Exhibit 2.1
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (this "Reorganization
Agreement"), dated as of December 16, 1997, is by and among XXXXXX CHARTERED
BANCORP, INC., a New York corporation ("Xxxxxx Chartered"), FIRST NATIONAL BANK
OF THE XXXXXX VALLEY, a national banking association ("Xxxxxx Valley"),
PROGRESSIVE BANK, INC., a New York corporation ("Progressive"), and PAWLING
SAVINGS BANK, a New York state-chartered stock savings bank ("Pawling").
WITNESSETH
WHEREAS, the parties hereto desire to combine their respective
businesses; and
WHEREAS, the Board of Directors of Progressive and Xxxxxx Chartered have
determined that the combination of the respective businesses and operations of
Progressive and Xxxxxx Chartered through a merger of equals would be in the best
long term interests of the respective shareholders of Progressive and Xxxxxx
Chartered; and
WHEREAS, in furtherance of the combination of their respective
businesses, the parties hereto desire that Progressive shall be merged (the
"Merger") with and into Xxxxxx Chartered under the name of "Premier National
Bancorp, Inc." (the corporation surviving the Merger is referred to herein as
the "Continuing Corporation"), all the issued and outstanding shares of common
stock of Progressive (other than shares held by dissenting shareholders, to the
extent applicable) shall be converted into and exchanged for shares of common
stock of the Continuing Corporation, and all the issued and outstanding shares
of capital stock of Xxxxxx Chartered shall continue to be issued and outstanding
shares of capital stock of the Continuing Corporation, all pursuant to a Plan of
Merger (the "Plan of Merger"), substantially in the form attached as Annex A
hereto and the provisions of which are herein incorporated by reference; and
WHEREAS, in furtherance of the combination of their respective
businesses, the parties hereto desire that, contemporaneously with the Merger,
Pawling, a wholly owned subsidiary of Progressive, shall be merged (the "Bank
Merger") with and into Xxxxxx Valley, a wholly owned subsidiary of Xxxxxx
Chartered, under the charter of Xxxxxx Valley and the name of "Premier National
Bank" (the bank surviving the Bank Merger is referred to herein as the
"Continuing Bank"), pursuant to an Agreement and Plan of Merger (the "Bank
Merger Agreement"), substantially in the form attached as Annex B hereto; and
WHEREAS, the parties hereto desire to provide for certain undertakings,
conditions, representations, warranties and covenants in connection with the
transactions contemplated hereby;
NOW, THEREFORE, in consideration of the premises and of the mutual
representations, warranties and covenants herein contained and intending to be
legally bound hereby, the parties hereto do hereby agree as follows:
ARTICLE 1.
CERTAIN DEFINED TERMS
1.1. "Bank Holding Company Act" shall mean the Bank Holding Company Act
of 1956, as amended.
1.2. "Banking Department" shall mean the New York State Banking
Department.
1.3. "Closing Date" shall have the meaning specified in Section 4.9
hereof.
1.4. "Code" shall mean the Internal Revenue Code of 1986, as amended.
1.5. "Commission" shall mean the Securities and Exchange Commission.
1.6. "Continuing Corporation Common Stock" shall mean Xxxxxx Chartered
Common Stock from and after the Effective Date.
1.7. "Effective Date" shall have the meaning specified in Section 4.9
hereof.
1.8. "Environmental Laws" shall mean all applicable federal, state and
local laws and regulations, including the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, that relate to pollution or
protection of human health or the environment (including, without limitation,
ambient air, surface water, ground water, land surface or subsurface strata).
This definition includes, without limitation, laws and regulations relating to
emissions, discharges, releases or threatened releases of Materials of
Environmental Concern, or otherwise relating to
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the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Materials of Environmental Concern.
1.9. "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
1.10. "ERISA Affiliate" shall mean any trade or business, whether or not
incorporated, that, together with Progressive or Xxxxxx Chartered, as the case
may be, would be deemed a "single employer" under Section 414 of the Code.
1.11. "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
1.12. "FDIA" shall mean the Federal Deposit Insurance Act, as amended.
1.13. "FDIC" shall mean the Federal Deposit Insurance Corporation.
1.14. "Federal Reserve Board" shall mean the Board of Governors of the
Federal Reserve System.
1.15. "FRBNY" shall mean the Federal Reserve Bank of New York.
1.16. "Xxxxxx Chartered Common Stock" shall have the meaning set forth in
Section 3.1 hereof.
1.17. "Xxxxxx Chartered DRP" shall mean Xxxxxx Chartered's Dividend
Reinvestment and Stock Purchase Plan.
1.18. "Xxxxxx Chartered Financial Statements" shall mean (i) the
consolidated balance sheets of Xxxxxx Chartered as of September 30, 1997 and as
of December 31, 1996 and 1995 and the related consolidated statements of income,
cash flows and changes in stockholders' equity (including related notes, if any)
for the nine months ended September 30, 1997 and for each of the three years
ended December 31, 1996, 1995 and 1994 as filed by Xxxxxx Chartered in SEC
Documents and (ii) the consolidated balance sheets of Xxxxxx Chartered and
related consolidated statements of income, cash flows and changes in
shareholders' equity (including related notes, if any) as filed by Xxxxxx
Chartered in SEC Documents with respect to periods ended subsequent to September
30, 1997.
1.19. "Xxxxxx Chartered Option Agreement" shall mean the Stock Option
Agreement dated of even date herewith
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between Xxxxxx Chartered, as issuer, and Progressive, as grantee, with regard to
Xxxxxx Chartered Common Stock.
1.20. "Xxxxxx Chartered Plan" shall mean each bonus, deferred
compensation, incentive compensation, stock purchase, stock option, severance
pay, medical, life or other insurance, profit-sharing, or pension plan, program,
agreement or arrangement, and each other employee benefit plan, program,
agreement or arrangement, sponsored, maintained or contributed to or required to
be contributed to by Xxxxxx Chartered or by an ERISA Affiliate for the benefit
of any employee or director or former employee or former director of Xxxxxx
Chartered or any ERISA Affiliate of Xxxxxx Chartered.
1.21. "Xxxxxx Chartered Preferred Stock" shall have the meaning set forth
in Section 3.1 hereof.
1.22. "Xxxxxx Chartered Stock-Based Compensation Plans" shall mean the
Xxxxxx Chartered Bancorp, Inc. 1995 Incentive Stock Plan (and its predecessors,
the Community Bancorp, Inc. 1988 Non-Qualified Stock Option Plan and the
Community Bancorp, Inc. Incentive Stock Option Plan), the Fishkill National
Corporation Incentive Stock Option Plan, and such other stock-based compensation
plans as may be Previously Disclosed.
1.23. "Xxxxxx Chartered Subsidiary" shall have the meaning set forth in
Section 3.3 hereof.
1.24. "Intellectual Property" means domestic and foreign letters patent,
patents, patent applications, patent licenses, software licensed or owned,
know-how, know-how licenses, trade names, common law and other trademarks,
service marks, licenses of trademarks, trade names and/or service marks,
trademark registrations and applications, service xxxx registrations and
applications and copyright registrations and applications.
1.25. "Materials of Environmental Concern" shall mean pollutants,
contaminants, wastes, toxic substances, petroleum and petroleum products and any
other materials regulated under Environmental Laws.
1.26. "OCC" shall mean the Office of the Comptroller of the Currency.
1.27. "Previously Disclosed" shall mean disclosed prior to the execution
hereof in (i) an SEC Document filed with the Commission after December 31, 1996
and before the
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date hereof, or (ii) a letter dated as of the date hereof from the party making
such disclosure and delivered to the other party. Any information disclosed by
one party to the other hereunder for any purpose hereunder shall be deemed to be
disclosed for all purposes hereunder. The inclusion of any matter in information
Previously Disclosed shall not be deemed an admission or otherwise to imply that
any such matter is material for purposes of this Agreement.
1.28. "Progressive Common Stock" shall have the meaning set forth in
Section 2.1 hereof.
1.29. "Progressive Financial Statements" shall mean (i) the consolidated
balance sheets of Progressive as of September 30, 1997 and as of December 31,
1996 and 1995 and the related consolidated statements of income, cash flows and
changes in stockholders' equity (including related notes, if any) for the nine
months ended September 30, 1997 and for each of the three years ended December
31, 1996, 1995 and 1994 as filed by Progressive in SEC Documents and (ii) the
consolidated balance sheets of Progressive and related consolidated statements
of income, cash flows and changes in stockholders' equity (including related
notes, if any) as filed by Progressive in SEC Documents with respect to periods
ended subsequent to September 30, 1997.
1.30. "Progressive Option Agreement" shall mean the Stock Option
Agreement dated as of even date herewith between Progressive, as issuer, and
Xxxxxx Chartered, as grantee, with regard to Progressive Common Stock.
1.31. "Progressive Plan" shall mean each bonus, deferred compensation,
incentive compensation, stock purchase, stock option, severance pay, medical,
life or other insurance, profit-sharing, or pension plan, program, agreement or
arrangement, and each other employee benefit plan, program, agreement or
arrangement, sponsored, maintained or contributed to or required to be
contributed to by Progressive or by an ERISA Affiliate for the benefit of any
employee or director or former employee or former director of Progressive or any
ERISA Affiliate of Progressive.
1.32. "Progressive Rights Agreement" shall mean the Shareholder Rights
Agreement dated as of October 15, 1997 by and between Progressive and Registrar
and Transfer Company, as rights agent, which provides that each share of
Progressive Common Stock outstanding on October 15, 1997, and each share of
Progressive Common Stock subsequently issued, has associated with it such rights
to acquire such shares of
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Progressive Series A Preferred Stock and such rights to acquire such shares of
Progressive Common Stock as are specified therein.
1.33. "Progressive Series A Preferred Stock" shall mean the Series A
Junior Participating Preferred Stock, par value $1.00 per share, of Progressive.
1.34. "Progressive Stock-Based Compensation Plans" shall mean the
Progressive Bank, Inc. 1997 Employee Stock Option Plan, the Progressive Bank,
Inc. 1993 Non-Qualified Stock Option Plan--Directors, the Progressive Bank, Inc.
Amended and Restated Incentive Stock Option Plan, the Progressive Bank, Inc.
Non-Qualified Stock Option Plan for Directors, and such other stock-based
compensation plans as may be Previously Disclosed.
1.35. "Proxy Statement" shall mean the joint proxy statement/prospectus
(or similar documents) together with any supplements thereto sent to the
shareholders of Progressive and Xxxxxx Chartered to solicit their votes in
connection with this Reorganization Agreement, the Plan of Merger and related
matters.
1.36. "Registration Statement" shall mean the registration statement with
respect to the Continuing Corporation Common Stock to be issued in connection
with the Merger as declared effective by the Commission under the Securities
Act.
1.37. "REO" shall mean real property assets acquired as a result of
foreclosure, deed in lieu of foreclosure, or any other method in satisfaction of
indebtedness.
1.38. "Rights" shall mean warrants, options, rights, convertible
securities and other arrangements or commitments which obligate an entity to
issue or dispose of any of its capital stock.
1.39. "SEC Documents" shall mean all reports and registration statements
filed, or required to be filed, by a party hereto pursuant to the Securities
Laws.
1.40. "Securities Act" shall mean the Securities Act of 1933, as amended.
1.41. "Securities Laws" shall mean the Securities Act; the Exchange Act;
the Investment Company Act of 1940, as amended; the Investment Advisers Act of
1940, as amended; the
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Trust Indenture Act of 1939, as amended; and the rules and regulations of the
Commission promulgated thereunder.
Other terms used herein are defined in the preamble, recitals or other
sections of this Reorganization Agreement.
ARTICLE 2.
REPRESENTATIONS AND WARRANTIES OF PROGRESSIVE AND PAWLING
Progressive and Pawling hereby represent and warrant to Xxxxxx Chartered
and Xxxxxx Valley as follows:
2.1. Capital Structure of Progressive
(a) The authorized capital stock of Progressive consists of (i)
15,000,000 shares of common stock, par value $1.00 per share ("Progressive
Common Stock"), of which 3,831,809 shares are issued and outstanding and 596,190
shares are held in treasury; and (ii) 5,000,000 shares of Preferred Stock, $1.00
par value per share, none of which have been issued or are outstanding. All
outstanding shares of Progressive Common Stock have been duly authorized and
validly issued, and are fully paid and nonassessable. None of the shares of
Progressive's capital stock has been issued in violation of the preemptive
rights of any person.
(b) Except for options granted under the Progressive Stock-Based
Compensation Plans with respect to 299,255 shares of Progressive Common Stock,
the Progressive Option Agreement, and Rights outstanding under the Progressive
Rights Agreement, there are no Rights authorized, issued or outstanding with
respect to the capital stock of Progressive and no written or oral plans,
understandings, commitments or contracts to which Progressive or, to
Progressive's knowledge, any of its affiliates is subject with respect to the
issuance, voting or sale of issued or unissued shares of Progressive's capital
stock.
2.2. Organization, Standing and Authority of Progressive
Progressive is a duly organized corporation, validly existing and in good
standing under the laws of the State of New York. Progressive (i) has full
corporate power and authority to carry on its business as now conducted and (ii)
is duly 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 and where failure to so qualify would have
a material adverse effect on the financial
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condition, results of operations or business of Progressive on a consolidated
basis. Progressive has all federal, state, local and foreign governmental
authorizations and licenses necessary for it to own and lease its properties and
assets and to carry on its business as it is now being conducted. Progressive
has delivered to Xxxxxx Chartered true, complete and correct copies of its
certificate of incorporation and by-laws, each as in effect on the date of this
Agreement. Progressive is registered as a bank holding company under the Bank
Holding Company Act.
2.3. Pawling
Progressive does not own, directly or indirectly, 5% or more of the
outstanding capital stock or other voting securities of any corporation, bank or
other organization except Pawling. The outstanding shares of capital stock of
Pawling have been duly authorized and are validly issued, and are fully paid and
nonassessable and all such shares are directly owned by Progressive free and
clear of all liens, claims and encumbrances, subject to the liquidation account
established and maintained by Pawling in connection with its conversion from
mutual to stock form (the "Liquidation Account"). No Rights are authorized,
issued or outstanding with respect to the capital stock of Pawling and there are
no agreements, understandings or commitments relating to the right of
Progressive to vote or to dispose of said shares. None of the shares of capital
stock of Pawling has been issued in violation of the preemptive rights of any
person. The Liquidation Account has been established and maintained in
accordance with all applicable laws and regulations.
2.4. Organization, Standing and Authority of Pawling
Pawling is a duly organized New York state-chartered stock savings bank,
validly existing and in good standing under applicable laws. There are no other
Progressive subsidiaries. Pawling (i) has full corporate power and authority to
own, lease and operate its properties and to carry on its business as now
conducted, and (ii) is duly 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 and where failure to so
qualify would have a material adverse effect on the financial condition, results
of operations or business of Progressive on a consolidated basis. Pawling has
all federal, state, local and foreign governmental authorizations and licenses
necessary for it to own or lease its properties and assets and to carry on its
business as it is now being conducted. Pawling has delivered
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to Xxxxxx Chartered true, complete and correct copies of its articles of
association and by-laws, each as in effect on the date of this Agreement.
2.5. Authorized and Effective Agreement
(a) Progressive has all requisite corporate power and authority to enter
into, adopt and perform all of its obligations under this Reorganization
Agreement, the Plan of Merger and the Progressive Option Agreement. The
execution, adoption and delivery of this Reorganization Agreement, the Plan of
Merger and the Progressive Option Agreement and the consummation of the
transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary corporate action in respect thereof on the part of
Progressive (including the unanimous approval of its Board of Directors), except
that the affirmative vote of the holders of the outstanding shares of
Progressive Common Stock entitled to vote thereon is required to adopt the Plan
of Merger pursuant to the New York Business Corporation Law, as amended, and
Progressive's Certificate of Incorporation and Bylaws.
(b) Pawling has all requisite corporate power and authority to enter into
and perform all of its obligations under this Reorganization Agreement and the
Bank Merger Agreement, and the execution and delivery of this Reorganization
Agreement and the Bank Merger Agreement and the consummation of the transactions
contemplated hereby and thereby have been duly and validly authorized by all
necessary corporate action in respect thereof on the part of Pawling.
(c) This Reorganization Agreement and the Plan of Merger constitute
legal, valid and binding obligations of Progressive and this Reorganization
Agreement and the Bank Merger Agreement constitute legal, valid and binding
obligations of Pawling, in each case enforceable against it in accordance with
their respective terms, subject as to enforceability, to bankruptcy, insolvency
and other laws of general applicability relating to or affecting creditors'
rights and to general equity principles.
(d) Except as Previously Disclosed, neither the execution, adoption and
delivery of this Reorganization Agreement, the Plan of Merger or the Progressive
Option Agreement, in the case of Progressive, or this Reorganization Agreement
or the Bank Merger Agreement, in the case of Pawling, nor consummation of the
transactions contemplated hereby or thereby, nor compliance by Progressive or
Pawling
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with any of the provisions hereof or thereof shall (i) conflict with or result
in a breach of any provision of the certificate of incorporation, articles of
association or by-laws of Progressive or Pawling, (ii) constitute or result in a
breach of any term, condition or provision of, or constitute a default under, or
give rise to any right of termination, cancellation or acceleration with respect
to, or result in the creation of any lien, charge or encumbrance upon any
property or asset of Progressive or Pawling pursuant to, any note, bond,
mortgage, indenture, license, agreement or other instrument or obligation, in
each case in an amount greater than $100,000 or requiring an annual payment
greater than $100,000, or (iii) subject to the receipt of all required
regulatory approvals, violate any order, writ, injunction, decree, statute, rule
or regulation applicable to Progressive or Pawling.
