................17
Section 3.07 No Material Adverse Effect.................................................................17
Section 3.08 Contracts..................................................................................17
Section 3.09 Ownership of Property; Insurance Coverage..................................................19
Section 3.10 Legal Proceedings..........................................................................20
Section 3.11 Compliance With Applicable Law.............................................................20
Section 3.12 ERISA/Employee Compensation................................................................21
Section 3.13 Brokers, Finders and Financial Advisors....................................................23
Section 3.14 Environmental Matters......................................................................23
Section 3.15 Loan Portfolio.............................................................................24
Section 3.16 Related Party Transactions.................................................................26
Section 3.17 Schedule of Termination Benefits...........................................................26
Section 3.18 Deposits...................................................................................26
Section 3.19 Antitakeover Provisions Inapplicable; Required Vote of Stockholders........................26
Section 3.20 Fairness Opinion...........................................................................26
Section 3.21 Administration of Fiduciary Accounts.......................................................27
Section 3.22 Derivative Transactions....................................................................27
Section 3.23 Information in the Proxy Statement.........................................................27
Section 3.24 Good Faith.................................................................................27
Section 3.25 Community Reinvestment Act Compliance......................................................28
Section 3.26 Anti-Money Laundering Compliance...........................................................28
ARTICLE IV-REPRESENTATIONS AND WARRANTIES OF ONEIDA FINANCIAL................................................28
Section 4.01 Organization...............................................................................28
Section 4.02 Authority; No Violation....................................................................29
Section 4.03 Consents...................................................................................30
Section 4.04 Compliance With Applicable Law.............................................................30
Section 4.05 Information to be Supplied.................................................................31
Section 4.06 Financing..................................................................................31
Section 4.07 Legal Proceedings..........................................................................31
ARTICLE V-COVENANTS OF THE PARTIES...........................................................................31
i
Section 5.01 Conduct of VBC's Business..................................................................31
Section 5.02 Access; Confidentiality....................................................................36
Section 5.03 Regulatory Matters and Consents............................................................37
Section 5.04 Taking of Necessary Action.................................................................37
Section 5.05 Certain Agreements.........................................................................38
Section 5.06 No Other Bids and Related Matters..........................................................40
Section 5.07 Duty to Advise; Duty to Update the VBC Disclosure Schedules................................41
Section 5.08 Conduct of Oneida Financial's Business.....................................................41
Section 5.09 Board and Committee Minutes................................................................42
Section 5.10 Undertakings by VBC and Oneida Financial...................................................42
Section 5.11 Employee and Termination Benefits; Directors and Management................................45
Section 5.12 Duty to Advise; Duty to Update Oneida Financial's Disclosure Schedules.....................48
Section 5.13 Bank and Related Merger Transactions.......................................................49
ARTICLE VI-CONDITIONS........................................................................................49
Section 6.01 Conditions to Each Party's Obligations under this Agreement................................49
Section 6.02 Conditions to VBC's Obligations under this Agreement.......................................50
Section 6.03 Conditions to Oneida Financial's and Oneida Savings' Obligations under this Agreement......50
ARTICLE VII-TERMINATION, WAIVER AND AMENDMENT................................................................51
Section 7.01 Termination................................................................................51
Section 7.02 Effect of Termination......................................................................53
ARTICLE VIII-MISCELLANEOUS...................................................................................53
Section 8.01 Expenses...................................................................................53
Section 8.02 Non-Survival of Representations and Warranties.............................................54
Section 8.03 Amendment, Extension and Waiver............................................................54
Section 8.04 Entire Agreement...........................................................................54
Section 8.05 No Assignment..............................................................................55
Section 8.06 Notices....................................................................................55
Section 8.07 Captions...................................................................................55
Section 8.08 Counterparts...............................................................................56
Section 8.09 Severability...............................................................................56
Section 8.10 Specific Performance.......................................................................56
Section 8.11 Governing Law..............................................................................56
Exhibits:
Exhibit A Form of VBC Voting Agreement
Exhibit B Form of Interim Merger Agreement
ii
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of
September 12, 2006, is by and between Oneida Financial Corp., a Federal
corporation ("Oneida Financial"), The Oneida Savings Bank, a New York-chartered
savings bank ("Oneida Savings"), ▇▇▇▇▇▇ Bank Corporation, a New York corporation
("VBC") and The National Bank of ▇▇▇▇▇▇, a national bank ("Vernon Bank"). Each
of Oneida Financial, Oneida Savings, VBC and ▇▇▇▇▇▇ Bank is sometimes
individually referred to herein as a "party," and Oneida Financial, Oneida
Savings, VBC and ▇▇▇▇▇▇ Bank are sometimes collectively referred to herein as
the "parties."
RECITALS
1. Oneida Financial is a registered savings and loan holding company,
with its principal offices located in Oneida, New York. Oneida Financial owns
all of the issued and outstanding capital stock of Oneida Savings, both with
principal offices located in Oneida, New York.
2. VBC is a registered bank holding company, with its principal offices
located in Vernon, New York. VBC owns all of the issued and outstanding capital
stock of ▇▇▇▇▇▇ Bank, with ▇▇▇▇▇▇ Bank's principal offices located in Vernon,
New York.
3. The respective Boards of Directors of Oneida Financial, Oneida
Savings, VBC and ▇▇▇▇▇▇ Bank ▇▇▇▇ it advisable and in the best interests of
their stockholders to consummate the business combination transaction
contemplated by this Agreement in which: (i) Oneida Savings will incorporate
Oneida Merger Corp., which, subject to the terms and conditions set forth
herein, will merge with and into VBC with VBC as the surviving corporation (the
"Merger"), and in connection therewith each outstanding share of VBC Common
Stock will be cancelled in exchange for the cash payments specified herein; (ii)
immediately following (i), VBC will liquidate into Oneida Savings with the
result that Oneida Savings will acquire the assets and liabilities of VBC and
VBC shall cease to exist (the "Company Liquidation"). Immediately thereafter,
the assets and liabilities of ▇▇▇▇▇▇ Bank (other than municipal deposits and
certain permitted assets) will be transferred to Oneida Savings, and ▇▇▇▇▇▇ Bank
will merge with and into Oneida Savings' commercial bank subsidiary, State Bank
of Chittenango ("State Bank"), with State Bank as the surviving bank (the "Bank
Merger").
4. As an inducement to Oneida Financial to enter into this Agreement,
certain stockholders of VBC have entered into that certain VBC Voting Agreement
with Oneida Financial pursuant to which, among other things, such VBC
stockholders will agree to vote their shares of VBC Common Stock in favor of
this Agreement and the transactions contemplated by this Agreement.
5. The parties desire to provide for certain undertakings, conditions,
representations, warranties and covenants in connection with the Merger, and the
other transactions contemplated by this Agreement and the VBC Voting Agreement.
3
6. In consideration of the premises and of the mutual representations,
warranties and covenants herein contained and intending to be legally bound
hereby, the parties hereby agree as follows:
ARTICLE I-CERTAIN DEFINITIONS
Section 1.01 Definitions
Except as otherwise provided herein, as used in this Agreement, the
following terms shall have the indicated meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"Acquisition Proposal" has the meaning set forth in Section
5.06.
"Affiliate" means, with respect to any Person, any Person who
directly, or indirectly, through one or more intermediaries, controls,
or is controlled by, or is under common control with, such Person and,
without limiting the generality of the foregoing, includes any
executive officer or director of such Person and any Affiliate of such
executive officer or director.
"Agreement" means this agreement, and any amendment or
supplement hereto, which constitutes a "plan of merger" between Oneida
Financial, Oneida Merger Corp., Oneida Savings, VBC and ▇▇▇▇▇▇ Bank.
"Applications" means the applications for regulatory approval
which are required by the transactions contemplated hereby.
"Bank Merger" has the meaning given to that term in the
recitals of this Agreement.
"BHCA" means the Bank Holding Company Act of 1956, as amended.
"Business Day" means any day other than a Saturday, Sunday or
Federal holiday.
"Certificate" has the meaning given to that term in Section
2.02(iv) of this Agreement.
"Closing" means the corporate action taken by the parties
following the approval of this Agreement by stockholders of VBC and
Regulatory Authorities and all relevant conditions of this Agreement
having been satisfied or waived. At Closing, the parties shall exchange
certificates, letters and other documents required by this Agreement.
"Closing Date" means the date determined by Oneida Financial,
in its sole discretion, upon three (3) days prior written notice to
VBC, but in no event later than thirty (30) days after the last
condition precedent pursuant to this Agreement has been
4
fulfilled or waived (including the expiration of any applicable waiting
period), or such other date as to which Oneida Financial and VBC shall
mutually agree.
"Closing Expense Statement" has the meaning given to that term
in Section 5.10(c) of this Agreement.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company Liquidation" has the meaning given to that term in
the recitals of this Agreement.
"Compensation and Benefit Plans" means the benefit plans of
VBC or any VBC subsidiary described in Section 3.12 hereof.
"Confidentiality Agreement" means the letter agreement between
Oneida Financial and VBC dated May 19, 2006.
"Department" means the Banking Department of the State of New
York.
"DIF" means the Deposit Insurance Fund administered by the
FDIC.
"Dissenters' Shares" means shares of VBC Common Stock that
have not been voted in favor of approval of the Merger and with respect
to which appraisal rights have been perfected in accordance with
Section 623 of the NYBCL.
"DOL" means the U.S. Department of Labor.
"Environmental Laws" means any Federal or state law, statute,
rule, regulation, code, order, judgment, decree, injunction, common law
or agreement with any Federal or state governmental authority relating
to (i) the protection, preservation or restoration of the environment
(including air, water vapor, surface water, groundwater, drinking water
supply, surface land, subsurface land, plant and animal life or any
other natural resource), (ii) human health or safety relating to the
presence of Hazardous Material, or (iii) exposure to, or the use,
storage, recycling, treatment, generation, transportation, processing,
handling, labeling, production, release or disposal of, Hazardous
Material, in each case as amended and now in effect.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated from time to time
thereunder.
"Exchange Agent" means the entity selected by Oneida Financial
and agreed to by VBC, as provided in Section 2.03(a) of this Agreement.
5
"FDIA" means the Federal Deposit Insurance Act, as amended.
"FDIC" means the Federal Deposit Insurance Corporation.
"FHLB" means a Federal Home Loan Bank.
"FRB" means the Board of Governors of the Federal Reserve
System.
"GAAP" means accounting principles generally accepted in the
United States of America as in effect at the relevant date and
consistently applied.
"Hazardous Material" means any substance (whether solid,
liquid or gas) which is or could be detrimental to human health or
safety or to the environment, currently or hereafter listed, defined,
designated or classified as hazardous, toxic, radioactive or dangerous,
or otherwise regulated, under any Environmental Law, whether by type or
by quantity, including any substance containing any such substance as a
component. Hazardous Material includes, without limitation, any toxic
waste, pollutant, contaminant, hazardous substance, toxic substance,
hazardous waste, special waste, industrial substance, oil or petroleum,
or any derivative or by-product thereof, radon, radioactive material,
asbestos, asbestos-containing material, urea formaldehyde foam
insulation, lead and polychlorinated biphenyl.
"HOLA" means the Home Owners' Loan Act, as amended.
"IRC" means the Internal Revenue Code of 1986, as amended.
"IRS" means the Internal Revenue Service.
"Knowledge" as used with respect to a Person (including
references to such Person being aware of a particular matter) means
those facts that are known, or should have been known, by the officers
and directors of such Person, and includes any facts, matters or
circumstances set forth in any written notice from any Regulatory
Authority or any other material written notice received by that Person.
"Loan Property" shall have the meaning given to such term in
Section 3.14(b) of this Agreement.
"Material Adverse Effect" shall mean, with respect to a
Person, any adverse effect on its assets, financial condition or
results of operations which is material to its assets, financial
condition or results of operations on a consolidated basis, except for
any material adverse effect which is primarily caused by (i) any change
in banking or similar laws, rules or regulations of general
applicability or interpretations thereof by courts or government
authorities, (ii) any change in GAAP or regulatory accounting
requirements applicable to banks or their holding companies generally,
(iii) general changes in conditions, including interest rates, in the
banking industry or in the global or United States economy or financial
markets, with respect to clause (i),(ii) or (iii), to the extent
6
that such a change does not materially affect the referenced party to a
materially different extent than other similarly situated banking
organizations, and (iv) any action or omission of the referenced party
or any of its Subsidiaries taken with the prior written consent of the
other party to this Agreement in contemplation of the Merger.
"Merger" means the merger of Oneida Merger Corp. into VBC with
VBC as the surviving corporation as described in Section 2.01 hereof.
"Merger Consideration" means the consideration payable to each
holder of VBC Common Stock pursuant to Section 2.02(i) of this
Agreement.
"Merger Effective Date" means that date upon which the
certificate of merger as to the merger of Oneida Merger Corp. with and
into VBC is filed with the New York Department of State, in accordance
with the NYBCL, or as otherwise stated in the certificate of merger.
"NYBCL" means the New York Business Corporation Law.
"OCC" means the Office of the Comptroller of the Currency.
"Oneida Financial" means Oneida Financial Corp., a
federally-chartered corporation.
"Oneida Financial Common Stock" has the meaning given to that
term in Section 4.02(a) of this Agreement.
"Oneida Financial Disclosure Schedules" means the Disclosure
Schedules delivered by Oneida Financial to VBC pursuant to Article IV
of this Agreement.
"Oneida Financial Financials" means (i) the audited
consolidated financial statements of Oneida Financial as of December
31, 2005 and 2004 and for the three years ended December 31, 2005,
including the notes thereto, and (ii) the unaudited interim
consolidated financial statements of Oneida Financial as of each
calendar quarter thereafter included in Securities Documents filed by
Oneida Financial.
"Oneida Financial Regulatory Reports" means the Call Reports
of Oneida Savings and accompanying schedules, as filed with the FDIC,
for each calendar quarter beginning with the quarter ended March 31,
2005, through the Closing Date, and all Annual, Quarterly or Current
Reports filed on Form H(b)-11 by Oneida Financial with the OTS by
Oneida Financial from March 31, 2006 through the Closing Date.
"Oneida Financial Subsidiary" means any corporation, 50% or
more of the capital stock of which is owned, either directly or
indirectly, by Oneida Financial or Oneida Savings, except any
corporation the stock of which is held as security by Oneida Savings in
the ordinary course of its lending activities.
7
"Oneida Merger Corp." means Oneida Merger Corp., a New York
corporation and wholly-owned subsidiary of Oneida Savings.
"Oneida Savings" means The Oneida Savings Bank, a New
York-chartered savings bank headquartered in Oneida, New York.
"OTS" means the Office of Thrift Supervision.
"Participation Facility" shall have the meaning given to such
term in Section 3.14(b) of this Agreement.
"Pension Plan" has the meaning given to that term in Section
3.12(b) of this Agreement.
"Person" means any individual, corporation, partnership, joint
venture, association, trust or "group" (as that term is defined under
the Exchange Act).
"Previously Disclosed" shall mean disclosed in a writing by
either party in a disclosure schedule (the "Disclosure Schedule") dated
of even date herewith from the party making such disclosure and
delivered to the other party prior to the execution of this Agreement.
Any information disclosed by one party to the other for any purpose
hereunder shall be deemed to be disclosed for all purposes hereunder.
"Proxy Statement" means the proxy statement, together with any
supplements thereto, to be transmitted to holders of VBC Common Stock
in connection with the transactions contemplated by this Agreement.
"Regulatory Agreement" has the meaning given to that term in
Section 3.11 of this Agreement.
"Regulatory Approvals" means all consents, waivers, approvals,
nonobjections and clearances required to be obtained from or issued by
the OTS, the FDIC, the OCC, the Department, the FRB or the respective
staffs thereof, in order to complete the transactions contemplated
hereby.
"Regulatory Authority" means, as applicable, any agency or
department of any federal or state government, including without
limitation the Department, the Superintendent, the FDIC, the OCC, the
FRB, the OTS, the SEC or the respective staffs thereof.
"Rights" means warrants, options, rights, convertible
securities and other capital stock equivalents which obligate an entity
to issue its securities.
"SEC" means the Securities and Exchange Commission.
8
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations promulgated from time to time thereunder.
"Securities Documents" means all registration statements,
schedules, statements, forms, reports, proxy material, and other
documents required to be filed under the Securities Laws.
"Securities Laws" means the Securities Act and the Exchange
Act.
"State Bank" means the State Bank of Chittenango, a New
York-chartered commercial bank headquartered in Chittenango, New York.
"Subsidiary" means any corporation, 50% or more of the capital
stock of which is owned, either directly or indirectly, by another
entity, except any corporation the stock of which is held as security
by either Oneida Financial or VBC, as the case may be, in the ordinary
course of its lending activities.
"Superintendent" means the Superintendent of Banks of the
State of New York, and where appropriate includes the Department and
the Banking Board of the State of New York.
"Surviving Corporation" has the meaning given to that term in
Section 2.01(a)(i) of this Agreement.
"Superior Proposal" has the meaning set forth in Section 5.06.
"VBC" means Vernon Bank Corporation, a New York corporation.
"VBC Common Stock" shall have the meaning given to such term
in Section 3.02(a).
"VBC Disclosure Schedules" means the Disclosure Schedules
delivered by VBC to Oneida Financial pursuant to Article III of this
Agreement.
"VBC Financials" means (i) the audited consolidated financial
statements of VBC as of December 31, 2005 and 2004 and for the three
years ended December 31, 2005, including the notes thereto, and (ii)
the unaudited interim consolidated financial statements of VBC as of
each calendar quarter thereafter through the Closing Date, included in
VBC Regulatory Reports filed by VBC with the FRB and ▇▇▇▇▇▇ Bank with
the OCC.
"VBC Regulatory Reports" means the Call Reports of ▇▇▇▇▇▇ Bank
and accompanying schedules, as filed with the OCC, for each calendar
quarter beginning with the quarter ended March 31, 2005, through the
Closing Date, and all Annual Reports on Form FR Y-6, any Current Report
on Form FRY-6A filed with the FRB by VBC from December 31, 2005 through
the Closing Date, as such reports may have been amended.
9
"VBC Subsidiary" means any corporation, 50% or more of the
capital stock of which is owned, either directly or indirectly, by VBC
or ▇▇▇▇▇▇ Bank, except any corporation the stock of which is held as
security by ▇▇▇▇▇▇ Bank in the ordinary course of its lending
activities.
"VBC Voting Agreement" means the Agreement between certain
stockholders and Oneida Financial and Oneida Savings to vote their
shares of VBC stock in favor of the Merger.
"▇▇▇▇▇▇ Bank" means the National Bank of ▇▇▇▇▇▇, a national
bank headquartered in Vernon, New York.
ARTICLE II-THE MERGER AND EXCHANGE OF SHARES
Section 2.01 The Merger; Effects of Merger; Surviving Corporation
(a) (i) On the Merger Effective Date, Oneida Merger Corp. shall merge
with and into VBC with VBC as the surviving or resulting corporation (the
"Merger"), pursuant to the terms and conditions of an agreement of merger to be
entered into between Oneida Merger Corp. and VBC substantially in the form
attached hereto as Exhibit B. As a result of the Merger, the separate existence
of Oneida Merger Corp. shall cease, and VBC shall be the surviving or resulting
corporation in the Merger (the "Surviving Corporation"). As a result of the
Merger all of the property (real, personal and mixed), rights, powers and duties
and obligations of Oneida Merger Corp. shall be transferred to, assumed by and
vested in VBC, as the Surviving Corporation in the Merger, without further act
or deed, all in accordance with the applicable New York and federal law.
