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AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
PARTNERS TRUST FINANCIAL GROUP, INC.
(a federal corporation)
SBU BANK
(a federally chartered savings bank)
WICKED ACQUISITION CORPORATION
(a Delaware corporation)
PARTNERS TRUST, MHC
(a federally chartered mutual holding company)
AND
BSB BANCORP, INC.
(a Delaware corporation)
DATED AS OF
DECEMBER 23, 2003
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Table of Contents
AGREEMENT AND PLAN OF MERGER...................................................1
ARTICLE I THE MERGER...................................................2
1.1 The Merger.........................................................2
1.2 Closing............................................................2
1.3 Effective Time.....................................................2
1.4 Effects of the Merger..............................................2
1.5 Certificate of Incorporation and By-laws of the Surviving
Corporation........................................................2
1.6 Directors and Officers.............................................2
1.7 Possible Alternative Structures....................................3
1.8 The Conversion.....................................................3
ARTICLE II EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES........3
2.1 Effect on Capital Stock............................................3
2.2 Proration..........................................................4
2.3 Company Stock Options..............................................5
2.4 Election and Exchange Procedures...................................6
2.5 Certain Adjustments................................................9
2.6 Shares of Dissenting Stockholders.................................10
ARTICLE III REPRESENTATIONS AND WARRANTIES...........................10
3.1 Representations and Warranties of Company.........................10
3.2 Representations and Warranties of Parent..........................32
ARTICLE IV COVENANTS RELATING TO CONDUCT OF BUSINESS................43
4.1 Conduct of Business by Company....................................43
4.2 Advice of Changes.................................................48
4.3 No Solicitation by Company........................................48
4.4 Transition........................................................49
4.5 No Fundamental Changes in the Conduct of Business by Parent.......50
ARTICLE V ADDITIONAL AGREEMENTS....................................50
5.1 Preparation of the Form S-4, Proxy Statement; Stockholders
Meeting...........................................................50
5.2 Access to Information; Confidentiality............................52
5.3 Reasonable Best Efforts...........................................53
5.4 Rule 16B-3 Actions................................................54
5.5 Indemnification, Exculpation and Insurance........................54
5.6 Fees and Expenses.................................................55
5.7 Public Announcements..............................................55
5.8 Affiliates........................................................55
5.9 Stock Exchange Listing............................................55
5.10 Stockholder Litigation............................................55
5.11 Standstill Agreements; Confidentiality Agreements.................56
5.12 Employee Benefits.................................................56
5.13 Tax Matters.......................................................57
5.14 Board of Directors................................................57
5.15 Subsequent Financial Statements...................................57
5.16 Other Agreements; MHC Conversion from Mutual to Stock Form........57
5.17 Accountant's Comfort Letter.......................................59
ARTICLE VI CONDITIONS PRECEDENT.....................................59
6.1 Conditions to Each Party's Obligation to Effect the Merger........59
6.2 Conditions to Obligations of the Parent Parties...................59
6.3 Conditions to Obligations of Company..............................60
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER........................61
7.1 Termination.......................................................61
7.2 Effect of Termination.............................................62
7.3 Amendment.........................................................63
7.4 Extension; Waiver.................................................63
ARTICLE VIII GENERAL PROVISIONS.......................................63
8.1 Nonsurvival of Representations and Warranties.....................63
8.2 Notices...........................................................63
8.3 Definitions.......................................................64
8.4 Interpretation....................................................66
8.5 Counterparts......................................................68
8.6 Entire Agreement; No Third Party Beneficiaries....................67
8.7 Governing Law.....................................................67
8.8 Assignment........................................................67
8.9 Consent to Jurisdiction...........................................67
8.10 Headings..........................................................67
8.11 Severability......................................................67
8.12 Enforcement.......................................................67
Exhibit A: Plan of Conversion
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Exhibit B: Form of Affiliate Agreements
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER, dated as of December 23, 2003 (this
"AGREEMENT"), is entered into by and among Partners Trust Financial Group, Inc.,
a federal corporation ("PARENT"), SBU Bank, a federally chartered savings bank
and majority owned subsidiary of Parent ("SBU BANK"), Wicked Acquisition
Corporation, a Delaware corporation and wholly owned subsidiary of SBU Bank
("NEWCO"), Partners Trust, MHC, a federally-chartered mutual holding company
("MHC"), and BSB Bancorp, Inc., a Delaware corporation ("COMPANY").
WHEREAS, each of Parent, SBU Bank, Newco, MHC and Company desire to
consummate the business combination transaction as provided for in this
Agreement, subject to and following the Conversion (as defined below), in which
(i) Company will merge (the "MERGER") with and into Newco, with Newco being the
Surviving Corporation (as defined in Section 1.1), upon the terms and conditions
set forth herein, and each issued and outstanding share of common stock, par
value $.01 per share, of Company (the "COMPANY COMMON STOCK") will be converted
into the right to receive the Merger Consideration (as defined in Section 2.1(b)
hereof); (ii) immediately following the Merger, BSB Bank & Trust Company, a New
York-chartered commercial bank and trust company and wholly-owned subsidiary of
Company ("BSB BANK"), will merge with and into SBU Bank, with SBU Bank being the
Surviving Bank (as defined in Section 1.1(b));
WHEREAS, in connection with the Merger, it is intended that MHC will
convert from the mutual form of organization to the capital stock form of
organization pursuant to certain transactions (the "CONVERSION") as the result
of which, inter alia, SBU Bank will become a wholly owned subsidiary of Newco,
and that in connection with such Conversion, Newco will conduct a subscription
offering of its common stock, and if necessary a community and/or syndicated
community offering, and an exchange offering to the existing public stockholders
of Parent, all pursuant to a plan of conversion and reorganization,
substantially in the Form attached at Exhibit A hereto and subject to regulatory
review and amendment in connection with such review as provided therein (the
"PLAN OF CONVERSION");
WHEREAS, the respective Boards of Directors of Parent, SBU Bank, Newco
and MHC (collectively, the "PARENT PARTIES") and the Board of Directors of the
Company have each approved this Agreement and the Merger in accordance with the
provisions of applicable law, including without limitation, the rules and
regulations of the Office of Thrift Supervision ("OTS") and the Delaware General
Corporation Law, as amended (the "DGCL"), and have each determined that the
Merger is advisable and in the best interests of their respective stockholders;
and
WHEREAS, for Federal income tax purposes, it is intended that the
Merger will qualify as a reorganization under the provisions of Section 368(a)
of the United States Internal Revenue Code of 1986, as amended (the "CODE"), and
that this Agreement be, and it hereby is, adopted as a plan of reorganization
for purposes of Sections 354 and 361 of the Code.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound hereby, agree as
follows:
ARTICLE I
THE MERGER
1.1 THE MERGER.
(a) Upon the terms and subject to the conditions set forth in this
Agreement, and in accordance with the DGCL, Company shall be merged with and
into Newco at the Effective Time (as defined in Section 1.3). Following the
Effective Time, Newco shall be the surviving corporation (the "SURVIVING
CORPORATION") and shall succeed to and assume all of the rights and obligations
of Company in accordance with the DGCL. Upon consummation of the Merger, the
corporate existence of Company shall cease and the Surviving Corporation shall
continue to exist as a Delaware corporation.