(e) Except for consents and approvals of or filings with the Federal
Reserve Board, the OCC, the FDIC, the Commission, the Banking Department and the
New York Department of State, and except as Previously Disclosed, 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, in
connection with the execution and delivery of this Agreement and the Bank Merger
Agreement by Progressive and Pawling or the consummation by Progressive or
Pawling of the transactions contemplated hereby, thereby or by the Plan of
Merger.
2.6. SEC Documents; Regulatory Filings
Progressive has filed all SEC Documents required by the Securities Laws
and such SEC Documents complied in all material respects with the Securities
Laws. Each of Progressive and Pawling has filed all reports required by statute
or regulation to be filed with any federal or state bank regulatory agency, and
such reports were prepared in accordance with the applicable statutes,
regulations and instructions in all material respects.
2.7. Financial Statements; Books and Records; Minute Books
The Progressive Financial Statements fairly present the consolidated
financial position of Progressive as of the dates indicated and the consolidated
results of operations, changes in stockholders' equity and cash flows of
Progressive for the periods then ended in conformity with generally accepted
accounting principles applicable to financial institutions applied on a
consistent basis except (i) as disclosed therein, (ii) for the omission of notes
to
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unaudited statements, (iii) for normally recurring year-end adjustments in the
case of interim financial statements, and (iv) as Previously Disclosed. The
books and records of Progressive and Pawling fairly reflect the transactions to
which it is a party or by which its properties are subject or bound. Such books
and records have been properly kept and maintained and are in compliance in all
material respects with all applicable legal and accounting requirements. The
minute books of Progressive and Pawling contain accurate records of all
corporate actions of their respective shareholders and Boards of Directors
(including committees of their Boards of Directors).
2.8. Material Adverse Change
Progressive has not, on a consolidated basis, suffered any material
adverse change in its business, financial condition or results of operations
since December 31, 1996 to the date hereof.
2.9. Absence of Undisclosed Liabilities
Neither Progressive nor Pawling has any liability (contingent or
otherwise) that is material to Progressive on a consolidated basis, or that,
when combined with all similar liabilities, would be material to Progressive on
a consolidated basis, except as disclosed in the Progressive Financial
Statements and except for liabilities incurred in the ordinary course of
business consistent with past practice since the date of the most recent
Progressive Financial Statements.
2.10. Properties
Except as Previously Disclosed, Progressive and Pawling have good title
free and clear of all liens, encumbrances, charges, defaults or equitable
interests to all of the properties and assets, real and personal, reflected on
the Progressive Financial Statements as of September 30, 1997 or acquired after
such date, except (i) liens for current taxes not yet due and payable, (ii)
pledges to secure deposits and other liens incurred in the ordinary course of
banking business, (iii) such imperfections of title, easements and encumbrances,
if any, as are customary under local practice or are not material in character,
amount or extent and (iv) dispositions and encumbrances for adequate
consideration in the ordinary course of business. Progressive or Pawling, as
lessee, has the right under valid and subsisting leases of properties used by
Progressive and Pawling in the conduct of their banking business to occupy
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and use all such properties as presently occupied and used by them. Each of the
real properties used by Progressive and Pawling has been maintained in all
material respects in good condition and is suitable for its current use by
Progressive and Pawling. Each of such properties conforms in all material
respects to currently applicable ordinances, regulations and zoning requirements
and, if required, is occupied pursuant to a certificate of occupancy authorizing
its current use. Except as Previously Disclosed, since September 30, 1997, none
of such properties which are material to the operation of Progressive and
Pawling has been damaged by fire, storm or other identifiable event or other act
of God, except to the extent that any property owned or leased by Progressive or
Pawling, if so damaged, is insured to the extent necessary to satisfactorily
repair the damaged premises.
2.11. Loans
(a) Except as Previously Disclosed, to the best knowledge of Progressive
and Pawling, each loan reflected as an asset in the Progressive Financial
Statements (i) is evidenced by notes, agreements or other evidences of
indebtedness which are true, genuine and what they purport to be, (ii) to the
extent secured, has been secured by valid liens and security interests which
have been perfected, and (iii) is the legal, valid and binding obligation of the
obligor named therein, enforceable in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent conveyance and other laws of general
applicability relating to or affecting creditors' rights and to general equity
principles. All loans and extensions of credit made by Pawling that are subject
to Regulation O of the Federal Reserve Board comply therewith.
(b) The classification on the books and records of Progressive and
Pawling of loans as nonaccrual, troubled debt restructuring, in-substance
foreclosure or other real estate owned, or other similar classification,
complies in all material respects with generally accepted accounting principles
and applicable regulatory accounting policy.
2.12. Allowance for Loan Losses
The allowance for loan losses reflected on the Progressive Financial
Statements as of September 30, 1997 and any Progressive Financial Statements
referred to in Section 1.29(ii) hereof, as of their respective dates, is
adequate in all material respects under the requirements of generally accepted
and regulatory accounting principles to provide for reasonably anticipated
losses on outstanding loans.
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2.13. Tax Matters
(a) Progressive and Pawling, and each of their respective predecessors,
have timely filed federal income tax returns for each year through December 31,
1996 and have timely filed, or caused to be filed, all other federal, state,
local and foreign tax returns (including, without limitation, estimated tax
returns, withholding tax returns and FICA and FUTA returns) required to be filed
with respect to Progressive or Pawling. Progressive has made available to Xxxxxx
Chartered true and complete copies of its federal and state income tax returns
for the past five years, and true and complete copies of all correspondence from
governmental authorities, and responses of Progressive or Pawling thereto,
relating to such federal and state income tax returns or any other federal,
state, local or other tax filings within the past five years. All taxes due in
respect of the periods covered by such tax returns have been paid or adequate
reserves have been established for the payment of such taxes and, as of the
Closing Date, all taxes due in respect of any subsequent periods ending on or
prior to the Closing Date will have been paid or adequate reserves will have
been established for the payment thereof. Except as Previously Disclosed, no
audit examination or deficiency or refund litigation with respect to such
returns is pending. Neither Progressive nor Pawling will have any material
liability for any such taxes in excess of the amounts so paid or reserves or
accruals so established.
(b) All federal, state and local (and, if applicable, foreign) tax
returns filed by Progressive and Pawling are complete and accurate in all
material respects. Neither Progressive nor Pawling is delinquent in the payment
of any tax, assessment or governmental charge, and none of them has requested
any extension of time within which to file any tax returns in respect of any
fiscal year or portion thereof which have not since been filed. No deficiencies
for any tax, assessment or governmental charge have been proposed, asserted or
assessed (tentatively or otherwise) against Progressive or Pawling which have
not been settled and paid. Except as Previously Disclosed, there are currently
no agreements in effect with respect to Progressive or Pawling to extend the
period of limitations for the assessment or collection of any tax.
(c) Progressive and Pawling have timely filed all information returns
required under Sections 6041-6050N of the
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Code and any comparable state and local laws, and have timely complied in all
respects with the requirements of Section 3406 of the Code and the regulations
thereunder and any comparable state and local laws and regulations.
(d) Except as Previously Disclosed, termination of the employment of any
employees of Progressive or Pawling following consummation of the transactions
contemplated hereby will not cause Progressive or Pawling to make or to be
required to make any "excess parachute payment" as that term is defined in
Section 280G of the Code.
2.14. Employee Benefit Plans; ERISA
(a) Progressive has Previously Disclosed each material Progressive Plan.
(b) With respect to each material Progressive Plan, Progressive has made
available to Xxxxxx Chartered true and complete copies of each of the following
documents: (1) the Progressive Plan and related documents (including all
amendments thereto); (2) the most recent annual reports, financial statements,
and actuarial reports, if any; (3) the most recent summary plan description,
together with each summary of material modifications, required under ERISA with
respect to such Progressive Plan; and (4) the most recent determination letter
received from the Internal Revenue Service with respect to each Progressive Plan
that is intended to be qualified under the Code.
(c) Except as Previously Disclosed, no liability under Title IV of ERISA
has been incurred by Progressive or any ERISA Affiliate of Progressive since the
effective date of ERISA that has not been satisfied in full, and no condition
exists that presents a material risk to Progressive or any ERISA Affiliate of
Progressive of incurring a liability under such Title, other than liability for
premium payments to the Pension Benefit Guaranty Corporation, which premiums
have been or will be paid when due.
(d) Neither Progressive nor any ERISA Affiliate of Progressive, nor any
of the Progressive Plans, nor any trust created thereunder, nor, to the best
knowledge of Progressive, any trustee or administrator thereof has engaged in a
prohibited transaction (within the meaning of Section 406 of ERISA and Section
4975 of the Code) in connection with which Progressive or any ERISA Affiliate of
Progressive could, either directly or indirectly, incur a material liability or
cost.
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(e) Except as Previously Disclosed, full payment has been made, or will
be made in accordance with Section 404(a)(6) of the Code, of all amounts that
Progressive or any ERISA Affiliate of Progressive is required to pay under
Section 412 of the Code or under the terms of the Progressive Plans.
(f) Except as Previously Disclosed, as of the Closing Date, the then fair
market value of the assets held under each Progressive Plan that is subject to
Title IV of ERISA will be sufficient so as to permit a "standard termination" of
each such Progressive Plan under Section 4042(b) of ERISA without the need to
make any additional contributions to such Progressive Plans. No reportable event
under Section 4043 of ERISA has occurred with respect to any Progressive Plan on
or before the Closing Date other than any reportable event occurring by reason
of the transactions contemplated by this Agreement or a reportable event for
which the requirement of notice to the Pension Benefit Guaranty Corporation has
been waived.
(g) Except as Previously Disclosed, none of the Progressive Plans is a
"multiemployer pension plan," as such term is defined in Section 3(37) of ERISA,
a "multiple employer welfare arrangement," as such term is defined in Section
3(40) of ERISA, or a single employer plan that has two or more contributing
sponsors, at least two of whom are not under common control, within the meaning
of Section 4063(a) of ERISA.
(h) Except as Previously Disclosed, a favorable determination letter has
been issued by the Internal Revenue Service with respect to each Progressive
Plan that is intended to be "qualified" within the meaning of Section 401(a) of
the Code to the effect that such plan is so qualified and each such Progressive
Plan satisfies the requirements of Section 401(a) of the Code in all material
respects. Each Progressive Plan that is intended to satisfy the requirements of
Section 125 or 501(c)(9) of the Code satisfies such requirements in all material
respects. Each Progressive Plan has been operated and administered in all
material respects in accordance with its terms and applicable laws, including
but not limited to ERISA and the Code.
(i) Except as Previously Disclosed, there are no actions, suits or claims
pending, or, to the knowledge of Progressive, threatened or anticipated (other
than routine claims for benefits) against any Progressive Plan, the assets of
any Progressive Plan or against Progressive or any ERISA Affiliate of
Progressive with respect to any Progressive
- 15 -
Plan. There is no judgment, decree, injunction, rule or order of any court,
governmental body, commission, agency or arbitrator outstanding against or in
favor of any Progressive Plan or any fiduciary thereof (other than rules of
general applicability). There are no pending or threatened audits, examinations
or investigations by any governmental body, commission or agency involving any
Progressive Plan.
(j) Except as Previously Disclosed, the consummation of the transactions
contemplated by this Agreement will not (i) entitle any current or former
employee or director of Progressive or any ERISA Affiliate of Progressive to
severance pay, unemployment compensation or any similar payment, or (ii)
accelerate the time of payment or vesting, or increase the amount, of any
compensation due to any such current or former employee or director, or (iii)
renew or extend the term of any agreement regarding compensation for any such
current or former employee or director.
2.15. Labor Matters
With respect to their employees, neither Progressive nor Pawling is a
party to any labor agreement with any labor organization, group or association
and each of Progressive and Pawling is in material compliance with all
applicable laws respecting employment practices, terms and conditions of
employment and wages and hours and has not engaged in any unfair labor practice.
Progressive and Pawling have not experienced any attempt by organized labor or
its representatives to make Progressive or Pawling conform to demands of
organized labor relating to their employees or to enter into a binding agreement
with organized labor that would cover the employees of Progressive or Pawling.
To the knowledge of Progressive and Pawling, there is no unfair labor practice
charge or other complaint by any employee or former employee of Progressive or
Pawling against any of them pending before any governmental agency arising out
of Progressive's or Pawling's activities; there is no labor strike or labor
disturbance pending or, to the knowledge of Progressive and Pawling, threatened
against any of them; and neither Progressive nor Pawling has experienced a work
stoppage or other labor difficulty since January 1, 1997.
2.16. Certain Contracts
(a) Except as Previously Disclosed, neither Progressive nor Pawling is a
party to, or is bound by, (i) any material agreement, arrangement or commitment
involving annual payments in excess of $100,000, whether or not made in the
ordinary course of business, (ii) any
- 16 -
agreement, indenture or other instrument relating to the borrowing of money by
Progressive or Pawling or the guarantee by Progressive or Pawling of any such
obligation, (iii) any agreement, arrangement or commitment relating to the
employment of a consultant or the employment, election, retention in office or
severance of any present or former director or officer, (iv) any agreement to
make loans or for the provision, purchase or sale of goods, services or property
between Progressive or Pawling and any director or executive officer of
Progressive or Pawling, or any member of the immediate family or affiliate of
any of the foregoing, or (v) any agreement between Progressive or Pawling and
any five percent or more shareholder of Progressive, in each case other than
transactions entered into in the ordinary course of the banking business of
Pawling consistent with past practice.
(b) Neither Progressive nor Pawling, nor to the knowledge of Progressive
or Pawling, the other party thereto, is in default under any material agreement,
commitment, arrangement, lease, insurance policy or other instrument whether
entered into in the ordinary course of business or otherwise and whether written
or oral, and there has not occurred any event that, with the lapse of time or
giving of notice or both, would constitute such a default, other than defaults
of loan agreements by borrowers from Pawling in the ordinary course of its
banking business.
(c) Since September 30, 1997, neither Progressive nor Pawling has
incurred or paid any obligation or liability that would be material to
Progressive, except obligations incurred or paid in connection with transactions
in the ordinary course of business of Pawling consistent with its past practice
and except as Previously Disclosed. Except as Previously Disclosed, from
September 30, 1997 to the date hereof, neither Progressive nor Pawling has taken
any action that, if taken after the date hereof, would breach any of the
covenants contained in Section 4.7(b) hereof.
(d) Except as Previously Disclosed, neither Progressive nor Pawling has,
during the period since December 31, 1995, controlled expenses through
elimination of employee benefits, deferral of routine maintenance of real
property or leased premises, elimination of reserves where the liability related
to such reserve has remained, reduction of capital improvements from previous
levels, failure to depreciate capital assets in accordance with past practice or
eliminate capital assets which are no longer used in the business of either
Progressive or Pawling, capitalized loan production expenses other than in
accordance with FAS 91 or extraordinary reduction or deferral of ordinary or
necessary expenses.
- 17 -
2.17. Real Estate Owned
(a) Except for liens, security interests, claims, charges, or such other
encumbrances as have been appropriately reserved for in the Progressive
Financial Statements or are not material and are in the process of being
cleared, title to the REO is good and marketable, and there are no adverse
claims or encumbrances on the REO.
(b) All title, hazard and other insurance claims and mortgage guaranty
claims with respect to the REO have been timely filed and neither Progressive
nor Pawling has received any notice of denial of any such claim.
(c) Progressive and Pawling are in possession of all of the REO or, if
any of the REO remains occupied by the mortgagor, eviction or summary
proceedings have been commenced or rental arrangements providing for market
rental rates have been agreed upon and Progressive and/or Pawling are diligently
pursuing such eviction or summary proceedings or such rental arrangements.
(d) Except as Previously Disclosed, no legal proceeding or quasi-legal
proceeding is pending or, to the knowledge of Progressive and Pawling,
threatened concerning any REO or any servicing activity or omission to provide a
servicing activity with respect to any of the REO.
2.18. Legal Proceedings
Except as Previously Disclosed, there are no actions, suits or
proceedings instituted, pending or, to the knowledge of Progressive, threatened
against Progressive or Pawling or against any asset, interest or right of
Progressive or Pawling that might have a material adverse effect on the
financial condition, results of operations or business of Progressive on a
consolidated basis. To the knowledge of Progressive, there are no actual or
threatened actions, suits or proceedings which present a claim to restrain or
prohibit the transactions contemplated herein. There are no actions, suits or
proceedings instituted, pending or, to the knowledge of Progressive, threatened
against any present or former director or officer of Progressive that might give
rise to a claim for indemnification, and, to the knowledge of Progressive, there
is no reasonable basis for any such action, suit or proceeding.