(ii) On the Merger Effective Date, the Certificate of
Incorporation of the Surviving Corporation shall be amended and restated to read
in its entirety as the Certificate of Incorporation of Oneida Merger Corp., as
in effect immediately prior to the Merger Effective Date; and the Bylaws of the
Surviving Corporation shall be amended and restated to read in their entirety as
the Bylaws of Oneida Merger Corp., as in effect immediately prior to the Merger
Effective Date, until thereafter altered, amended or repealed in accordance with
applicable law.
(iii) On the Merger Effective Date, the directors of Oneida
Merger Corp. duly elected and holding office immediately prior to the Merger
Effective Date shall be the directors of the Surviving Corporation in the
Merger, each to hold office until his or her successor is elected and qualified
or otherwise in accordance with the Certificate of Incorporation and Bylaws of
the Surviving Corporation.
(iv) On the Merger Effective Date, the officers of Oneida
Merger Corp. duly elected and holding office immediately prior to the Merger
Effective Date shall be the officers of the Surviving Corporation in the Merger,
each to hold office until his or her successor is elected and qualified or
otherwise in accordance with the Certificate of Incorporation and the Bylaws of
the Surviving Corporation.
10
(b) Notwithstanding any provision of this Agreement to the contrary,
Oneida Financial may elect, subject to the filing of all necessary applications
and the receipt of all required regulatory approvals, to modify the structure of
the transactions contemplated hereby, and the parties shall enter into such
alternative transactions to effect the Merger, provided that (i) there are no
adverse tax consequences to any of the stockholders of VBC as a result of such
modification, (ii) the Merger Consideration is not thereby changed in kind or
reduced in amount because of such modification, (iii) such modification will not
be likely to materially delay or jeopardize receipt of any required regulatory
approvals or the consummation of the transactions contemplated by this
Agreement, and (iv) it does not result in any representation or warranty of any
party set forth in this Agreement becoming incorrect in any material respect.
Section 2.02 Conversion of Shares
On the Merger Effective Date, by virtue of the Merger and without any
action on the part of VBC or the holders of shares of VBC Common Stock:
(i) Each outstanding share of VBC Common Stock issued and outstanding
on the Merger Effective Date, except as provided in clauses (ii) and (v) of this
Section, shall cease to be outstanding, shall cease to exist and shall be
converted into the right to receive $54.00 in cash, without interest (referred
to as the "Merger Consideration").
(ii) Any shares of VBC Common Stock which are owned or held by either
party hereto or any of their respective Subsidiaries (other than in a fiduciary
capacity or in connection with debts previously contracted) on the Merger
Effective Date shall cease to exist, the certificates for such shares shall as
promptly as practicable be canceled, such shares shall not be converted into the
Merger Consideration, and no cash or shares of capital stock of Oneida Financial
shall be issued or exchanged therefor.
(iii) Each share of Oneida Merger Corp. common stock issued and
outstanding immediately before the Merger Effective Date shall be converted into
and become an outstanding share of the surviving corporation.
(iv) The holders of certificates representing shares of VBC Common
Stock (any such certificate being hereinafter referred to as a "Certificate")
shall cease to have any rights as stockholders of VBC, except such rights, if
any, as they may have pursuant to this Agreement or applicable law.
(v) Following the Merger Effective Date, the Surviving Corporation or
Oneida Savings shall pay for any dissenters' shares in accordance with Section
623 of the NYBCL, provided that if appraisal rights under Section 910 of the
NYBCL with respect to any dissenters' shares shall have been effectively
withdrawn or lost, such shares will only be entitled to be converted into the
right to receive the Merger Consideration.
11
Section 2.03 Exchange Procedures
(a) Immediately prior to the Merger Effective Date, Oneida Financial
shall cause to be deposited with Registrar and Transfer Company or another
entity experienced in serving as an exchange agent (the "Exchange Agent"), for
exchange in accordance with this Article II, cash equal to the aggregate Merger
Consideration, by wire transfer of immediately available funds, into which the
outstanding shares of VBC common stock shall be converted pursuant to this
Agreement. As promptly as practicable and in any event within ten (10) calendar
days after the Merger Effective Date, Oneida Financial shall cause the Exchange
Agent to mail to each holder of record of an outstanding share Certificate or
Certificates a Letter of Transmittal containing instructions for the surrender
of the Certificate or Certificates held by such holder for payment therefor.
Upon surrender of the Certificate or Certificates to the Exchange Agent in
accordance with the instructions set forth in the Letter of Transmittal, such
holder shall promptly receive in exchange therefor the Merger Consideration,
without interest thereon. The Exchange Agent shall send payments within three
(3) business days after the receipt of properly submitted documents. Neither
Oneida Financial nor the Exchange Agent shall be obligated to deliver the Merger
Consideration to a former stockholder of VBC until such former stockholder
surrenders his Certificate or Certificates or, in lieu thereof, any such
appropriate affidavit of loss and indemnity agreement and bond as may be
reasonably required by Oneida Financial.
(b) If payment of the Merger Consideration is to be made to a person
other than the person in whose name a Certificate surrendered in exchange
therefor is registered, it shall be a condition of payment that the Certificate
so surrendered shall be properly endorsed (or accompanied by an appropriate
instrument of transfer) and otherwise in proper form for transfer, and that the
person requesting such payment shall pay any transfer or other taxes required by
reason of the payment to a person other than the registered holder of the
Certificate surrendered, or required for any other reason, or shall establish to
the satisfaction of the Exchange Agent that such tax has been paid or is not
payable.
(c) The payment of the Merger Consideration upon the conversion of VBC
Common Stock in accordance with the above terms and conditions shall be deemed
to be paid in full satisfaction of all rights pertaining to such VBC Common
Stock.
(d) Promptly following the date which is twelve (12) months after the
Merger Effective Date, the Exchange Agent shall deliver to Oneida Financial all
cash, certificates and other documents in its possession relating to the
transactions described in this Agreement, and the Exchange Agent's duties shall
terminate. Thereafter, each holder of a Certificate formerly representing shares
of VBC Common Stock may surrender such Certificate to Oneida Financial and
(subject to applicable abandoned property, escheat and similar laws) receive in
consideration therefor the Merger Consideration multiplied by the number of
shares of VBC Common Stock formerly represented by such Certificate, without any
interest or dividends thereon.
(e) After the Closing, there shall be no transfers on the stock
transfer books of VBC of the shares of VBC Common Stock, which are outstanding
immediately prior to the Merger, and the stock transfer books of VBC shall be
closed with respect to such shares. If, after the Merger Effective Date,
Certificates representing such shares are presented for transfer to the
12
Exchange Agent, they shall be canceled and exchanged for the Merger
Consideration as provided in this Article II.
(f) In the event any certificate for VBC Common Stock shall have been
lost, stolen or destroyed, the Exchange Agent shall deliver (except as otherwise
provided in Section 2.02(v)) in exchange for such lost, stolen or destroyed
Certificate, upon the making of an affidavit of the fact by the holder thereof,
the cash to be paid in the Merger as provided for herein; provided, however,
that Oneida Financial may, in its sole discretion and as a condition precedent
to the delivery thereof, require the owner of such lost, stolen or destroyed
Certificate to deliver a bond in such reasonable sum as Oneida Financial may
request as indemnity against any claim that may be made against VBC, Oneida
Financial or any other party with respect to the Certificate alleged to have
been lost, stolen or destroyed.
(g) Oneida Financial is hereby authorized to adopt additional rules and
regulations with respect to the matters referred to in this Section 2.03 not
inconsistent with the provisions of this Agreement.
Section 2.04 Closing
The Closing of the Merger shall take place on the Closing Date at the
executive offices of Oneida Savings, or such other location as determined by
Oneida Financial and Oneida Savings.
ARTICLE III-REPRESENTATIONS AND WARRANTIES OF VBC AND ▇▇▇▇▇▇ BANK
VBC and ▇▇▇▇▇▇ Bank represent and warrant to Oneida Financial and
Oneida Savings that the statements contained in this Article III are correct and
complete as of the date of this Agreement and will be correct and complete as of
the Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this Article III), except
as set forth in a VBC DISCLOSURE SCHEDULE. VBC has made a good faith effort to
ensure that the disclosure on each schedule of the VBC DISCLOSURE SCHEDULES
corresponds to the section reference herein.
Section 3.01 Organization.
(a) VBC is a corporation duly organized, validly existing and in good
standing under the laws of the State of New York, and is duly registered as a
bank holding company under the BHCA. VBC has full corporate power and authority
to carry on its business as now conducted and is duly licensed or qualified to
do business in the states of the United States and foreign jurisdictions where
its ownership or leasing of property or the conduct of its business requires
such qualification, except where the failure to be so licensed or qualified
would not have a Material Adverse Effect on VBC.
(b) ▇▇▇▇▇▇ Bank is a national bank duly organized, validly existing
and, except as set forth in the VBC DISCLOSURE SCHEDULES, in good standing under
the laws of the United States of America. ▇▇▇▇▇▇ Bank is the only VBC
Subsidiary. The deposits of ▇▇▇▇▇▇
13
Bank are insured by the FDIC through the DIF to the fullest extent permitted by
law, and all premiums and assessments required to be paid in connection
therewith have been paid when due by ▇▇▇▇▇▇ Bank. As of the date hereof, no
proceedings for the revocation of such deposit insurance are pending, or
expressly threatened. VBC has heretofore made available to Oneida Financial a
complete and correct copy of the certificate of incorporation and bylaws or
comparable organizational documents, each as amended to the date hereof, of each
of VBC and its Subsidiaries.
(c) ▇▇▇▇▇▇ Bank is a member in good standing of the FHLB of New York
and owns the requisite amount of stock therein.
(d) The respective minute books of VBC and each VBC Subsidiary
accurately record, in all material respects, all material corporate actions of
their respective stockholders and boards of directors (including committees)
through the date of this Agreement.
(e) VBC owns, directly or indirectly, all of the issued and outstanding
equity securities of each Subsidiary. There are no contracts, commitments,
understandings or arrangements by which any of such Subsidiaries is or may be
bound to sell or otherwise transfer any shares of its equity securities (other
than to VBC or a wholly-owned Subsidiary of it). There are no contracts,
commitments, understandings, or arrangements relating to VBC's rights to vote or
to dispose of such securities. All of the equity securities of each such
Subsidiary held by VBC are fully paid and nonassessable, not subject to
preemptive or similar rights and are owned by VBC free and clear of any liens.
(f) Each of VBC's Subsidiaries has been duly organized and qualified
under the laws of the jurisdiction of its organization and is duly qualified to
do business and in good standing in the jurisdictions where its ownership or
leasing of property or the conduct of its business requires it to be so
qualified, except where the failure to be so qualified would not have a Material
Adverse Effect.
Section 3.02 Capitalization.
(a) The authorized capital stock of VBC consists of 300,000 shares of
Common Stock, $5.00 par value per share ("VBC Common Stock"), and no shares of
preferred stock. There are 210,447 shares of VBC Common Stock validly issued and
outstanding, all of which are fully paid and non-assessable. There are no shares
of VBC preferred stock issued and outstanding. Neither VBC nor any VBC
Subsidiary has or is bound by any Right of any character relating to the
purchase, sale or issuance or voting of, or right to receive dividends or other
distributions on, any shares of VBC Common Stock, or any other security of VBC
or any securities representing the right to vote, purchase or otherwise receive
any shares of VBC Common Stock or any other security of VBC. VBC has granted no
other rights through an option, warrant, or other derivative instrument, to
acquire VBC Common Stock.
(b) VBC owns all of the capital stock of ▇▇▇▇▇▇ Bank free and clear of
any lien or encumbrance. Except for the VBC Subsidiaries, and as set forth in
VBC DISCLOSURE SCHEDULE 3.02(b), VBC does not possess, directly or indirectly,
any material equity interest in
14
any corporation, except for equity interests held in the investment portfolios
of VBC and the VBC Subsidiaries, equity interests held by VBC Subsidiaries in a
fiduciary capacity, and equity interests held in connection with the lending
activities of VBC Subsidiaries. Except as disclosed in the VBC DISCLOSURE
SCHEDULE 3.02(b), all the outstanding shares of capital stock of each VBC
Subsidiary are validly issued, fully paid and non-assessable and are owned by
VBC or by a VBC Subsidiary, free and clear of any liens. There are no existing
options, warrants, calls or other rights, agreements or commitments of any
character relating to the sale, issuance or voting of any shares of the issued
or unissued capital stock of any VBC Subsidiary which have been issued, granted
or entered into by VBC or any VBC Subsidiary.
(c) No Person or "group" (as that term is used in Section 13(d)(3) of
the Exchange Act), is the beneficial owner (as defined in Section 13(d) of the
Exchange Act) of 5% or more of the outstanding shares of VBC Common Stock,
except as disclosed in the VBC DISCLOSURE SCHEDULE 3.02(c).
Section 3.03 Authority; No Violation.
(a) VBC and ▇▇▇▇▇▇ Bank each has full corporate power and authority to
execute and deliver this Agreement and, subject to a favorable vote of the VBC
stockholders and receipt of all Regulatory Approvals, to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by VBC and ▇▇▇▇▇▇ Bank and the completion by VBC and ▇▇▇▇▇▇ Bank of the
transactions contemplated hereby have been duly and validly approved by the
Boards of Directors of VBC and ▇▇▇▇▇▇ Bank and, except for approval of the
stockholders of VBC, no other corporate proceedings on the part of VBC and
▇▇▇▇▇▇ Bank are necessary to complete the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by VBC and ▇▇▇▇▇▇
Bank and, subject to approval by the stockholders of VBC and receipt of the
required approvals of Regulatory Authorities described in Section 4.03 hereof,
constitutes the valid and binding obligation of VBC and ▇▇▇▇▇▇ Bank, enforceable
against VBC and ▇▇▇▇▇▇ Bank in accordance with its terms, subject to applicable
bankruptcy, insolvency and similar laws affecting creditors' rights generally,
and as to ▇▇▇▇▇▇ Bank, the conservatorship or receivership provisions of the
FDIA, and subject, as to enforceability, to general principles of equity.
(b) The execution and delivery of this Agreement by VBC and ▇▇▇▇▇▇
Bank, subject to receipt of approvals from the Regulatory Authorities referred
to in Section 4.03 hereof and VBC's and Oneida Financial's compliance with any
conditions contained therein, the consummation of the transactions contemplated
hereby, and compliance by VBC and ▇▇▇▇▇▇ Bank with any of the terms or
provisions hereof will not: (i) conflict with or result in a breach of any
provision of the certificate of incorporation or bylaws of VBC or the charter
and bylaws of ▇▇▇▇▇▇ Bank; (ii) violate any statute, code, ordinance, rule,
regulation, judgment, order, writ, decree or injunction applicable to VBC or
▇▇▇▇▇▇ Bank or any of their respective properties or assets; or (iii) violate,
conflict with, result in a breach of any provisions of, constitute a default (or
an event which, with notice or lapse of time, or both, would constitute a
default) under, result in the termination of, accelerate the performance
required by, or result in a right of termination or acceleration or the creation
of any lien, security interest, charge or other encumbrance upon any of the
properties or assets of VBC or ▇▇▇▇▇▇ Bank, under any of the terms, conditions
or
15
provisions of any note, bond, mortgage, indenture, deed of trust, license,
lease, agreement or other investment or obligation to which VBC or ▇▇▇▇▇▇ Bank,
is a party, or by which they or any of their respective properties or assets may
be bound or affected.
Section 3.04 Consents
Except for the consents, waivers, approvals, and filings from or with
the Regulatory Authorities referred to in Section 4.03 hereof and compliance
with any conditions contained therein, and the approval of this Agreement by the
requisite vote of the stockholders of VBC, no consents, waivers or approvals of,
or filings or registrations with, any governmental authority are necessary. No
consents, waivers or approvals of, or filings or registrations with, any other
third parties are necessary in connection with (a) the execution and delivery of
this Agreement by VBC and ▇▇▇▇▇▇ Bank, and (b) the completion by VBC or ▇▇▇▇▇▇
Bank of the transactions contemplated hereby. Neither VBC nor ▇▇▇▇▇▇ Bank has
any Knowledge or reason to believe that (i) any required consents or approvals
including Regulatory Approvals will not be received, or (ii) any public body or
authority, the consent or approval of which is not required or any filing with
which is not required, will object to the completion of the transactions
contemplated by this Agreement.
Section 3.05 Regulatory Reports; Financial Statements
(a) VBC has previously delivered to Oneida Financial the VBC Regulatory
Reports. The VBC Regulatory Reports have been, and will be, prepared in all
material respects in accordance with applicable regulatory accounting principles
and practices throughout the periods covered by such statements, and fairly
present, and will fairly present in all material respects, the consolidated
financial position, results of operations and changes in stockholders' equity of
VBC as of and for the periods ended on the dates thereof, in accordance with
applicable regulatory accounting principles applied on a consistent basis.
(b) VBC has previously delivered to Oneida Financial the VBC
Financials. The VBC Financials have been, and will be, prepared in accordance
with GAAP, and (including the related notes where applicable) fairly present, or
will fairly present, in each case in all material respects (subject in the case
of the unaudited interim statements to normal year-end adjustments), the
consolidated financial position, results of operations and cash flows of VBC and
the VBC Subsidiaries as of and for the respective periods ending on the dates
thereof, in accordance with GAAP applied on a consistent basis during the
periods involved, except as indicated in the notes thereto, or in the case of
unaudited statements, to normal recurring audit adjustments and the absence of
footnotes.
(c) At the date of each balance sheet included in the VBC Financials or
the VBC Regulatory Reports, VBC did not have, and will not have any liabilities,
obligations or loss contingencies of any nature (whether absolute, accrued,
contingent or otherwise) of a type required to be reflected in such VBC
Financials or VBC Regulatory Reports or in the footnotes thereto which are not
fully reflected or reserved against therein or fully disclosed in a footnote
thereto, except for liabilities, obligations and loss contingencies which are
not material individually or in the aggregate and which are incurred in the
ordinary course of business,
16
consistent with past practice and except for liabilities, obligations and loss
contingencies which are within the subject matter of a specific representation
and warranty herein and subject, in the case of any unaudited statements, to
normal, recurring audit adjustments and the absence of footnotes.
(d) VBC and ▇▇▇▇▇▇ Bank have filed all VBC Regulatory Reports, together
with any amendments required to be made with respect thereto, that were required
to be filed.
Section 3.06 Taxes
VBC and the VBC Subsidiaries are members of the same affiliated group
within the meaning of IRC Section 1504(a). VBC has duly filed all federal, state
and material local tax returns required to be filed by or with respect to VBC
and all VBC Subsidiaries on or prior to the Closing Date (all such returns being
accurate and correct in all material respects) and has duly paid or will pay, or
made or will make, provisions for the payment of all material federal, state and
local taxes which have been incurred by or are due or claimed to be due from VBC
and any VBC Subsidiary by any taxing authority or pursuant to any written tax
sharing agreement on or prior to the Closing Date other than taxes or other
charges which (i) are not delinquent, (ii) are being contested in good faith, or
(iii) have not yet been fully determined. As of the date of this Agreement,
there is no audit examination, deficiency assessment, tax investigation or
refund litigation with respect to any taxes of VBC or any VBC Subsidiary, and no
claim has been made by any authority in a jurisdiction where VBC or any VBC
Subsidiary does not file tax returns that VBC or any VBC Subsidiary is subject
to taxation in that jurisdiction. VBC and each VBC Subsidiary have not executed
an extension or waiver of any statute of limitations on the assessment or
collection of any material tax due that is currently in effect. VBC and each VBC
Subsidiary has withheld and paid all taxes required to have been withheld and
paid in connection with amounts paid or owing to any employee, independent
contractor, creditor, stockholder or other third party, and VBC and each VBC
Subsidiary has timely complied with all applicable information reporting
requirements under Part III, Subchapter A of Chapter 61 of the Code and similar
applicable state and local information reporting requirements in all material
respects.