(b) Immediately following the Merger, subject to the terms and
conditions of this Agreement and the Bank Merger Agreement (as defined in
Section 5.3(c)), and in accordance with applicable law, BSB Bank shall merge
with and into SBU Bank, with SBU Bank being the surviving bank (hereinafter
sometimes called the "SURVIVING BANK"). Upon consummation of the Bank
Combination (as defined in Section 5.3), the separate existence of BSB Bank
shall cease and the Surviving Bank shall continue to exist as a federal savings
bank.
1.2 CLOSING. Subject to the satisfaction or waiver of all of the conditions
to closing contained in Article VI hereof (other than those conditions that by
their nature are to be satisfied at the Closing, but subject to the fulfillment
or waiver of those conditions), the closing of the Merger (the "CLOSING") will
take place on the date of the closing of the Conversion (the "CLOSING DATE"),
immediately following the completion of the Conversion, unless another time or
date is agreed to by the parties hereto.
1.3 EFFECTIVE TIME. Subject to the provisions of this Agreement, at the
Closing, the parties shall cause the Merger to be consummated by filing a
certificate of merger in accordance with the DGCL (the "CERTIFICATE OF MERGER")
and shall make all other filings or recordings required under the DGCL to
effectuate the Merger. The Merger shall become effective at such date and time
as the parties shall agree and specify in the Certificate of Merger (the time
the Merger becomes effective being hereinafter referred to as the "EFFECTIVE
TIME") filed by the parties with the Office of the Delaware Secretary of State.
1.4 EFFECTS OF THE MERGER. The Merger shall have the effects set forth in
Sections 259 and 261 of the DGCL.
1.5 CERTIFICATE OF INCORPORATION AND BY-LAWS OF THE SURVIVING CORPORATION.
The certificate of incorporation and the by-laws of Newco, as in effect
immediately prior to the Effective Time, shall be the certificate of
incorporation and the by-laws of the Surviving Corporation until thereafter
changed or amended as provided therein or by applicable law.
1.6 DIRECTORS AND OFFICERS.
(a) From and after the Effective Time, the directors of Newco shall
consist of the directors of Newco in office immediately prior to the Effective
Time, together with three directors designated by Company (the "COMPANY
DESIGNEES"), one of whom shall be Xxxxxxx Xxxxxx, who will also be appointed to
serve as Chairman of Newco's Board of Directors, as provided in Section 5.14,
and the remaining two of whom shall be non-management directors of Company as of
the date hereof, until their successors shall have been duly elected, appointed
or qualified or until their earlier death, resignation or removal in accordance
with the certificate of incorporation and the by-laws of Newco. Each of the
Company Designees shall be nominated and elected to serve in a class of
directors of Newco whose terms expire not less than two years from the date of
the Effective Time.
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(b) From and after the Effective Time, except as provided in
paragraph (a) of this Section 1.6 with respect to the Chairman of the Board of
Directors, the officers of Newco shall become the officers of the Surviving
Corporation until their successors shall have been duly elected, appointed or
qualified or until their earlier death, resignation or removal in accordance
with the certificate of incorporation and the by-laws of the Surviving
Corporation.
1.7 POSSIBLE ALTERNATIVE STRUCTURES. Notwithstanding anything to the
contrary contained in this Agreement, prior to the Effective Time, Parent or
Newco shall be entitled to revise the structure of the Merger, the Bank
Combination or the Conversion, provided that (i) there are no adverse federal or
state income tax consequences to Company stockholders as a result of the
modification; (ii) the consideration to be paid to the holders of Company Common
Stock (as defined below) under this Agreement is not thereby changed in kind or
value or reduced in amount as a result of such change in structure and, in the
case of any revision to the structure of the Conversion, the pro forma
capitalization of Newco (or the corporation issuing its capital stock to Company
shareholders giving effect to such revision) shall not be materially different
than that contemplated by the Plan of Conversion); and (iii) such modification
will not materially delay or jeopardize receipt of any required regulatory
approvals or other consents and approvals relating to the consummation of the
Merger. Each of the parties hereto agree to appropriately amend this Agreement
and any related documents in order to reflect any such revised structure.
1.8 THE CONVERSION. Contemporaneous with the adoption of this Agreement,
the Board of Directors of MHC is adopting the Plan of Conversion to convert into
the capital stock form of organization. Newco is being organized to become the
parent of SBU Bank and to offer for sale shares of common stock to the
Participants (as defined in the Plan of Conversion) in the Conversion, based on
the Independent Valuation (as defined in Section 8.3). The price per share of
the shares of common stock, par value $.0001 per share, of Newco (the "NEWCO
COMMON STOCK") to be issued in the Conversion is referred to as the "CONVERSION
PRICE PER SHARE." The Conversion Price Per Share is expected to be $10.00. The
shares of Newco Common Stock to be issued in connection with the Merger may be
either shares unsubscribed for in the Conversion subscription or community
offerings, or to the extent such shares are unavailable, authorized but unissued
shares of Newco Common Stock, which shares shall be issued immediately following
completion of the Conversion.
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK
OF THE CONSTITUENT CORPORATIONS;
EXCHANGE OF CERTIFICATES
2.1 EFFECT ON CAPITAL STOCK. As of the Effective Time, by virtue of the
Merger and without any action on the part of the holder thereof:
(a) CANCELLATION OF TREASURY STOCK; CONVERSION OF SHARE OWNED BY
SUBSIDIARIES. Each share of Company capital stock (including the Company Common
Stock) that is owned by Company (other than shares held in a fiduciary or agency
capacity or in satisfaction of debts previously contracted) or by Newco shall
automatically be cancelled and retired and shall cease to exist, and no
consideration shall be delivered in exchange therefor. Each share of Company
Common Stock that is owned by any Subsidiary (as defined in Section 8.3) of
Company or Newco shall be converted into a number of shares of Newco Common
Stock equal to the Exchange Ratio (as defined in Section 2.1(b)(ii)).