- 18 -
2.19. Compliance with Laws
Progressive and Pawling are in compliance in all material respects with
all statutes and regulations applicable to the conduct of their business, and
neither Progressive nor Pawling has received notification from any agency or
department of federal, state or local government (i) asserting a material
violation of any such statute or regulation, (ii) threatening to revoke any
license, franchise, permit or government authorization or (iii) restricting or
in any way limiting its operations. Neither Progressive nor Pawling is subject
to any regulatory or supervisory cease and desist order, agreement, directive,
memorandum of understanding or commitment, and neither of them has received any
communication requesting that they enter into any of the foregoing. Without
limiting the generality of the foregoing, Pawling has timely filed all currency
transaction reports required to be filed and taken all other actions required
under the Currency and Foreign Transactions Reporting Act, codified at 31 U.S.C.
ss. 5301 et seq., and its implementing regulations.
2.20. Brokers and Finders
Except for Progressive's engagement of and agreement to pay Sandler
X'Xxxxx & Partners, L.P. a fee or commission as Previously Disclosed, neither
Progressive nor Pawling, nor any of their respective officers, directors or
employees, has employed any broker, finder or financial advisor or incurred any
liability for any fees or commissions in connection with the transactions
contemplated herein, the Bank Merger Agreement or the Plan of Merger.
2.21. Insurance
Progressive and Pawling currently maintain insurance in amounts
reasonably necessary for their operations and, to the best knowledge of
Progressive, similar in scope and coverage to that maintained by other entities
similarly situated. Neither Progressive nor Pawling has received any advance
notice of a material premium increase or cancellation with respect to any of its
insurance policies or bonds, and within the last three years, neither
Progressive nor Pawling has been refused any insurance coverage sought or
applied for, and Progressive has no reason to believe that existing insurance
coverage cannot be renewed as and when the same shall expire, upon terms and
conditions as favorable as those presently in effect, other than possible
increases in premiums or unavailability in coverage that have not resulted
from any extraordinary loss experience of Progressive or Pawling.
- 19 -
2.22. Repurchase Agreements
With respect to all agreements pursuant to which Progressive or Pawling
has purchased securities subject to an agreement to resell, if any, Progressive
or Pawling, as the case may be, has a valid, perfected first lien or security
interest in the government securities or other collateral securing the
repurchase agreement, and the value of such collateral equals or exceeds the
amount of the debt secured thereby.
2.23. Deposit Insurance
The deposits of Pawling are insured by the FDIC in accordance with the
FDIA, and Pawling has paid all assessments and filed all reports required by the
FDIA.
2.24. Environmental Matters
(a) Except for any violation, liability or noncompliance which does not
have a material adverse effect on Progressive or Pawling: (i) neither
Progressive nor Pawling has violated during the last five years or is in
violation of or is liable under any federal, state or local environmental law;
(ii) none of the properties owned or leased by either Progressive or Pawling
(including, without limitation, soils and surface and ground waters) are
contaminated with any hazardous substance; (iii) neither Progressive nor Pawling
is liable for any off-site contamination; and (iv) each of Progressive and
Pawling is, and during the last five years has been, in compliance with, all of
its respective permits, licenses and other authorizations issued under any
environmental laws. For purposes of the foregoing, all references to
"properties" include, without limitation, any owned real property or leased real
property.
(b) Neither Progressive nor Pawling has received any written notice of
any legal, administrative, arbitral or other proceeding, claim or action and, to
the knowledge of Progressive and Pawling, there is no governmental investigation
of any nature ongoing, in each case that could reasonably be expected to result
in the imposition, on Progressive or Pawling of any liability arising under any
local, state or federal environmental statute, regulation or ordinance
including, without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act of
- 20 -
1980, as amended, which liability would have a material adverse effect on
Progressive or Pawling; to the best knowledge of Progressive and Pawling, there
are no facts or circumstances which could reasonably be expected to form the
basis for any such proceeding, claim, action or governmental investigation that
would impose any such liability; and neither Progressive nor Pawling is subject
to any agreement, order, judgment, decree or memorandum by or with any court,
governmental authority, regulatory agency or third party imposing any such
liability.
2.25. Certain Information
When the Registration Statement or any post-effective amendment thereto
shall become effective, and at all times subsequent to such effectiveness up to
and including the time of the later of the Progressive and Xxxxxx Chartered
shareholders' meetings to vote upon the Merger, such Registration Statement and
all amendments or supplements thereto, with respect to all information set forth
therein furnished by Progressive relating to Progressive and Pawling, (i) shall
comply in all material respects with the applicable provisions of the Securities
Laws, and (ii) shall not 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 contained therein not misleading.
2.26. Administration of Trust Accounts
Pawling has properly administered, in all respects material and which
could reasonably be expected to be material to the business, operations or
financial condition of Progressive and Pawling, taken as a whole, all accounts
for which it acts as a fiduciary, including but not limited to accounts for
which it serves as a trustee, agent, custodian, personal representative,
guardian, conservator or investment advisor, in accordance with the terms of the
governing documents and applicable state and federal law and regulation and
common law. Neither Progressive, Pawling, nor any director, officer or employee
of Progressive or Pawling has committed any breach of trust with respect to any
such fiduciary account which is material to or could reasonably be expected to
be material to the business, operations or financial condition of Progressive
and Pawling, taken as a whole, and the accountings for each such fiduciary
account are true and correct in all material respects and accurately reflect the
assets of such fiduciary account in all material respects.
- 21 -
2.27. Information in Applications
All information concerning Progressive and Pawling, and their respective
officers, directors and shareholders, included (or submitted for inclusion) in
the applications described in Section 4.3 hereof shall be true, correct and
complete in all material respects.
2.28. Pooling of Interests
Progressive knows of no reason (after consultation with its independent
accountants) which would reasonably cause it to believe that the Merger will not
qualify as a pooling of interests for financial accounting purposes.
2.29. Derivative Transactions
Except as Previously Disclosed, as of the date hereof, neither
Progressive nor Pawling has engaged in transactions in or involving forwards,
futures, options on futures, swaps or other derivative instruments since
December 31, 1996.
2.30. Intellectual Property
Progressive and Pawling own the entire right, title and interest in and
to, or have valid licenses with respect to, all the Intellectual Property
necessary in all material respects to conduct their business and operations as
presently conducted, except where the failure to do so would not, individually
or in the aggregate, have a material adverse effect on the financial condition,
results of operations or business of Progressive on a consolidated basis. None
of such Intellectual Property is subject to any outstanding order, decree,
judgment, stipulation, settlement, lien, charge, encumbrance or attachment,
which order, decree, judgment, stipulation, settlement, lien, charge,
encumbrance or attachment would have a material adverse effect on the financial
condition, results of operations or business of Progressive on a consolidated
basis.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF XXXXXX CHARTERED
AND XXXXXX VALLEY
Hudson Chartered and Xxxxxx Valley hereby represent and warrant to
Progressive and Pawling as follows:
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3.1. Capital Structure of Xxxxxx Chartered
(a) The authorized capital stock of Xxxxxx Chartered consists of (i)
20,000,000 shares of common stock, par value $0.80 per share ("Xxxxxx Chartered
Common Stock"), of which 7,076,263 shares are issued and outstanding and 85,015
shares are held in treasury; and (ii) 5,000,000 shares of preferred stock, par
value $0.01 per share ("Xxxxxx Chartered Preferred Stock"), none of which are
currently outstanding. All outstanding shares of Xxxxxx Chartered Common Stock
have been duly authorized and validly issued, and are fully paid and
nonassessable. None of the shares of Xxxxxx Chartered's capital stock has been
issued in violation of the preemptive rights of any person.
(b) Except for options granted under the Xxxxxx Chartered Stock-Based
Compensation Plans with respect to 462,247 shares of Xxxxxx Chartered Common
Stock, and the Xxxxxx Chartered Option Agreement, there are no Rights
authorized, issued or outstanding with respect to the capital stock of Xxxxxx
Chartered and no written or oral plans, understandings, commitments or contracts
to which Xxxxxx Chartered or, to Xxxxxx Chartered's knowledge, any of its
affiliates is subject with respect to the issuance, voting or sale of issued or
unissued shares of Xxxxxx Chartered's capital stock.
3.2. Organization, Standing and Authority of Xxxxxx Chartered
Xxxxxx Chartered is a duly organized corporation, validly existing and in
good standing under the laws of the State of New York. Xxxxxx Chartered (i) has
full corporate power and authority to carry on its business as now conducted and
(ii) is duly 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 and where failure to so qualify
would have a material adverse effect on the financial condition, results of
operations or business of Xxxxxx Chartered on a consolidated basis. Xxxxxx
Chartered has all federal, state, local and foreign governmental authorizations
and licenses necessary for it to own and lease its properties and assets and to
carry on its business as it is now being conducted. Xxxxxx Chartered has
delivered to Progressive true, complete and correct copies of its certificate of
incorporation and by-laws, each as in effect on the date of this Agreement.
Xxxxxx Chartered is registered as a bank holding company under the Bank Holding
Company Act.
- 23 -
3.3. Ownership of the Xxxxxx Chartered Subsidiaries; Capital Structure of the
Xxxxxx Chartered Subsidiaries
Xxxxxx Chartered does not own, directly or indirectly, 5% or more of the
outstanding capital stock or other voting securities of any corporation, bank or
other organization except Xxxxxx Valley, Xxxxxx Chartered Realty Corporation
(collectively the "Xxxxxx Chartered Subsidiaries" and each individually a
"Xxxxxx Chartered Subsidiary"). The outstanding shares of capital stock of each
Xxxxxx Chartered Subsidiary have been duly authorized and are validly issued,
and are fully paid and (subject to 12 U.S.C. ss. 55) nonassessable and, except
as Previously Disclosed, all such shares are directly or indirectly owned by
Xxxxxx Chartered free and clear of all liens, claims and encumbrances. No Rights
are authorized, issued or outstanding with respect to the capital stock of any
Xxxxxx Chartered Subsidiary and there are no agreements, understandings or
commitments relating to the right of Xxxxxx Chartered to vote or to dispose of
said shares. None of the shares of capital stock of any Xxxxxx Chartered
Subsidiary has been issued in violation of the preemptive rights of any person.
3.4. Organization, Standing and Authority of the Hudson Chartered Subsidiaries
Xxxxxx Valley is a duly organized national banking association, validly
existing and in good standing under applicable laws. Each other Xxxxxx Chartered
Subsidiary is a duly organized corporation, validly existing and in good
standing under applicable laws. Each Xxxxxx Chartered Subsidiary (i) has full
corporate power and authority to own, lease and operate its properties and to
carry on its business as now conducted, and (ii) is duly 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 and where failure to so qualify would have a material adverse
effect on the financial condition, results of operations or business of Xxxxxx
Chartered on a consolidated basis. Each Xxxxxx Chartered Subsidiary has all
federal, state, local and foreign governmental authorizations and licenses
necessary for it to own or lease its properties and assets and to carry on its
business as it is now being conducted. Xxxxxx Valley has delivered to
Progressive true, complete and correct copies of its articles of association and
by-laws, each as in effect on the date of this Agreement.
- 24 -
3.5. Authorized and Effective Agreement
(a) Xxxxxx Chartered has all requisite corporate power and authority to
enter into, adopt and perform all of its obligations under this Reorganization
Agreement, the Plan of Merger and the Xxxxxx Chartered Option Agreement. The
execution, adoption and delivery of this Reorganization Agreement, the Plan of
Merger and the Xxxxxx Chartered Option Agreement and the consummation of the
transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary corporate action in respect thereof on the part of
Xxxxxx Chartered (including the unanimous approval of its Board of Directors),
except that the affirmative vote of the holders of the outstanding shares of
Xxxxxx Chartered Common Stock entitled to vote thereon is required to adopt the
Plan of Merger pursuant to the New York Business Corporation Law, as amended,
and Xxxxxx Chartered's Certificate of Incorporation and Bylaws.
(b) Xxxxxx Valley has all requisite corporate power and authority to
enter into and perform all of its obligations under this Reorganization
Agreement and the Bank Merger Agreement and the execution and delivery of this
Reorganization Agreement and the Bank Merger Agreement and the consummation of
the transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary corporate action in respect thereof on the part of
Xxxxxx Valley.
(c) This Reorganization Agreement and the Plan of Merger constitute
legal, valid and binding obligations of Xxxxxx Chartered and this Reorganization
Agreement and the Bank Merger Agreement constitute legal, valid and binding
obligations of Xxxxxx Valley, in each case enforceable against it in accordance
with their respective terms, subject as to enforceability, to bankruptcy,
insolvency and other laws of general applicability relating to or affecting
creditors' rights and to general equity principles.
(d) Except as Previously Disclosed, neither the execution, adoption and
delivery of this Reorganization Agreement, the Plan of Merger or the Xxxxxx
Chartered Option Agreement, in the case of Xxxxxx Chartered, or this
Reorganization Agreement or the Bank Merger Agreement, in the case of Xxxxxx
Valley, nor consummation of the transactions contemplated hereby or thereby, nor
compliance by Hudson Chartered or Xxxxxx Valley with any of the provisions
hereof or thereof shall (i) conflict with or result in a breach of any provision
of the certificate of incorporation, articles of association or by-laws of
Xxxxxx Chartered or any Xxxxxx
- 25 -
Chartered Subsidiary, (ii) constitute or result in a breach of any term,
condition or provision of, or constitute a default under, or give rise to any
right of termination, cancellation or acceleration with respect to, or result in
the creation of any lien, charge or encumbrance upon any property or asset of
Xxxxxx Chartered or any Xxxxxx Chartered Subsidiary pursuant to, any note, bond,
mortgage, indenture, license, agreement or other instrument or obligation, in
each case in an amount greater than $100,000 or requiring an annual payment
greater than $100,000, or (iii) subject to the receipt of all required
regulatory approvals, violate any order, writ, injunction, decree, statute, rule
or regulation applicable to Xxxxxx Chartered or any Xxxxxx Chartered Subsidiary.
(e) Except for consents and approvals of or filings with the Federal
Reserve Board, the OCC, the FDIC, the Commission, the Banking Department, the
New York Department of State and any appropriate state securities authorities,
and except as Previously Disclosed, 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, in connection with the
execution and delivery of this Agreement and the Bank Merger Agreement by Xxxxxx
Chartered and Xxxxxx Valley or the consummation by Hudson Chartered or Xxxxxx
Valley of the transactions contemplated hereby, thereby or by the Plan of
Merger.
3.6. SEC Documents; Regulatory Filings
Xxxxxx Chartered has filed all SEC Documents required by the Securities
Laws and such SEC Documents complied in all material respects with the
Securities Laws. Each of Xxxxxx Chartered and Xxxxxx Valley has filed all
reports required by statute or regulation to be filed with any federal or state
bank regulatory agency, and such reports were prepared in accordance with the
applicable statutes, regulations and instructions in all material respects.
3.7. Financial Statements; Books and Records; Minute Books
The Xxxxxx Chartered Financial Statements fairly present the consolidated
financial position of Xxxxxx Chartered as of the dates indicated and the
consolidated results of operations, changes in stockholders' equity and cash
flows of Xxxxxx Chartered for the periods then ended in conformity with
generally accepted accounting principles applicable to financial institutions
applied on a consistent basis except (i) as disclosed therein, (ii) for the
omission of notes to unaudited statements, and (iii) for normally
- 26 -
recurring year-end adjustments in the case of interim financial statements. The
books and records of Xxxxxx Chartered and each Xxxxxx Chartered Subsidiary
fairly reflect the transactions to which it is a party or by which its
properties are subject or bound. Such books and records have been properly kept
and maintained and are in compliance in all material respects with all
applicable legal and accounting requirements. The minute books of Xxxxxx
Chartered and each Xxxxxx Chartered Subsidiary contain accurate records of all
corporate actions of their respective shareholders and Boards of Directors
(including committees of their Boards of Directors).
3.8. Material Adverse Change
Xxxxxx Chartered has not, on a consolidated basis, suffered any material
adverse change in its business, financial condition or results of operations
since December 31, 1996 to the date hereof.
3.9. Absence of Undisclosed Liabilities
Neither Xxxxxx Chartered nor any Xxxxxx Chartered Subsidiary has any
liability (contingent or otherwise) that is material to Xxxxxx Chartered on a
consolidated basis, or that, when combined with all similar liabilities, would
be material to Xxxxxx Chartered on a consolidated basis, except as disclosed in
the Xxxxxx Chartered Financial Statements and except for liabilities incurred in
the ordinary course of business consistent with past practice since the date of
the most recent Xxxxxx Chartered Financial Statements.