Section 3.07 No Material Adverse Effect
Except as set forth in VBC DISCLOSURE SCHEDULE 3.07, VBC and the VBC
Subsidiaries, taken as a whole, have not suffered any Material Adverse Effect
since December 31, 2005.
Section 3.08 Contracts
(a) Except as set forth in VBC DISCLOSURE SCHEDULE 3.08(a), neither VBC
nor any VBC Subsidiary is a party to or subject to: (i) any employment,
consulting or severance contract or material arrangement with any past or
present officer, director or employee of VBC or any VBC Subsidiary, except for
"at will" arrangements; (ii) any plan, material arrangement or contract
providing for bonuses, pensions, options, deferred compensation, retirement
payments, profit sharing or similar material arrangements for or with any past
or present officers, directors or employees of VBC or any VBC Subsidiary; (iii)
any collective bargaining agreement with any
17
labor union relating to employees of VBC or any VBC Subsidiary; (iv) any
agreement which by its terms limits the payment of dividends by VBC; (v) any
instrument evidencing or related to material indebtedness for borrowed money
whether directly or indirectly, by way of purchase money obligation, conditional
sale, lease purchase, guaranty or otherwise, in respect of which VBC or any VBC
Subsidiary is an obligor to any person, which instrument evidences or relates to
indebtedness other than deposits, repurchase agreements, bankers' acceptances,
and "treasury tax and loan" accounts established in the ordinary course of
business and transactions in "federal funds" or which contains financial
covenants or other restrictions (other than those relating to the payment of
principal and interest when due) which would be applicable on or after the
Closing Date to Oneida Financial or any Oneida Financial Subsidiary; (vi) any
agreement, written or oral, that obligates VBC or any VBC Subsidiary for the
payment of more than $15,000 annually; (vii) any contract (other than this
Agreement) limiting the freedom, in any material respect, of VBC or any VBC
Subsidiary, to engage in any type of banking or bank-related business which VBC
or any VBC Subsidiary, is permitted to engage in under applicable law as of the
date of this Agreement; or (viii) any agreement, contract, arrangement,
commitment or understanding (whether written or oral) that is a "material
contract" within the meaning of Item 601(b)(10) of the SEC's Regulation S-K
(assuming such provisions were applicable to VBC).
(b) True and correct copies of agreements, plans, contracts,
arrangements and instruments referred to in Section 3.08(a), have been provided
to Oneida Financial on or before the date hereof, are listed on VBC DISCLOSURE
SCHEDULE 3.08(a) and are in full force and effect on the date hereof and neither
VBC nor any VBC Subsidiary (nor, to the knowledge of VBC, any other party to any
such contract, plan, arrangement or instrument) has materially breached any
provision of, or is in default in any respect under any term of, any such
contract, plan, arrangement or instrument. Except as set forth in the VBC
DISCLOSURE SCHEDULE 3.08(b), no party to any material contract, plan,
arrangement or instrument will have the right to terminate any or all of the
provisions of any such contract, plan, arrangement or instrument as a result of
the execution of, and the transactions contemplated by, this Agreement. None of
the employees (including officers) of VBC, possesses the right to terminate
his/her employment as a result of the execution of this Agreement. No plan,
contract, employment agreement, termination agreement, or similar agreement or
arrangement to which VBC or any VBC Subsidiary is a party or under which VBC or
any VBC Subsidiary may be liable contains any provision which permits an
employee or independent contractor to terminate it without cause and continue to
accrue future benefits thereunder. Except as set forth in VBC DISCLOSURE
SCHEDULE 3.08(b), no such agreement, plan, contract, or arrangement (x) provides
for acceleration in the vesting of benefits or payments due thereunder upon the
occurrence of a change in ownership or control of VBC or any VBC Subsidiary
absent the occurrence of a subsequent event; or (y) requires VBC or any VBC
Subsidiary to provide a benefit in the form of VBC Common Stock or determined by
reference to the value of VBC Common Stock. No such agreement, plan or
arrangement with respect to officers or directors of VBC, or to VBC's knowledge,
to its employees, provides for benefits which will cause an "excess parachute
payment" or the disallowance of a federal income tax deduction under IRC Section
280G.
18
Section 3.09 Ownership of Property; Insurance Coverage
(a) Except as set forth in VBC DISCLOSURE SCHEDULE 3.09(a), VBC and the
VBC Subsidiaries have good and, as to real property, marketable title to all
material assets and properties owned by VBC or any VBC Subsidiary in the conduct
of their businesses, whether such assets and properties are real or personal,
tangible or intangible, including assets and property reflected in the balance
sheets contained in the VBC Regulatory Reports and in the VBC Financials or
acquired subsequent thereto (except to the extent that such assets and
properties have been disposed of in the ordinary course of business, since the
date of such balance sheets), subject to no material encumbrances, liens,
mortgages, security interests or pledges, except (i) those items which secure
liabilities for public or statutory obligations or any discount with, borrowing
from or other obligations to the FHLB of New York, inter-bank credit facilities,
or any transaction by ▇▇▇▇▇▇ Bank acting in a fiduciary capacity, and (ii)
statutory liens for amounts not yet delinquent or which are being contested in
good faith. VBC and the VBC Subsidiaries, as lessee, have the right under valid
and subsisting leases of real and material personal properties used by VBC and
the VBC Subsidiaries in the conduct of their businesses to occupy or use all
such leased properties as presently occupied and used by each of them. Such
existing leases and commitments to lease constitute or will constitute operating
leases for both tax and financial accounting purposes and the lease expense and
minimum rental commitments with respect to such leases and lease commitments are
as disclosed in the notes to the VBC Financials.
(b) With respect to all material agreements pursuant to which VBC or
any VBC Subsidiary has purchased securities subject to an agreement to resell,
if any, VBC or such VBC Subsidiary, as the case may be, has a lien or security
interest (which to VBC's knowledge is a valid, perfected first lien) in the
securities or other collateral securing the repurchase agreement, and the value
of such collateral equals or exceeds the amount of the debt secured thereby.
(c) VBC and each VBC Subsidiary currently maintains insurance
considered by VBC to be reasonable for their respective operations and similar
in scope and coverage to that customarily maintained by other businesses
similarly engaged in a similar location, in accordance with good business
practice. Except as set forth in VBC DISCLOSURE SCHEDULE 3.09(c), VBC has not
received notice from any insurance carrier that (i) such insurance will be
canceled or that coverage thereunder will be reduced or eliminated, or (ii)
premium costs with respect to such policies of insurance will be substantially
increased. There are presently no material claims pending under such policies of
insurance and no notices have been given by VBC under such policies. All such
insurance is valid and enforceable and in full force and effect, and within the
last three years VBC has received each type of insurance coverage for which it
has applied and during such periods has not been denied indemnification for any
material claims submitted under any of its insurance policies. VBC DISCLOSURE
SCHEDULE 3.09(c) identifies all policies of insurance maintained by VBC.
19
Section 3.10 Legal Proceedings
Except as set forth in VBC DISCLOSURE SCHEDULE 3.10, Neither VBC nor
any VBC Subsidiary is a party to any, and there are no pending or, to the best
of VBC's knowledge, threatened legal, administrative, arbitration or other
proceedings, claims (whether asserted or unasserted), actions or governmental
investigations or inquiries of any nature (i) against VBC or any VBC Subsidiary,
(ii) to which VBC or any VBC Subsidiary's assets are or may be subject, (iii)
challenging the validity or propriety of any of the transactions contemplated by
this Agreement, or (iv) which could adversely affect the ability of VBC to
perform under this Agreement.
Section 3.11 Compliance With Applicable Law
(a) VBC and the VBC Subsidiaries hold all licenses, franchises, permits
and authorizations necessary for the lawful conduct of their respective
businesses under, and have complied in all material respects with, applicable
laws, statutes, orders, rules or regulations of any federal, state or local
governmental authority relating to them. VBC and each VBC Subsidiary, directly
or indirectly, owns, or are licensed or otherwise possess legally enforceable
rights to use, all patents, trademarks, trade names, service marks, copyrights
and any applications therefor, technology, know-how and tangible or intangible
proprietary information or material that are material to the business of VBC and
the VBC Subsidiaries.
(b) Except as set forth in VBC DISCLOSURE SCHEDULE 3.11(b), neither VBC
nor any VBC Subsidiary has received any notification or communication from any
Regulatory Authority, nor do they have any Knowledge of facts which would form
the basis for any Regulatory Authority to take action (i) asserting that VBC or
any VBC Subsidiary is not in material compliance with any of the statutes,
regulations or ordinances which such Regulatory Authority enforces; (ii)
threatening to revoke any license, franchise, permit or governmental
authorization which is material to VBC or any VBC Subsidiary; (iii) requiring or
threatening to require VBC or any VBC Subsidiary, or indicating that VBC or any
VBC Subsidiary may be required, to enter into a cease and desist order,
agreement or memorandum of understanding or any other agreement with any federal
or state governmental agency or authority which is charged with the supervision
or regulation of banks or engages in the insurance of bank deposits restricting
or limiting, or purporting to restrict or limit, in any material respect the
operations of VBC or any VBC Subsidiary, including without limitation any
restriction on the payment of dividends; or (iv) directing, restricting or
limiting, or purporting to direct, restrict or limit, in any manner the
operations of VBC or any VBC Subsidiary, including without limitation any
restriction on the payment of dividends (any such notice, communication,
memorandum, agreement or order described in this sentence is hereinafter
referred to as a "Regulatory Agreement"). Except as set forth in VBC Disclosure
Schedule 3.11(b), neither VBC nor any VBC Subsidiary has consented to or entered
into any currently effective Regulatory Agreement. The most recent regulatory
ratings given to ▇▇▇▇▇▇ Bank as to compliance with the Community Reinvestment
Act is satisfactory or better.
20
Section 3.12 ERISA/Employee Compensation
(a) VBC DISCLOSURE SCHEDULE 3.12(a) includes a descriptive list of all
existing bonus, incentive, deferred compensation, pension, retirement,
profit-sharing, thrift, savings, phantom stock, severance, welfare and fringe
benefit plans, employment, severance and change in control agreements and all
other benefit practices, policies and arrangements maintained by VBC or any VBC
Subsidiary in which any employee or former employee, consultant or former
consultant or director or former director of VBC or any VBC Subsidiary
participates or to which any such employee, consultant or director is a party or
is otherwise entitled to receive benefits (the "Compensation and Benefit
Plans"). A true and correct copy of each Compensation and Benefit Plan has
previously been delivered to Oneida Savings. Neither VBC nor any VBC Subsidiary
has any commitment to create any additional Compensation and Benefit Plan or,
except as set forth in VBC DISCLOSURE SCHEDULE 3.12(a) or as provided for in
this Agreement, to modify, change or renew any existing Compensation and Benefit
Plan.
(b) Each Compensation and Benefit Plan has been operated and
administered in all material respects in accordance with its terms and with
applicable law, including, but not limited to, ERISA, the Code, the Age
Discrimination in Employment Act, and any regulations or rules promulgated
thereunder, and all material filings, disclosures and notices required by ERISA,
the Code, the Age Discrimination in Employment Act and any other applicable law
have been timely made. Each Compensation and Benefit Plan which is an "employee
pension benefit plan" within the meaning of Section 3(2) of ERISA (a "Pension
Plan") and which is intended to be qualified under Section 401(a) of the Code
has received a favorable determination letter from the IRS, and VBC is not aware
of any circumstances which are reasonably likely to result in revocation of any
such favorable determination letter. There is no material pending or, to the
best knowledge of VBC, threatened action, suit or claim relating to any of the
Compensation and Benefit Plans (other than routine claims for benefits). Neither
VBC nor any VBC Subsidiary has engaged in a transaction, or omitted to take any
action, with respect to any Compensation and Benefit Plan that would reasonably
be expected to subject VBC or any VBC Subsidiary to a tax or penalty imposed by
either Section 4975 of the Code or Section 502 of ERISA, assuming for purposes
of Section 4975 of the Code that the taxable period of any such transaction
expired as of the date hereof and subsequently expires as of the day next
preceding the Merger Effective Date.
(c) Neither VBC, nor any VBC Subsidiary or any entity which is
considered one employer with VBC under Section 4001(a)(14) of ERISA or Section
414(b) or (c) of the Code (an "ERISA Affiliate") is a sponsor of or maintains a
defined benefit Pension Plan or any Compensation and Benefit Plan subject to
Title IV of ERISA, or has any liability under any such plan that was previously
sponsored or maintained by it. No notice of a "reportable event," within the
meaning of Section 4043 of ERISA for which the 30-day reporting requirement has
not been waived, has been required to be filed for any Compensation and Benefit
Plan or by any single employer plan of an ERISA Affiliate (an "ERISA Affiliate
Plan") within the 12-month period ending on the date hereof. To the knowledge of
VBC, there is no pending investigation or enforcement action by any Regulatory
Authority with respect to any Compensation and Benefit Plan or any ERISA
Affiliate Plan, except as set forth in VBC DISCLOSURE SCHEDULE 3.12(c).
21
(d) All material contributions required to be made under the terms of
any Compensation and Benefit Plan or ERISA Affiliate Plan or any employee
benefit arrangements to which VBC or any VBC Subsidiary is a party or a sponsor
have been timely made, and all anticipated contributions and funding obligations
are accrued monthly on VBC's consolidated financial statements. VBC and the VBC
Subsidiaries have expensed and accrued as a liability the present value of
future benefits under each applicable Compensation and Benefit Plan for
financial reporting purposes as required by generally accepted accounting
principles. Neither any Pension Plan nor any ERISA Affiliate Plan has an
"accumulated funding deficiency" (whether or not waived) within the meaning of
Section 412 of the Code or Section 302 of ERISA. Neither VBC, nor any VBC
Subsidiary or any ERISA Affiliate (x) has provided, or would reasonably be
expected to be required to provide, security to any Pension Plan or to any ERISA
Affiliate Plan pursuant to Section 401(a)(29) of the Code, or (y) has taken any
action, or omitted to take any action, that has resulted, or would reasonably be
expected to result, in the imposition of a Lien under Section 412(n) of the Code
or pursuant to ERISA.
(e) Except as set forth in VBC DISCLOSURE SCHEDULE 3.12(a), neither VBC
nor any VBC Subsidiary has any obligations to provide retiree health, life
insurance, disability insurance, or other retiree death benefits under any
Compensation and Benefit Plan, other than benefits mandated by Section 4980B of
the Code. There has been no communication to employees by VBC or any VBC
Subsidiary that would reasonably be expected to promise or guarantee such
employees retiree health, life insurance, disability insurance, or other retiree
death benefits.
(f) Neither VBC nor any VBC Subsidiary maintains any Compensation and
Benefit Plans covering foreign employees.
(g) With respect to each Compensation and Benefit Plan, if applicable,
VBC has provided or made available to Oneida Savings copies of the: (A) trust
instruments and insurance contracts; (B) two most recent Forms 5500 filed with
the IRS; (C) most recent actuarial report and financial statement; (D) the most
recent summary plan description; (E) most recent determination letter issued by
the IRS; (F) any Form 5310 or Form 5330 filed with the IRS; and (G) most recent
nondiscrimination tests performed under ERISA and the Code (including 401(k) and
401(m) tests).
(h) Except as set forth in VBC DISCLOSURE SCHEDULE 3.12(h) or as
otherwise provided in this Agreement, the consummation of the Merger will not,
directly or indirectly (including, without limitation, as a result of any
termination of employment or service at any time prior to or following the
Merger Effective Date) (A) entitle any employee, consultant or director to any
payment or benefit (including severance pay, change in control benefit, or
similar compensation) or any increase in compensation, (B) result in the vesting
or acceleration of any benefits under any Compensation and Benefit Plan or (C)
result in any material increase in benefits payable under any Compensation and
Benefit Plan.
(i) No compensation payable by VBC or any VBC Subsidiary to any of
their employees under any Compensation and Benefit Plan (including by reason of
the transactions contemplated hereby) will be subject to disallowance under
Section 162(m) of the IRC.
22
Section 3.13 Brokers, Finders and Financial Advisors
Other than the engagement of ▇▇▇▇▇▇▇▇▇ Associates, Inc. to render its
opinion as contemplated by Section 3.20 of this Agreement, neither VBC nor any
VBC Subsidiary, nor any of their respective officers, directors, employees or
agents, has employed any broker, finder or financial advisor in connection with
the transactions contemplated by this Agreement, or, incurred any liability or
commitment for any fees or commissions to any such person in connection with the
transactions contemplated by this Agreement, which has not been reflected in the
VBC Financials.
Section 3.14 Environmental Matters
(a) With respect to VBC and each VBC Subsidiary:
(i) Each of VBC and the VBC Subsidiaries, the Participation
Facilities, and, to VBC's knowledge, the Loan Properties are, and have been, in
substantial compliance with, and are not liable under, any Environmental Laws;
(ii) There is no suit, claim, action, demand, executive or
administrative order, directive, investigation or proceeding pending or, to
VBC's knowledge, threatened, before any court, governmental agency or board or
other forum against VBC or any VBC Subsidiary or any Participation Facility (x)
for alleged noncompliance (including by any predecessor) with, or liability
under, any Environmental Law or (y) relating to the presence of or release (as
defined herein) into the environment of any Hazardous Material (as defined
herein), whether or not occurring at or on a site owned, leased or operated by
it or any VBC Subsidiary or any Participation Facility;
(iii) There is no suit, claim, action, demand, executive or
administrative order, directive, investigation or proceeding pending or, to
VBC's knowledge, threatened, before any court, governmental agency or board or
other forum relating to or against any Loan Property (or VBC or any VBC
Subsidiary in respect of such Loan Property) (x) relating to alleged
noncompliance (including by any predecessor) with, or liability under, any
Environmental Law or (y) relating to the presence of or release into the
environment of any Hazardous Material, whether or not occurring at or on a site
owned, leased or operated by a Loan Property;
(iv) The properties currently owned or operated by VBC or any
VBC Subsidiary (including, without limitation, soil, groundwater or surface
water on, under or adjacent to the properties, and buildings thereon) are not
contaminated with and do not otherwise contain any Hazardous Material other than
as permitted under applicable Environmental Law;
(v) Neither VBC nor any VBC Subsidiary has received any
notice, demand letter, executive or administrative order, directive or request
for information from any federal, state, local or foreign governmental entity or
any third party indicating that it may be in violation of, or liable under, any
Environmental Law;
23
(vi) There are no underground storage tanks on, in or under
any properties owned or operated by VBC or any VBC Subsidiary or any
Participation Facility, and no underground storage tanks have been closed or
removed from any properties owned or operated by VBC or any VBC Subsidiary or
any Participation Facility; and
(vii) During the period of VBC's or any VBC Subsidiary's
ownership or operation of any of their respective current properties or VBC's or
any VBC Subsidiary's participation in the management of any Participation
Facility, there has been no contamination by or release of Hazardous Materials
in, on, under or affecting such properties. To VBC's knowledge, prior to the
period of (x) VBC's or any VBC Subsidiary's ownership or operation of any of
their respective current properties or (y) VBC's or any VBC Subsidiary's
participation in the management of any Participation Facility, there was no
contamination by or release of Hazardous Material in, on, under or affecting
such properties.
(b) "Loan Property" means any property in which the applicable party
(or a Subsidiary of it) holds a security interest, and, where required by the
context, includes the owner or operator of such property, but only with respect
to such property. "Participation Facility" means any facility in which the
applicable party (or a Subsidiary of it) participates in the management
(including all property held as trustee or in any other fiduciary capacity) and,
where required by the context, includes the owner or operator of such property,
but only with respect to such property.
Section 3.15 Loan Portfolio
(a) The allowance for possible losses reflected in VBC's statement of
condition at December 31, 2005 and all applicable regulatory requirements was,
and the allowance for possible losses shown on the balance sheets in VBC's
Regulatory Reports for periods ending after December 31, 2005 and all applicable
regulatory requirements will be, adequate, as of the dates thereof, under GAAP.