(b) CONVERSION OF COMPANY COMMON STOCK. Subject to the provisions of this
Article II, each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time (other than shares cancelled and retired
or converted pursuant to Section 2.1(a), and other than Dissenting Shares (as
defined in Section 2.6)) shall be converted, at the election of the
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holder thereof, in accordance with the procedures set forth in Section 2.4 and
subject to Sections 2.2 and 2.5, into the right to receive the following,
without interest:
(i) for each share of Company Common Stock with respect to which an
election to receive cash has been effectively made and not revoked or lost,
pursuant to Section 2.4 (a "CASH ELECTION" and collectively, the "CASH ELECTION
SHARES"), the right to receive in cash from Newco, without interest, the amount
of $36.00 (the "CASH CONSIDERATION");
(ii) for each share of Company Common Stock with respect to which an
election to receive Newco Common Stock has been effectively made and not revoked
or lost, pursuant to Section 2.4 (a "STOCK ELECTION" and collectively, the
"STOCK ELECTION SHARES"), the right to receive from Newco 3.6 shares, or if the
Conversion Price Per Share is not $10.00 then such other number of shares as is
equal to 36 divided by the Conversion Price Per Share (the "EXCHANGE RATIO"), of
Newco Common Stock (the "STOCK CONSIDERATION"); and
(iii) for each share of Company Common Stock other than shares as to
which a Cash Election or a Stock Election has been effectively made and not
revoked, pursuant to Section 2.4 (collectively, "NON-ELECTION SHARES"), the
right to receive from Newco such Stock Consideration or Cash Consideration, as
determined in accordance with Section 2.2(b). The Cash Consideration and Stock
Consideration are sometimes referred to herein collectively as the "MERGER
CONSIDERATION".
For purposes of this Agreement, references to Company Common Stock shall be
deemed to include, where appropriate, references to the right to receive shares
of Company Series A Junior Participating Preferred Stock pursuant to the Rights
Agreement, dated as of May 24, 1999, as amended between Company and American
Stock Transfer & Trust Company ("AST") (the "COMPANY RIGHTS AGREEMENT").
2.2 PRORATION.
(a) Notwithstanding any other provision contained in this Agreement,
the total number of shares of Company Common Stock to be converted into Stock
Consideration pursuant to Section 2.1(b) (the "STOCK CONVERSION NUMBER") shall
be equal (subject to rounding in the discretion of Newco) to the product
obtained by multiplying (x) the number of shares of Company Common Stock
outstanding immediately prior to the Effective Time by (y) .60, it being
understood that all of the other shares of Company Common Stock shall be
converted into Cash Consideration (in each case, excluding shares of Company
Common Stock to be canceled as provided in Section 2.1(a) and Dissenting
Shares); provided, however, that in the event counsel for Newco reasonably
determines that the Merger may not satisfy the continuity of interest
requirements applicable to reorganizations under Section 368(a) of the Code,
Newco shall reduce the number of shares of Company Common Stock entitled to
receive the Cash Consideration and correspondingly increase the number of shares
of Company Common Stock entitled to receive the Stock Consideration by the
minimum amount necessary to enable the Merger to satisfy such continuity of
interest requirements.
(b) Within five business days after the Effective Time (as defined
in Section 1.3), Newco shall cause the Exchange Agent (as defined in Section
2.4) to effect among holders of Company Common Stock the allocation of rights to
receive the Cash Consideration and the Stock Consideration as follows:
(i) If the aggregate number of shares of Company Common Stock with
respect to which Stock Elections shall have been made (the "STOCK ELECTION
NUMBER") exceeds the Stock Conversion Number, then all Cash Election Shares and
all Non-Election Shares of each holder thereof shall be converted into the right
to receive the Cash Consideration, and Stock Election
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Shares of each holder thereof will be converted into the right to receive the
Stock Consideration in respect of that number of Stock Election Shares equal to
the product obtained by multiplying (x) the number of Stock Election Shares held
by such holder by (y) a fraction, the numerator of which is the Stock Conversion
Number and the denominator of which is the Stock Election Number, with the
remaining number of such holder's Stock Election Shares being converted into the
right to receive the Cash Consideration; and
(ii) If the Stock Election Number is less than the Stock Conversion
Number (the amount by which the Stock Conversion Number exceeds the Stock
Election Number being referred to herein as the "SHORTFALL NUMBER"), then all
Stock Election Shares shall be converted into the right to receive the Stock
Consideration and the Non-Election Shares and Cash Election Shares shall be
treated in the following manner:
(A) If the Shortfall Number is less than or equal to the number of
Non-Election Shares, then all Cash Election Shares shall be converted into the
right to receive the Cash Consideration and the Non-Election Shares of each
holder thereof shall convert into the right to receive the Stock Consideration
in respect of that number of Non-Election Shares equal to the product obtained
by multiplying (x) the number of Non-Election Shares held by such holder by (y)
a fraction, the numerator of which is the Shortfall Number and the denominator
of which is the total number of Non-Election Shares, with the remaining number
of such holder's Non-Election Shares being converted into the right to receive
the Cash Consideration; or
(B) If the Shortfall Number exceeds the number of Non-Election
Shares, then all Non-Election Shares shall be converted into the right to
receive the Stock Consideration and Cash Election Shares of each holder thereof
shall convert into the right to receive the Stock Consideration in respect of
that number of Cash Election Shares equal to the product obtained by multiplying
(x) the number of Cash Election Shares held by such holder by (y) a fraction,
the numerator of which is the amount by which (1) the Shortfall Number exceeds
(2) the total number of Non-Election Shares and the denominator of which is the
total number of Cash Election Shares, with the remaining number of such holder's
Cash Election Shares being converted into the right to receive the Cash
Consideration.
2.3 COMPANY STOCK OPTIONS. (a) As of the Effective Time, each Company Stock
Option (as defined in Section 3.1(c)) representing a right to receive Company
Common Stock upon exercise of such Company Stock Option outstanding at the
Effective Time, whether or not exercisable or vested, shall be canceled and
converted into the right to receive from Newco replacement stock options in
accordance with this Section 2.3: At the Effective Time, each Company Stock
Option which is outstanding and unexercised immediately prior thereto shall be
converted automatically into an option to purchase shares of Newco Common Stock
in an amount and at an exercise price determined as provided below (and
otherwise subject to the terms of Company's 1996 Long Term Incentive and Capital
Accumulation Plan, as amended, or the Directors' Stock Option Plan, as
applicable, and the stock option agreements granted thereunder (the "COMPANY
OPTION PLANS"));
(i) The number of shares of Newco Common Stock to be subject to the
option immediately after the Effective Time shall be equal to the product of the
number of shares of Company Common Stock subject to the option immediately
before the Effective Time, multiplied by the Exchange Ratio, provided that any
fractional shares of Newco Common Stock resulting from such multiplication shall
be rounded to the nearest share; and
(ii) The exercise price per share of Newco Common Stock under the option
immediately after the Effective Time shall be equal to the exercise price per
share of Company Common Stock under the option immediately before the Effective
Time divided by the Exchange Ratio, provided that such exercise price shall be
rounded to the nearest cent.
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The adjustment provided herein shall be and is intended to be effected in a
manner which is consistent with Section 424(a) of the Code. The duration and
other terms of the option immediately after the Effective Time shall be the same
as the corresponding terms in effect immediately before the Effective Time,
except that all references to Company or BSB Bank in the Company Stock Plan (and
the corresponding references in the option agreement documenting such option)
shall be deemed to be references to Newco or SBU Bank. Nothing herein shall be
construed as preventing option or warrant holders from exercising the same prior
to the Effective Time in accordance with the terms thereof.