3.10. Properties
Xxxxxx Chartered and the Xxxxxx Chartered Subsidiaries have good title
free and clear of all liens, encumbrances, charges, defaults or equitable
interests to all of the properties and assets, real and personal, reflected on
the Xxxxxx Chartered Financial Statements as of September 30, 1997 or acquired
after such date, except (i) liens for current taxes not yet due and payable,
(ii) pledges to secure deposits and other liens incurred in the ordinary course
of banking business, (iii) such imperfections of title, easements and
encumbrances, if any, as are customary under local practice or are not material
in character, amount or extent and (iv) dispositions and encumbrances for
adequate consideration in the ordinary course of business. Xxxxxx Chartered or
one of the Xxxxxx Chartered Subsidiaries, as lessee, has the right under valid
and subsisting leases of properties used by Xxxxxx Chartered and the Xxxxxx
Chartered
- 27 -
Subsidiaries in the conduct of its banking business to occupy and use all such
properties as presently occupied and used by it. Each of the real properties
used by Xxxxxx Chartered and the Xxxxxx Chartered Subsidiaries has been
maintained in all material respects in good condition and is suitable for its
current use by Xxxxxx Chartered and the Xxxxxx Chartered Subsidiaries. Each of
such properties conforms in all material respects to currently applicable
ordinances, regulations and zoning requirements and, if required, is occupied
pursuant to a certificate of occupancy authorizing its current use. Since
September 30, 1997, none of such properties which are material to the operation
of Xxxxxx Chartered and the Xxxxxx Chartered Subsidiaries has been damaged by
fire, storm or other identifiable event or other act of God, except to the
extent that any property owned or leased by Xxxxxx Chartered or one of the
Xxxxxx Chartered Subsidiaries, if so damaged, is insured to the extent necessary
to satisfactorily repair the damaged premises.
3.11. Loans
(a) Except as Previously Disclosed, to the best knowledge of Xxxxxx
Chartered and Xxxxxx Valley, each loan reflected as an asset in the Xxxxxx
Chartered Financial Statements (i) is evidenced by notes, agreements or other
evidences of indebtedness which are true, genuine and what they purport to be,
(ii) to the extent secured, has been secured by valid liens and security
interests which have been perfected, and (iii) is the legal, valid and binding
obligation of the obligor named therein, enforceable in accordance with its
terms, subject to bankruptcy, insolvency, fraudulent conveyance and other laws
of general applicability relating to or affecting creditors' rights and to
general equity principles. All loans and extensions of credit made by Xxxxxx
Valley that are subject to Regulation O of the Federal Reserve Board comply
therewith.
(b) The classification on the books and records of Xxxxxx Chartered and
each Xxxxxx Chartered Subsidiary of loans as nonaccrual, troubled debt
restructuring, in-substance foreclosure or other real estate owned, or other
similar classification, complies in all material respects with generally
accepted accounting principles and applicable regulatory accounting policy.
3.12. Allowance for Loan Losses
The allowance for loan losses reflected on the Xxxxxx Chartered Financial
Statements as of September 30, 1997 and any Xxxxxx Chartered Financial
Statements referred to in
- 28 -
Section 1.18(ii) hereof, as of their respective dates, is adequate in all
material respects under the requirements of generally accepted and regulatory
accounting principles to provide for reasonably anticipated losses on
outstanding loans.
3.13. Tax Matters
(a) Xxxxxx Chartered and each Xxxxxx Chartered Subsidiary, and each of
their respective predecessors, have timely filed federal income tax returns for
each year through December 31, 1996 and have timely filed, or caused to be
filed, all other federal, state, local and foreign tax returns (including,
without limitation, estimated tax returns, withholding tax returns and FICA and
FUTA returns) required to be filed with respect to Xxxxxx Chartered or such
Xxxxxx Chartered Subsidiary. Xxxxxx Chartered has made available to Progressive
true and complete copies of its federal and state income tax returns for the
past five years, and true and complete copies of all correspondence from
governmental authorities, and responses of Xxxxxx Chartered or any Xxxxxx
Chartered Subsidiary thereto, relating to such federal and state income tax
returns or any other federal, state, local or other tax filings within the past
five years. All taxes due in respect of the periods covered by such tax returns
have been paid or adequate reserves have been established for the payment of
such taxes and, as of the Closing Date, all taxes due in respect of any
subsequent periods ending on or prior to the Closing Date will have been paid or
adequate reserves will have been established for the payment thereof. Except as
Previously Disclosed, no audit examination or deficiency or refund litigation
with respect to such returns is pending. Neither Xxxxxx Chartered nor any Xxxxxx
Chartered Subsidiary will have any material liability for any such taxes in
excess of the amounts so paid or reserves or accruals so established.
(b) All federal, state and local (and, if applicable, foreign) tax
returns filed by Xxxxxx Chartered and each Xxxxxx Chartered Subsidiary are
complete and accurate in all material respects. Neither Xxxxxx Chartered nor any
Xxxxxx Chartered Subsidiary is delinquent in the payment of any tax, assessment
or governmental charge, and, except as Previously Disclosed, none of them has
requested any extension of time within which to file any tax returns in respect
of any fiscal year or portion thereof which have not since been filed. No
deficiencies for any tax, assessment or governmental charge have been proposed,
asserted or assessed (tentatively or otherwise) against Xxxxxx Chartered or any
Xxxxxx Chartered Subsidiary which have not been settled and paid. Except as
- 29 -
Previously Disclosed, there are currently no agreements in effect with respect
to Xxxxxx Chartered or any Xxxxxx Chartered Subsidiary to extend the period of
limitations for the assessment or collection of any tax.
(c) Xxxxxx Chartered and each Xxxxxx Chartered Subsidiary have timely
filed all information returns required under Sections 6041-6050N of the Code and
any comparable state and local laws, and have timely complied in all respects
with the requirements of Section 3406 of the Code and the regulations thereunder
and any comparable state and local laws and regulations.
(d) Termination of the employment of any employees of Xxxxxx Chartered or
any Xxxxxx Chartered Subsidiary following consummation of the transactions
contemplated hereby will not cause Xxxxxx Chartered or any Xxxxxx Chartered
Subsidiary to make or to be required to make any "excess parachute payment" as
that term is defined in Section 280G of the Code.
3.14. Employee Benefit Plans; ERISA
(a) Xxxxxx Chartered has Previously Disclosed each material Xxxxxx
Chartered Plan.
(b) With respect to each material Xxxxxx Chartered Plan, Xxxxxx Chartered
has made available to Progressive true and complete copies of each of the
following documents: (1) the Xxxxxx Chartered Plan and related documents
(including all amendments thereto); (2) the most recent annual reports,
financial statements, and actuarial reports, if any; (3) the most recent summary
plan description, together with each summary of material modifications, required
under ERISA with respect to such Xxxxxx Chartered Plan; and (4) the most recent
determination letter received from the Internal Revenue Service with respect to
each Xxxxxx Chartered Plan that is intended to be qualified under the Code.
(c) No liability under Title IV of ERISA has been incurred by Xxxxxx
Chartered or any ERISA Affiliate of Xxxxxx Chartered since the effective date of
ERISA that has not been satisfied in full, and no condition exists that presents
a material risk to Xxxxxx Chartered or any ERISA Affiliate of Xxxxxx Chartered
of incurring a liability under such Title. None of the Xxxxxx Chartered Plans is
subject to Title IV of ERISA.
(d) Neither Xxxxxx Chartered nor any ERISA Affiliate of Xxxxxx Chartered,
nor any of the Xxxxxx Chartered Plans,
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nor any trust created thereunder, nor, to the best knowledge of Xxxxxx
Chartered, any trustee or administrator thereof has engaged in a prohibited
transaction (within the meaning of Section 406 of ERISA and Section 4975 of the
Code) in connection with which Xxxxxx Chartered or any ERISA Affiliate of Xxxxxx
Chartered could, either directly or indirectly, incur a material liability or
cost.
(e) Full payment has been made, or will be made in accordance with
Section 404(a)(6) of the Code, of all amounts that Xxxxxx Chartered or any ERISA
Affiliate of Xxxxxx Chartered is required to pay under Section 412 of the Code
or under the terms of the Xxxxxx Chartered Plans.
(f) Except as Previously Disclosed, none of the Xxxxxx Chartered Plans is
a "multiemployer pension plan," as such term is defined in Section 3(37) of
ERISA, a "multiple employer welfare arrangement," as such term is defined in
Section 3(40) of ERISA, or a single employer plan that has two or more
contributing sponsors, at least two of whom are not under common control, within
the meaning of Section 4063(a) of ERISA.
(g) A favorable determination letter has been issued by the Internal
Revenue Service with respect to each Xxxxxx Chartered Plan that is intended to
be "qualified" within the meaning of Section 401(a) of the Code to the effect
that such plan is so qualified and each such Xxxxxx Chartered Plan satisfies the
requirements of Section 401(a) of the Code in all material respects. Each Xxxxxx
Chartered Plan that is intended to satisfy the requirements of Section 125 or
501(c)(9) of the Code satisfies such requirements in all material respects. Each
Xxxxxx Chartered Plan has been operated and administered in all material
respects in accordance with its terms and applicable laws, including but not
limited to ERISA and the Code.
(h) There are no actions, suits or claims pending, or, to the knowledge
of Xxxxxx Chartered, threatened or anticipated (other than routine claims for
benefits) against any Xxxxxx Chartered Plan, the assets of any Xxxxxx Chartered
Plan or against Xxxxxx Chartered or any ERISA Affiliate of Xxxxxx Chartered with
respect to any Xxxxxx Chartered Plan. There is no judgment, decree, injunction,
rule or order of any court, governmental body, commission, agency or arbitrator
outstanding against or in favor of any Xxxxxx Chartered Plan or any fiduciary
thereof (other than rules of general applicability). There are no pending or
threatened audits, examinations or investigations by any governmental
body, commission or agency involving any Xxxxxx Chartered Plan.
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(i) Except as Previously Disclosed, the consummation of the transactions
contemplated by this Agreement will not (i) entitle any current or former
employee or director of Xxxxxx Chartered or any ERISA Affiliate of Xxxxxx
Chartered to severance pay, unemployment compensation or any similar payment, or
(ii) accelerate the time of payment or vesting, or increase the amount, of any
compensation due to any such current or former employee or director, or (iii)
renew or extend the term of any agreement regarding compensation for any such
current or former employee or director.
3.15. Labor Matters
With respect to their employees, neither Xxxxxx Chartered nor any Xxxxxx
Chartered Subsidiary is a party to any labor agreement with any labor
organization, group or association, and each of Xxxxxx Chartered and the Xxxxxx
Chartered Subsidiaries is in material compliance with all applicable laws
respecting employment practices, terms and conditions of employment and wages
and hours and has not engaged in any unfair labor practice. Xxxxxx Chartered and
the Xxxxxx Chartered Subsidiaries have not experienced any attempt by organized
labor or its representatives to make Xxxxxx Chartered or any Xxxxxx Chartered
Subsidiary conform to demands of organized labor relating to their employees or
to enter into a binding agreement with organized labor that would cover the
employees of Xxxxxx Chartered or any Xxxxxx Chartered Subsidiary. To the
knowledge of Xxxxxx Chartered and the Xxxxxx Chartered Subsidiaries, there is no
unfair labor practice charge or other complaint by any employee or former
employee of Xxxxxx Chartered or any Xxxxxx Chartered Subsidiary against any of
them pending before any governmental agency arising out of Xxxxxx Chartered's or
such Xxxxxx Chartered Subsidiary's activities; there is no labor strike or labor
disturbance pending or, to the knowledge of Xxxxxx Chartered and the Xxxxxx
Chartered Subsidiaries, threatened against any of them; and neither Xxxxxx
Chartered nor any Xxxxxx Chartered Subsidiary has experienced a work stoppage or
other labor difficulty since January 1, 1997.
3.16. Certain Contracts
(a) Except as Previously Disclosed, neither Xxxxxx Chartered nor any
Xxxxxx Chartered Subsidiary is a party to, or is bound by, (i) any material
agreement, arrangement or commitment involving annual payments in excess of
$100,000, whether or not made in the ordinary course of business, (ii)
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any agreement, indenture or other instrument relating to the borrowing of money
by Xxxxxx Chartered or any Xxxxxx Chartered Subsidiary or the guarantee by
Xxxxxx Chartered or any Xxxxxx Chartered Subsidiary of any such obligation,
(iii) any agreement, arrangement or commitment relating to the employment of a
consultant or the employment, election, retention in office or severance of any
present or former director or officer, (iv) any agreement to make loans or for
the provision, purchase or sale of goods, services or property between Xxxxxx
Chartered or any Xxxxxx Chartered Subsidiary and any director or executive
officer of Xxxxxx Chartered or any Xxxxxx Chartered Subsidiary, or any member of
the immediate family or affiliate of any of the foregoing, or (v) any agreement
between Xxxxxx Chartered or any Xxxxxx Chartered Subsidiary and any five percent
or more shareholder of Xxxxxx Chartered, in each case other than transactions
entered into in the ordinary course of the banking business of Xxxxxx Valley
consistent with past practice.
(b) Neither Xxxxxx Chartered nor any Xxxxxx Chartered Subsidiary, nor to
the knowledge of Xxxxxx Chartered or such Xxxxxx Chartered Subsidiary, the other
party thereto, is in default under any material agreement, commitment,
arrangement, lease, insurance policy or other instrument whether entered into in
the ordinary course of business or otherwise and whether written or oral, and
there has not occurred any event that, with the lapse of time or giving of
notice or both, would constitute such a default, other than defaults of loan
agreements by borrowers from Xxxxxx Valley in the ordinary course of its banking
business.
(c) Since September 30, 1997, neither Xxxxxx Chartered nor any Xxxxxx
Chartered Subsidiary has incurred or paid any obligation or liability that would
be material to Xxxxxx Chartered, except obligations incurred or paid in
connection with transactions in the ordinary course of business of Xxxxxx Valley
consistent with its past practice and except as Previously Disclosed. Except as
Previously Disclosed, from September 30, 1997 to the date hereof, neither Xxxxxx
Chartered nor any Xxxxxx Chartered Subsidiary has taken any action that, if
taken after the date hereof, would breach any of the covenants contained in
Section 4.8(b) hereof.
(d) Except as Previously Disclosed, neither Xxxxxx Chartered nor any
Xxxxxx Chartered Subsidiary has, during the period since December 31, 1995,
controlled expenses through elimination of employee benefits, deferral of
routine maintenance of real property or leased premises, elimination of reserves
where the liability related to such reserve has
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remained, reduction of capital improvements from previous levels, failure to
depreciate capital assets in accordance with past practice or eliminate capital
assets which are no longer used in the business of either of Xxxxxx Chartered or
any Xxxxxx Chartered Subsidiary, capitalized loan production expenses other than
in accordance with FAS 91 or extraordinary reduction or deferral of ordinary or
necessary expenses.
3.17. Real Estate Owned
(a) Except for liens, security interests, claims, charges, or such other
encumbrances as have been appropriately reserved for in the Xxxxxx Chartered
Financial Statements or are not material and are in the process of being
cleared, title to the REO is good and marketable, and there are no adverse
claims or encumbrances on the REO.
(b) All title, hazard and other insurance claims and mortgage guaranty
claims with respect to the REO have been timely filed and neither Xxxxxx
Chartered nor any Xxxxxx Chartered Subsidiary has received any notice of denial
of any such claim.
(c) Except as Previously Disclosed, Xxxxxx Chartered and each Xxxxxx
Chartered Subsidiary are in possession of all of the REO or, if any of the REO
remains occupied by the mortgagor, eviction or summary proceedings have been
commenced or rental arrangements providing for market rental rates have been
agreed upon and Xxxxxx Chartered and/or each Xxxxxx Chartered Subsidiary are
diligently pursuing such eviction or summary proceedings or such rental
arrangements.
(d) Except as Previously Disclosed, no legal proceeding or quasi-legal
proceeding is pending or, to the knowledge of Xxxxxx Chartered and each Xxxxxx
Chartered Subsidiary, threatened concerning any REO or any servicing activity or
omission to provide a servicing activity with respect to any of the REO.
3.18. Legal Proceedings
Except as Previously Disclosed, there are no actions, suits or
proceedings instituted, pending or, to the knowledge of Xxxxxx Chartered,
threatened against Xxxxxx Chartered or any Xxxxxx Chartered Subsidiary or
against any asset, interest or right of Xxxxxx Chartered or any Xxxxxx Chartered
Subsidiary that might have a material adverse effect on the financial condition,
results of operations or business of Xxxxxx Chartered on a consolidated basis.
To the knowledge
- 34 -
of Xxxxxx Chartered, there are no actual or threatened actions, suits or
proceedings which present a claim to restrain or prohibit the transactions
contemplated herein. There are no actions, suits or proceedings instituted,
pending or, to the knowledge of Xxxxxx Chartered, threatened against any present
or former director or officer of Xxxxxx Chartered that might give rise to a
claim for indemnification, and, to the knowledge of Xxxxxx Chartered, there is
no reasonable basis for any such action, suit or proceeding.
3.19. Compliance with Laws
Xxxxxx Chartered and the Xxxxxx Chartered Subsidiaries are in compliance
in all material respects with all statutes and regulations applicable to the
conduct of their business, and except as Previously Disclosed, neither Xxxxxx
Chartered nor any Xxxxxx Chartered Subsidiary has received notification from any
agency or department of federal, state or local government (i) asserting a
material violation of any such statute or regulation, (ii) threatening to revoke
any license, franchise, permit or government authorization or (iii) restricting
or in any way limiting its operations. Except as Previously Disclosed, neither
Xxxxxx Chartered nor any Xxxxxx Chartered Subsidiary is subject to any
regulatory or supervisory cease and desist order, agreement, directive,
memorandum of understanding or commitment, and neither of them has received any
communication requesting that they enter into any of the foregoing. Without
limiting the generality of the foregoing, Xxxxxx Valley has timely filed all
currency transaction reports required to be filed and taken all other actions
required under the Currency and Foreign Transactions Reporting Act, codified at
31 U.S.C. ss. 5301 et seq., and its implementing regulations.
3.20. Brokers and Finders
Except for Xxxxxx Chartered's engagement of and agreement to pay Xxxxx
Xxxxxxxx & Xxxxx, Inc. a fee or commission as Previously Disclosed, neither
Xxxxxx Chartered nor any Xxxxxx Chartered Subsidiary, nor any of their
respective officers, directors or employees, has employed any broker, finder or
financial advisor or incurred any liability for any fees or commissions in
connection with the transactions contemplated herein, the Bank Merger Agreement
or the Plan of Merger.