(b) VBC DISCLOSURE SCHEDULE 3.15(b) sets forth a listing, as of the
last practicable date prior to the date of this Agreement, by account, of: (A)
all loans (including loan participations) of VBC or any VBC Subsidiary that have
been accelerated during the past twelve months; (B) all loan commitments or
lines of credit of VBC or any VBC Subsidiary which have been terminated by VBC
or any VBC Subsidiary during the past twelve months by reason of a default or
adverse developments in the condition of the borrower or other events or
circumstances affecting the credit of the borrower; (C) all loans, lines of
credit and loan commitments as to which VBC or any VBC Subsidiary has given
written notice of its intent to terminate during the past twelve months; (D)
with respect to all commercial loans (including commercial real estate loans),
all notification letters and other written communications from VBC or any VBC
Subsidiary to any of their respective borrowers, customers or other parties
during the past twelve months wherein VBC or any VBC Subsidiary has requested or
demanded that actions be taken to correct existing defaults or facts or
circumstances which may become defaults; (E) each borrower, customer or other
party which has notified VBC or any VBC Subsidiary during the past twelve months
of, or has asserted against VBC or any VBC Subsidiary, in each case in writing,
any "lender liability" or similar claim, and, to the knowledge
24
of VBC, each borrower, customer or other party which has given VBC or any VBC
Subsidiary any oral notification of, or orally asserted to or against VBC or any
VBC Subsidiary, any such claim; (F) all loans, (1) that are contractually past
due 90 days or more in the payment of principal and/or interest, (2) that are on
non-accrual status, (3) that as of the date of this Agreement are classified as
"Other Loans Specially Mentioned", "Special Mention", "Substandard", "Doubtful",
"Loss", "Classified", "Criticized", "Watch list" or words of similar import,
together with the principal amount of and accrued and unpaid interest on each
such Loan and the identity of the obligor thereunder, (4) where a reasonable
doubt exists as to the timely future collectibility of principal and/or
interest, whether or not interest is still accruing or the loans are less than
90 days past due, (5) where the interest rate terms have been reduced and/or the
maturity dates have been extended subsequent to the agreement under which the
loan was originally created due to concerns regarding the borrower's ability to
pay in accordance with such initial terms, or (6) where a specific reserve
allocation exists in connection therewith, and (G) all assets classified by VBC
or any VBC Subsidiary as real estate acquired through foreclosure or in lieu of
foreclosure, including in-substance foreclosures, and all other assets currently
held that were acquired through foreclosure or in lieu of foreclosure.
(c) All loans receivable (including discounts) and accrued interest
entered on the books of VBC and each VBC Subsidiary arose out of bona fide
arm's-length transactions, were made for good and valuable consideration in the
ordinary course of the respective business of VBC and each VBC Subsidiary, and
the notes or other evidences of indebtedness with respect to such loans
(including discounts) are true and genuine and are what they purport to be. To
the knowledge of VBC and each VBC Subsidiary, the loans, discounts and the
accrued interest reflected on the books of VBC and each VBC Subsidiary, are
subject to no defenses, set-offs or counterclaims (including, without
limitation, those afforded by usury or truth-in-lending laws), except as may be
provided by bankruptcy, insolvency or similar laws affecting creditors' rights
generally or by general principles of equity. All such loans are owned by VBC or
each VBC Subsidiary, free and clear of any Liens.
(d) The notes and other evidences of indebtedness evidencing the loans
described in clause (c) above, and all pledges, mortgages, deeds of trust and
other collateral documents or security instruments relating thereto are, in all
material respects, valid, true and genuine, and what they purport to be.
(e) VBC DISCLOSURE SCHEDULE 3.15(e) sets forth by category the amounts
of all loans, leases, advances, credit enhancements, other extensions of credit,
commitments and interest-earning assets of VBC, and each VBC Subsidiary that
have been classified (whether regulatory or internal) as "Special Mention,"
"Substandard," "Doubtful," "Loss" or words of similar import, and VBC and each
VBC Subsidiary shall promptly after the end of any month inform Oneida Financial
of any such classification arrived at any time after the date hereof. The other
real estate owned ("OREO") included in any non-performing assets of VBC, or any
VBC Subsidiary is carried net of reserves at the lower of cost or fair value,
less estimated selling costs, based on current independent appraisals or
evaluations or current management appraisals or evaluations; provided, however,
that "current" shall mean within the past twelve (12) months.
25
Section 3.16 Related Party Transactions
Except as disclosed in VBC DISCLOSURE SCHEDULE 3.16, neither VBC nor
▇▇▇▇▇▇ Bank is a party to any transaction (including any loan or other credit
accommodation) with any Affiliate of VBC. All such transactions (a) were made in
the ordinary course of business, (b) were made on substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions with other Persons, and (c) did not involve more than
the normal risk of collectability or present other unfavorable features. No loan
or credit accommodation to any Affiliate of VBC is presently in default or,
during the three year period prior to the date of this Agreement, has been in
default or has been restructured, modified or extended. VBC has not been
notified that principal and interest with respect to any such loan or other
credit accommodation will not be paid when due or that the loan grade
classification accorded such loan or credit accommodation by VBC is
inappropriate.
Section 3.17 Schedule of Termination Benefits
VBC DISCLOSURE SCHEDULE 3.17 includes a schedule of all termination
benefits and related payments that would be payable to the individuals
identified thereon, granted to such individuals, under any and all employment
agreements, special termination agreements, supplemental executive retirement
plans, deferred bonus plans, deferred compensation plans, salary continuation
plans, or any compensation arrangement, or other pension benefit or welfare
benefit plan maintained by VBC or any VBC Subsidiary solely for the benefit of
officers or directors of VBC or any VBC Subsidiary (the "Benefits Schedule"),
assuming their employment or service is terminated as of January 2, 2007 and the
Closing Date occurs immediately prior to such termination. No other individuals
are entitled to benefits under any such plans.
Section 3.18 Deposits
None of the deposits of VBC or any VBC Subsidiary is a "brokered"
deposit as defined in 12 CFR 337.6(a)(2).
Section 3.19 Antitakeover Provisions Inapplicable; Required Vote
of Stockholders
Except as set forth on VBC DISCLOSURE SCHEDULE 3.19, and except for
approvals required under the federal and state banking laws, the transactions
contemplated by this Agreement are not subject to any applicable state takeover
law. The affirmative vote of the holders of two-thirds of the issued and
outstanding shares of VBC common stock entitled to vote is necessary to approve
this Agreement and the transactions contemplated hereby.
Section 3.20 Fairness Opinion
VBC has received an opinion from ▇▇▇▇▇▇▇▇▇ Associates, Inc. , to the
effect that, subject to the terms, conditions and qualifications set forth
therein, as of the date thereof, the Merger Consideration to be received by the
stockholders of VBC pursuant to this Agreement is fair to such stockholders from
a financial point of view. Such opinion has not been amended or rescinded as of
the date of this Agreement.
26
Section 3.21 Administration of Fiduciary Accounts
VBC and each VBC Subsidiary has properly administered all accounts for
which it acts as a fiduciary including, but not limited to, accounts for which
it serves as trustee, agent, custodian, personal representative, guardian,
conservator or investment advisor, in accordance with the terms of the governing
documents and applicable laws and regulations, except for failures to so
administer which would not have a Material Adverse Effect on the VBC. Neither
VBC nor any VBC Subsidiary, nor any of their respective directors, officers or
employees, has committed any breach of trust with respect to any such fiduciary
account and the records for each such fiduciary account, except for breaches of
trust and failures to maintain records which would not, individually or in the
aggregate, have a Material Adverse Effect on VBC.
Section 3.22 Derivative Transactions
All material interest rate swaps, caps, floors, option agreements,
futures and forward contracts and other similar risk management arrangements,
whether entered into for VBC's own account, or for the account of one or more of
VBC's Subsidiaries or their customers (all of which are set forth in VBC
DISCLOSURE SCHEDULE 3.22), were entered into in accordance with prudent business
practices and in all material respects in compliance with all applicable laws,
rules, regulations and regulatory policies and with counterparties believed to
be financially responsible at the time; and each of them constitutes the valid
and legally binding obligation of VBC or a VBC Subsidiary, enforceable in
accordance with its terms (except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and
similar laws of general applicability relating to or affecting creditors' rights
or by general equity principles), and is in full force and effect. Neither VBC
nor any VBC Subsidiary, nor to the Knowledge of VBC any other party thereto, is
in breach of any of its obligations under any such agreement or arrangement in
any material respect.
Section 3.23 Information in the Proxy Statement
VBC represents and warrants that the Proxy Statement will not, either
at the time it is mailed to the VBC Stockholders or at the time of the VBC
stockholders meeting, contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they were made, not
misleading; provided, however, no representation or warranty is made hereby with
respect to information supplied or required to be supplied by Oneida Financial
for inclusion in the proxy statement.
Section 3.24 Good Faith
Neither VBC or any VBC Subsidiary has taken or agreed to take any
action or has any knowledge of any fact or circumstance that would (i) prevent
the transactions contemplated hereby from qualifying as a reorganization within
the meaning of Section 368 of the Code, or (ii) materially impede or delay
receipt of any approval from any regulatory authority or the consummation of the
transactions contemplated by this Agreement.
27
Section 3.25 Community Reinvestment Act Compliance.
▇▇▇▇▇▇ Bank is in material compliance with the applicable provisions of
the Community Reinvestment Act (the "CRA") and the regulations promulgated
thereunder except where the failure to be in compliance would not have a
Material Adverse Effect on VBC, and ▇▇▇▇▇▇ Bank currently has a CRA rating of
satisfactory or better. To the knowledge of VBC, there is no fact or
circumstance or set of facts or circumstances that would cause ▇▇▇▇▇▇ Bank to
fail to comply with such provisions or cause the CRA rating of ▇▇▇▇▇▇ Bank to
fall below satisfactory.
Section 3.26 Anti-Money Laundering Compliance.
▇▇▇▇▇▇ Bank maintains an effective anti-money laundering program and is
in compliance in all material respects with federal laws and regulations
relating to such anti-money laundering program.
ARTICLE IV-REPRESENTATIONS AND WARRANTIES OF ONEIDA FINANCIAL
Oneida Financial represents and warrants to VBC that the statements
contained in this Article IV are correct and complete as of the date of this
Agreement and will be correct and complete as of the Closing Date (as though
made then and as though the Closing Date were substituted for the date of this
Agreement throughout this Article IV), except as set forth in the ONEIDA
FINANCIAL DISCLOSURE SCHEDULES delivered by Oneida Financial to VBC on the date
hereof. Oneida Financial has made a good faith effort to ensure that the
disclosure on each schedule of the ONEIDA FINANCIAL DISCLOSURE SCHEDULES
corresponds to the section reference herein.
Section 4.01 Organization
(a) Oneida Financial is a corporation duly organized, validly existing
and in good standing under the laws of the United States of America, and is duly
registered as a savings and loan holding company under the HOLA. Oneida
Financial has full corporate power and authority to carry on its business as now
conducted and is duly licensed or qualified to do business in the states of the
United States and foreign jurisdictions where its ownership or leasing of
property or the conduct of its business requires such qualification, except
where the failure to be so licensed or qualified would not have a Material
Adverse Effect on Oneida Financial.
(b) Oneida Savings is a stock savings bank duly organized, validly
existing and in good standing under the laws of the State of New York. State
Bank is a stock bank duly organized, validly existing and in good standing under
the laws of the State of New York. The deposits of Oneida Savings and State Bank
are insured by the FDIC through the DIF to the fullest extent permitted by law,
and all premiums and assessments required to be paid in connection therewith
have been paid when due by Oneida Savings and State Bank.
28
(c) Oneida Financial owns all of the capital stock of Oneida Savings,
and Oneida Savings owns all of the capital stock of State Bank, in each case,
free and clear of any lien or encumbrance.
(d) Oneida Merger Corp., at the Merger Effective Date, will be a
corporation duly organized, validly existing and in good standing under the laws
of the State of New York. At the Merger Effective Date, Oneida Savings will have
received all requisite approvals of government authorities to own, and Oneida
Savings will own, all of the outstanding capital stock of Oneida Merger Corp.
Section 4.02 Authority; No Violation
(a) Each of Oneida Financial and Oneida Savings has full corporate
power and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by Oneida Financial and Oneida Savings and the completion by Oneida Financial
and Oneida Savings of the transactions contemplated hereby have been duly and
validly approved by the Board of Directors of Oneida Financial and Oneida
Savings, respectively, and no other corporate proceedings on the part of Oneida
Financial and Oneida Savings are necessary to complete the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by Oneida Financial and Oneida Savings and, subject to receipt of the
required approvals of Regulatory Authorities described in Section 4.03 hereof,
constitutes the valid and binding obligation of Oneida Financial and Oneida
Savings, enforceable against them in accordance with its terms, subject to
applicable bankruptcy, insolvency and similar laws affecting creditors' rights
generally.
(b) The execution and delivery of this Agreement by Oneida Financial
and Oneida Savings, subject to receipt of approvals from the Regulatory
Authorities referred to in Section 4.03 hereof and VBC's, ▇▇▇▇▇▇ Bank's and
Oneida Financial's and Oneida Savings' compliance with any conditions contained
therein, the consummation of the transactions contemplated hereby, and
compliance by Oneida Financial or Oneida Savings with any of the terms or
provisions hereof, will not (i) conflict with or result in a breach of any
provision of the charter or bylaws of Oneida Financial or any Oneida Financial
Subsidiary; (ii) violate any statute, code, ordinance, rule, regulation,
judgment, order, writ, decree or injunction applicable to Oneida Financial or
any Oneida Financial Subsidiary or any of their respective properties or assets;
or (iii) violate, conflict with, result in a breach of any provisions of,
constitute a default (or an event which, with notice or lapse of time, or both,
would constitute a default), under, result in the termination of, accelerate the
performance required by, or result in a right of termination or acceleration or
the creation of any lien, security interest, charge or other encumbrance upon
any of the properties or assets of Oneida Financial or any Oneida Financial
Subsidiary, or under any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, deed of trust, license, lease, agreement or other
investment or obligation to which Oneida Financial or any Oneida Financial
Subsidiary is a party, or by which they or any of their respective properties or
assets may be bound or affected, except for such violations, conflicts, breaches
or defaults in clause (ii) or (iii) hereof which, either, individually or in the
aggregate will not have a Material Adverse Effect on Oneida Financial or Oneida
Savings.
29
(c) Oneida Merger Corp. will, at the Merger Effective Date, have full
corporate power and authority to enter into and join in this Agreement or to
execute and deliver a plan of merger to effectuate the Merger contemplated by
this Agreement and, subject to receipt of the required approvals of Regulatory
Authorities, to consummate the transactions contemplated hereby.
Section 4.03 Consents
Except for consents, approvals, filings and registrations from or with
the Department, FDIC, OCC, FRB and OTS, and compliance with any conditions
contained therein, and the approval of this Agreement by the stockholders of
VBC, and the filing of the articles of combination and certificate of merger
with the OTS, the Department, and the New York Department of State, no consents
or approvals of, or filings or registrations with, any public body or authority
are necessary, and no consents or approvals of any third parties are necessary,
or will be, in connection with (a) the execution and delivery of this Agreement
by Oneida Financial and Oneida Savings, and (b) the completion by Oneida
Financial and Oneida Savings of the transactions contemplated hereby. Neither
Oneida Financial nor Oneida Savings has any Knowledge or reason to believe that
(i) any required consents or approvals including Regulatory Approvals will not
be received or will be received with conditions, limitations or restrictions
unacceptable to it or which would adversely impact Oneida Financial's or Oneida
Savings' ability to complete the transactions contemplated by this Agreement, or
(ii) that any public body or authority, the consent or approval of which is not
required or any filing with which is not required, will object to the completion
of the transactions contemplated by this Agreement.
Section 4.04 Compliance With Applicable Law
Neither Oneida Financial nor any Oneida Financial Subsidiary has
received any notification or communication from any Regulatory Authority, nor do
they have any Knowledge of facts which would form the basis for any Regulatory
Authority to take action: (i) asserting that Oneida Financial or any Oneida
Financial Subsidiary is not in compliance in any material manner with any of the
statutes, regulations or ordinances which such Regulatory Authority enforces;
(ii) threatening to revoke any license, franchise, permit or governmental
authorization which is material to Oneida Financial or any Oneida Financial
Subsidiary; (iii) requiring or threatening to require Oneida Financial or any
Oneida Financial Subsidiary, or indicating that Oneida Financial or any Oneida
Financial Subsidiary may be required, to enter into a cease and desist order,
agreement or memorandum of understanding or any other agreement restricting or
limiting, or purporting to restrict or limit, in any manner the operations of
Oneida Financial or any Oneida Financial Subsidiary; or (iv) directing,
restricting or limiting, or purporting to direct, restrict or limit, in any
manner the operations of Oneida Financial or any Oneida Financial Subsidiary,
including without limitation any restriction on the payment of dividends (any
such notice, communication, memorandum, agreement or order described in this
sentence is hereinafter referred to as a "Regulatory Agreement"). Neither Oneida
Financial nor any Oneida Financial Subsidiary is a party to, nor has consented
to any Regulatory Agreement. The most recent regulatory rating given to Oneida
Savings as to compliance with the CRA is satisfactory or better.
30
Section 4.05 Information to be Supplied
The information to be supplied by Oneida Financial for inclusion in the
Proxy Statement will not, at the time the Proxy Statement is mailed, contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements therein not misleading. The information
supplied, or to be supplied, by Oneida Financial for inclusion in the
Applications will, at the time such documents are filed with any Regulatory
Authority, be accurate in all material aspects.
Section 4.06 Financing
As of the date hereof Oneida Financial has adequate financial resources
under regulatory capital standards, and at the Merger Effective Date, Oneida
Financial will have sufficient cash funds to meet its obligations under this
Agreement and to consummate in a timely manner the transactions contemplated
hereby and thereby, including without limitation the payment of the Merger
Consideration.
Section 4.07 Legal Proceedings
As of the date of this Agreement, neither Oneida Financial nor any
Oneida Financial Subsidiary is a party to any action, suit or proceeding that
challenges the validity or propriety of any of the transactions contemplated by
this Agreement, or which could adversely affect the ability of Oneida Financial
to perform under this Agreement.
ARTICLE V-COVENANTS OF THE PARTIES
Section 5.01 Conduct of VBC's Business
(a) From the date of this Agreement to the Closing Date, VBC and each
VBC Subsidiary will conduct its business and engage in transactions, including
extensions of credit, only in the ordinary course and consistent with past
practice and policies, except as otherwise required or contemplated by this
Agreement, or required by law or with the written consent of Oneida Financial.
VBC and each VBC Subsidiary will use their reasonable good faith efforts subject
to the requirements of this Agreement, to (i) preserve their business
organizations intact, (ii) maintain good relationships with employees, and (iii)
preserve for themselves the good will of their customers and others with whom
business relationships exist.