(b) Prior to the Effective Time, Company shall take any and all
actions necessary to effectuate this Section 2.3. Parent, Newco or the Surviving
Corporation, as the case may be, shall take, or shall cause to be taken, the
necessary action to reserve and continue to reserve adequate shares of Newco
Common Stock for delivery upon exercise of any converted options. As soon as
reasonably practicable after the Effective Time, Parent, Newco or the Surviving
Corporation, as the case may be, shall file, or shall cause to be filed, a
registration statement on Form S-8 (or any successor or other appropriate
forms), with respect to the shares of Newco Common Stock subject to converted
options and shall use its reasonable best efforts to maintain, or shall use its
reasonable best efforts to cause to be maintained, the effectiveness of such
registration statement (and maintain the current status of the prospectus or
prospectuses contained therein) for so long as such converted options remain
outstanding.
2.4 ELECTION AND EXCHANGE PROCEDURES. Each holder of record of shares of
Company Common Stock (other than Dissenting Shares) ("HOLDER") shall have the
right, subject to the limitations set forth in this Article II, to submit an
election in accordance with the following procedures:
(a) Each Holder may specify in a request made in accordance with the
provisions of this Section 2.4 (herein called an "ELECTION") (x) the number of
shares of Company Common Stock owned by such Holder with respect to which such
Holder desires to make a Stock Election, in which case such Holder shall be
deemed to have made a Stock Election with respect to such shares and a Cash
Election with respect to the balance, or (y) the number of shares of Company
Common Stock owned by such Holder with respect to which such Holder desires to
make a Cash Election, in which case such Holder shall be deemed to have made a
Cash Election with respect to such shares and a Stock Election with respect to
the balance.
(b) Newco shall prepare an election form reasonably acceptable to Company
(the "FORM OF ELECTION") which shall specify that delivery shall be effected,
and risk of loss and title to the Company Stock Certificate(s) (as defined
below) theretofore representing Company Common Stock shall pass, only upon
proper delivery of such certificates to such bank or trust company designated by
Newco and reasonably satisfactory to Company (the "EXCHANGE AGENT"). The
Election Form shall be mailed to Company's stockholders entitled to vote at the
meeting of the stockholders of Company at which the stockholders of Company
consider and vote on this Agreement (the "COMPANY STOCKHOLDERS MEETING") so as
to permit Company's stockholders to exercise their right to make an Election
prior to the Election Deadline (as defined in Section 2.4(d)).
(c) Newco shall mail the Form of Election on or about the time that
the Proxy Statement (as defined herein) is mailed to the stockholders of
Company, to such stockholders, and shall use all reasonable efforts to make
available as promptly as possible a Form of Election to any stockholder of
Company who requests such Form of Election following the initial mailing of the
Forms of Election and prior to the Election Deadline. In no event shall the Form
of Election be made available less than 20 business days prior to the Election
Deadline.
(d) Any Election shall have been made properly only if the Exchange
Agent shall have received, by 5:00 p.m. local time in the city in which the
principal office of such Exchange Agent
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is located, on the date of the Election Deadline, a Form of Election properly
completed and signed and accompanied by certificates of the shares of Company
Common Stock (the "COMPANY STOCK CERTIFICATES") to which such Form of Election
relates or by an appropriate customary guarantee of delivery of such
certificates, as set forth in such Form of Election, from a member of any
registered national securities exchange or a commercial bank or trust company in
the United States; provided, that such certificates are in fact delivered to the
Exchange Agent by the time required in such guarantee of delivery. Failure to
deliver shares of Company Stock Certificates covered by such a guarantee of
delivery within the time set forth on such guarantee shall be deemed to
invalidate any otherwise properly made Election, unless otherwise determined by
Newco, in its sole discretion. As used herein, "ELECTION DEADLINE" means 5:00
p.m. on the date that, as reasonably determined by Newco, is as close as
possible to the fifth business day prior to date on which the Effective Time
occurs. Company and Newco shall cooperate to issue a press release reasonably
satisfactory to each of them announcing the date of the Election Deadline not
more than 10 business days before, and at least five business days prior to, the
Election Deadline.
(e) Any Company stockholder may, at any time prior to the Election
Deadline, change or revoke his, her or its Election by written notice received
by the Exchange Agent prior to the Election Deadline accompanied by a properly
completed and signed, revised Form of Election. If Newco shall determine in its
reasonable discretion that any Election is not properly made with respect to any
shares of Company Common Stock, such Election shall be deemed to be not in
effect, and the shares of Company Common Stock covered by such Election shall,
for purposes hereof, be deemed to be Non-Election Shares, unless a proper
Election is thereafter timely made.
(f) Any Company stockholder may, at any time prior to the Election
Deadline, revoke his, her or its Election by written notice received by the
Exchange Agent prior to the Election Deadline or by withdrawal prior to the
Election Deadline of his or her Company Stock Certificate or of the guarantee of
delivery of such certificates previously deposited with the Exchange Agent. All
Elections shall be revoked automatically if the Exchange Agent is notified in
writing by Newco or Company, upon exercise by Newco or Company of its respective
or their mutual rights to terminate this Agreement to the extent provided under
Article VII, that this Agreement has been terminated in accordance with Article
VII.
(g) If any portion of the Merger Consideration is to be paid to a
Person other than the Person in whose name a Company Stock Certificate so
surrendered is registered, it shall be a condition to such payment that such
Company Stock Certificate shall be properly endorsed or otherwise be in proper
form for transfer and the Person requesting such payment shall pay to the
Exchange Agent any transfer or other similar Taxes (as defined in Section
3.1(j)(xvii)) required as a result of such payment to a Person other than the
registered holder of such Company Stock Certificate, or establish to the
reasonable satisfaction of the Exchange Agent that such Tax has been paid or is
not payable. The Exchange Agent (or, subsequent to the twelve-month anniversary
of the Effective Time, Newco) shall be entitled to deduct and withhold from the
Merger Consideration (including cash in lieu of fractional shares of Newco
Common Stock) otherwise payable pursuant to this Agreement to any holder of
Company Common Stock such amounts as the Exchange Agent or Newco, as the case
may be, is required to deduct and withhold under the Code or any provision of
state, local or foreign Tax law with respect to the making of such payment. To
the extent the amounts are so withheld by the Exchange Agent or Newco, as the
case may be, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of shares of Company Common Stock in
respect of whom such deduction and withholding was made by the Exchange Agent or
Newco, as the case may be.
(h) After the Effective Time there shall be no further registration
or transfers of shares of Company Common Stock. If, after the Effective Time,
Company Stock Certificates are presented to the Surviving Corporation, they
shall be cancelled and exchanged for the Merger
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Consideration in accordance with the procedures set forth in this Article II.
(i) At any time following the twelve-month anniversary of the Effective
Time, Newco shall be entitled to require the Exchange Agent to deliver to Newco
any remaining portion of the Merger Consideration not distributed to Holders of
shares of Company Common Stock that was deposited with the Exchange Agent at the
Effective Time (the "EXCHANGE FUND") (including any interest received with
respect thereto and other income resulting from investments by the Exchange
Agent, as directed by Newco), and Holders shall be entitled to look only to
Newco (subject to abandoned property, escheat or other similar laws) with
respect to the Merger Consideration, any cash in lieu of fractional shares of
Newco Common Stock and any dividends or other distributions with respect to
Newco Common Stock payable upon due surrender of their Company Stock
Certificates, without any interest thereon. Notwithstanding the foregoing,
neither Newco nor the Exchange Agent shall be liable to any Holder of a Company
Stock Certificate for Merger Consideration (or dividends or distributions with
respect thereto) or cash from the Exchange Fund in each case delivered to a
public official pursuant to any applicable abandoned property, escheat or
similar law.