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3.21. Insurance
Xxxxxx Chartered and each Xxxxxx Chartered Subsidiary currently maintain
insurance in amounts reasonably necessary for their operations and, to the best
knowledge of Xxxxxx Chartered, similar in scope and coverage to that maintained
by other entities similarly situated. Neither Xxxxxx Chartered nor any Xxxxxx
Chartered Subsidiary has received any advance notice of a material premium
increase or cancellation with respect to any of its insurance policies or bonds,
and within the last three years, neither Xxxxxx Chartered nor any Xxxxxx
Chartered Subsidiary has been refused any insurance coverage sought or applied
for, and Xxxxxx Chartered has no reason to believe that existing insurance
coverage cannot be renewed as and when the same shall expire, upon terms and
conditions as favorable as those presently in effect, other than possible
increases in premiums or unavailability in coverage that have not resulted from
any extraordinary loss experience of Xxxxxx Chartered or any Xxxxxx Chartered
Subsidiary.
3.22. Repurchase Agreements
With respect to all agreements pursuant to which Xxxxxx Chartered or any
Xxxxxx Chartered Subsidiary has purchased securities subject to an agreement to
resell, if any, Xxxxxx Chartered or such Xxxxxx Chartered Subsidiary, as the
case may be, has a valid, perfected first lien or security interest in the
government securities or other collateral securing the repurchase agreement, and
the value of such collateral equals or exceeds the amount of the debt secured
thereby.
3.23. Deposit Insurance; Federal Reserve Membership
The deposits of Xxxxxx Valley are insured by the FDIC in accordance with
the FDIA, and Xxxxxx Valley has paid all assessments and filed all reports
required by the FDIA. Xxxxxx Valley is a member of the Federal Reserve System
and has subscribed and paid for the requisite number of shares of capital stock
of the FRBNY.
3.24. Environmental Matters
(a) Except for any violation, liability or noncompliance which does not
have a material adverse effect on Xxxxxx Chartered or any Xxxxxx Chartered
Subsidiary: (i) neither Xxxxxx Chartered nor any Xxxxxx Chartered Subsidiary has
violated during the last five years or is in violation of or is liable under any
federal, state or local
- 36 -
environmental law; (ii) none of the properties owned or leased by either Xxxxxx
Chartered or any Xxxxxx Chartered Subsidiary (including, without limitation,
soils and surface and ground waters) are contaminated with any hazardous
substance; (iii) neither Xxxxxx Chartered nor any Xxxxxx Chartered Subsidiary is
liable for any off-site contamination; and (iv) each of Xxxxxx Chartered and the
Xxxxxx Chartered Subsidiaries is, and during the last five years has been, in
compliance with, all of its respective permits, licenses and other
authorizations issued under any environmental laws. For purposes of the
foregoing, all references to "properties" include, without limitation, any owned
real property or leased real property.
(b) Neither Xxxxxx Chartered nor any Xxxxxx Chartered Subsidiary has
received any written notice of any legal, administrative, arbitral or other
proceeding, claim or action and, to the knowledge of Xxxxxx Chartered and the
Xxxxxx Chartered Subsidiaries, there is no governmental investigation of any
nature ongoing, in each case that could reasonably be expected to result in the
imposition, on Xxxxxx Chartered or any Xxxxxx Chartered Subsidiary of any
liability arising under any local, state or federal environmental statute,
regulation or ordinance including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended,
which liability would have a material adverse effect on Xxxxxx Chartered or any
Xxxxxx Chartered Subsidiary; to the best knowledge of Xxxxxx Chartered and the
Xxxxxx Chartered Subsidiaries, there are no facts or circumstances which could
reasonably be expected to form the basis for any such proceeding, claim, action
or governmental investigation that would impose any such liability; and neither
Xxxxxx Chartered nor any Xxxxxx Chartered Subsidiary is subject to any
agreement, order, judgment, decree or memorandum by or with any court,
governmental authority, regulatory agency or third party imposing any such
liability.
3.25. Certain Information
When the Registration Statement or any post-effective amendment thereto
shall become effective, and at all times subsequent to such effectiveness up to
and including the time of the later of the Progressive and Xxxxxx Chartered
shareholders' meetings to vote upon the Merger, such Registration Statement and
all amendments or supplements thereto, with respect to all information set forth
therein furnished by Xxxxxx Chartered relating to Xxxxxx Chartered and the
Xxxxxx Chartered Subsidiaries, (i) shall comply in all material respects with
the applicable provisions of the
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Securities Laws, and (ii) shall not 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 contained therein not misleading.
3.26. Administration of Trust Accounts
Xxxxxx Valley has properly administered, in all respects material and
which could reasonably be expected to be material to the business, operations or
financial condition of Xxxxxx Chartered and Xxxxxx Valley, taken as a whole, all
accounts for which it acts as a fiduciary, including but not limited to accounts
for which it serves as a trustee, agent, custodian, personal representative,
guardian, conservator or investment advisor, in accordance with the terms of the
governing documents and applicable state and federal law and regulation and
common law. Neither Xxxxxx Chartered, Xxxxxx Valley, nor any director, officer
or employee of Xxxxxx Chartered or Xxxxxx Valley has committed any breach of
trust with respect to any such fiduciary account which is material to or could
reasonably be expected to be material to the business, operations or financial
condition of Xxxxxx Chartered and Xxxxxx Valley, taken as a whole, and the
accountings for each such fiduciary account are true and correct in all material
respects and accurately reflect the assets of such fiduciary account in all
material respects.
3.27. Information in Applications
All information concerning Xxxxxx Chartered and the Xxxxxx Chartered
Subsidiaries, and their respective officers, directors and shareholders,
included (or submitted for inclusion) in the applications described in Section
4.3 hereof shall be true, correct and complete in all material respects.
3.28. Pooling of Interests
Xxxxxx Chartered knows of no reason (after consultation with its
independent accountants) which would reasonably cause it to believe that the
Merger will not qualify as a pooling of interests for financial accounting
purposes.
3.29. Derivative Transactions
Except as Previously Disclosed, as of the date hereof, neither Xxxxxx
Chartered nor any Xxxxxx Chartered Subsidiary has engaged in transactions in or
involving forwards,
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futures, options on futures, swaps or other derivative instruments since
December 31, 1996.
3.30. Intellectual Property
Xxxxxx Chartered and the Xxxxxx Chartered Subsidiaries own the entire
right, title and interest in and to, or have valid licenses with respect to, all
the Intellectual Property necessary in all material respects to conduct their
business and operations as presently conducted, except where the failure to do
so would not, individually or in the aggregate, have a material adverse effect
on the financial condition, results of operations or business of Xxxxxx
Chartered on a consolidated basis. None of such Intellectual Property is subject
to any outstanding order, decree, judgment, stipulation, settlement, lien,
charge, encumbrance or attachment, which order, decree, judgment, stipulation,
settlement, lien, charge, encumbrance or attachment would have a material
adverse effect on the financial condition, results of operations or business of
Xxxxxx Chartered on a consolidated basis.
ARTICLE 4.
COVENANTS
4.1. Shareholders' Meetings
Xxxxxx Chartered and Progressive shall submit this Reorganization
Agreement, the Plan of Merger and such related matters as the parties shall
reasonably and in good faith agree (including amendments to their respective
certificates of incorporation) to their respective shareholders for approval at
an annual or a special meeting to be held as soon as practicable. Except to the
extent legally required for the discharge by the boards of directors of their
fiduciary duties as determined by such boards of directors after consultation
with such board's counsel, the boards of directors of Progressive and Xxxxxx
Chartered shall recommend at the respective shareholders' meetings that the
shareholders vote in favor of and approve the Merger and adopt the Plan of
Merger.
4.2. Proxy Statement; Registration Statement
As promptly as practicable after the date hereof, Xxxxxx Chartered and
Progressive shall cooperate in the preparation of the Registration Statement,
which shall include the Proxy Statement to be mailed to the shareholders of
Xxxxxx Chartered and Progressive in connection with the
- 39 -
Merger. Xxxxxx Chartered will advise Progressive, promptly after it receives
notice thereof, of the time when the Registration Statement or any
post-effective amendment thereto has become effective or any supplement or
amendment has been filed, of the issuance of any stop order, of the suspension
of qualification of the Continuing Corporation Common Stock issuable in
connection with the Merger for offering or sale in any jurisdiction, or the
initiation or threat of any proceeding for any such purpose, or of any request
by the Commission for the amendment or supplement of the Registration Statement
or for additional information. The parties hereto shall exercise reasonable
efforts in good faith to file or cause to be filed, on or before the Effective
Date, a post-effective amendment to the Registration Statement either with
respect to the sale of the shares of Continuing Corporation Common Stock
provided for in paragraph 8 of Article V of the Plan of Merger to the holders of
stock options issued by Progressive or for the resale of such shares by such
optionees, and the Continuing Corporation shall continue to make applicable
filings thereafter as may be necessary to permit the continued exercise of
options and the sale of such shares. The Continuing Corporation shall take all
actions necessary to register or qualify the shares of Continuing Corporation
Common Stock to be issued in the Merger and pursuant to such options pursuant to
all applicable state "blue sky" or securities laws and shall maintain such
registrations or qualifications in effect for all purposes hereof for so long as
such options remain outstanding.
4.3. Applications
The parties hereto shall use their best efforts to submit or cause to be
submitted, as promptly as practicable after the date hereof, any requisite
applications or notices for prior approval of the transactions contemplated
herein and in the Plan of Merger, or requests for waivers thereof, to any state
or federal government agency, department or body the approval of which is
required for consummation of the Merger and the Bank Merger. At a reasonable
time prior to the making of any such filings with any regulatory authority or
any third persons, Xxxxxx Chartered and Progressive shall submit to each other
the materials to be filed, mailed or released. Any such materials must be
acceptable to both Xxxxxx Chartered and Progressive prior to the filings with
any regulatory authorities or any third persons, except to the extent that
Xxxxxx Chartered or Progressive is legally required to proceed prior to
obtaining the acceptance of the other. Each party agrees to consult with the
other with respect to obtaining all necessary approvals and consents and
- 40 -
each will keep the other apprised of the status of matters relating to such
approvals and consents.
4.4. Best Efforts
Xxxxxx Chartered, Xxxxxx Valley, Progressive and Pawling each shall use
its best efforts in good faith to (i) furnish such information as may be
necessary or desirable in connection with the preparation of the documents
referred to in Sections 4.2 and 4.3 above, and (ii) take or cause to be taken
all action necessary or desirable on its part so as to permit consummation of
the Merger and the Bank Merger at the earliest possible date, including, without
limitation, (1) obtaining the consent or approval of each individual,
partnership, corporation, association or other business or professional entity
whose consent or approval is necessary or desirable for consummation of the
transactions contemplated hereby, and (2) 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 adversely affect the qualification of the Merger
for pooling of interests accounting treatment or as a reorganization within the
meaning of Section 368(a) of the Code; provided that nothing herein contained
shall preclude Xxxxxx Chartered from exercising its rights under the Progressive
Option Agreement or Progressive from exercising its rights under the Xxxxxx
Chartered Option Agreement. In the event that any party hereto has taken any
action, whether before, on or after the date hereof, that would adversely affect
such qualification, each party shall take such action as any other party may
reasonably request to cure such effect to the extent curable without a material
adverse effect on the financial condition, results of operations or business of
either Xxxxxx Chartered or Progressive on a consolidated basis.
4.5. Investigation and Confidentiality
(a) Xxxxxx Chartered and Progressive each will keep the other advised of
all material developments relevant to its business and to consummation of the
transactions contemplated herein. Xxxxxx Chartered and Progressive each may make
or cause to be made such investigation of the financial and legal condition of
the other as such party reasonably deems necessary or advisable in connection
with the transactions contemplated herein and in the Plan of Merger and the Bank
Merger Agreement, provided, however, that such investigation shall be reasonably
related to such transactions and shall not interfere unnecessarily with
- 41 -
normal operations. Xxxxxx Chartered and Progressive agree to furnish the other
and the other's advisors with such financial data and other information with
respect to its business and properties as such other party shall from time to
time reasonably request. No investigation pursuant to this Section 4.5 shall
affect or be deemed to modify any representation or warranty made by, or the
conditions to the obligations to consummate the Merger and the Bank Merger of,
any party hereto.
(b) Each party hereto shall, and shall cause its directors, officers,
attorneys and advisors to, maintain the confidentiality of all information
obtained in such investigation which is not otherwise publicly disclosed by the
other parties, said undertaking with respect to confidentiality to survive any
termination of this Agreement pursuant to Section 6.1 hereof. Each party hereto
shall hold all information furnished by any other party or such other party's
subsidiaries or representatives pursuant hereto in confidence to the extent
required by, and in accordance with, the provisions of the confidentiality
agreement dated October 23, 1997 by and between Xxxxxx Chartered and Progressive
(the "Confidentiality Agreement"). In the event of termination of this Agreement
each party shall return to the furnishing party or destroy and certify the
destruction of all information previously furnished in connection with the
transactions contemplated by this Agreement.
(c) Progressive shall give prompt notice to Xxxxxx Chartered, and Xxxxxx
Chartered shall give prompt notice to Progressive, of (i) the occurrence, or
failure to occur, of any material event which occurrence or failure would be
likely to cause any representation or warranty contained in this Agreement to be
untrue or inaccurate in any material respect any time from the date hereof to
the Closing Date and (ii) any material failure of Progressive or Xxxxxx
Chartered, as the case may be, to comply with or satisfy any covenant, condition
or agreement to be complied with or satisfied by it hereunder, and each party
shall use all reasonable efforts to remedy such failure.
4.6. Press Releases
The parties hereto shall agree with each other as to the form and
substance of any press release related to this Reorganization Agreement, the
Plan of Merger and the Bank Merger Agreement or the transactions contemplated
hereby or thereby, and shall consult each other as to the form and substance of
other public disclosures related thereto, provided, however, that nothing
contained herein shall
- 42 -
prohibit any party, following notification to the other parties, from making any
disclosure which its counsel deems necessary.
4.7. Covenants of Progressive and Pawling
(a) Prior to the Closing Date, and except as otherwise provided for by
this Reorganization Agreement or consented to or approved by Xxxxxx Chartered,
Progressive and Pawling each shall use its best efforts to preserve its
properties, business and relationships with customers, employees and other
persons.