(b) From the date of this Agreement to the Closing Date, except as
otherwise consented to by Oneida Financial in writing, which consent shall not
be unreasonably withheld, or as contemplated or required by this Agreement, VBC
will not, and VBC will not permit any VBC Subsidiary to:
(i) amend or change any provision of its certificate of
incorporation, charter, or bylaws, impose, or suffer the imposition, on any
share of VBC common stock held by VBC of any material lien, charge or
encumbrance or permit any such lien to exist;
31
(ii) change the number of shares of its authorized capital
stock or issue or grant any Right, option, warrant, call, commitment,
subscription, right to purchase or agreement of any character relating to its
authorized or issued capital stock, or any securities convertible into shares of
such capital stock, or split, combine or reclassify any shares of its capital
stock, redeem or otherwise acquire any shares of such capital stock, or sell or
issue any shares of capital stock;
(iii) declare, set aside or pay any dividend or other
distribution (whether in cash, stock or property or any combination thereof) in
respect of its capital stock;
(iv) hire any new employees (except to replace departing
employees at comparable compensation levels), grant or agree to pay any bonus,
severance or termination to, or enter into, renew or amend any employment
agreement, severance agreement and/or supplemental executive agreement with, or
increase in any manner the compensation or fringe benefits of, any of its
directors, officers or employees, except and as may be required pursuant to
legally binding commitments existing on the date hereof and set forth on VBC
DISCLOSURE SCHEDULES 3.08 and 3.12;
(v) enter into or, except as may be required by law, modify
any pension, retirement, stock purchase, stock appreciation right, stock grant,
savings, profit sharing, deferred compensation, supplemental retirement,
consulting, bonus, group insurance or other employee benefit, incentive or
welfare contract, plan or arrangement, or any trust agreement related thereto,
in respect of any of its directors, officers or employees; or make any
contributions to any defined contribution or defined benefit plan not in the
ordinary course of business consistent with past practice;
(vi) merge or consolidate VBC or any VBC Subsidiary with any
other corporation; sell or lease all or any substantial portion of the assets or
business of VBC or any VBC Subsidiary; make any acquisition of all or any
substantial portion of the business or assets of any other person, firm,
association, corporation or business organization other than in connection with
foreclosures, settlements in lieu of foreclosure, troubled loan or debt
restructuring, or the collection of any loan or credit arrangement between VBC,
or any VBC Subsidiary, and any other person; enter into a purchase and
assumption transaction with respect to deposits and liabilities; permit the
revocation or surrender by VBC or any VBC Subsidiary of its certificate of
authority to maintain, or file an application for the relocation of, any
existing branch office, or file an application for a certificate of authority to
establish a new branch office;
(vii) sell or otherwise dispose of the capital stock of VBC or
any VBC Subsidiary or sell or otherwise dispose of any asset of VBC or of any
VBC Subsidiary other than in the ordinary course of business consistent with
past practice; subject any asset of VBC or of any VBC Subsidiary to a lien,
pledge, security interest or other encumbrance (other than in connection with
deposits, the collections and/or processing of checks, drafts, notes,
instruments or letters of credit, liens granted to the FHLB of New York to
secure advances to VBC from the FHLB of New York, repurchase agreements, bankers
acceptances, "treasury tax and loan" accounts established in the ordinary course
of business and transactions in "federal funds" and the satisfaction of legal
requirements in the exercise of trust powers) other than in the ordinary course
of business consistent with past practice; incur any indebtedness for borrowed
money (or
32
guarantee any indebtedness for borrowed money), except in the ordinary course of
business consistent with past practice;
(viii) take any action which would result in any of the
representations and warranties of VBC set forth in this Agreement becoming
untrue as of any date after the date hereof or in any of the conditions set
forth in Article VI hereof not being satisfied, except in each case as may be
required by applicable law;
(ix) change any method, practice or principle of accounting,
except as may be required from time to time by GAAP (without regard to any
optional early adoption date) or any Regulatory Authority responsible for
regulating VBC or ▇▇▇▇▇▇ Bank;
(x) waive, release, grant or transfer any material rights of
value, cancel or compromise any material debt or claim, or modify or change in
any material respect any existing material agreement or indebtedness to which
VBC or any VBC Subsidiary is a party, other than in the ordinary course of
business, consistent with past practice;
(xi) purchase any security for its investment portfolio not
rated "A" or higher by either Standard & Poor's Corporation or ▇▇▇▇▇'▇ Investor
Services, Inc., except for a local municipal bond issue with which ▇▇▇▇▇▇ Bank
has a relationship, to the extent and in amounts consistent with ▇▇▇▇▇▇ Bank's
past practice, or otherwise alter, in any material respect, the mix, maturity,
credit or interest rate risk profile of its portfolio of investment securities
or its portfolio of mortgage-backed securities;
(xii) except for commitments issued prior to the date of this
Agreement which have not yet expired and which have been disclosed on the VBC
DISCLOSURE SCHEDULE 5.01(b)(xii), and the renewal of existing lines of credit,
make any new loan or other credit facility commitment (including without
limitation, lines of credit and letters of credit) to any borrower or group of
affiliated borrowers in excess of $30,000 in the aggregate for unsecured loans
and $100,000 in the aggregate for secured loans; provided, however, that Oneida
Financial's prior written consent or approval to any new loan or other credit
facility commitment shall not be unreasonably withheld or delayed;
(xiii) enter into, renew, extend or modify any other
transaction with any Affiliate;
(xiv) purchase any debt securities, or enter into any futures
contract, option, interest rate caps, interest rate floors, interest rate
exchange agreement or other agreement or take any other action for purposes of
hedging the exposure of its interest-earning assets and interest-bearing
liabilities to changes in market rates of interest;
(xv) except for the execution of this Agreement and actions
taken in accordance with this Agreement, take any action that would give rise to
a right of payment to any individual under any employment agreement;
(xvi) make any change in policies with regard to: the
extension of credit, or the establishment of reserves with respect to the
possible loss thereon or the charge off of losses
33
incurred thereon; investments; asset/liability management; or other material
banking policies, including deposit liabilities, in any material respect except
as may be required by changes in applicable law or regulations or direction of a
Regulatory Authority;
(xvii) except for the execution of this Agreement, and actions
taken in accordance with this Agreement, take any action that would give rise to
a right of payment or an acceleration of the right to payment to any individual
under any Compensation and Benefit Plan;
(xviii) make any capital expenditures in excess of $10,000
individually or $25,000 in the aggregate, other than pursuant to binding
commitments existing on the date hereof and other than expenditures not greater
than $5,000 in order to maintain existing assets in good repair;
(xix) purchase or otherwise acquire, or sell or otherwise
dispose of, any assets or incur any liabilities other than in the ordinary
course of business consistent with past practices and policies;
(xx) sell any loan (other than sales of loans secured by one-
to four-family real estate that are consistent with past practice) or OREO
properties (other than sales of OREO which generate a net book loss of not more
than $5,000 per property) or acquire any new loan participation or loan
servicing rights;
(xxi) modify or restructure the terms of any loan to any
borrower or group of affiliated borrowers in excess of $30,000 in the aggregate
for unsecured loans and $100,000 in the aggregate for secured loans;
(xxii) sell or otherwise dispose of any loan, mortgage-backed
security or investment security except in the ordinary course of business
consistent with past practices;
(xxiii) except as set forth in VBC DISCLOSURE SCHEDULE
5.01(b)(xxiii) undertake, enter into or renew any lease, contract or other
commitment for its account, other than in the normal course of providing credit
to customers as part of its banking business, involving a payment by VBC or any
VBC Subsidiary of more than $10,000 annually, or containing a material financial
commitment and extending beyond 12 months from the date hereof;
(xxiv) except as required by applicable law, regulation or
regulatory directive, charge-off any loan with a principal balance in excess of
$5,000;
(xxv) materially change the pricing strategies of ▇▇▇▇▇▇ Bank
with respect to its deposits or loan accounts;
(xxvi) invest in "high risk" mortgage derivative investments
as defined by the Federal Financial Institutions Examination Council;
34
(xxvii) discharge or satisfy any lien or encumbrance or pay
any material obligation or liability (absolute or contingent) other than at
scheduled maturity or in the ordinary course of business;
(xxviii) enter or agree to enter into any agreement or
arrangement granting any preferential right to purchase any of its assets or
rights or requiring the consent of any party to the transfer and assignment of
any such assets or rights;
(xxix) foreclose upon or otherwise take title to or possession
or control of any real property without first obtaining a phase one
environmental report thereon indicating that there is no apparent violation of
or liability under the Environmental Laws, provided, however, that it shall not
be required to obtain such a report with respect to one- to four-family,
non-agricultural residential property of five (5) acres or less to be foreclosed
upon unless it has reason to believe that such property might be in violation of
or require remediation under Environmental Laws;
(xxx) except as set forth in VBC DISCLOSURE SCHEDULE
5.01(b)(xxx), make any sale, assignment, transfer, pledge, hypothecation or
other disposition of any assets having a book or market value, whichever is
greater, in the aggregate in excess of $10,000, other than pledges of assets to
secure government deposits, to exercise trust powers, sales of assets received
in satisfaction of debts previously contracted in the normal course of business,
issuance of loans, sales of previously purchased government guaranteed loans, or
transactions in the investment securities portfolio by VBC or a VBC Subsidiary
or repurchase agreements made, in each case, in the ordinary course of business;
(xxxi) except in the ordinary course of business consistent
with past practice and involving an amount not in excess of $5,000, settle any
claim, action or proceeding; provided that no settlement shall be made if it
involves a precedent for other similar claims, which in the aggregate, could be
material to VBC, taken as a whole;
(xxxii) take any action which would or is reasonably likely to
adversely effect or materially delay the receipt of the necessary approvals from
the Regulatory Authorities, except as may be required by law or regulatory
directive;
(xxxiii) take action that would or is reasonably likely to
materially and adversely affect VBC's ability to perform its covenants and
agreements under this Agreement, except as may be required by law or regulatory
directive;
(xxxiv) take any action that would result in any of the
conditions to the Merger not being satisfied, except as may be required by law
or regulatory directive; or
(xxxv) agree to do any of the foregoing.
35
Section 5.02 Access; Confidentiality
(a) Each of VBC and the VBC Subsidiaries shall permit Oneida Financial
and its representatives reasonable access to its properties, and shall disclose
and make available to them all books, papers and records relating to the assets,
stock ownership, properties, operations, obligations and liabilities of VBC and
its Subsidiaries, including, but not limited to, all books of account (including
the general ledger), tax records, minute books of meetings of boards of
directors and any committees thereof (other than minutes that discuss any of the
transactions contemplated by this Agreement), and stockholders, organizational
documents, bylaws, material contracts and agreements, filings with any
Regulatory Authority, accountants' work papers, litigation files, plans
affecting employees, and any other business activities or prospects in which
Oneida Financial may have a reasonable interest. Notwithstanding the foregoing,
neither VBC nor the VBC Subsidiaries shall be required to provide access to or
to disclose information where such access or disclosure would violate or
prejudice the rights of such party's customers, jeopardize the attorney-client
privilege of the institution in possession or control of such information or
contravene any law, rule, regulation, order, judgment or decree. Subject to
applicable legal requirements, the parties hereto will make appropriate
substitute disclosure arrangements under circumstances in which restrictions of
the preceding sentence apply. VBC and the VBC Subsidiaries shall make their
respective officers, employees and agents and authorized representatives
(including counsel and independent public accountants) available to confer with
Oneida Financial and its representatives, subject to the limitations of this
paragraph. Upon advance notice and coordination of mutually agreeable and
reasonable arrangements, VBC and each VBC Subsidiary shall permit Oneida
Financial, at its expense, to cause a "phase I environmental audit" and, if a
recognized environmental condition is found or suspected, a "phase II
environmental audit" to be performed at any physical location owned or occupied
by VBC or any VBC Subsidiary. For any leased locations, such arrangements shall
be subject to obtaining any necessary consents of the landlord. Copies of any
such environmental reports shall be provided to VBC upon its request. The
parties will hold all such information delivered in confidence to the extent
required by, and in accordance with, the provisions of the agreement between VBC
and Oneida Financial (the "Confidentiality Agreement").
(b) Oneida Financial agrees to conduct such investigations and
discussions hereunder in a manner so as not to interfere unreasonably with
normal operations and customer and employee relationships of the other party.
(c) Subject to applicable legal requirements, in addition to the access
permitted by subparagraph (a) above, from the date of this Agreement through the
Closing Date, VBC shall permit employees of Oneida Financial reasonable access
to information relating to problem loans, loan restructurings and loan work-outs
of VBC and the VBC Subsidiaries.
(d) If the transactions contemplated by this Agreement shall not be
consummated, VBC and Oneida Financial will each destroy or return all documents
and records obtained from the other party or its representatives, during the
course of its investigation and will cause all information with respect to the
other party obtained pursuant to this Agreement or preliminarily thereto to be
kept confidential, except to the extent such information becomes public through
no fault of the party to whom the information was provided or any of its
representatives or agents
36
and except to the extent disclosure of any such information is legally required.
VBC and Oneida Financial shall each give prompt written notice to the other
party of any contemplated disclosure where such disclosure is so legally
required.
Section 5.03 Regulatory Matters and Consents
(a) Oneida Financial and Oneida Savings will prepare all Applications
and make all filings for, and use their best efforts to obtain as promptly as
practicable after the date hereof, all necessary permits, consents, approvals,
waivers and authorizations of all Regulatory Authorities necessary or advisable
to consummate the transactions contemplated by this Agreement.
(b) VBC will furnish Oneida Financial with all information concerning
VBC and VBC Subsidiaries as may be necessary or advisable in connection with any
Application or filing made by or on behalf of Oneida Financial to any Regulatory
Authority in connection with the transactions contemplated by this Agreement.
The information supplied, or to be supplied by VBC and ▇▇▇▇▇▇ Bank for inclusion
in the Applications will, at the time such documents are filed with any
Regulatory Authority, be accurate in all material respects.
(c) Oneida Financial and VBC will promptly furnish each other with
copies of all material written communications to, or received by them from any
Regulatory Authority in respect of the transactions contemplated hereby and
notice of material oral communications with the Regulatory Authorities with
respect to the transactions contemplated hereby.
(d) 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 Regulatory Authorities. Oneida Financial
will furnish VBC with (i) copies of all Applications prior to filing with any
Regulatory Authority and provide VBC a reasonable opportunity to provide changes
to such Applications, and (ii) copies of all Applications filed by Oneida
Financial.
(e) VBC and Oneida Financial will cooperate with each other in the
foregoing matters and will furnish the responsible party with all information
concerning it and its Subsidiaries as may be necessary or advisable in
connection with any Application or filing (including the Proxy Statement) made
by or on behalf of Oneida Financial or VBC to any Regulatory Authority in
connection with the transactions contemplated by this Agreement, and such
information will be accurate and complete in all material respects. In
connection therewith, each party will provide certificates and other documents
reasonably requested by the other.
Section 5.04 Taking of Necessary Action
(a) Oneida Financial and VBC shall each use its best efforts in good
faith, and each of them shall cause its Subsidiaries to use their best efforts
in good faith, to (i) obtain any necessary stockholder approval of their
respective stockholders to complete the Merger, (ii) furnish such information as
may be required in connection with the preparation of the documents referred to
in Section 5.03 of this Agreement, and (iii) take or cause to be taken all
action necessary on its part using its best efforts so as to permit completion
of the Merger including,
37
without limitation, (A) obtaining the consent or approval of each individual,
partnership, corporation, association or other business or professional entity
whose consent or approval is required for consummation of the transactions
contemplated hereby (including assignment of leases without any change in
terms), provided that neither VBC nor any VBC Subsidiary shall agree to make any
payments or modifications to agreements in connection therewith without the
prior written consent of Oneida Financial, and (B) requesting the delivery of
appropriate opinions, consents and letters from its counsel and independent
auditors. No party hereto shall take, or cause, or to the best of its ability
permit to be taken, any action that would impair the prospects of completing the
Merger and the transactions contemplated hereby pursuant to this Agreement and
the related agreements; provided that nothing herein contained shall preclude
Oneida Financial or VBC from exercising its rights under this Agreement.
(b) VBC shall prepare, subject to the review and consent of Oneida
Financial with respect to matters relating to Oneida Financial and the
transactions contemplated by this Agreement, a Proxy Statement to be mailed to
the stockholders of VBC in connection with the meeting of its stockholders and
transactions contemplated hereby, which Proxy Statement shall conform to all
applicable legal requirements. The parties shall cooperate with each other with
respect to the preparation of the Proxy Statement. VBC shall, as promptly as
practicable following the preparation thereof, file the Proxy Statement with the
applicable agency, if any, and VBC shall use all reasonable efforts to have the
Proxy Statement mailed to stockholders as promptly as practicable. VBC will
promptly advise Oneida Financial of the time when the Proxy Statement has been
filed, if applicable, and mailed, or of any comments from any applicable agency
or any request for additional information.
Section 5.05 Certain Agreements
(a) From and after the Merger Effective Date through the sixth
anniversary thereof, or until the final disposition of such Claim (as herein
defined) with respect to any Claim asserted within the period, and except as
limited, conditioned or prohibited by laws, rules, regulations or orders to
which Oneida Financial is subject at the time such payments are to be made,
Oneida Financial shall, to the fullest extent permitted under applicable law,
and under the respective Certificate of Incorporation, bylaws, or similar
governing documents of VBC or any VBC subsidiary as in effect on the date of
this Agreement, indemnify, defend and hold harmless each present director and
officer of VBC and any VBC Subsidiary determined as of the Closing Date (the
"Indemnified Parties") against all losses, claims, damages, costs, expenses
(including reasonable attorneys' fees and expenses), liabilities, judgments or
amounts paid in settlement (with the approval of Oneida Financial, which
approval shall not be unreasonably withheld) or in connection with any claim,
action, suit, proceeding or investigation arising out of matters existing or
occurring at or prior to the Merger Effective Date (a "Claim"), except that a
Claim shall not include any action, suit, proceeding or investigation, whether
formal or informal, by a Regulatory Authority, in which an Indemnified Party is,
or is threatened to be made, a party or a witness based in whole or in part on,
or arising in whole or in part out of, the fact that such person is a director
or officer of VBC or any VBC Subsidiary, regardless of whether such Claim is
asserted or claimed prior to, at or after the Closing Date, to the fullest
extent to which directors and officers of VBC or any VBC Subsidiary are entitled
under applicable law as in effect on the date hereof (and Oneida Financial shall
pay expenses in advance of the final disposition of any
38
such action or proceeding to each Indemnified Party to the extent permissible
under applicable law as in effect on the date hereof; provided, that the person
to whom expenses are advanced provides an undertaking to repay such expenses if
it is ultimately determined that such person is not entitled to
indemnification). All rights to indemnification in respect of a Claim asserted
or made within the period described in the preceding sentence shall continue
until the final non-appealable disposition of such Claim.
(b) Any Indemnified Party wishing to claim indemnification under
Section 5.05(a), upon learning of any Claim, shall promptly notify Oneida
Financial, but the failure to so notify shall not relieve Oneida Financial of
any liability it may have to such Indemnified Party except to the extent that
such failure materially prejudices Oneida Financial. In the event of any Claim,
(i) Oneida Financial shall have the right to assume the defense thereof (with
counsel reasonably satisfactory to the Indemnified Party) and upon such
assumption shall not be liable to such Indemnified Parties for any legal
expenses of other counsel or any other expenses subsequently incurred by such
Indemnified Parties in connection with the defense thereof, except that, if
Oneida Financial elects not to assume such defense or counsel for the
Indemnified Parties advises that there are issues which raise conflicts of
interest between Oneida Financial and the Indemnified Parties, the Indemnified
Parties may retain counsel satisfactory to them and Oneida Financial, and Oneida
Financial shall pay all reasonable fees and expenses of such counsel for the
Indemnified Parties promptly as statements therefor are received, provided
further that Oneida Financial shall in all cases be obligated pursuant to this
paragraph to pay for only one firm of counsel for all Indemnified Parties in
connection with any one action or separate but similar or related actions in the
same jurisdiction arising out of the same allegations or circumstances, (ii) the
Indemnified Parties will cooperate in the defense of any such Claim and (iii)
Oneida Financial shall not be liable for any settlement effected without its
prior written consent.
(c) In the event Oneida Financial or any of its successors or assigns
(i) consolidates with or merges into any other Person and shall not continue or
survive such consolidation or merger, or (ii) transfers or conveys all or
substantially all of its properties and assets to any Person, then, and in each
such case, to the extent necessary, proper provision shall be made so that the
successors and assigns of Oneida Financial assume the obligations set forth in
this Section 5.05.