(j) In the event any Company Stock Certificates shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
Person claiming such Company Stock Certificate(s) to be lost, stolen or
destroyed and, if required by Newco or the Exchange Agent, the posting by such
Person of a bond in such sum as Newco may reasonably direct as indemnity against
any claim that may be made against it or the Surviving Corporation with respect
to such Company Stock Certificate(s), the Exchange Agent will issue the Merger
Consideration deliverable in respect of the shares of Company Common Stock
represented by such lost, stolen or destroyed Company Stock Certificates.
(k) No dividends or other distributions with respect to Newco Common
Stock with a record date after the Effective Time shall be paid to the holder of
any unsurrendered Company Stock Certificate with respect to the shares of Newco
Common Stock represented thereby, and no cash payment in lieu of fractional
shares shall be paid to any such holder pursuant to subsection (l) below, and
all such dividends, other distributions and cash in lieu of fractional shares of
Newco Common Stock shall be paid by Newco to the Exchange Agent and shall be
included in the Exchange Fund, in each case until the surrender of such Company
Stock Certificate in accordance with subsection (l) below. Subject to the effect
of applicable abandoned property, escheat or similar laws, following surrender
of any such Company Stock Certificate there shall be paid to the holder of a
certificate for Newco Common Stock (a "NEWCO STOCK CERTIFICATE") representing
whole shares of Newco Common Stock issued in exchange therefor, without
interest, (i) at the time of such surrender, the amount of dividends or other
distributions with a record date after the Effective Time theretofore paid with
respect to such whole shares of Newco Common Stock and the amount of any cash
payable in lieu of a fractional share of Newco Common Stock to which such holder
is entitled pursuant to subsection (l), and (ii) at the appropriate payment
date, the amount of dividends or other distributions with a record date after
the Effective Time but prior to such surrender and with a payment date
subsequent to such surrender payable with respect to such whole shares of Newco
Common Stock. Newco shall make available to the Exchange Agent cash for these
purposes, if necessary.
(l) No Newco Stock Certificates representing fractional shares of
Newco Common Stock shall be issued upon the surrender for exchange of Company
Stock Certificates; no dividend or distribution by Newco shall relate to such
fractional share interests; and such fractional share interests will not entitle
the owner thereof to vote or to any rights as a stockholder of Newco. In lieu of
any such fractional shares, each Holder of a Company Stock Certificate who would
otherwise have been entitled to receive a fractional share interest in exchange
for such Company Stock Certificate shall receive from the Exchange Agent an
amount in cash determined by
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multiplying the price for which the Newco Common Stock is sold in the Exchange
Offering by the fraction of a share of Newco Common Stock which such Holder
would otherwise be entitled to receive pursuant to Section 2.1(b)(ii) above. No
interest will be paid on the cash that the Holders of such fractional shares
shall be entitled to receive upon such delivery.
(m) Newco, in the exercise of its reasonable discretion, shall have
the right to make all determinations, not inconsistent with the terms of this
Agreement, governing (A) the validity of the Forms of Election and compliance by
any stockholder of Company with the Election procedures set forth herein, (B)
the manner and extent to which Elections are to be taken into account in making
the determinations prescribed by Section 2.4, (C) the issuance and delivery of
Newco Stock Certificates into which shares of Company Common Stock are converted
in the Merger and (D) the method of payment of cash for shares of Company Common
Stock converted into the right to receive the Cash Consideration and cash in
lieu of fractional shares of Newco Common Stock where the holder of the
applicable Company Stock Certificate has no right to receive whole shares of
Newco Common Stock.
(n) Prior to the Effective Time, Newco will deposit with the
Exchange Agent certificates representing shares of Newco Common Stock sufficient
to pay in a timely manner, and Newco shall instruct the Exchange Agent to timely
pay, the aggregate Stock Consideration. In addition, prior to the Effective
Time, Newco shall deposit with the Exchange Agent sufficient cash to permit
prompt payment of the Cash Consideration and cash in lieu of fractional shares
of Newco Common Stock, and Newco shall instruct the Exchange Agent to timely pay
the Cash Consideration and cash in lieu of fractional shares of Newco Common
Stock where the holder of the applicable Company Stock Certificate has no right
to receive whole shares of Newco Common Stock.
(o) As soon as reasonably practicable, and in any case within 10
business days, after the Effective Time, Newco shall cause the Exchange Agent to
mail to each Holder of Company Common Stock whose shares were converted into the
right to receive the Merger Consideration pursuant to Section 2.1 and any cash
in lieu of fractional shares of Newco Common Stock to be issued or paid in
consideration therefor who did not complete an Election Form, (i) a letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to Company Stock Certificate(s) shall pass, only upon delivery of
Company Stock Certificate(s) (or affidavits of loss in lieu of such
certificates)) (the "LETTER OF TRANSMITTAl") to the Exchange Agent and shall be
substantially in such form and have such other provisions as shall be determined
by Newco and (ii) instructions for use in surrendering Company Stock
Certificate(s) in exchange for the Merger Consideration and any cash in lieu of
fractional shares of Newco Common Stock to be issued or paid in consideration
therefor upon surrender of such certificate in accordance with Section 2.4(k)
and any dividends or distributions to which such holder is entitled pursuant to
Section 2.4(j).
(p) Upon surrender to the Exchange Agent of its Company Stock
Certificate(s), accompanied by a properly completed Form of Election or a
properly completed Letter of Transmittal, a Holder of Company Common Stock will
be entitled to receive promptly after the Effective Time the Merger
Consideration (elected or deemed elected by the Holder, subject to Sections 2.1
and 2.2) in respect of the shares of Company Common Stock represented by the
Holder's Company Stock Certificate. Until so surrendered, each such Company
Stock Certificate shall represent after the Effective Time, for all purposes,
only the right to receive the Merger Consideration and any cash in lieu of
fractional shares of Newco Common Stock to be issued or paid in consideration
therefor upon surrender of such certificate in accordance with Section 2.4(l)
and any dividends or distributions to which such holder is entitled pursuant to
Section 2.4(k).
2.5 CERTAIN ADJUSTMENTS. If after the date hereof and on or prior to the
Effective Time the outstanding shares of Newco Common Stock shall be changed
into a different number of shares by reason of any reclassification,
recapitalization or combination, stock split, reverse stock split,
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stock dividend or rights issued in respect of such stock, or any similar event
shall occur (any such event, a "NEWCO ADJUSTMENT EVENT"), the Exchange Ratio
shall be proportionately adjusted to provide to the holders of Company Common
Stock the same economic effect as contemplated by this Agreement prior to such
Newco Adjustment Event.