(b) Except with the prior written consent of Xxxxxx Chartered or except
as Previously Disclosed, between the date hereof and the Effective Date,
Progressive and Pawling each shall not:
(1) carry on its business other than in the usual, regular and
ordinary course in substantially the same manner as heretofore conducted;
(2) in the case of Progressive only, declare, set aside, make or
pay any dividend or other distribution in respect of its capital stock
other than quarterly cash dividends in respective amounts not in excess
of $0.20 per share, in a manner consistent with past practice and in
accordance with applicable law, regulation and contractual and regulatory
commitments;
(3) issue any shares of its capital stock or permit any treasury
shares to become outstanding other than pursuant to the Progressive
Option Agreement or pursuant to Rights outstanding at the date hereof or
Rights issued subsequent to the date hereof as Previously Disclosed, or
incur any additional debt obligation or other obligation for borrowed
money other than in the ordinary course of business of Pawling consistent
with past practice;
(4) issue, grant or authorize any Rights other than pursuant to
the Progressive Option Agreement or as Previously Disclosed or effect any
recapitalization, reclassification, stock dividend, stock split or like
change in capitalization or redeem, repurchase or otherwise acquire any
shares of its capital stock;
(5) amend its certificate of incorporation, articles of
association or by-laws except as contemplated herein or as agreed to by
the parties hereto (and, to the extent required, disclosed in the Proxy
Statement) to
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facilitate the consummation of the transactions contemplated hereby;
impose, or suffer the imposition, on any share of stock held by
Progressive in Pawling of any lien, charge or encumbrance, or permit any
such lien, charge or encumbrance to exist;
(6) merge or consolidate with any other entity; sell, lease,
liquidate or dispose of all or any material portion of its assets or
business or any material asset; 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 the collection of any loan or credit arrangement between
it and any other person; enter into or consummate a purchase and
assumption transaction with respect to deposits and liabilities; revoke
or surrender its certificate of authority to maintain, or apply for the
relocation of, any existing branch office or apply for a certificate of
authority to establish a new branch office, except as Previously
Disclosed;
(7) fail to comply in any material respect with any laws,
regulations, ordinances or governmental actions applicable to it and to
the conduct of its business;
(8) acquire any material assets; make any capital expenditures in
excess of $250,000 in the aggregate; or modify any leases or other
contracts relating thereto that involve annual payments that exceed
$250,000 in the aggregate, except as Previously Disclosed;
(9) increase the rate of compensation of, pay or agree to pay any
bonus to, or provide any additional employee benefit or incentive to (i)
any director or any executive officer Previously Disclosed under any
circumstances, or (ii) any other officer or employee except in the
ordinary course of business in a manner consistent with the company's
established salary and bonus policies and procedures and past practice,
provided, however, that such payments may not increase severance amounts
payable under employment or severance agreements (except for any payments
made or paid pursuant to any change in control provisions contained
therein); enter into, modify or extend any employment or severance
contracts with any of its present or former directors, officers or
employees, except as Previously Disclosed; or enter into or modify
(except as may be required by applicable law) any pension, retirement,
stock option, stock purchase, stock appreciation right, savings, profit
sharing, deferred compensation, consulting, bonus, group insurance or
other employee benefit, incentive or welfare
- 44 -
contract, plan or arrangement, or any trust agreement related thereto, in
respect of any of its directors, officers or other employees;
(10) change its lending, investment, asset/ liability management
or other material banking policies in any material respect except as may
be required by changes in applicable law; except as Previously Disclosed,
make any loan or extend any credit in an amount greater than $250,000,
except in the ordinary course of business consistent with its lending
policies and past practice;
(11) change its methods of accounting in effect at December 31,
1996, except as required by changes in generally accepted accounting
principles concurred in by its independent certified public accountants,
or change any of its methods of reporting income and deductions for
federal income tax purposes from those employed in the preparation of its
federal income tax returns for the year ended December 31, 1996, except
as required by changes in law;
(12) solicit or encourage inquiries or proposals with respect to
any acquisition or purchase of all or a substantial portion of the assets
of, or a substantial equity interest in, Progressive or Pawling or any
business combination with Progressive or Pawling other than as
contemplated by this Reorganization Agreement; or authorize or permit any
officer, director, agent or affiliate of it to do any of the above; or
fail to notify Xxxxxx Chartered immediately if any such inquiries or
proposals are received by Progressive or Pawling; provided, however, that
if following the execution hereof and prior to the Closing Date any
unsolicited inquiry or proposal is received by any Progressive officer,
director, agent or affiliate and the Progressive directors determine (in
good faith after consultation with financial advisors and legal counsel)
that their fiduciary duties require them to consider such inquiry or
proposal, Progressive shall be free to deal with any such inquiry or
proposal in any manner that is deemed by Progressive's directors as being
in the best interests of Progressive's shareholders and that is not
contrary to the terms of this Agreement, the Plan of Merger or the Xxxxxx
Chartered Option Agreement;
(13) foreclose on any commercial loan secured by real property
(other than those commercial loans in which it already has commenced
action seeking foreclosure) unless it first has obtained an environmental
audit, analysis or survey that indicates that it will not incur material
potential liability under Environmental Laws as a result of such
foreclosure;
- 45 -
(14) purchase or acquire any of the outstanding shares of capital
stock of Xxxxxx Chartered or any of the Xxxxxx Chartered Subsidiaries
other than as contemplated by the Xxxxxx Chartered Option Agreement; or
(15) agree to do any of the foregoing.
4.8. Covenants of Xxxxxx Chartered and Xxxxxx Valley
(a) Prior to the Closing Date, and except as otherwise provided for by
this Reorganization Agreement or consented to or approved by Progressive, Xxxxxx
Chartered and Xxxxxx Valley each shall use its best efforts to preserve its
properties, business and relationships with customers, employees and other
persons.
(b) Except with the prior written consent of Progressive or except as
Previously Disclosed, between the date hereof and the Effective Date, Xxxxxx
Chartered and Xxxxxx Valley each shall not:
(1) carry on its business other than in the usual, regular and
ordinary course in substantially the same manner as heretofore conducted;
(2) in the case of Xxxxxx Chartered only, declare, set aside, make
or pay any dividend or other distribution in respect of its capital stock
other than quarterly cash dividends in respective amounts not in excess
of $0.13 per share, in a manner consistent with past practice and in
accordance with applicable law, regulation and contractual and regulatory
commitments;
(3) issue any shares of its capital stock or permit any treasury
shares to become outstanding other than pursuant to the Xxxxxx Chartered
Option Agreement, pursuant to the Xxxxxx Chartered DRP, or pursuant to
Rights outstanding at the date hereof or Rights issued subsequent to the
date hereof as Previously Disclosed, or incur any additional debt
obligation or other obligation for borrowed money other than in the
ordinary course of business of Xxxxxx Valley consistent with past
practice;
(4) issue, grant or authorize any Rights other than pursuant to
the Xxxxxx Chartered Option Agreement or as Previously Disclosed, or
effect any recapitalization, reclassification, stock dividend (other than
pursuant to the
- 46 -
Xxxxxx Chartered DRP), stock split or like change in capitalization, or
redeem, repurchase or otherwise acquire any shares of its capital stock;
(5) amend its certificate of incorporation, articles of
association or by-laws except as contemplated herein or as agreed to by
the parties hereto (and, to the extent required, disclosed in the Proxy
Statement) to facilitate the consummation of the transactions
contemplated hereby; impose, or suffer the imposition, on any share of
stock held by Xxxxxx Chartered in Xxxxxx Valley of any lien, charge or
encumbrance, or permit any such lien, charge or encumbrance to exist;
(6) merge or consolidate with any other entity; sell, lease,
liquidate or dispose of all or any material portion of its assets or
business or any material asset; 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 the collection of any loan or credit arrangement between
it and any other person; enter into or consummate a purchase and
assumption transaction with respect to deposits and liabilities; revoke
or surrender its certificate of authority to maintain, or apply for the
relocation of, any existing branch office or apply for a certificate of
authority to establish a new branch office;
(7) fail to comply in any material respect with any laws,
regulations, ordinances or governmental actions applicable to it and to
the conduct of its business;
(8) acquire any material assets; except as Previously Disclosed,
make any capital expenditures in excess of $250,000 in the aggregate;
modify any leases or other contracts relating thereto that involve annual
payments that exceed $250,000 in the aggregate, except as Previously
Disclosed;
(9) increase the rate of compensation of, pay or agree to pay any
bonus to, or provide any additional employee benefit or incentive to (i)
any director or any executive officer Previously Disclosed under any
circumstances, or (ii) any other officer or employee except in the
ordinary course of business in a manner consistent with the company's
established salary and bonus policies and procedures and past practice
provided, however, that such payments may not increase severance amounts
payable under employment or severance agreements (except for any payments
made or paid pursuant to any change in control provisions contained
- 47 -
therein); enter into, modify or extend, or permit to be renewed, any
employment or severance contracts with any of its present or former
directors, officers or employees, except as Previously Disclosed; or
enter into or modify (except as may be required by applicable law) any
pension, retirement, stock option, stock purchase, stock appreciation
right, savings, profit sharing, deferred compensation, 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 other employees;
(10) change its lending, investment, asset/ liability management
or other material banking policies in any material respect except as may
be required by changes in applicable law; make any loan or extend any
credit in an amount greater than $250,000, except in the ordinary course
of business consistent with its lending policies and past practice;
(11) change its methods of accounting in effect at December 31,
1996, except as required by changes in generally accepted accounting
principles concurred in by its independent certified public accountants,
or change any of its methods of reporting income and deductions for
federal income tax purposes from those employed in the preparation of its
federal income tax returns for the year ended December 31, 1996, except
as required by changes in law;
(12) solicit or encourage inquiries or proposals with respect to
any acquisition or purchase of all or a substantial portion of the assets
of, or a substantial equity interest in, Xxxxxx Chartered or Xxxxxx
Valley or any business combination with Xxxxxx Chartered or Xxxxxx Valley
other than as contemplated by this Reorganization Agreement; or authorize
or permit any officer, director, agent or affiliate of it to do any of
the above; or fail to notify Progressive immediately if any such
inquiries or proposals are received by Xxxxxx Chartered or Xxxxxx Valley;
provided, however, that if following the execution hereof and prior to
the Closing Date any unsolicited inquiry or proposal is received by any
Xxxxxx Chartered officer, director, agent or affiliate and the Xxxxxx
Chartered directors determine (in good faith after consultation with
financial advisors and legal counsel) that their fiduciary duties require
them to consider such inquiry or proposal, Xxxxxx Chartered shall be free
to deal with any such inquiry or proposal in any manner that is deemed by
Xxxxxx Chartered's directors as being in the best interests of Xxxxxx
Chartered's shareholders and
- 48 -
that is not contrary to the terms of this Agreement, the Plan of Merger
or the Progressive Option Agreement;
(13) foreclose on any commercial loan secured by real property
(other than those commercial loans in which it already has commenced
action seeking foreclosure) unless it first has obtained an environmental
audit, analysis or survey that indicates that it will not incur material
potential liability under Environmental Laws as a result of such
foreclosure;
(14) purchase or acquire any of the outstanding shares of capital
stock of Progressive or Pawling other than as contemplated by the
Progressive Option Agreement; or
(15) agree to do any of the foregoing.
4.9. Closing; Certificate of Merger; Headquarters
The transactions contemplated by this Reorganization Agreement, the Plan
of Merger and the Bank Merger Agreement shall be consummated at a closing to be
held at such location as the parties shall agree on the fifth business day
following satisfaction of the conditions to consummation of the Merger and the
Bank Merger set forth in Article 5 hereof or such other date as may be agreed
upon by the parties hereto (the "Closing Date"). In connection with such
Closing, Xxxxxx Chartered and Progressive shall execute a certificate of merger
and shall cause such certificate to be delivered to the New York Department of
State in accordance with Section 904 of the New York Business Corporation Law.
The Merger shall be effective at the time and on the date specified in such
certificate of merger (the "Effective Date"). The Bank Merger shall be effective
as provided in the Bank Merger Agreement. At the Effective Date, the
headquarters of the Continuing Corporation and of the Continuing Bank shall be
located at the headquarters of Xxxxxx Chartered and Xxxxxx Valley, respectively.
4.10. Affiliates
Xxxxxx Chartered and Progressive shall cooperate and use their best
efforts to identify those persons who may be deemed to be "affiliates" of Xxxxxx
Chartered or Progressive within the meaning of Rule 144 or 145 promulgated by
the Commission under the Securities Act, as appropriate, or by whom the transfer
of Continuing Corporation Common Stock following consummation of the Merger may
adversely affect the accounting for the Merger as a pooling of interests.
Progressive and Xxxxxx Chartered shall use their best efforts
- 49 -
to cause each person so identified to deliver to Xxxxxx Chartered or
Progressive, no later than 30 days prior to the Effective Date, a written
agreement providing that such person will not dispose of any Progressive Common
Stock, Xxxxxx Chartered Common Stock or Continuing Corporation Common Stock
except in compliance with the Securities Act, the rules and regulations
promulgated thereunder and the Commission's rules relating to pooling of
interests accounting treatment. Shares of Continuing Corporation Common Stock
issued to such affiliates in exchange for Progressive Common Stock shall not be
transferable until such time as financial results covering at least 30 days of
combined operations of Progressive and Xxxxxx Chartered have been published,
regardless of whether each such affiliate has provided the written agreement
referred to in this section.
4.11. Board of Directors
(a) From and after the Effective Date, the Board of Directors of the
Continuing Corporation shall consist of 20 persons, 10 of whom shall be persons
named by the Board of Directors of Xxxxxx Chartered as Previously Disclosed and
10 of whom shall be persons named by the Board of Directors of Progressive as
Previously Disclosed. It is the intention of the parties that T. Xxxxxxxxx
Xxxxxxxxxx III shall be elected Chairman of the Board and Chairman of the
Executive Committee of the Board of the Continuing Corporation. The terms of the
directors of the Continuing Corporation after the Effective Date shall be
allocated, prior to the mailing of the Proxy Statement, so that, as nearly as
practicable, the terms of the same number of persons designated as directors by
Xxxxxx Chartered and by Progressive, respectively, will expire in each
applicable year. If prior to the Effective Date (i) any of the individuals named
by either Xxxxxx Chartered or Progressive to serve on the Board of Directors of
the Continuing Corporation following the Effective Date becomes unable or
unwilling to serve as a director of the Continuing Corporation, or (ii) either
Xxxxxx Chartered or Progressive determines to replace an individual named by
such party to serve on the Board of Directors of the Continuing Corporation, the
party that designated such individual may name a replacement to become a
director of the Continuing Corporation after the Effective Date. The Board of
Directors of the Continuing Bank following the Bank Merger shall be determined
in accordance with the Bank Merger Agreement.
(b) The members of the Executive Committees of the Boards of Directors of
the Continuing Corporation and of the Continuing Bank following the Effective
Date shall be as Previously Disclosed.
- 50 -
(c) The persons named by Xxxxxx Chartered and Progressive as members of
the Board of Directors of the Continuing Corporation after the Effective Date
shall be named in the Proxy Statement and the Registration Statement, subject to
receipt of the consent of such individuals to be so named.
4.12. Management; Employees; Employee Benefits
(a) From and after the Effective Date, Xxxxx Xxx Xxxxxx shall be the
President and Chief Executive Officer of the Continuing Corporation and Xxxx X.
XxxXxxxxx shall be Executive Vice President of the Continuing Corporation. The
principal officers of the Continuing Bank from and after the Effective Date
shall be as provided in the Bank Merger Agreement. As of the Effective Date, the
Continuing Corporation shall enter into an employment agreement with each of
T. Xxxxxxxxx Xxxxxxxxxx III and Xxxxx Xxx Xxxxxx, on substantially the terms
Previously Disclosed or as the parties may otherwise agree. The Surviving
Corporation shall honor all Previously Disclosed employment and severance
agreements of Xxxxxx Chartered and Progressive in accordance with their terms.
The parties hereto recognize and acknowledge that the Merger will constitute a
change in control for purposes of Progressive's severance agreements and other
benefit plans.
(b) It is the intention of the parties hereto that, as soon as
practicable after the Effective Date, all directors, officers and employees of
the Continuing Corporation and its subsidiaries will be entitled to participate
in compensation, benefit, welfare and related plans, programs or arrangements
made available to similarly situated directors, officers and employees under the
same terms and conditions, notwithstanding whether such individual was employed
by, or provided services to, Xxxxxx Chartered and its subsidiaries or
Progressive and its subsidiaries prior to the Effective Date. The parties agree
to work together prior to the Effective Date to develop and design such plans,
programs and arrangements, and to prepare for the implementation of such plans,
programs and arrangements as soon as practicable following the Effective Date.
It is also anticipated that any such plans, programs or arrangements that are
effective after the Effective Date shall provide that, for purposes of
determining eligibility for and vesting of such employee benefits only (and not
for pension benefit or other accrual purposes except to the extent that an
- 51 -
individual was covered by the applicable plan prior to the Effective Date and
accrued benefits thereunder), service with Progressive or Pawling, on the one
hand, or Xxxxxx Chartered or Xxxxxx Valley, on the other hand, prior to the
Effective Date shall be treated as service with an "employer" to the same extent
as if such persons had been employees of Xxxxxx Chartered or Xxxxxx Valley or of
Progressive or Pawling, as appropriate. The parties hereto agree that no
previously inapplicable pre-existing condition exclusions shall be applicable to
their employees and/or covered dependents with respect to the continuation of
health insurance coverage with the Continuing Corporation.
(c) After the Effective Date, as provided in the Plan of Merger, the
obligations of Progressive under the Progressive Stock-Based Compensation Plans
shall be assumed by the Continuing Corporation and administered by the
Compensation Committee of the Continuing Corporation, no further options shall
be granted under such plans, and all officers and employees of the Continuing
Corporation shall be eligible to participate in the applicable Xxxxxx Chartered
Stock-Based Compensation Plans notwithstanding such individuals' prior
affiliation with Xxxxxx Chartered or Progressive. For the purposes of
determining eligibility for and vesting of rights under such plans only (and not
for pension benefit or accrual purposes), service with Progressive or Pawling
prior to the Effective Date shall be treated as service with an "employer" to
the same extent as if such persons had been employees of Xxxxxx Chartered or
Xxxxxx Valley, as appropriate.
(d) Except as provided under Section 4.12(a) hereof, nothing herein shall
be construed as giving any employee of Xxxxxx Chartered, Progressive or their
respective subsidiaries a right to continuing employment with the Continuing
Corporation at any of its subsidiaries after the Effective Date.
(e) The Continuing Corporation shall honor Progressive's obligations
through the Effective Date under its deferred compensation plan for directors
(as restated in November of 1997) and under its noncontributory retirement and
severance plan for directors (the "Progressive Director Retirement Plan"), to
the extent that such obligations have been properly recorded and accrued for on
Progressive's books. Service as a director of the Continuing Corporation from
and after the Effective Date by any person who was a director of Progressive
immediately prior to the Effective Date shall be treated as service with
Progressive for purposes of determining eligibility under Section 3 of the
- 52 -
Progressive Director Retirement Plan and calculating benefits under Section 4 of
the Progressive Director Retirement Plan. The Continuing Corporation shall also
honor Progressive's supplemental executive retirement agreement with Xxxxx Xxx
Xxxxxx and Xxxxxx Chartered's supplemental executive retirement agreement with
T. Xxxxxxxxx Xxxxxxxxxx III, and each such executive's benefits shall accrue
under the applicable agreement or under alternative arrangements agreed to by
Xx. Xxx Xxxxxx and Xx. Xxxxxxxxxx, respectively, until his employment with the
Continuing Corporation terminates for any reason.