(d) Oneida Financial will use its reasonable best efforts to maintain,
or cause Oneida Savings to maintain, in effect for six years following the
Merger Effective Date, the current directors' and officers' liability insurance
policies maintained by VBC and ▇▇▇▇▇▇ Bank (provided, that Oneida Financial may,
at its option, substitute therefor polices of at least the same coverage
containing terms and conditions which are not materially less favorable) with
respect to matters occurring prior to the Merger Effective Date; provided,
however, that in no event shall Oneida Financial be required to expend pursuant
to this Section 5.05(d) in the aggregate more than $20,000 with respect to such
insurance (the "Maximum Amount"); provided, further, that if the amount of the
annual premiums necessary to maintain or procure such insurance coverage exceed
the Maximum Amount, Oneida Financial shall maintain the most advantageous
policies of directors' and officers' insurance obtainable for an annual premium
equal to the Maximum Amount. In connection with the foregoing, VBC and ▇▇▇▇▇▇
Bank agrees in order for Oneida
39
Financial to fulfill its agreement to provide directors' and officers' liability
insurance policies for six years to provide such insurer or substitute insurer
with such representations as such insurer may request with respect to the
reporting of any prior claims.
(e) The provisions of this Section 5.05 are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party and his or her
heirs and representatives.
Section 5.06 No Other Bids and Related Matters
From and after the date hereof until the earlier of the Closing or the
termination of this Agreement, neither VBC, nor any VBC Subsidiary, nor any of
their respective officers, directors, employees, representatives, agents or
affiliates (including, without limitation, any investment banker, attorney or
accountant retained by VBC or any VBC Subsidiary), will, directly or indirectly,
initiate, solicit or knowingly encourage (including by way of furnishing
non-public information or assistance), or facilitate knowingly, any inquiries or
the making of any proposal that constitutes, or may reasonably be expected to
lead to, any Acquisition Proposal (as defined below), or enter into or maintain
or continue discussions or negotiate with any person or entity in furtherance of
such inquiries or to obtain an Acquisition Proposal or agree to or endorse any
Acquisition Proposal, or authorize or permit any of its officers, directors, or
employees or any VBC Subsidiary or any investment banker, financial advisor,
attorney, accountant or other representative retained by any VBC Subsidiary to
take any such action, and VBC shall notify Oneida Financial orally (within one
business day) and in writing (as promptly as practicable) of all of the relevant
details relating to all inquiries and proposals which it or any VBC Subsidiary
or any such officer, director, employee, investment banker, financial advisor,
attorney, accountant or other representative may receive relating to any of such
matters; provided, however, that nothing contained in this Section 5.06 shall
prohibit the Board of Directors of VBC from (i) furnishing information to, or
entering into discussions or negotiations with any person or entity that makes
an unsolicited written, bona fide proposal to acquire VBC pursuant to a merger,
consolidation, share exchange, business combination, tender or exchange offer or
other similar transaction, if, and only to the extent that: (A) the Board of
Directors of VBC determines in its good faith, after reasonable inquiry and
consultation with its independent financial advisor that such proposal may be
superior to the Merger from a financial point-of-view to VBC's stockholders; (B)
the Board of Directors of VBC, after consultation with and after considering the
advice of independent legal counsel, determines in good faith that failure to
take such action may cause the Board of Directors of VBC to breach its fiduciary
duties to stockholders under applicable law (such proposal that satisfies (A)
and (B) being referred to herein as a "Superior Proposal"); (C) prior to
furnishing such information to, or entering into discussions or negotiations
with, such person or entity, VBC (x) notifies Oneida Financial of such
inquiries, proposals or offers received by, any such information requested from,
or any such discussions or negotiations sought to be initiated or continued with
VBC or any of its representatives, indicating in connection with such notice,
the name of such person and the material terms and conditions of any inquiries,
proposals or offers, and (y) receives from such person or entity an executed
confidentiality agreement substantially identical to the Confidentiality
Agreement; and (D) the VBC special meeting of stockholders convened to approve
this Agreement has not occurred, (ii) complying with Rule 14e-2 promulgated
under the Exchange Act with regard to a tender or exchange offer, or (iii) prior
to the VBC special meeting of stockholders convened to approve
40
this Agreement, failing to make or withdrawing or modifying its recommendation
for stockholders to approve this Agreement because there exists a Superior
Proposal and the Board of Directors of VBC, after consultation with and after
considering the advice of independent legal counsel, determined in good faith
that failure to take such action may cause such Board of Directors to breach its
fiduciary duties to stockholders under applicable law. Notwithstanding the
foregoing, this Agreement shall be submitted to the VBC stockholders for the
purpose of adopting this Agreement and approving the Merger, provided that this
Agreement shall not be required to be submitted to the stockholders of VBC if
this Agreement has been terminated pursuant to Section 7.01(c)(iv) or (d)(iv).
VBC agrees that it will promptly keep Oneida Financial informed of the status
and terms of any Acquisition Proposals and the discussions or negotiations
relating thereto. For purposes of this Agreement, "Acquisition Proposal" shall
mean any proposal or offer as to any of the following (other than the
transactions contemplated hereunder) involving VBC or any VBC Subsidiary: (i)
any merger, consolidation, share exchange, business combination, or other
similar transactions; (ii) any sale, lease, exchange, mortgage, pledge, transfer
or other disposition of 10% or more of the assets of VBC, taken as a whole, in a
single transaction or series of transactions; (iii) any tender offer or exchange
offer for 10% or more of the outstanding shares of capital stock of VBC or the
filing of a registration statement under the Securities Act in connection
therewith; or (iv) any public announcement of a proposal, plan or intention to
do any of the foregoing or any agreement to engage in any of the foregoing.
Section 5.07 Duty to Advise; Duty to Update the VBC Disclosure
Schedules
VBC shall promptly advise Oneida Financial of any change or event
having a Material Adverse Effect on it or on any VBC Subsidiary or which it
believes would or would be reasonably likely to cause or constitute a material
breach of any of its representations, warranties or covenants set forth herein.
VBC shall update the VBC DISCLOSURE SCHEDULES as promptly as practicable after
the occurrence of an event or fact which, if such event or fact had occurred
prior to the date of this Agreement, would have been disclosed in the VBC
DISCLOSURE SCHEDULES. The delivery of such updated Schedule shall not relieve
VBC from any breach or violation of this Agreement and shall not have any effect
for the purposes of determining the satisfaction of the condition set forth in
Sections 6.02(c) hereof.
Section 5.08 Conduct of Oneida Financial's Business
From the date of this Agreement to the Closing Date, Oneida Financial
will use its best efforts to (x) preserve its business organizations intact, (y)
maintain good relationships with employees, and (z) preserve for itself the
goodwill of customers of Oneida Savings and its other Subsidiaries. From the
date of this Agreement to the Closing Date, neither Oneida Financial nor any
Oneida Financial Subsidiary will (i) amend its certificate of incorporation,
charter or bylaws in any manner inconsistent with the prompt and timely
consummation of the transactions contemplated by this Agreement, (ii) take any
action which would result in any of the representations and warranties of Oneida
Financial or Oneida Savings set forth in this Agreement becoming untrue as of
any date after the date hereof or in any of the conditions set forth in Article
VI hereof not being satisfied, except in each case as may be required by
applicable law, (iii) take any action which would or is reasonably likely to
adversely effect or materially delay
41
the receipt of the necessary approvals from the Regulatory Authorities, (iv)
take action that would or is reasonably likely to materially and adversely
affect Oneida Financial's ability to perform its covenants and agreements under
this Agreement, (v) take any action that would result in any of the conditions
to the Merger not being satisfied, or (vi) agree to do any of the foregoing.
Section 5.09 Board and Committee Minutes
VBC and the VBC Subsidiaries shall each provide to Oneida Financial
within thirty (30) days after any meeting of their respective Board of
Directors, or any committee thereof, a copy of the minutes of such meeting,
except that with respect to any meeting held within thirty (30) days of the
Closing Date, such minutes shall be provided to each party prior to the Closing
Date (provided that they may redact any portion of the minutes that relate to
any confidential discussion or matters related to this Agreement and the
transactions contemplated thereby).
Section 5.10 Undertakings by VBC and Oneida Financial
(a) From and after the date of this Agreement:
(i) Voting by Directors. Simultaneously with the execution of
this Agreement, each Director of VBC shall enter into the VBC Voting Agreement
set forth as Exhibit A to this Agreement;
(ii) Proxy Solicitor. VBC may, and shall if requested to do so
by Oneida Financial, retain a proxy solicitor in connection with the
solicitation of stockholder approval of this Agreement;
(iii) Outside Service Bureau Contracts. If requested to do so
by Oneida Financial, VBC shall use its best efforts to obtain an extension of,
or termination of, any contract with an outside service bureau or other vendor
of services to VBC, on terms and conditions mutually acceptable to VBC and
Oneida Financial;
(iv) Board Meetings. VBC and ▇▇▇▇▇▇ Bank shall permit a
representative of Oneida Financial to attend any meeting of VBC or ▇▇▇▇▇▇ Bank's
Board of Directors or the Committees thereof as an observer (provided that they
shall not be required to permit the Oneida Financial representative to remain
present during any confidential discussion of the Agreement and the transactions
contemplated thereby) or during the discussion of any other matter for which the
Board of Directors reasonably determines that the presence of an observer may
violate a confidentiality obligation or other legal or regulatory requirement;
(v) List of Nonperforming Assets and Lending Activities. VBC
shall provide Oneida Financial, within ten (10) days of the end of each calendar
month, a written list of nonperforming assets (the term "nonperforming assets,"
for purposes of this subsection, means (i) loans that are "troubled debt
restructuring" as defined in Statement of Financial Accounting Standards No.15,
"Accounting by Debtors and Creditors for Troubled Debt Restructuring," (ii)
loans on nonaccrual, (iii) real estate owned, (iv) all loans ninety (90) days or
more past due) as of
42
the end of such month and (iv) and impaired loans. On a monthly basis, VBC shall
provide Oneida Financial with a schedule of all loan approvals, which schedule
shall indicate the loan amount, loan type and information contained in standard
monthly reports, the form of which has been provided to Oneida Financial. VBC
shall not foreclose on any commercial real estate loan except to the extent that
VBC and Oneida Financial mutually agree on the conditions of the foreclosure
proceedings or for proceedings currently in process;
(vi) Reserves and Merger-Related Costs. On or before the
Merger Effective Date, VBC shall establish such additional accruals and reserves
as may be necessary to conform the accounting reserve practices and methods
(including credit loss practices and methods) of VBC to those of Oneida
Financial (as such practices and methods are to be applied to VBC from and after
the Closing Date) and Oneida Financial's plans with respect to the conduct of
the business of VBC following the Merger and otherwise to reflect Merger-related
expenses and costs incurred by VBC; provided, however, that VBC shall not be
required to take such action unless Oneida Financial agrees in writing that all
conditions to closing set forth in Section 6.02 have been satisfied or waived
(except for the expiration of any applicable waiting periods); prior to the
delivery by Oneida Financial of the writing referred to in the preceding clause,
VBC shall provide Oneida Financial a written statement, certified by the chief
executive officer of VBC and dated the date of such writing, that the
representation made in Section 3.15 hereof is true as of such date or,
alternatively, setting forth in detail the circumstances that prevent such
representation from being true as of such date; and no accrual or reserve made
by VBC or any VBC Subsidiary pursuant to this subsection, or any litigation or
regulatory proceeding arising out of any such accrual or reserve, shall
constitute or be deemed to be a breach or violation of any representation,
warranty, covenant, condition or other provision of this Agreement or to
constitute a termination event within the meaning of Section 7.01(b) hereof. No
action shall be required to be taken by VBC pursuant to this Section 5.10(vi)
if, in the opinion of VBC's independent auditors, such action would contravene
GAAP;
(vii) Stockholders Meeting. VBC shall submit this Agreement to
its stockholders for approval at a meeting to be held within ninety 90 days of
the date of this Agreement, and, subject to the next sentence, its Boards of
Director shall recommend approval of this Agreement to the VBC stockholders. The
Board of Directors of VBC may fail to make such a recommendation, or withdraw,
modify or change any such recommendation only in connection with a Superior
Proposal, as set forth in Section 5.06 of this Agreement, and only if such Board
of Directors, after having consulted with and considered the advice of outside
counsel to such Board, has determined that the making of such recommendation, or
the failure so to withdraw, modify or change its recommendation, would
constitute a breach of the fiduciary duties of such directors under New York
law; and
(viii) Systems Conversions. VBC and Oneida Financial shall
meet on a regular basis to discuss and plan for the conversion of VBC and the
VBC Subsidiaries' data processing and related electronic informational systems
to those used by Oneida Financial and its subsidiaries, which planning shall
include, but not be limited to, discussion of the possible termination by VBC
and ▇▇▇▇▇▇ Bank of third-party service provider arrangements effective at the
Effective Time or at a date thereafter, non-renewal of personal property leases
and software licenses used by VBC or any of its Subsidiaries in connection with
its systems operations,
43
retention of outside consultants and additional employees to assist with the
conversion, and outsourcing, as appropriate, of proprietary or self-provided
system services, it being understood that VBC shall not be obligated to take any
such action prior to the Effective Time and, unless VBC otherwise agrees, no
conversion shall take place prior to the Effective Time. In the event that VBC
or any of its Subsidiaries takes, at the request of Oneida Financial, any action
relative to third parties to facilitate the conversion that results in the
imposition of any termination fees, expenses or charges, Oneida Financial shall
indemnify VBC and its Subsidiaries for any such fees, expenses and charges, and
the costs of reversing the conversion process, if for any reason the Merger is
not consummated because of a breach of this Agreement by Oneida Financial.
(b) From and after the date of this Agreement, Oneida Financial and VBC
shall each:
(i) Filings and Approvals. Cooperate with the other in the
preparation and filing, as soon as practicable, of (A) the Applications, (B) the
Proxy Statement, (C) all other documents necessary to obtain any other approvals
and consents required to effect the completion of the Merger, and (D) all other
documents contemplated by this Agreement;
(ii) Public Announcements. Cooperate and cause their
respective officers, directors, employees and agents to cooperate in good faith,
consistent with their respective legal obligations, in the preparation and
distribution of, and agree upon the form and substance of, any press release
related to this Agreement and the transactions contemplated hereby, and any
other public disclosures related thereto, including without limitation
communications to stockholders, internal announcements and customer disclosures,
but nothing contained herein shall prohibit either party from making any
disclosure which its counsel deems necessary, provided that the disclosing party
notifies the other party reasonably in advance of the timing and contents of
such disclosure;
(iii) Maintenance of Insurance. Maintain, and cause their
respective Subsidiaries to maintain, insurance in such amounts as are reasonable
to cover such risks as are customary in relation to the character and location
of its properties and the nature of its business;
(iv) Maintenance of Books and Records. Maintain, and cause
their respective Subsidiaries to maintain, books of account and records in
accordance with generally accepted accounting principles applied on a basis
consistent with those principles used in preparing the financial statements
heretofore delivered;
(v) Taxes. File all federal, state, and local tax returns
required to be filed by them or their respective Subsidiaries on or before the
date such returns are due (including any extensions) and pay all taxes shown to
be due on such returns on or before the date such payment is due, except those
being contested in good faith; or
(vi) Delivery of Securities. Deliver to the other, copies of
all Securities Documents and Regulatory Reports simultaneously with the filing
thereof.
(c) VBC DISCLOSURE SCHEDULE 5.10(c) sets forth a good faith estimate of
VBC's budget of Merger-related expenses (the "Budget") to be incurred and
payable by VBC in
44
connection with this Agreement and the transactions contemplated hereby,
including the fee and expenses of counsel, accountants, investment bankers and
other professionals. VBC shall promptly notify Oneida Financial if or when it
determines that it expects to exceed its Budget. Promptly, but in any event
within 30 days, after the execution of this Agreement, VBC shall ask all of its
attorneys and other professionals to render current and correct invoices for all
unbilled time and disbursements. VBC shall accrue and/or pay all of such amounts
as soon as possible. VBC shall request that its professionals render monthly
invoices within 30 days after the end of each month. VBC shall notify Oneida
Financial monthly of all out-of-pocket expenses, which VBC has incurred in
connection with this Agreement. No later than three (3) business days prior to
the Closing Date, VBC shall provide Oneida Financial with a statement of all
Merger-related expenses incurred and payable, and to be incurred and payable,
including the fees and expenses of counsel, accountants, investment bankers and
other professionals, and all costs and expenses associated with any legal
proceedings relating to this Agreement and the transactions contemplated
hereunder, through the Merger Effective Date (the "Closing Expense Statement").
Section 5.11 Employee and Termination Benefits; Directors and
Management
(a) Employee Benefits. Except as otherwise specifically provided in
------------------
this Section 5.11, Oneida Financial will review all VBC Compensation and Benefit
Plans to determine whether to terminate or continue such plans.
(1) Health, Welfare and Fringe Benefits. All VBC employees who
-----------------------------------
become employed by Oneida Financial or any entity within the same controlled
group of corporations as Oneida Financial as a result of the Merger ("VBC
Continuing Employees") shall become participants in all health, welfare and/or
fringe benefit plans, programs and policies on the same terms and conditions as
are applicable to employees of Oneida Financial(or Subsidiary, as applicable).
In addition, VBC Continuing Employees shall be given credit for service with VBC
(or a VBC subsidiary or any predecessor thereto) prior to the Merger Effective
Date for purposes of (i) determining eligibility; (ii) satisfying any waiting
periods concerning pre-existing conditions; and (iii) satisfying any co-payment
or deductible requirements. Furthermore, VBC employees whose employment is
terminated in connection with the Merger shall be eligible for severance
benefits pursuant to the Transition Benefit Plan adopted by Oneida Savings,
subject to the qualifications and limitations thereof, and the Transition
Benefit Plan shall remain in effect for one year from the Merger Effective Date.
(2) Tax-Qualified Retirement Plans.
------------------------------
(A) VBC ESOP. The ▇▇▇▇▇▇ Bank Corporation Amended and
--------
Restated Employee Stock Ownership Plan ("VBC ESOP") shall be terminated and
participants shall become fully vested in their account balances as of, or prior
to, the Merger Effective Date. All shares held by the VBC ESOP shall be
converted into the right to receive the Merger Consideration, all outstanding
VBC ESOP indebtedness shall be repaid as soon as practicable following the
Merger Effective Date, and the balance of the shares and any other assets
remaining in the loan suspense account shall be allocated and distributed to VBC
ESOP participants (subject to the receipt of a favorable determination letter
from the IRS), as provided for in the VBC ESOP and unless otherwise required by
applicable law. Prior to the Merger Effective Date, VBC, and following the
Merger Effective Date, Oneida Savings, shall use their respective best efforts
in good faith to obtain such favorable determination letter (including, but not
limited to, making such changes to the ESOP and the proposed allocations as may
be requested by the IRS as a condition to its issuance of a favorable
determination letter). Prior to the Merger
45
Effective Date, VBC, and following the Merger Effective Date, Oneida Savings,
will adopt such amendments to the VBC ESOP as may be reasonably required by the
IRS as a condition to granting such favorable determination letter on
termination. Neither VBC, prior to the Merger Effective Date, nor Oneida
Savings, following the Merger Effective Date, shall make any distribution from
the VBC ESOP except as may be required by applicable law until receipt of such
favorable determination letter. Following receipt of a favorable determination
letter from the IRS, participants in the VBC ESOP may elect to make a tax-free
direct rollover of their VBC ESOP account to the Oneida 401(k) Plan (described
below). In the case of a conflict between the terms of this Section and the
terms of the VBC ESOP, the terms of the VBC ESOP shall control; however, in the
event of any such conflict, VBC before the Merger Effective Date, and Oneida
Savings, after the Merger Effective Date, shall use their best efforts to cause
the VBC ESOP to be amended to conform to the requirements of this Section.