2.6 SHARES OF DISSENTING STOCKHOLDERS. Notwithstanding anything in this
Agreement to the contrary, any shares of Company Common Stock that are issued
and outstanding as of the Effective Time and that are held by a stockholder who
has properly exercised appraisal rights under the DGCL (the "DISSENTING SHARES
") shall not be converted into the right to receive the Merger Consideration
unless and until the holder shall have failed to perfect, or shall have
effectively withdrawn or lost, the right to dissent from the Merger under the
DGCL and to receive such consideration as may be determined to be due with
respect to such Dissenting Shares pursuant to and subject to the requirements of
the DGCL. If any such holder shall have so failed to perfect or have effectively
withdrawn or lost such right after the Election Deadline, each share of such
holder's Company Common Stock shall thereupon be deemed to have been converted
into and to have become, as of the Effective Time, the right to receive, without
any interest thereon, the Stock Election Consideration or the Cash Election
Consideration, or a combination thereof, as determined by Newco, in its sole
discretion. Company shall give Newco (i) prompt notice of any notice or demands
for appraisal or payment for shares of Company Common Stock received by Company
and (ii) the opportunity to participate in and direct all negotiations and
proceedings with respect to any such demands or notices. Company shall not,
without the prior written consent of Newco, make any payment with respect to, or
settle, offer to settle or otherwise negotiate, any such demands.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF COMPANY. Except as set forth on the
Disclosure Schedule delivered by Company to the Parent Parties prior to the
execution of this Agreement (the "COMPANY DISCLOSURE SCHEDULE") and making
reference to the particular subsection of this Agreement to which exception is
being taken, Company represents and warrants to the Parent Parties as follows:
(a) Organization, Standing and Corporate Power.
(i) Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware, is duly registered as a
bank holding company under the BHC Act (as defined in Section 3.1d)), and has
the requisite corporate power and authority to carry on its business as now
being conducted. Company is duly qualified or licensed to do business and is in
good standing in each jurisdiction in which the nature of its business or the
ownership, leasing or operation of its properties makes such qualification or
licensing necessary, except for those jurisdictions where the failure to be so
qualified or licensed or to be in good standing would not, individually or in
the aggregate, reasonably be expected to result in a Material Adverse Effect (as
defined in Section 8.3) on Company. The Certificate of Incorporation and Bylaws
of Company set forth as exhibits to the Company Filed SEC Documents (as defined
in Section 3.1(g)) are true and complete copies of such documents as of the date
hereof.
(ii) BSB Bank is duly registered as a New York-chartered commercial
bank and trust company duly organized, validly existing and in good standing
under the laws of the State of New York and has the requisite corporate or other
power, as the case may be, and authority to carry on its business as now being
conducted. BSB Bank is duly qualified or licensed to do business and is in good
standing in each jurisdiction in which the nature of its business or the
ownership, leasing or operation of its properties makes such qualification or
licensing necessary, except for those jurisdictions where the failure to be so
qualified, or licensed or to be in good standing
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would not, individually or in the aggregate, reasonably be expected to result in
a Material Adverse Effect on BSB Bank. Section 3.1(a) of the Company Disclosure
Schedule contains a true and complete copy of the Certificate of Organization
and Bylaws of BSB Bank, as currently in effect.
(iii) Each Subsidiary (as defined in Section 8.3) of Company is a
corporation or other legal entity duly organized, validly existing and in good
standing (with respect to jurisdictions which recognize such concept) under the
laws of the jurisdiction in which it is organized and has the requisite
corporate or other power, as the case may be, and authority to carry on its
business as now being conducted. Each Subsidiary of Company is duly qualified or
licensed to do business and is in good standing in each jurisdiction in which
the nature of its business or the ownership, leasing or operation of its
properties makes such qualification or licensing necessary, except for those
jurisdictions where the failure to be so qualified or licensed or to be in good
standing would not, individually or in the aggregate, reasonably be expected to
result in a Material Adverse Effect on such Subsidiary.
(iv) Company has delivered or made available to Newco prior to the
execution of this Agreement complete and correct copies of the certificate of
incorporation and by-laws or other organizational documents, as amended to date,
of Company and all Subsidiaries of Company.
(v) Except as set forth in Section 3.1(a) of the Company Disclosure
Schedule, the minute books of Company, BSB Bank, and each other
Subsidiary of Company (collectively, the "COMPANY PARTIES"), in all material
respects contain accurate records of all meetings and accurately reflect all
other material actions taken by the stockholders of the Company Parties, the
Boards of Directors of the Company Parties and all standing committees of the
Boards of Directors of the Company Parties.
(b) SUBSIDIARIES. Section 3.1(b) of the Company Disclosure Schedule
lists all the Subsidiaries of Company, whether consolidated or unconsolidated,
and sets forth the issued and outstanding securities of each of such
Subsidiaries and its jurisdiction of incorporation. Except as set forth in
Section 3.1(b) of the Company Disclosure Schedule, all outstanding shares of
capital stock of, or other equity interests in, each such Subsidiary: (i) have
been validly issued and are fully paid and nonassessable; (ii) and except for
the preferred interests in BSB Capital Trust, L.L.C., BSB Capital Trust II,
L.L.C. and BSB Capital Trust III, L.L.C. (the "TRUST PREFERRED SUBSIDIARIES"),
are owned directly or indirectly by Company, free and clear of all pledges,
claims, liens, charges, encumbrances and security interests of any kind or
nature whatsoever, other than those imposed generally on similar entities under
applicable law (collectively, "LIENS") and other than Company Permitted Liens
(as defined in this Section 3.1(b)); and (iii) other than Company Permitted
Liens, are free of any other material restriction (including any restriction on
the right to vote, sell or otherwise dispose of such capital stock or other
ownership interests) that would prevent the operation by the Surviving
Corporation of such Subsidiary's business as currently conducted. Neither
Company nor any of its Subsidiaries has any employees located in workplaces, or
any branches, offices or other facilities located outside of the United States.
Other than the Subsidiaries of Company, Company does not own or control,
directly or indirectly, a five percent or greater equity interest in any
corporation, company, association, partnership, joint venture or other entity.
For purposes of this Section 3.1(b) (except as indicated) and elsewhere through
this Agreement: (i) "COMPANY PERMITTED LIENS" shall mean (A) Liens described in
Section 3.1(b) of the Company Disclosure Schedule; (B) restrictions on
transferability pursuant to federal and state securities laws; and (C) Liens for
Taxes not yet due. Deposit accounts in BSB Bank are insured by the Federal
Deposit Insurance Corporation (the "FDIC") to the fullest extent permitted by
law, and all premiums and assessments required in connection therewith as of the
date hereof have been paid by BSB Bank.