(f) The parties recognize and acknowledge that the Merger constitutes a
change in control for purposes of Progressive's Executive Severance Plan and
1992 Severance Pay Plan (together, the "Severance Plans"). The parties agree
that any of their employees who are employed as of the date hereof and who incur
a qualifying termination of employment under the Severance Plans between the
date hereof and the date two years after the Effective Date shall (i) receive
severance benefits in accordance with the terms of the Severance Plans (or at
such greater severance benefit levels as the Continuing Corporation may offer),
and (ii) be entitled to exercise stock options in accordance with the terms of
the Severance Plans, subject to the terms of the plans and stock option
agreements under which the stock options were granted, including without
limitation the specified termination date of the option.
(g) After the Effective Date, the post-retirement health insurance that
is currently provided for Progressive's and Pawling's employees who are retired
as of the Effective Date shall continue for their benefit under the terms and
conditions in effect as of the date hereof.
(h) The parties hereto agree that their respective vacation, leave and
sick day policies shall continue in effect through the Effective Date, and that
the Continuing Corporation shall honor all accruals under these policies for
which a liability has been recorded on the respective books of Progressive and
Xxxxxx Chartered through the Effective Date.
4.13. Indemnification
(a) From and after the Effective Date, the Continuing Corporation shall
indemnify, defend and hold harmless each person who is now, or who has been at
any time before the date hereof or who becomes before the Effective Date, an
officer or director of either Progressive or Xxxxxx Chartered
- 53 -
or any of their respective subsidiaries (the "Indemnified Parties") against all
losses, claims, damages, costs, expenses (including attorneys' fees),
liabilities or judgments or amounts that are paid in settlement (which
settlement shall require the prior written consent of the Continuing
Corporation, which consent shall not be unreasonably withheld) of or in
connection with any claim, action, suit, proceeding or investigation, whether
civil, criminal, or administrative (each, a "Claim"), in which an Indemnified
Party is, or is threatened to be made, a party or witness in whole or in part on
or arising in whole or in part out of the fact that such person is or was a
director or officer of either Progressive or Xxxxxx Chartered or any of their
respective subsidiaries if such Claim pertains to any matter or fact arising,
existing or occurring before the Effective Date (including without limitation
the Merger and the other transactions contemplated hereby), regardless of
whether such Claim is asserted or claimed before, or at or after, the Effective
Date (the "Indemnified Liabilities"), to the fullest extent permitted under
applicable state or federal law in effect as of the date hereof or as amended
applicable to a time before the Effective Date and under Progressive's or Xxxxxx
Chartered's governing corporate documents, and the Continuing Corporation shall
pay expenses in advance of the final disposition of any such action or
proceeding to each Indemnified Party to the full extent permitted by applicable
state or federal law in effect as of the date hereof or as amended applicable to
a time before the Effective Date upon receipt of any undertaking required by
applicable law. Any Indemnified Party wishing to claim indemnification under
this Section 4.13(a), upon learning of any Claim, shall notify the Continuing
Corporation (but the failure so to notify the Continuing Corporation shall not
relieve it from any liability which it may have under this Section 4.13(a),
except to the extent such failure materially prejudices the Continuing
Corporation) and shall deliver to the Continuing Corporation the undertaking, if
any, required by applicable law. The Continuing Corporation shall ensure, to the
extent permitted under applicable law, that all limitations of liability
existing in favor of the Indemnified Parties as provided in Progressive's or
Xxxxxx Chartered's governing corporation documents, as in effect as of the date
hereof, or allowed under applicable state or federal law as in effect as of the
date hereof or as amended applicable to a time before the Effective Date, with
respect to claims or liabilities arising from facts or events existing or
occurring before the Effective Date (including without limitation, the
transactions contemplated hereby), shall survive the Merger. In the event of any
such Claim (whether arising before or after the Effective Date), (1) the
- 54 -
Continuing Corporation shall have the right to assume the defense thereof (in
which event the Indemnified Parties will cooperate in the defense of any such
matter) and upon such assumption the Continuing Corporation shall not be liable
to any Indemnified Party for any legal expenses of other counsel or any other
expenses subsequently incurred by any Indemnified Party in connection with the
defense thereof, except that if the Continuing Corporation elects not to assume
such defense, or counsel for the Indemnified Parties reasonably advises the
Indemnified Parties that there are or may be (whether or not any have yet
actually arisen) issues which raise conflicts of interest between the Continuing
Corporation and the Indemnified Parties, the Indemnified Parties may retain
counsel reasonably satisfactory to them, and the Continuing Corporation shall
pay the reasonable fees and expenses of such counsel for the Indemnified
Parties, (2) the Continuing Corporation shall be obligated pursuant to this
paragraph to pay for only one firm of counsel for all Indemnified Parties whose
reasonable fees and expenses shall be paid promptly as statements are received,
(3) the Continuing Corporation shall not be liable for any settlement effected
without its prior written consent (which consent shall not be unreasonably
withheld) and (4) the Continuing Corporation shall have no obligation hereunder
to any Indemnified Party when and if a court of competent jurisdiction shall
ultimately determine, and such determination shall have become final and
nonappealable, that indemnification of such Indemnified Party in the manner
contemplated hereby is prohibited by applicable law.
(b) From and after the Effective Date, the directors, officers and
employees of Progressive and Xxxxxx Chartered hereto or any of their respective
subsidiaries who become directors or officers of the Continuing Corporation or
any of its subsidiaries, except for the indemnification rights provided pursuant
to the Indemnification Agreements between Xxxxxx Chartered and Progressive and
their respective directors and as set forth in paragraph (a) of this Section
4.13, shall have indemnification rights having prospective application only. The
prospective indemnification rights shall consist of such rights to which
directors and officers of the Continuing Corporation and its subsidiaries are
entitled under the provisions of the governing corporation documents of the
Continuing Corporation and its subsidiaries, as in effect from time to time
after the Effective Date, as applicable, and provisions of applicable state and
federal law as in effect from time to time after the Effective Date.
- 55 -
(c) For a period of six years from and after the Effective Date, the
Continuing Corporation shall cause to be maintained in effect the current
policies of directors' and officers' liability insurance maintained by
Progressive (provided that the Continuing Corporation may substitute therefor
policies from financially capable insurers of at least the same coverage and
amounts containing terms and conditions which are substantially no less
advantageous) with respect to Claims arising from facts or events which occurred
before the Effective Date. Following consummation of the Merger, the directors
and officers of the Continuing Corporation shall be covered by the directors'
and officers' liability insurance maintained by the Continuing Corporation.
(d) The obligations of the Continuing Corporation provided under
paragraphs (a), (b) and (c) of this Section 4.13 are intended to be enforceable
against the Continuing Corporation directly by the Indemnified Parties and shall
be binding on all respective successors and permitted assigns of the Continuing
Corporation.
(e) In the event the Continuing Corporation or any of its successors or
assigns (i) consolidates with or merges into any other person and shall not be
the continuing or surviving corporation or entity of 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 the
Continuing Corporation shall assume the obligations set forth in this Section
4.13.
(f) As a condition to receiving indemnification under this Section 4.13,
the party claiming indemnification shall assign, by separate writing, to the
Continuing Corporation all right, title and interest to and in proceeds of any
insurance maintained or provided by Progressive or Xxxxxx Chartered or any of
their respective affiliates for the benefits of the claiming party, to the
extent of indemnification actually received from the Continuing Corporation
hereunder and shall send such notices as the Continuing Corporation may
reasonably request under any applicable directors' and officers' liability or
blanket bond insurance coverage to preserve claims of which the claiming party
is aware.
(g) No person shall be entitled to indemnification under this Section
4.13 if such person is seeking indemnification based on a claim (other than a
claim arising as a supplier to, customer of or borrower from Xxxxxx
- 56 -
Chartered, Xxxxxx Valley, Progressive or Pawling) brought by such person or by
an entity of which such person is a general partner, executive officer,
director, trustee, beneficiary or controlling person unless such person has
waived any right to participate in any damage or other award to such claiming
party or other entity in any such action, suit or proceeding.
4.14. Shares Listed
The parties hereto shall use their best efforts to cause the shares of
Continuing Corporation Common Stock to be issued in the Merger to be listed on
the American Stock Exchange, Inc., subject to official notice of issuance.
4.15. Reservation of Right to Revise Transaction
The parties hereto may hereafter agree in writing to change the method of
effecting the Merger to the extent permitted by applicable law and to the extent
they deem any such change to be desirable; provided, however, that no such
change shall materially alter the benefits of the Merger as is presently
contemplated in this Agreement and in the Plan of Merger to any of the parties
hereto or to their respective shareholders.
4.16. Dividends
After the date of this Agreement, each of the parties hereto shall
coordinate with the other the declaration of any dividends in respect of Xxxxxx
Chartered Common Stock or Progressive Common Stock and the record dates and
payment dates relating thereto, it being the intention of the parties hereto
that holders of Xxxxxx Chartered Common Stock and Progressive Common Stock shall
not receive two dividends, or fail to receive one dividend, for any single
calendar quarter with respect to their shares of Xxxxxx Chartered Common Stock
and/or Progressive Common Stock and any shares of Continuing Corporation Common
Stock any such holder receives in exchange therefor in the Merger.
ARTICLE 5.
CONDITIONS PRECEDENT
5.1. Conditions Precedent - Mutual
The respective obligations of Xxxxxx Chartered and Progressive to effect
the Merger and of Xxxxxx Valley and Pawling to effect the Bank Merger shall be
subject to
- 57 -
satisfaction or waiver of the following conditions at or prior to the Closing
Date:
(a) All corporate action necessary to authorize the execution, delivery
and performance of this Reorganization Agreement, the Plan of Merger and the
Bank Merger Agreement and consummation of the transactions contemplated hereby
and thereby shall have been duly and validly taken, and all required shareholder
approvals shall have been duly received.
(b) The parties hereto shall have received all regulatory approvals
required or mutually deemed necessary in connection with the transactions
contemplated by this Reorganization Agreement, the Plan of Merger and the Bank
Merger Agreement, all notice periods and waiting periods required after the
granting of any such approvals shall have passed and all conditions contained in
any such approval required to have been satisfied prior to consummation of such
transactions shall have been satisfied, provided, however, that no such approval
shall have imposed any condition or requirement which, in the reasonable good
faith opinion of the Boards of Directors of Xxxxxx Chartered and Progressive (as
they shall so agree) so materially and adversely affects the anticipated
economic and business benefits to such parties of the transactions contemplated
by this Agreement as to render consummation of such transactions inadvisable.
(c) The parties hereto shall have received an opinion of Xxxxxx & Xxxxxx
dated as of the Closing Date, satisfactory in form and substance to Xxxxxx
Chartered and Progressive, to the effect that the Merger when consummated in
accordance with the terms hereof and the Plan of Merger, and the Bank Merger
when consummated in accordance with the terms of the Bank Merger Agreement, will
constitute reorganizations within the meaning of Section 368(a) of the Code, and
that the exchange of Progressive Common Stock to the extent exchanged for Xxxxxx
Chartered Common Stock will not give rise to recognition of gain or loss for
federal income tax purposes to the shareholders of Progressive, except to the
extent that cash is received in lieu of fractional share interests of Xxxxxx
Chartered Common Stock, and neither the Merger nor the Bank Merger will give
rise to recognition of gain or loss for federal income tax purposes to the
Continuing Corporation. Xxxxxx Chartered, Xxxxxx Valley, Progressive and Pawling
shall provide Xxxxxx & Xxxxxx with the facts, representations and assumptions
(including without limitation the standard representations set forth in Revenue
Procedure 86-42, 1986-2 C.B. 772) on which Xxxxxx & Xxxxxx will rely in
rendering its opinion, which facts, representations and assumptions will be
consistent with the state of facts Xxxxxx Chartered, Xxxxxx Valley, Progressive
and Pawling believe will exist on the Effective Date.
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(d) No event shall have occurred that shall preclude the Merger from
being accounted for as a pooling of interests, and the parties shall have
received from each of their respective independent accountants a letter to the
effect that they are not aware of any reason that would preclude the Merger from
being accounted for as a pooling of interests.
(e) The Registration Statement (including any post-effective amendment
thereto) shall be effective under the Securities Act, and no proceeding shall be
pending or threatened by the Commission to suspend the effectiveness of such
Registration Statement, and Xxxxxx Chartered shall have received all state
securities or "Blue Sky" permits or other authorizations, or confirmations as to
the availability of an exemption from registration requirements as may be
necessary, and no proceedings shall be pending or threatened by any state "Blue
Sky" securities administrator to suspend the effectiveness of such Registration
Statement.
(f) To the extent that any lease, license, loan, financing agreement or
other contract or agreement to which any party hereto of any of its
subsidiaries, as the case may be, is a party requires the consent of or waiver
from the other party thereto as a result of the transactions contemplated by
this Agreement, such consent or waiver shall have been obtained, unless the
failure to obtain such consent or waiver would not have a material adverse
effect on the Continuing Corporation as the parties hereto shall reasonably and
in good faith agree.
(g) None of the parties hereto or to the Bank Merger Agreement shall be
subject to any order, decree or injunction of a court or agency of competent
jurisdiction, which enjoins or prohibits the consummation of the transactions
contemplated by this Reorganization Agreement, the Plan of Merger and the Bank
Merger Agreement and there shall be no action or proceeding by or before any
such court or agency that, in the judgment of Progressive or Xxxxxx Chartered,
with the advice of its respective counsel, shall present a bona fide claim to
restrain, prohibit or invalidate the transactions contemplated hereby.
(h) The shares of Xxxxxx Chartered Common Stock to be issued in the
Merger shall have been approved for listing on the American Stock Exchange,
Inc., subject to official notice of issuance.
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(i) The Rights issued pursuant to the Progressive Rights Agreement shall
not have become nonredeemable, exercisable, distributed or triggered pursuant to
the terms of such agreement (unless, in the case of a distribution or trigger,
the effects can be cured by Progressive).
5.2. Conditions Precedent - Xxxxxx Chartered and Xxxxxx Valley
The obligations of Xxxxxx Chartered to effect the Merger and of Xxxxxx
Valley to effect the Bank Merger shall be subject to satisfaction of the
following additional conditions at or prior to the Closing Date unless waived by
Xxxxxx Chartered pursuant to Section 6.4 hereof:
(a) The representations and warranties of Progressive and Pawling set
forth in Article 2 hereof shall be true and correct in all material respects as
of the date of this Reorganization Agreement and as of the Closing Date as
though made on and as of the Closing Date (or on the date when made in the case
of any representation and warranty which specifically relates to an earlier
date), except as otherwise contemplated by this Reorganization Agreement or
consented to in writing by Xxxxxx Chartered or where the failure to be true and
correct would not have, or would not reasonably be expected to have, a material
adverse effect on Progressive and Pawling, taken as a whole;
(b) Progressive and Pawling shall have in all material respects performed
all obligations and complied with all covenants required by this Reorganization
Agreement, the Plan of Merger and the Bank Merger Agreement, except where the
failure to perform or comply would not have, or would not reasonably be expected
to have, a material adverse effect on Progressive and Pawling, taken as a whole;
(c) Xxxxxx Chartered shall have received from KPMG Peat Marwick LLP a
letter dated not more than five days prior to (i) the effective date of the
Registration Statement and (ii) the Closing Date, with respect to certain
financial information regarding Progressive, each in form and substance which is
customary in transactions of the nature contemplated by this Agreement;
(d) Each of Progressive and Pawling shall have delivered to Xxxxxx
Chartered a certificate, dated the Closing Date and signed by its President and
Chief Executive Officer and by its Chief Financial Officer to the effect that
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the conditions set forth in paragraphs (a), (b) and (f) of this section have
been satisfied;
(e) Xxxxxx Chartered shall have received an opinion or opinions of
Housley Kantarian & Xxxxxxxxx, P.C. and/or in-house counsel to Progressive,
dated as of the Closing Date, in the form attached as Annex 5.2(e) hereto; and
(f) Neither Progressive nor Pawling shall have experienced or suffered
any material adverse change in its business, operations, assets or condition
(financial or other) since the date hereof; provided, however, that a material
adverse change shall not be deemed to include the impact of (i) changes in
banking and similar laws of general applicability to all depository institutions
or interpretations thereof by courts or other governmental authorities, (ii)
changes in generally accepted accounting principles or regulatory accounting
requirements generally applicable to financial institutions and their holding
companies, (iii) actions or omissions of a party hereto taken with the prior
written consent of the other party, and (iv) the transaction costs associated
with the Merger and compliance by either party with the provisions of this
Agreement.