(B) Oneida ESOP. All VBC Continuing Employees who
-----------
become Oneida Financial (or Subsidiary) employees shall become participants in
The Oneida Savings Bank Employee Stock Ownership Plan ("Oneida ESOP") in
accordance with the terms of the Oneida ESOP and shall not be given credit for
any purpose under the Oneida ESOP for service with VBC (or a VBC subsidiary or
any predecessor thereto) prior to the Merger Effective Date.
(C) Oneida 401(k) Plan. All VBC Continuing Employees
------------------
who become Oneida Financial (or Subsidiary) employees shall become participants
in The Oneida Savings Bank 401(k) Savings Plan ("Oneida 401(k) Plan") on the
same terms and conditions as are applicable to employees of Oneida Financial(or
Subsidiary). In addition, VBC Continuing Employees shall be given credit under
the Oneida 401(k) Plan for service with VBC (or a VBC subsidiary or any
predecessor thereto) prior to the Merger Effective Date with respect to
determining eligibility and vesting, but not with respect to determining benefit
accrual.
(D) Oneida Retirement Accumulation Plan. The Oneida
-------------------------------------
Retirement Accumulation Plan is a cash-balance type defined benefit plan, which
was frozen with respect to accrual of benefits in June 2004. Accordingly, VBC
employees will not participate in this Plan.
(E) NY State Bankers Retirement System Volume
------------------------------------------------
Submitter Plan. This Plan is a frozen defined benefit plan that only covers
---------------
employees of State Bank. Accordingly, VBC employees will not participate in this
Plan.
(3) VBC Nonqualified Deferred Compensation Plans.
--------------------------------------------
(A) ▇▇▇▇▇▇▇ Deferred Compensation Plan. Prior to the
-----------------------------------
Merger Effective Date, ▇▇▇▇▇▇ Bank shall terminate or cause to be terminated The
National Bank of ▇▇▇▇▇▇ Supplemental Executive Retirement Agreement for ▇▇.
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, dated as of December 12, 2005 ("▇▇▇▇▇▇▇ SERP"). As a
condition to entering into this Agreement, contemporaneously with the execution
of this Agreement, ▇▇. ▇▇▇▇▇▇▇ shall enter into a written
46
agreement, satisfactory to Oneida Financial and subject to any required
regulatory approval or non-objection, agreeing to the amount of a settlement
regarding the ▇▇▇▇▇▇▇ SERP and releasing ▇▇▇▇▇▇ Bank, VBC, Oneida Financial and
Oneida Savings, and their affiliates, from any and all claims arising
thereunder.
(B) ▇▇▇▇▇▇▇▇▇ Deferred Compensation Plan. Oneida
---------------------------------------
Financial and Oneida Savings agree to honor the terms of the Deferred
Compensation Agreement between ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ Bank dated
November 12, 2003 and agree to pay the amount due pursuant to such agreement
upon termination of such agreement, subject to any required regulatory approval
or non-objection and ▇▇. ▇▇▇▇▇▇▇▇▇'▇ signing of an acknowledgment of payment
satisfactory to Oneida Financial and Oneida Savings.
(C) ▇▇▇▇▇▇ Deferred Compensation Plan. Oneida
--------------------------------------
Financial and Oneida Savings agree to honor the terms of that certain Amended
and Restated Deferred Compensation Agreement between ▇▇▇▇▇▇ Bank and ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇ (former President and Chief Executive Officer of ▇▇▇▇▇▇ Bank) dated
August 3, 1992 ("▇▇▇▇▇▇ SERP"), subject to any required regulatory approval or
non-objection.
(D) Director Deferred Compensation Plans. Oneida
---------------------------------------
Financial and Oneida Savings agree to honor the terms of those certain Deferred
Compensation Agreements between ▇▇▇▇▇▇ Bank and (i) ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, dated
December 29, 1988 ("▇▇▇▇▇▇ Director SERP"); (ii) ▇▇▇▇▇ ▇▇▇▇▇, dated March 13,
1989 ("Rapke Director SERP); and (iii) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, dated March 15, 1989
("▇▇▇▇▇▇▇ Director SERP")"), subject to any required regulatory approval or
non-objection.
(E) Director Emeritus Retirement Plan. Oneida
--------------------------------------
Financial and Oneida Savings agree to honor the terms of the Director Emeritus
Agreement entered into between ▇▇▇▇▇▇ Bank and ▇▇▇▇ ▇▇▇▇, effective February 1,
2006, and between ▇▇▇▇▇▇ Bank and ▇▇▇▇▇▇ ▇▇▇▇▇, effective March 1, 2006, under
which Messrs. Ford and ▇▇▇▇▇ will each receive $220 per month for 60 months,
subject to any required regulatory approval or non-objection.
(4) Split Dollar Agreements. Prior to the Merger Effective
-------------------------
Date, ▇▇▇▇▇▇ Bank shall terminate or cause to be terminated all supplemental and
split dollar life insurance agreements between ▇▇▇▇▇▇ Bank and its employees and
directors, including the agreements with Messrs. Gilbert, Malecki, Rapke and
▇▇▇▇▇▇. As a condition to entering into this Agreement, contemporaneously with
the execution of this Agreement, Messrs. Gilbert, Malecki, Rapke and ▇▇▇▇▇▇
shall each enter into a written agreement, satisfactory to Oneida Financial and
subject to any required regulatory approval or non-objection, agreeing to a
settlement of the split dollar agreements and releasing ▇▇▇▇▇▇ Bank, VBC, Oneida
Financial and Oneida Savings, and their affiliates, from any and all claims
arising thereunder.
(b) Employment Agreements.
---------------------
(1) ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇. As a condition to entering into this
----------------
Agreement, contemporaneously with the execution of this Agreement, ▇▇. ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇, President and Chief Executive Officer of ▇▇▇▇▇▇ Bank, shall deliver
to Oneida Financial and Oneida Savings
47
an executed written agreement, satisfactory to Oneida Financial and Oneida
Savings, and subject to any required regulatory approval or non-objection, which
shall be effective on the Merger Effective Date, (i) acknowledging the
termination of the employment agreement between ▇▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ Bank
dated December 9, 2002; (ii) agreeing to the amount of a settlement regarding
such employment agreement; and (iii) releasing ▇▇▇▇▇▇ Bank, VBC, Oneida
Financial and Oneida Savings and their affiliates, from any and all claims
arising thereunder.
(2) ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇. Oneida Financial and Oneida Savings
------------------
agree to honor the terms of the employment agreement dated July 25, 2003 between
▇▇▇▇▇▇ Bank and ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Senior Lending Officer and Community
Banking Division Manager of ▇▇▇▇▇▇ Bank and agree to pay the amount of severance
due upon termination of such employment agreement, subject to any required
regulatory approval or non-objection and ▇▇. ▇▇▇▇▇▇▇▇▇'▇ signing of an
acknowledgment of payment satisfactory to Oneida Financial and Oneida Savings.
(3) ▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇ Demo. Oneida Financial and Oneida
--------------------------
Savings agree to honor the terms of the employment agreement dated April 3, 2004
between ▇▇▇▇▇▇ Bank and ▇▇. ▇▇▇▇▇ ▇▇▇▇, Vice President and Administrative
Services Division Manager of ▇▇▇▇▇▇ Bank, and Ms. ▇▇▇▇▇ Demo, Vice President and
Banking Operations Division Manager of ▇▇▇▇▇▇ Bank and agree to pay the amount
of severance due upon termination of such employment agreements, subject to any
required regulatory approval or non-objection and ▇▇. ▇▇▇▇'▇ and Ms. Demo's
signing of an acknowledgment of payment satisfactory to Oneida Financial and
Oneida Savings.
(c) Compliance with Tax Code. Notwithstanding any provision in this
-------------------------
Agreement to the contrary, to the extent that any payment to be made hereunder
to any individual would constitute an "excess parachute payment," as defined in
Internal Revenue Code Section 280G and the regulations thereunder, such payment
shall be automatically reduced to an amount that is one dollar ($1.00) less than
the amount which would have caused the payment to be treated as an "excess
parachute payment." In addition, no payment shall be made to any individual
under this Section 5.11 to the extent such payment is non-deductible under the
Internal Revenue Code by Oneida Financial or Oneida Savings.
(d) VBC Representative on Oneida Boards. As soon as practicable
---------------------------------------
following the Merger Effective Date, and subject to any required regulatory
approval or non-objection, Oneida Financial and Oneida Savings shall offer to
appoint one current member of the board of directors of VBC to the Board of
Directors of Oneida Financial and Oneida Savings, and shall further offer to
re-nominate such person for election to a three year term to the board of
directors at the first annual meeting of stockholders following the Merger
Effective Date. At the discretion of Oneida Financial and Oneida Savings said
person may be re-nominated for additional terms upon completion of his term of
office.
Section 5.12 Duty to Advise; Duty to Update Oneida Financial's
Disclosure Schedules
Oneida Financial shall promptly advise VBC of any change or event which
it believes would or would be reasonably likely to cause or constitute a
material breach of any of its
48
representations, warranties or covenants set forth herein. Oneida Financial
shall update ONEIDA FINANCIAL'S DISCLOSURE SCHEDULES as promptly as practicable
after the occurrence of an event or fact which, if such event or fact had
occurred prior to the date of this Agreement, would have been disclosed in the
ONEIDA FINANCIAL DISCLOSURE SCHEDULE. The delivery of such updated Schedule
shall not relieve Oneida Financial from any breach or violation of this
Agreement and shall not have any effect for the purposes of determining the
satisfaction of the condition set forth in Sections 6.01(c) hereof.
Section 5.13 Bank and Related Merger Transactions
(a) As soon as practicable following the Merger Effective Date, Oneida
Savings shall, and it shall cause VBC (as the Surviving Corporation in the
Merger) to, effect the Company Liquidation by filing a certificate of complete
liquidation or other appropriate documentation with the New York Department of
State pursuant to the NYBCL. The Company Liquidation shall become effective at
the time (the "Subsequent Effective Time") specified in the certificate of
complete liquidation and/or other appropriate documentation. As a result of the
Company Liquidation, the separate corporate existence of VBC shall cease and
Oneida Savings shall acquire all of the assets and liabilities of VBC.
(b) As soon as practicable following the consummation of the Company
Liquidation, ▇▇▇▇▇▇ Bank shall transfer its assets and liabilities (other than
municipal deposits and certain permitted assets) to Oneida Savings, and the Bank
Merger shall be effected by executing a merger agreement and filing articles of
merger or certificates of merger with the OCC and the New York Department of
State or Department pursuant to applicable law. The Bank Merger shall become
effective at the time specified in the articles of merger. As a result of the
Bank Merger, the separate corporate existence of ▇▇▇▇▇▇ Bank shall cease and
State Bank shall be the surviving bank and continue its corporate existence
under the laws of the State of New York.
ARTICLE VI-CONDITIONS
Section 6.01 Conditions to Each Party's Obligations under this
Agreement
The respective obligations of each party under this Agreement shall be
subject to satisfaction at or prior to the Closing Date of each of the following
conditions, none of which may be waived:
(a) Stockholder Approval. This Agreement and the transactions
contemplated hereby shall have been approved by the requisite vote of the
stockholders of VBC in accordance with applicable laws and regulations and the
Certificate of Incorporation and Bylaws of VBC:
(b) Corporate Proceedings. All action required to be taken by, or on
the part of, each party hereto, to authorize the execution, delivery and
performance of this Agreement, and the consummation of the transactions
contemplated by this Agreement, shall have been duly and validly taken by each
party; and the other party shall have received certified copies of the
resolutions evidencing such authorizations;
49
(c) Regulatory Approvals. All required Regulatory Approvals shall have
been obtained and shall remain in full force and effect and all waiting periods
relating thereto shall have expired; and no such Regulatory Approval shall
include any condition or requirement that in Oneida Financial's reasonable
judgment is unduly burdensome, and which shall include any condition that would
cause Oneida Financial to become a Bank Holding Company under the BHCA.
(d) Injunctions. None of the parties hereto shall be subject to any
order, decree or injunction of a court or agency of competent jurisdiction, and
no statute, rule or regulation shall have been enacted, entered, promulgated,
interpreted, applied or enforced by any Regulatory Authority, that enjoins or
prohibits the consummation of the transactions contemplated by this Agreement.
Section 6.02 Conditions to VBC's Obligations under this Agreement
The obligations of VBC hereunder shall be subject to satisfaction at or
prior to the Closing Date of each of the following conditions, unless waived by
VBC pursuant to Section 8.03 hereof:
(a) Covenants. The obligations and covenants of Oneida Financial and
Oneida Savings required by this Agreement to be performed by Oneida Financial
and Oneida Savings at or prior to the Closing Date shall have been duly
performed and complied with in all material respects;
(b) Representations and Warranties. Each of the representations and
warranties of Oneida Financial in this Agreement which is qualified as to
materiality shall be true and correct, and each such representation or warranty
that is not so qualified shall be true and correct in all material respects, in
each case 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 Merger
Effective Date;
(c) Officer's Certificate. Oneida Financial shall have delivered to VBC
a certificate, dated the Closing Date and signed, by its chairman of the board
or president without personal liability, to the effect that the conditions set
forth in Sections 6.01 and 6.2 have been satisfied, to the best knowledge of the
officer executing the same;
(d) Payment of Merger Consideration. Oneida Financial shall have caused
the Merger Consideration to be delivered to the Exchange Agent on or before the
Closing Date and the Exchange Agent shall provide VBC with a certificate
evidencing such delivery.
Section 6.03 Conditions to Oneida Financial's and Oneida Savings'
Obligations under this Agreement
The obligations of Oneida Financial and Oneida Savings hereunder shall
be subject to satisfaction at or prior to the Closing Date of each of the
following conditions, unless waived by Oneida Financial and Oneida Savings
pursuant to Section 8.03 hereof:
50
(a) Covenants. The obligations and covenants of VBC and ▇▇▇▇▇▇ Bank
required by this Agreement to be performed at or prior to the Closing Date shall
have been duly performed and complied with in all material respects;
(b) Representations and Warranties. Each of the representations and
warranties of VBC and ▇▇▇▇▇▇ Bank in this Agreement which is qualified as to
materiality shall be true and correct, and each such representation or warranty
that is not so qualified shall be true and correct in all material respects, in
each case 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 Merger
Effective Date;
(c) No Material Adverse Effect. Except as set forth in VBC DISCLOSURE
SCHEDULE 3.07, since December 31, 2005, there shall not have occurred any
Material Adverse Effect with respect to VBC;
(d) Officer's Certificate. VBC shall have delivered to Oneida Financial
a certificate, dated the Closing Date and signed, by its chairman of the board
or president without personal liability, to the effect that the conditions set
forth in Sections 6.01 and 6.03 have been satisfied, to the best knowledge of
the officer executing the same; and
(e) Dissenters' Rights. The holders of not more than 10% of the
outstanding VBC Common Stock have dissented from the Merger and preserved, as of
the Merger Effective Date, the right to pursue their right of appraisal for the
fair value of their shares under New York law.
(f) Employee and Termination Benefits. Oneida Financial and Oneida
Savings shall have received satisfactory evidence that all of VBC's employee and
termination benefits have been treated as contemplated by Section 5.11 of this
Agreement.
ARTICLE VII-TERMINATION, WAIVER AND AMENDMENT
Section 7.01 Termination
This Agreement may be terminated on or at any time prior to the Closing
Date whether before or after approval of the stockholders of VBC referred to in
Section 5.10(a)(vii) hereof:
(a) by mutual written consent of the parties authorized by their
respective boards of managers/directors;
(b) by Oneida Financial or VBC (i) if the Merger Effective Date shall
not have occurred on or prior to May 31, 2007, (ii) if a vote of the
stockholders of VBC is taken and such stockholders fail to approve this
Agreement at the meeting of stockholders (or any adjournment thereof) of VBC
contemplated by Section 5.10(a)(vii) hereof, or (iii) any applicable regulatory
authority formally disapproves the issuance of any required regulatory approval,
unless in the case of clause (ii) of this Section 7.01(b) such failure is due to
the failure of the party seeking to terminate this Agreement to perform or
observe its agreements set forth herein to be performed or observed by such
party on or before such meeting of stockholders, and in the case of clause (i)
51
of this Section 7.01(b), the right to terminate shall not be available to any
party whose failure to perform an obligation under this Agreement has been the
cause of, or resulted in, the failure of the Merger and the other transactions
contemplated hereby to be consummated by May 31, 2007.
(c) by Oneida Financial if (i) at the time of such termination any of
the representations and warranties of VBC contained in this Agreement shall not
be true and correct to the extent that the conditions set forth in Section
6.02(a) or (b) hereof cannot be satisfied, prior to the date set forth in
Section 7.01(b), (ii) there shall have been any material breach of any covenant,
agreement or obligation of VBC hereunder and such breach shall have not been
remedied by VBC or any third-party within thirty (30) days after receipt by VBC
of notice in writing from Oneida Financial specifying the nature of such breach
and requesting that it be remedied, (iii) any applicable regulatory authority
approves the transactions contemplated but with conditions attached such that
the requirements of Section 6.01(c) are not satisfied, (iv) VBC has received a
Superior Proposal, and in accordance with Section 5.06 of this Agreement, the
Board of Directors of VBC has entered into an acquisition agreement with respect
to the Superior Proposal or withdraws its recommendation of this Agreement,
fails to make such recommendation or modifies or qualifies its recommendation in
a manner adverse to Oneida Financial, or (v) any event occurs such that a
condition set forth in Sections 6.01 or 6.03 hereof which must be fulfilled
before Oneida Financial is obligated to consummate the Merger cannot be
fulfilled and non-fulfillment is not waived by Oneida Financial.
(d) by VBC if (i) at the time of such termination any of the
representations and warranties of Oneida Financial contained in this Agreement
shall not be true and correct to the extent that the conditions set forth in
Section 6.01(a) and/or (b) hereof cannot be satisfied, prior to the date set
forth in Section 7.01(b), (ii) there shall have been any material breach of any
covenant, agreement or obligation of Oneida Financial hereunder and such breach
shall not have been remedied within thirty (30) days after receipt by Oneida
Financial of notice in writing from VBC specifying the nature of such breach and
requesting that it be remedied, (iii) any event occurs such that a condition set
forth in Sections 6.01 or 6.03 hereof which must be fulfilled before VBC is
obligated to consummate the Merger cannot be fulfilled and non-fulfillment is
not waived by VBC, or (iv) VBC has received a Superior Proposal, and in
accordance with Section 5.06 of this Agreement, the Board of Directors of VBC
has made a determination to accept such Superior Proposal subject to approval
thereof by the VBC's stockholders, and simultaneously with the termination of
this Agreement pursuant to this subsection VBC enters into an acquisition
agreement with respect to the Superior Proposal; provided that VBC shall not
terminate this Agreement pursuant to this Section 7.01(d)(iv) and enter in a
definitive agreement with respect to the Superior Proposal until the expiration
of five (5) business days following Oneida Financial's receipt of written notice
advising Oneida Financial that VBC has received a Superior Proposal, specifying
the material terms and conditions of such Superior Proposal (and including a
copy thereof with all accompanying documentation, if in writing) identifying the
person making the Superior Proposal and stating whether VBC intends to enter
into a definitive agreement with respect to the Superior Proposal. After
providing such notice, VBC shall provide a reasonable opportunity to Oneida
Financial during the five day period to make such adjustments in the terms and
conditions of this Agreement as would enable VBC to proceed with the Merger on
such adjusted terms.
52
Section 7.02 Effect of Termination
If this Agreement is terminated pursuant to Section 7.01 hereof, this
Agreement shall forthwith become void (other than the confidentiality provisions
of Section 5.02(a) and (d) and Section 8.01 hereof, which shall remain in full
force and effect), and except as otherwise provided herein there shall be no
further liability on the part of any of Oneida Financial, Oneida Savings or of
VBC or ▇▇▇▇▇▇ Bank, or their respective officers, directors and employees.