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(c) CAPITAL STRUCTURE. The authorized capital stock of Company
consists of 30,000,000 shares of Company Common Stock and 2,500,000 shares of
preferred stock, par value $0.01 per share, of Company ("COMPANY PREFERRED
STOCk"). As of December 1, 2003: (i) 9,206,774 shares of Company Common Stock
were issued and outstanding; (ii) 2,539,538 shares of Company Common Stock were
held by Company in its treasury and no shares of Company Common Stock were held
by Subsidiaries of Company; (iii) no shares of Company Preferred Stock were
issued and outstanding; (iv) no shares of Company Preferred Stock were held by
Company in its treasury or were held by any Subsidiary of Company; and (v)
2,117,367 shares of Company Common Stock were reserved for issuance pursuant to
all plans, including the Company Option Plans, agreements or arrangements
providing for equity-based compensation to any director, Employee (as defined in
Section 3.1(f)), consultant or independent contractor of Company or any of its
Subsidiaries (collectively, the "COMPANY STOCK PLANS"), of which 1,119,865
shares are subject to outstanding stock options to acquire Company Common Stock.
All outstanding shares of capital stock of Company are, and all shares thereof
which may be issued prior to the Closing will be, when issued, duly authorized,
validly issued, fully paid and nonassessable and not subject to preemptive
rights. Company has delivered to Newco a true and complete list, as of the close
of business on December 1, 2003, of all outstanding stock options to purchase or
receive Company Common Stock and all other rights to purchase or receive Company
Common Stock granted under Company Stock Plans (collectively, the "COMPANY STOCK
OPTIONS"), the number of shares subject to each such Company Stock Option, the
grant dates, the vesting schedule and the exercise prices (to the extent
applicable) of each such Company Stock Option and the names of the holders
thereof. Company has not awarded or authorized the award of any Company Stock
Options since December 1, 2003. Except as set forth in this Section 3.1(c) and
except for the Company Rights Agreement and changes since December 1, 2003
resulting from (i) the issuance of shares of Company Common Stock pursuant to
and in accordance with Company Stock Options outstanding prior to December 1,
2003 and (ii) as expressly contemplated hereby (x) there are not issued,
reserved for issuance or outstanding (A) any shares of capital stock or voting
securities or other ownership interests of Company, (B) any securities of
Company or any Subsidiary of Company convertible into or exchangeable or
exercisable for shares of capital stock or voting securities or other ownership
interests of Company, or (C) any warrants, calls, options or other rights to
acquire from Company or any Subsidiary of Company, or any obligation of Company
or any of its Subsidiaries to issue, any capital stock, voting securities or
other ownership interests in, or securities convertible into or exchangeable or
exercisable for, capital stock or voting securities or other ownership interests
of Company, and (y) there are no outstanding obligations of Company or any of
its Subsidiaries to repurchase, redeem or otherwise acquire any such securities
or to issue, deliver or sell, or cause to be issued, delivered or sold, any such
securities, other than pursuant to any "cashless exercise" provision of any
Company Stock Options. Except as set forth in Section 3.1(c) of the Company
Disclosure Schedule (which schedule shall include the Company Rights Agreement
and the Company Stock Plans), there are no outstanding (A) securities of Company
or any of its Subsidiaries convertible into or exchangeable or exercisable for
shares of capital stock or voting securities or other ownership interests in any
Subsidiary of Company, (B) warrants, calls, options or other rights to acquire
from Company or any of its Subsidiaries, or any obligation of Company or any of
its Subsidiaries to issue, any capital stock, voting securities or other
ownership interests in, or any securities convertible into or exchangeable or
exercisable for, any capital stock, voting securities or other ownership
interests in, any Subsidiary of Company or (C) obligations of Company or any of
its Subsidiaries to repurchase, redeem or otherwise acquire any such outstanding
securities of Subsidiaries of Company or to issue, deliver or sell, or cause to
be issued, delivered or sold, any such securities. Except for the Company Rights
Agreement and the Company Stock Plans, neither Company nor any of its
Subsidiaries is a party (and, to the knowledge of Company as of the date hereof,
no other Person having beneficial ownership (within the meaning of Rule 13d-3 of
the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT")) of five
percent or more of the outstanding Company Common Stock (a "MAJOR COMPANY
STOCKHOLDER") is a party) to any agreement restricting the transfer of, relating
to the voting of, requiring registration of, or granting any preemptive or
antidilutive rights with respect to any of the securities of Company
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or any of its Subsidiaries. There are no voting trusts or other agreements or
understandings to which Company or any of its Subsidiaries is a party or, to the
knowledge of Company as of the date hereof, any Major Company Stockholder is a
party with respect to the voting of the capital stock of Company or any of its
Subsidiaries.
(d) Authority; Noncontravention. Company has all requisite corporate
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation by Company of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of Company,
subject, in the case of the Merger, to Company Stockholder Approval. This
Agreement has been duly executed and delivered by Company and, assuming the due
authorization, execution and delivery by the Parent Parties, constitutes the
legal, valid and binding obligation of Company, enforceable against Company in
accordance with its terms, except as enforcement may be limited by general
principles of equity whether applied in a court of law or a court of equity and
by bankruptcy, insolvency and similar law affecting creditors' rights and
remedies generally. The execution and delivery of this Agreement does not, and
the consummation of the transactions contemplated hereby (including the Bank
Combination) and compliance with the provisions of this Agreement will not,
conflict with, or result in any violation, forfeiture or termination of, or
default (with or without notice or lapse of time, or both) under, or give rise
to a right of forfeiture, termination, cancellation or acceleration (with or
without notice or lapse of time, or both) of any material obligation or loss of
a material benefit, under, or result in the creation of any Lien upon any of the
properties or assets of Company or any of its Subsidiaries under, (i) the
certificate of incorporation or by-laws of Company, (ii) the certificate of
incorporation or by-laws or the comparable organizational documents of any of
its Subsidiaries, (iii) subject to the governmental filings and other matters
referred to in the following sentence, any loan or credit agreement, note, bond,
mortgage, indenture, lease, vendor agreement, software agreement or other
agreement, instrument, Intellectual Property (as defined in Section 3.1(n))
right, permit, concession, franchise, license or similar authorization
applicable to Company or any of its Subsidiaries or their respective properties
or assets that is material to the operations of Company and its Subsidiaries,
taken as a whole, or (iv) subject to the governmental filings and other matters
referred to in the following sentence, any judgment, order, decree, statute,
law, ordinance, rule or regulation ("LAWS") applicable to Company or any of its
Subsidiaries or their respective properties or assets, other than, in the case
of clauses (iii) and (iv) only, any such conflicts, violations, defaults,
rights, losses or Liens that would not, individually or in the aggregate (x)
reasonably be expected to result in a Material Adverse Effect on Company or (y)
reasonably be expected to materially impair or materially delay the ability of
Company to perform its obligations under this Agreement. Provided that the
Company makes no representation or warranty with respect to filings or other
actions to be taken or required to be taken by any of the Parent Parties in
respect of consents or approvals required in connection with the transactions
contemplated hereby, no consent, approval, order or authorization of, action by
or in respect of, or registration, declaration or filing with any Governmental
Entity (as defined in Section 8.3) is required by or with respect to Company or
any of its Subsidiaries in connection with the execution and delivery of this
Agreement by Company or the consummation by Company and BSB Bank of the
transactions contemplated hereby, except for (1) the filing by Company with the
United States Securities and Exchange Commission (the "SEC") of (A) the proxy
statement and other proxy solicitation materials of Company constituting a part
thereof (the "PROXY STATEMENT") to be included in a registration statement on
Form S-4 to be prepared and filed by Newco in connection with the issuance of
Newco Common Stock in the Merger (as it may be amended from time to time, the
"FORM S-4"), and the declaration of effectiveness of the Form S-4 by the SEC,
and (B) such reports under the Exchange Act as may be required in connection
with this Agreement and the transactions contemplated by this Agreement; (2) the
filing of the Certificate of Merger with the Office of the Secretary of State of
the State of Delaware and such filings with Governmental Entities to satisfy the
applicable requirements of the laws of states in which Company and its
Subsidiaries are qualified or licensed to do business or state securities or
"blue sky" laws; (3) the approval of the
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Board of Governors of the Federal Reserve System (the "FEDERAL RESERVE")under
the Bank Holding Company Act of 1956, as amended (the "BHC ACT") in connection
with the merger of the Company and Newco, or the waiver thereof; (4)the approval
or non-objection of the OTS under the Home Owners' Loan Act (the "HOLA") in
connection with the merger of Company and Newco and the approval of the OTS
under the Bank Merger Act (the "BMA") in connection with the merger of SBU Bank
and BSB Bank; and (5) the approval of the Superintendent of Banking and the
Banking Board of the State of New York (collectively, the "NYSBD") under the
New York Banking Law (the "NYBL") in connection with the acquisition of the
voting stock of BSB Bank as a result of the merger of the Company and Newco and
the merger of SBU Bank and BSB Bank (the matters described in the foregoing
clauses (3) through (5), inclusive, being sometimes referred to herein
collectively as the "BANK REGULATORY APPROVALS").