5.3. Conditions Precedent - Progressive and Pawling
The obligations of Progressive to effect the Merger and of Pawling to
effect the Bank Merger shall be subject to satisfaction of the following
additional conditions at or prior to the Closing Date unless waived by
Progressive pursuant to Section 6.4 hereof:
(a) The representations and warranties of Xxxxxx Chartered and Xxxxxx
Valley set forth in Article 3 hereof shall be true and correct in all material
respects as of the date of this Reorganization Agreement and as of the Closing
Date as though made on and as of the Closing Date (or on the date when made in
the case of any representation and warranty which specifically relates to an
earlier date), except as otherwise contemplated by this Reorganization Agreement
or consented to in writing by Progressive or where the failure to be true and
correct would not have, or would not reasonably be expected to have, a material
adverse effect on Xxxxxx Chartered and the Xxxxxx Chartered Subsidiaries, taken
as a whole;
(b) Xxxxxx Chartered and Xxxxxx Valley shall have in all material
respects performed all obligations and complied with all covenants required by
this Reorganization Agreement,
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the Plan of Merger and the Bank Merger Agreement, except where the failure to
perform or comply would not have, or would not reasonably be expected to have, a
material adverse effect on Xxxxxx Chartered and the Xxxxxx Chartered
Subsidiaries, taken as a whole;
(c) Progressive shall have received from Deloitte & Touche LLP a letter
dated not more than five days prior to (i) the effective date of the
Registration Statement and (ii) the Closing Date, with respect to certain
financial information regarding Xxxxxx Chartered, each in form and substance
which is customary in transactions of the nature contemplated by this Agreement;
(d) Each of Xxxxxx Chartered and Xxxxxx Valley shall have delivered to
Progressive a certificate, dated the Closing Date and signed by its President
and Chief Executive Officer and by its Chief Financial Officer to the effect
that the conditions set forth in paragraphs (a), (b) and (f) of this section
have been satisfied;
(e) Progressive shall have received an opinion or opinions of Xxx XxXxxxx
& Xxx XxXxxxx and/or Xxxxxx & Xxxxxx, dated as of the Closing Date, in the form
attached as Annex 5.3(e) hereto; and
(f) Neither Xxxxxx Chartered nor Xxxxxx Valley shall have experienced or
suffered any material adverse change in its business, operations, assets or
condition (financial or other) since the date hereof; provided, however, that a
material adverse change shall not be deemed to include the impact of (i) changes
in banking and similar laws of general applicability to all depository
institutions or interpretations thereof by courts or other governmental
authorities, (ii) changes in generally accepted accounting principles or
regulatory accounting requirements generally applicable to financial
institutions and their holding companies, (iii) actions or omissions of a party
hereto taken with the prior written consent of the other party, and (iv) the
transaction costs associated with the Merger and compliance by either party with
the provisions of this Agreement.
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ARTICLE 6.
TERMINATION, WAIVER AND AMENDMENT
6.1. Termination
This Reorganization Agreement, the Plan of Merger and the Bank Merger
Agreement may be terminated, either before or after approval by the shareholders
of Xxxxxx Chartered or Progressive:
(a) At any time on or prior to the Effective Date, by the mutual consent
in writing of the parties hereto;
(b) At any time on or prior to the Closing Date, by Xxxxxx Chartered in
writing, if Progressive or Pawling has, or by Progressive in writing, if Xxxxxx
Chartered or Xxxxxx Valley has, in any material respect, breached (i) any
covenant or agreement contained herein, in the Plan of Merger or in the Bank
Merger Agreement or (ii) any representation or warranty contained herein, and in
either case if such breach has not been cured by the earlier of 30 days after
the date on which written notice of such breach is given to the party committing
such breach or the Closing Date, and which breach would, in the reasonable
opinion of the non-breaching party, individually or in the aggregate, have, or
reasonably likely to have, a material adverse effect on the breaching party or
upon consummation of the transactions contemplated by this Agreement;
(c) On the Closing Date, by any party hereto in writing, if any of the
conditions precedent set forth in Article 5 hereof with respect to such party
have not been satisfied or fulfilled;
(d) At any time, by any party hereto in writing, if the governmental
applications for prior approval referred to in Section 4.3 hereof have been
denied, and the time period for appeals and requests for reconsideration has
run;
(e) At any time, by any party hereto in writing, if the shareholders of
Progressive or Xxxxxx Chartered do not approve the transactions contemplated
herein at the annual or special meeting duly called for that purpose; or
(f) By any party hereto in writing if the Closing Date has not occurred
by the close of business on November 15, 1998.
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6.2. Effect of Termination
In the event this Reorganization Agreement, the Plan of Merger or the
Bank Merger Agreement are terminated pursuant to Section 6.1 hereof, this
Agreement, the Plan of Merger and the Bank Merger Agreement shall become void
and have no effect, except that (i) the provisions relating to confidentiality
and expenses set forth in Sections 4.5, 4.6, 4.7(b)(14), 4.8(b)(14) and 7.1
hereof, respectively, shall survive any such termination and (ii) a termination
pursuant to Section 6.1(b) shall not relieve the breaching party from liability
for an uncured, intentional and willful breach of such representation, warranty,
covenant or agreement giving rise to such termination.
6.3. Survival of Representations, Warranties and Covenants
All representations, warranties and covenants in this Reorganization
Agreement, the Plan of Merger and the Bank Merger Agreement or in any instrument
delivered pursuant hereto or thereto shall expire on, and be terminated and
extinguished at, the Effective Date and from and after the Effective Date, none
of the parties hereto shall have any liability to the other on account of any
breach or failure of any of these representations, warranties or covenants;
provided, however, that the foregoing clause (i) shall not apply to agreements
or covenants of the parties that by their terms are to survive or be performed
after the Effective Date, and (ii) no such representations, warranties or
covenants shall be deemed to be terminated or extinguished so as to deprive
Xxxxxx Chartered, Xxxxxx Valley, Progressive or Pawling (or any director,
officer or controlling person thereof) of any defense in law or equity which
otherwise would be available against the claims of any person, including,
without limitation, any shareholder or former shareholder of either Xxxxxx
Chartered or Progressive, the aforesaid representations, warranties and
covenants being material inducements to the consummation by Xxxxxx Chartered,
Progressive, Xxxxxx Valley and Pawling of the transactions contemplated herein
and in the Bank Merger Agreement.
6.4. Waiver
Except with respect to any required shareholder or regulatory approval,
Xxxxxx Chartered and Progressive respectively, by written instrument signed by
an executive officer of such party, may at any time (whether before or after
approval of this Reorganization Agreement and the Plan of Merger by the
shareholders of Xxxxxx Chartered and
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Progressive) extend the time for the performance of any of the obligations or
other acts of Xxxxxx Chartered or Xxxxxx Valley, on the one hand, or Progressive
or Pawling, on the other hand, and may waive (i) any inaccuracies of such
parties in the representations or warranties contained in this Agreement, the
Plan of Merger, the Bank Merger Agreement or any document delivered pursuant
hereto or thereto, (ii) compliance with any of the covenants, undertakings or
agreements of such parties, or satisfaction of any of the conditions precedent
to its obligations, contained herein, in the Plan of Merger or in the Bank
Merger Agreement or (iii) the performance by such parties of any of its
obligations set out herein or therein; provided, however, that no such waiver
executed after approval of this Reorganization Agreement and the Plan of Merger
by the shareholders of Xxxxxx Chartered and/or Progressive shall alter the
number of shares of Xxxxxx Chartered Common Stock into which each share of
Progressive Common Stock shall be converted pursuant to the Merger.
6.5. Amendment or Supplement
This Reorganization Agreement, the Plan of Merger and the Bank Merger
Agreement may be amended or supplemented at any time by mutual agreement of the
parties hereto, in the case of this Reorganization Agreement, or thereto, in the
case of the Plan of Merger and the Bank Merger Agreement, respectively. Any such
amendment or supplement must be in writing and approved by their respective
boards of directors and/or officers authorized thereby and shall be subject to
the proviso in Section 6.4 hereof.
ARTICLE 7.
MISCELLANEOUS
7.1. Expenses
Except as provided in Section 7.1(b) below, each party hereto shall bear
and pay all costs and expenses incurred by it in connection with the
transactions contemplated in this Reorganization Agreement, including fees and
expenses of its own financial consultants, accountants and counsel, except that
Xxxxxx Chartered and Progressive each shall bear and pay 50% of all printing
costs relating to the Registration Statement and the Proxy Statement.
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7.2. Entire Agreement
This Reorganization Agreement, the Plan of Merger, the Bank Merger
Agreement, the Xxxxxx Chartered Option Agreement, the Progressive Option
Agreement and the Confidentiality Agreement contain the entire agreement between
the parties with respect to the transactions contemplated hereunder and
thereunder and supersede all prior arrangements or understandings with respect
thereto, written or oral, other than documents referred to herein or therein.
The terms and conditions of this Reorganization Agreement, the Plan of Merger
and the Bank Merger Agreement shall inure to the benefit of and be binding upon
the parties hereto and thereto and their respective successors. Nothing in this
Reorganization Agreement, the Plan of Merger or the Bank Merger Agreement,
expressed or implied, is intended to confer upon any party, other than the
parties hereto and thereto, and their respective successors, any rights,
remedies, obligations or liabilities.
7.3. No Assignment
No party hereto may assign any of its rights or obligations under this
Reorganization Agreement to any other person.
7.4. Notices
All notices or other communications which are required or permitted
hereunder shall be in writing and sufficient if delivered personally or sent by
facsimile transmission or overnight express or by registered or certified mail,
postage prepaid, addressed as follows:
If to Xxxxxx Chartered or Xxxxxx Valley:
Xxxxxx Chartered Bancorp, Inc.
Xxxxx 00
XxXxxxxxxxxxx, Xxx Xxxx 00000
Attention: T. Xxxxxxxxx Xxxxxxxxxx III,
Chairman and Chief Executive Officer
Facsimile No.: (000) 000-0000
With a required copy to:
Xxxxxx & Xxxxxx
000 00xx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxxx Xxxxxx, Esq.
Facsimile No.: (000) 000-0000
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If to Progressive or Pawling:
Progressive Bank, Inc.
0000 Xxxxx 00
Xxxxxxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxx Xxxxxx,
President and Chief Executive Officer
Facsimile No.: (000) 000-0000
With a required copy to:
Housley Kantarian & Xxxxxxxxx, P.C.
0000 00xx Xxxxxx, X.X., Xxxxx 000
Xxxxxxxxxx, X.X. 00000
Attention: Xxxx X. Xxxxxxxxx, Esq.
Facsimile No.: (000) 000-0000
7.5. Captions
The captions contained in this Reorganization Agreement are for reference
purposes only and are not part of this Reorganization Agreement.
7.6. Counterparts
This Reorganization 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.
7.7. Governing Law
THIS REORGANIZATION AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE
AND ENTIRELY TO BE PERFORMED WITHIN SUCH JURISDICTION, EXCEPT TO THE EXTENT
FEDERAL LAW MAY BE APPLICABLE.
7.8. Construction and Interpretation
Except as the context otherwise requires, all references herein to any
state or federal regulatory agency shall also be deemed to refer to any
predecessor or successor agency, and all references to state and federal
statutes or regulations also shall be deemed to refer to any successor statute
or regulation.
- 67 -
7.9. Severability
Whenever possible, each provision of this Agreement shall be interpreted
in such manner as to be effective and valid under applicable law, but if any
provision of this Agreement is held to be prohibited by or invalid under
applicable law, then such provision will be ineffective only to the extent of
such prohibition or invalidity, without invalidating the remainder of such
provision or other remaining provisions of the Agreement.
7.10. No Employment Solicitation
If this Agreement is terminated, the parties hereto agree that, for a
period of two years subsequent to such termination (i) none of the parties
shall, without first obtaining the prior written consent of the other, directly
or indirectly, actively solicit the employment of any current director, officer
or employee of the other party and (ii) none of the parties will actively
solicit business relationships with clients of the other party solely as a
result of review of the information contemplated in Section 4.5 herein or
otherwise.
[Remainder of page left intentionally blank; signatures appear on following
page.]
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IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have caused this Reorganization Agreement to be executed in counterparts
by their duly authorized officers and their corporate seal to be hereunto
affixed and attested by their officers thereunto duly authorized, all as of the
day and year first above written.
Attest XXXXXX CHARTERED BANCORP, INC.
______________________ By ____________________________
Xxxxx X. Xxxxxxxx T. Xxxxxxxxx Xxxxxxxxxx III
Assistant Secretary Chairman and Chief Executive
Officer
(SEAL)
Attest FIRST NATIONAL BANK OF XXXXXX VALLEY
______________________ By _____________________________
Xxxxx X. Xxxxxxxx Xxxx X. XxxXxxxxx
Assistant Secretary President and Chief Executive
Officer
(SEAL)
Attest PROGRESSIVE BANK, INC.
______________________ By _____________________________
Xxxxxxxx X. Parent Xxxxx Xxx Xxxxxx
Corporate Secretary President and Chief Executive
Officer
(SEAL)
Attest PAWLING SAVINGS BANK
______________________ By _____________________________
Xxxxxxxx X. Parent Xxxxx Xxx Xxxxxx
Corporate Secretary President and Chief Executive
Officer
(SEAL)
- 69 -
ANNEX A
PLAN OF MERGER
[See Exhibit 2.2 hereto.]
ANNEX B
AGREEMENT AND PLAN OF MERGER
[See Exhibit 2.3 hereto.]
ANNEX 5.2(e)
FORM OF OPINION OF HOUSLEY KANTARIAN & XXXXXXXXX, P.C.
AND/OR IN-HOUSE COUNSEL TO PROGRESSIVE
1. Progressive is duly incorporated, validly existing and in good standing as
a corporation under the corporate laws of the State of New York and has all
the requisite corporate power and authority to consummate the Merger.
Progressive is a bank holding company under the Bank Holding Company Act,
as amended.
2. Pawling is duly incorporated, validly existing and in good standing as a
savings bank organized and existing under the laws of the State of New
York.
3. The Reorganization Agreement and the Plan of Merger and the Merger have
been duly approved and adopted by the Board of Directors and shareholders
of Progressive and the Board of Directors of Pawling has approved and
adopted the Reorganization Agreement, all as required by law. The Bank
Merger Agreement has been duly approved and adopted by the Board of
Directors and sole shareholder of Pawling.
4. The Reorganization Agreement and the Plan of Merger have been duly executed
and delivered by Progressive and the Reorganization Agreement has been duly
executed and delivered by Pawling and (assuming due approval and execution
thereof by Xxxxxx Chartered and Xxxxxx Valley as applicable) constitute
valid and binding obligations of Progressive and Pawling enforceable
against Progressive and Pawling in accordance with their respective terms,
except to the extent that (1) enforceability thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance
of other laws relating to or from time to time affecting the enforcement of
creditors' rights generally or the rights of creditors of bank holding
companies, the accounts of whose subsidiaries are insured by the Federal
Deposit Insurance Corporation and (2) the availability of certain remedies
may be precluded by general principles of equity.
5. The execution, delivery and performance of the Reorganization Agreement,
the Plan of Merger and the Bank Merger Agreement do not violate the
Certificate of Incorporation, Charter or Bylaws of Progressive or Pawling.
6. To our actual knowledge, all approvals required to be obtained by
Progressive or Pawling in connection with the Merger and the Bank Merger
provided for in the Reorganization Agreement, the Plan of Merger and the
Bank Merger Agreement have been obtained from the appropriate regulatory
authorities.
ANNEX 5.3(e)
FORM OPINION OF XXX XXXXXXX & XXX XXXXXXX
AND/OR XXXXXX & XXXXXX
1. Xxxxxx Chartered is duly incorporated, validly existing and in good
standing as a corporation under the corporate laws of the State of New York
and has all the requisite corporate power and authority to consummate the
Merger. Xxxxxx Chartered is a bank holding company under the Bank Holding
Company Act, as amended.
2. Xxxxxx Valley is organized, validly existing and in good standing as a
national banking association.
3. The Reorganization Agreement and the Plan of Merger and the Merger have
been duly approved and adopted by the Board of Directors and shareholders
of Xxxxxx Chartered and the Board of Directors of Xxxxxx Valley has
approved and adopted the Reorganization Agreement, all as required by law.
The Bank Merger Agreement has been duly approved and adopted by the Board
of Directors and sole shareholder of Xxxxxx Valley.
4. The Reorganization Agreement and the Plan of Merger have been duly executed
and delivered by Xxxxxx Chartered and the Reorganization Agreement has been
duly executed and delivered by Xxxxxx Valley and (assuming due approval and
execution thereof by Progressive and Pawling as applicable) constitute
valid and binding obligations of Xxxxxx Chartered and Xxxxxx Valley
enforceable against Xxxxxx Chartered and Xxxxxx Valley in accordance with
their respective terms, except to the extent that (1) enforceability
thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance of other laws relating to or from time to
time affecting the enforcement of creditors' rights generally or the rights
of creditors of bank holding companies, the accounts of whose subsidiaries
are insured by the Federal Deposit Insurance Corporation and (2) the
availability of certain remedies may be precluded by general principles of
equity.
5. The execution, delivery and performance of the Reorganization Agreement,
the Plan of Merger and the Bank Merger Agreement do not violate the
Certificate of Incorporation, Charter or Bylaws of Xxxxxx Chartered or
Xxxxxx Valley.
6. To our actual knowledge, all approvals required to be obtained by Xxxxxx
Chartered or Xxxxxx Valley in connection with the Merger and the Bank
Merger provided for in the Reorganization Agreement, the Plan of Merger and
the Bank Merger Agreement have been obtained from the appropriate
regulatory authorities.