ARTICLE VIII-MISCELLANEOUS
Section 8.01 Expenses
(a) Except as provided herein, each party hereto shall bear and pay all
costs and expenses incurred by it in connection with the transactions
contemplated hereby, including fees and expenses of its own financial
consultants, accountants and counsel. In the event of any termination of this
Agreement pursuant to Section 7.01(b)(i), 7.01(c)(i) or (ii), or 7.01(d)(i) or
(ii) hereof because of a willful breach of a representation, warranty or
covenant contained in this Agreement by one of the parties, and in addition to
any other damages and remedies that may be available to the non-breaching party,
the non-breaching party shall be entitled to payment of, and the breaching party
shall pay to the non-breaching party, all out-of-pocket costs and expenses,
including, without limitation, reasonable legal, accounting and investment
banking fees and expenses, incurred by the non-breaching party in connection
with entering into this Agreement and carrying out of any and all acts
contemplated hereunder up to a maximum of $150,000; provided, however, that this
clause shall not be construed to relieve or release a breaching party from any
additional liabilities or damages arising out of its willful breach of any
provision of this Agreement.
(b) As a condition of Oneida Financial's willingness, and in order to
induce Oneida Financial to enter into this Agreement and to reimburse Oneida
Financial for incurring the costs and expenses related to entering into this
Agreement and consummating the transactions contemplated by this Agreement, VBC
hereby agrees to pay Oneida Financial, and Oneida Financial shall be entitled to
payment of a fee of $500,000 (the "Fee"), within five business days after
written demand for payment is made by Oneida Financial, following the occurrence
of any of the events set forth below:
(i) VBC terminates this Agreement pursuant to Section 7.01(d)(iv) or
Oneida Financial terminates this Agreement pursuant to Section 7.01(c)(iv); or
(ii) the entering into a definitive agreement by VBC relating to an
Acquisition Proposal or the consummation of an Acquisition Proposal involving
VBC within twelve (12) months after the occurrence of any of the following: (A)
the termination of the Agreement by Oneida Financial pursuant to Section
7.01(c)(ii); (B) the failure of the stockholders of VBC to approve this
Agreement after the occurrence of an Acquisition Proposal; or (C) May 31, 2007
if prior thereto the VBC stockholders have not adopted of this Agreement.
53
If demand for payment of the Fee is made pursuant to this Section
8.01(b) and payment is timely made, then Oneida Financial will not have any
other rights or claims against VBC, its Subsidiaries, and their respective
officers, directors, attorneys and financial advisors under this Agreement,
other than pursuant to Section 8.01(a), it being agreed that the acceptance of
the Fee under this Section 8.01(b) will constitute the sole and exclusive remedy
of Oneida Financial against VBC, its Subsidiaries and their respective officers,
directors, attorneys and financial advisors other than pursuant to Section
8.01(a).
Section 8.02 Non-Survival of Representations and Warranties
All representations, warranties and, except to the extent specifically
provided otherwise herein, agreements and covenants, other than those covenants
set forth in Article II, and Section 5.02(d), the last sentence of Section
5.02(a), Sections 5.05, 5.11, and 5.13(a) and (b), which will survive the
Merger, shall terminate on the Closing Date.
Section 8.03 Amendment, Extension and Waiver
Subject to applicable law, at any time prior to the consummation of the
transactions contemplated by this Agreement, the parties may (a) amend this
Agreement, (b) extend the time for the performance of any of the obligations or
other acts of either party hereto, (c) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto, or (d) waive compliance with any of the agreements or
conditions contained in Articles V and VI hereof or otherwise: provided,
however, that after any approval of the transactions contemplated by this
Agreement by VBC's stockholders, there may not be, without further approval of
such stockholders, any amendment of this Agreement which reduces the amount or
changes the form of the consideration to be delivered to VBC stockholders
hereunder other than as contemplated by this Agreement. This Agreement may not
be amended except by an instrument in writing authorized by the respective
Boards of Directors and signed, by duly authorized officers, on behalf of the
parties hereto. Any agreement on the part of a party hereto to any extension or
waiver shall be valid only if set forth in an instrument in writing signed by a
duly authorized officer on behalf of such party, but such waiver or failure to
insist on strict compliance with such obligation, covenant, agreement or
condition shall not operate as a waiver of, or estoppel with respect to, any
subsequent or other failure.
Section 8.04 Entire Agreement
This Agreement, including the documents and other writings referred to
herein or delivered pursuant hereto, contains the entire agreement and
understanding of the parties with respect to its subject matter. This Agreement
supersedes all prior arrangements and understandings between the parties, both
written or oral with respect to its subject matter. This Agreement shall inure
to the benefit of and be binding upon the parties hereto and their respective
successors; provided, however, that nothing in this Agreement, expressed or
implied, is intended to confer upon any party, other than the parties hereto and
their respective successors, any rights, remedies, obligations or liabilities
other than pursuant to Sections 2.02, 2.03, 5.05 and 5.11.
54
Section 8.05 No Assignment
Neither party hereto may assign any of its rights or obligations
hereunder to any other person, without the prior written consent of the other
party hereto.
Section 8.06 Notices
All notices or other communications hereunder shall be in writing and
shall be deemed given if delivered personally, mailed by prepaid registered or
certified mail (return receipt requested), or sent by telecopy, addressed as
follows:
(a) If to Oneida Financial Corp. to:
Oneida Financial Corp.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President and Chief Executive Officer
with a copy to:
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, PC
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇, Esq.
▇▇▇▇ ▇▇▇▇▇▇, Esq.
(b) If to Vernon Bank Corporation to:
▇▇▇▇▇▇ Bank Corporation
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇.▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President and Chief Executive Officer
with a copy to:
Bond, ▇▇▇▇▇▇▇▇▇ & King
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Section 8.07 Captions
The captions contained in this Agreement are for reference purposes
only and are not part of this Agreement.
55
Section 8.08 Counterparts
This Agreement may be executed in any number of counterparts, and each
such counterpart shall be deemed to be an original instrument, but all such
counterparts together shall constitute but one agreement.
Section 8.09 Severability
If any provision of this Agreement or the application thereof to any
person or circumstance shall be invalid or unenforceable to any extent, the
remainder of this Agreement and the application of such provisions to other
persons or circumstances shall not be affected thereby and shall be enforced to
the greatest extent permitted by law.
Section 8.10 Specific Performance
The parties hereto agree that irreparable damage would occur in the
event that any of the provisions of this Agreement were not performed in
accordance with their 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 hereof, this being in addition to any other remedy to
which they are entitled at law or in equity.
Section 8.11 Governing Law
This Agreement shall be governed by and construed in accordance with
the domestic internal law (including the law of conflicts of law) of the State
of New York, except to the extent federal law and regulations applicable to
financial institutions shall be controlling.
56
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized officers as of the day and year first above
written.
ONEIDA FINANCIAL CORP.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President and Chief Executive Officer
THE ONEIDA SAVINGS BANK
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President and Chief Executive Officer
▇▇▇▇▇▇ BANK CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President and Chief Executive Officer
THE NATIONAL BANK OF ▇▇▇▇▇▇
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President and Chief Executive Officer
57
EXHIBIT A
VBC VOTING AGREEMENT
58
September 12, 2006
Oneida Financial Corp.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Ladies and Gentlemen:
Oneida Financial Corp. ("Oneida Financial"), Oneida Savings Bank
("Oneida Savings"), ▇▇▇▇▇▇ Bank Corporation ("VBC") and The National Bank of
▇▇▇▇▇▇ ("▇▇▇▇▇▇ Bank") have entered into an Agreement and Plan of Merger dated
as of September 12, 2006 (the "Merger Agreement"), pursuant to which, subject to
the terms and conditions set forth therein, (i) Oneida Savings will incorporate
Oneida Merger Corp., which will merge with and into VBC with VBC surviving the
merger (referred to as the "Merger"), and (ii) subsequent thereto VBC will be
liquidated into Oneida Savings, with the result that Oneida Savings will acquire
the assets and liabilities of VBC and VBC shall cease to exist. Immediately
thereafter, the assets and liabilities of ▇▇▇▇▇▇ Bank (other than municipal
deposits and certain permitted assets) will be transferred to Oneida Savings,
and ▇▇▇▇▇▇ Bank will merge with and into Oneida Savings' commercial bank
subsidiary, State Bank of Chittenango ("State Bank"), with State Bank as the
surviving bank (the "Bank Merger"). In connection with the Merger, each share of
VBC which is outstanding immediately prior to consummation of the Merger (except
as otherwise provided in the Merger Agreement) shall be automatically converted
into the right to receive $54.00 per share without interest.
Oneida Financial has requested, as a condition to its execution and
delivery to VBC of the Merger Agreement, that the undersigned, being directors
and executive officers of VBC, execute and deliver to Oneida Financial this
Letter Agreement.
Each of the undersigned, in order to induce Oneida Financial to execute
and deliver to VBC the Merger Agreement, hereby irrevocably:
(a) Agrees to be present (in person or by proxy) at all meetings of
shareholders of VBC called to vote for approval of the Merger Agreement and the
Merger so that all shares of common stock of VBC then beneficially owned by the
undersigned, and as to which the undersigned has voting ▇▇▇▇▇▇, ▇▇▇▇ be counted
for the purpose of determining the presence of a quorum at such meetings and to
vote all such shares (i) in favor of approval and adoption of the Merger
Agreement and the transactions contemplated thereby (including any amendments or
modifications of the terms thereof approved by the Board of Directors of VBC),
and (ii) against approval or adoption of any other merger, business combination,
recapitalization, partial liquidation or similar transaction involving VBC;
(b) Agrees not to vote or execute any written consent to rescind or
amend in any manner any prior vote or written consent, as a shareholder of VBC,
to approve or adopt the Merger Agreement;
(c) Agrees not to sell, transfer or otherwise dispose of any common
stock of VBC on or prior to the date of the meeting of VBC shareholders to vote
on the Merger Agreement; and
(d) Represents that the undersigned has the capacity to enter into this
Letter Agreement and that it is a valid and binding obligation enforceable
against the undersigned in accordance with its terms, subject to bankruptcy,
insolvency and other laws affecting creditors' rights and general equitable
principles.
The agreements of the undersigned contained herein shall apply to the
undersigned solely in his capacity as a stockholder of VBC, and no agreement
contained herein shall apply in his capacity as a director, officer or employee
of VBC or in any other capacity. Nothing contained in this Letter Agreement
shall be deemed to apply to, or limit in any manner, the obligations of the
undersigned to comply with his fiduciary duties as a director or officer of VBC.
The obligations set forth herein shall terminate concurrently with any
termination of the Merger Agreement. In addition, the obligations set forth
herein may be limited to the extent the undersigned or VBC is advised by the
Board of Governors of the Federal Reserve or the Office of the Comptroller of
the Currency that this Letter Agreement is contrary to applicable banking law.
----------------------------
This Letter Agreement may be executed in two or more counterparts, each
of which shall be deemed to constitute an original, but all of which together
shall constitute one and the same Letter Agreement.
----------------------------
The undersigned has executed and delivered this Letter Agreement as of
the date first written above intending to be legally bound hereby.
Sincerely,
--------------------------------------
Name:
---------------------------------
Title:
--------------------------------
60
EXHIBIT B
INTERIM MERGER AGREEMENT
61
AGREEMENT OF MERGER
AGREEMENT OF MERGER, dated as of_________, 2006 by and among Oneida
Savings Bank ("Oneida"), Oneida Merger Corp. ("Interim"), a corporation formed
by Oneida solely to facilitate the transactions contemplated by the Agreement,
defined below, and ▇▇▇▇▇▇ Bank Corporation ("VBC"), a New York corporation.
Interim and VBC are hereinafter sometimes collectively referred to as the
"Merging Corporations".
This Agreement of Merger is being entered into pursuant to an Agreement
and Plan of Merger, dated as of September 12, 2006 (the "Agreement") between
Oneida, Oneida Financial Corp., VBC and the National Bank of ▇▇▇▇▇▇.
In consideration of the premises, and the mutual covenants and
agreements contained herein and in the Agreement, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
Except as otherwise provided herein, the capitalized terms set forth
below shall have the following meanings:
1.1 "Effective Time" shall mean the date at which the Merger
contemplated by this Agreement of Merger becomes effective as provided in
Section 2.2 hereof.
1.2 "Interim Common Stock" shall mean the common stock, par value $.01
per share, of Interim owned by Oneida.
1.3 "VBC Common Stock" shall mean the common stock, par value $5.00 per
share, of VBC.
1.4 The "Merger" shall refer to the merger of Interim with and into VBC
as provided in Section 2.1 of this Agreement of Merger.
1.5 "Stockholder Meeting" shall mean the meeting of the stockholders of
VBC held pursuant to Section 5.04(a) of the Agreement.
1.6 "Surviving Corporation" shall refer to VBC as the surviving
corporation of the Merger.
ARTICLE II
TERMS OF THE MERGER
2.1 The Merger. Subject to the terms and conditions set forth in the
Agreement, on the Effective Time, Interim shall be merged with and into VBC
pursuant and subject to Section 904 of the New York Business Corporation Law
("NYBCL"). VBC shall be the Surviving Corporation of the Merger and shall
continue to be governed by the laws of the State of New York. On the Effective
Time, the Surviving Corporation shall be considered the same business and
corporate entity as each of the Merging Corporations and thereupon and
thereafter, all the property, rights, powers, and franchises of a public as well
as a private nature of each of the Merging Corporations shall vest in the
Surviving Corporation and the Surviving Corporation shall be subject to and be
deemed to have assumed all of the debts, liabilities, obligations and duties of
each of the Merging Corporations and shall have succeeded to all of each of
their relationships, fiduciary or otherwise, as fully and to the same extent as
if such property, right, privileges, powers, franchises, debts, obligations,
duties and relationships had been originally acquired, incurred or entered into
by the Surviving Corporation. In addition, any reference to either of the
Merging Corporations in any contract, will or document, whether executed or
taking effect before or after the Effective Time, shall be considered a
reference to the Surviving Corporation if not inconsistent with the other
provisions of the contract, will or document; and any pending action or other
judicial proceeding to which either of the Merging Corporations is a party,
shall not be deemed to have abated or to have discontinued by reason of the
Merger, but may be prosecuted to final judgment, order or decree in the same
manner as if the Merger had not been made; or the Surviving Corporation may be
substituted as a party to such action or proceeding, and any judgment, order or
decree may be rendered for or against it that might have been rendered for or
against either of the Merging Corporations if the Merger had not occurred.
2.2 Effective Time. The Merger shall become effective on the date and
at the time that a Certificate of Merger pursuant to Section 904 of the NYBCL is
executed and filed with the Secretary of State of the State of New York, unless
a later date and time is specified as the Effective Time in the Certificate of
Merger.
2.3 Name of the Surviving Corporation. The name of the Surviving
Corporation shall be "▇▇▇▇▇▇ Bank Corporation"
2.4 Certificate of Incorporation. At the Effective Time, the
Certificate of Incorporation of the Surviving Corporation shall be amended and
restated to read in its entirety as the Certificate of Incorporation of Interim,
as in effect immediately prior to the Effective Time, except that Article First
thereof shall be further amended to replace the reference to "Oneida Merger
Corp." therein with "▇▇▇▇▇▇ Bank Corporation"
2.5 Bylaws. The Bylaws of the Surviving Corporation shall be amended
and restated to read in their entirety as the Bylaws of Interim, as in effect
immediately prior to the Merger Time, until thereafter altered, amended or
repealed in accordance with applicable law.
2.6 Directors and Officers of the Surviving Corporation. The directors
and
63
officers of Interim shall become the directors and officers of the Surviving
Corporation as of the Effective Time, each to hold office in accordance with the
Certificate of Incorporation and Bylaws of the Surviving Corporation until
changed in accordance therewith.
ARTICLE III
CONVERSION OF SHARES
3.1 Conversion of VBC Common Stock.
(a) VBC has outstanding 210,447 shares of VBC Common Stock, all of
which are entitled to vote upon the Merger.
(b) Interim has outstanding 100 shares of Interim Common Stock, all of
which are entitled to vote upon the Merger.
As of the Effective Time each share of VBC Common Stock, issued and
outstanding immediately prior to the Effective Time shall, by virtue of the
Merger and without any action on the part of the holder thereof, be converted
into the right to receive $54.00 in cash, without interest (referred to as the
"Merger Consideration").
3.2 Exchange of Shares.
(a) Oneida shall deliver funds in payment of the Merger Consideration
as set forth in Section 2.03 of the Agreement in connection with the
cancellation of VBC Common Stock.
(b) After the Effective Time, there shall be no transfers on the stock
transfer books of VBC of the shares of VBC Common Stock which were outstanding
immediately prior to the Effective Time and, if any Certificates representing
such shares are presented for transfer to VBC, they shall be canceled and
exchanged for the Merger Consideration provided for in Section 3.1 hereof.
(c) If payment of the Merger Consideration pursuant to Section 3.1
hereof for shares of VBC Common Stock is to be made in a name other than that in
which the Certificate surrendered in exchange therefor is registered, it shall
be a condition of such payment that the Certificate so surrendered shall be
properly endorsed (or accompanied by an appropriate instrument of transfer) and
otherwise in proper form for transfer, and that the person requesting such
payment shall pay to VBC in advance any transfer or other taxes required by
reason of the payment to a person other than that of the registered holder of
the Certificate surrendered, or required for any other reason, or shall
establish to the satisfaction of VBC that such tax has been paid or is not
payable.
3.3 Interim Common Stock. Each share of Interim Common Stock which is
issued and outstanding immediately prior to the Effective Time shall be
converted automatically and without any action on the part of the holder thereof
into an issued and outstanding share of Common Stock of the Surviving
Corporation.
64
ARTICLE IV
MISCELLANEOUS
4.1 Conditions Precedent. The respective obligations of each party
under this Plan of Merger shall be subject to the satisfaction, or waiver by the
party permitted to do so, of the conditions set forth in Article VI of the
Agreement.
4.2 Stockholder Approval. By executing this Agreement of Merger, Oneida
shall be deemed to have approved this Agreement of Merger in its capacity as
sole stockholder of Interim.
4.3 Termination. This Agreement of Merger shall be terminated upon the
termination of the Agreement in accordance with Article VII thereof; provided,
that any such termination of this Agreement of Merger shall not relieve any
party hereto from liability on account of a breach by such party of any of the
terms hereof or thereof.
4.4 Amendments. To the extent permitted by law, this Agreement of
Merger may be amended by a subsequent writing signed by all of the parties
hereto upon the approval of the Board of Directors of each of the parties
hereto; provided, however, that the provisions of Article III of this Agreement
of Merger relating to the consideration to be paid for all of the shares of VBC
Common Stock shall not be amended after the approval of the stockholders of VBC
referred to in Section 5.04(a) of the Agreement so as to decrease the amount or
change the form of such consideration without the approval of the stockholders
of VBC.
4.5 Successors. This Agreement of Merger shall be binding on the
successors of Oneida, Interim and VBC.
65
IN WITNESS WHEREOF, Oneida, Interim and VBC have caused this Agreement
of Merger to be executed by their duly authorized officers and their corporate
seals to be hereunto affixed as of the date first above written.
ONEIDA SAVINGS BANK
Attest:
By:
------------------------------- -------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Corporate Secretary President and Chief Executive Officer
ONEIDA MERGER CORP.
Attest:
By:
------------------------------- -------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Corporate Secretary President and Chief Executive Officer
▇▇▇▇▇▇ BANK CORPORATION
Attest:
By:
------------------------------- -------------------------------------
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Secretary President and Chief Executive Officer
66