(e) Company Documents; Undisclosed Liabilities.
(i) Since January 1, 2001, Company has filed all required reports with
the SEC and all required schedules, forms, statements and other documents
(including exhibits and all other information incorporated therein) with the SEC
(collectively, the "COMPANY SEC DOCUMENTS"). As of their respective filing
dates, (i) except as set forth in Section 3.1(e) of the Company Disclosure
Schedule, Company SEC Documents complied in all material respects with the
requirements of the Securities Act of 1933, as amended (the "SECURITIES ACT"),
or the Exchange Act, as the case may be, and the rules and regulations of the
SEC promulgated thereunder applicable to such Company SEC Documents, and (ii) no
Company SEC Document, as of its date, except as amended or supplemented by a
subsequent Company Filed SEC Document (as defined in Section 3.1(g)), contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, and no Company SEC Document filed subsequent to the date hereof will
contain, as of its date, any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading (provided that, with respect to the Proxy Statement or any
other filing made on or after the date hereof in connection with the
transactions contemplated hereby, the Company makes no representation or
warranty with respect to information regarding or supplied for inclusion in such
filing by any Parent Party).
(ii) The financial statements of Company and its consolidated
Subsidiaries included in Company SEC Documents (including the related notes)
complied as to form, as of their respective dates of filing with the SEC, in all
material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, have been prepared in
accordance with accepted accounting principles generally accepted in the United
States ("GAAP") (except, in the case of unaudited statements, as permitted by
Form 10-Q of the SEC) applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto) and fairly present in all
material respects the consolidated financial position of Company and its
consolidated Subsidiaries as of the dates thereof and the consolidated results
of their operations and cash flows for the periods then ended (subject in the
case of unaudited statements, to the absence of footnotes and to recurring
year-end audit adjustments normal in nature and amount).
(iii) Except (A) as reflected in Company's unaudited balance sheet as
of November 30, 2003 or liabilities described in any notes thereto (or
liabilities for which neither accrual nor footnote disclosure is required
pursuant to GAAP) or (B) for liabilities incurred in the ordinary course of
business consistent with past practice since December 31, 2002 or in connection
with this Agreement or the transactions contemplated hereby, Company and its
Subsidiaries, taken as a whole, do not have any material liabilities or material
obligations of any nature, whether absolute, accrued, contingent or otherwise.
-14-
(iv) The Company's and its Subsidiaries' books and records fairly
reflect in all material respects the transactions to which each of Company and
its Subsidiaries are a party or by which its or its Subsidiaries properties or
assets 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.
(f) Certain Contracts. Except as set forth in the Section 3.1(f) of
the Company Disclosure Schedule, as of the date of this Agreement, neither
Company nor any of its Subsidiaries is a party to or bound by (i) any agreement
relating to the incurring of Indebtedness (as defined in this Section 3.1(f)) by
Company or any of its Subsidiaries in an amount in excess in the aggregate of
$1,000,000, including any such agreement which contains provisions that
restrict, or may restrict, the conduct of business of the issuer thereof as
currently conducted (collectively, "INSTRUMENTS OF INDEBTEDNESS"), except in
connection with the outstanding trust preferred securities of the Trust
Preferred Subsidiaries and related junior subordinated debentures, advances and
lines of credit advances from the Federal Home Loan Bank and securities sold
under repurchase agreements, (ii) any "material contract" (as such term is
defined in Item 601(b)(10) of Regulation S-K of the SEC), other than this
Agreement and the documents set forth as exhibits to the Company Filed SEC
Documents, (iii) any non-competition or exclusive dealing agreement, or any
other agreement or obligation which purports to limit or restrict in any respect
(A) the ability of Company or any of its Subsidiaries to solicit customers or
(B) the manner in which, or the localities in which, all or any portion of the
business of Company and its Subsidiaries or, following consummation of the
transactions contemplated by this Agreement, Parent and its Subsidiaries, is or
would be conducted, (iv) any agreement providing for the indemnification by
Company or a Subsidiary of Company of any Person other than Company's engagement
letter with KBW (as defined in Section 3.1(s)), customary indemnification
provisions in underwriting agreements relating to the offering of securities of
Company and the Trust Preferred Subsidiaries and customary agreements relating
to the indemnity of directors, officers and employees of Company or its
Subsidiaries, (v) any joint venture or partnership agreement, (vi) any agreement
that grants any right of first refusal or right of first offer or similar right
or that limits or purports to limit the ability of Company or any of its
Subsidiaries to own or operate any business or own, operate, sell, transfer,
pledge or otherwise dispose of any material amount of assets or business, (vii)
any contract or agreement providing for any material (individually or in the
aggregate) payments that are conditioned, in whole or in part, on a change of
control of Company or any of its Subsidiaries, (viii) any collective bargaining
agreement, (ix) except as disclosed in the Company SEC Documents, any employment
agreement with, or any agreement or arrangement that contains any severance pay
or post-employment liabilities or obligations (other than as required by law)
to, any employee or former employee of Company or any of its Subsidiaries (any
such Person, hereinafter, an "EMPLOYEE"), (x) any agreement regarding any agent
bank or other similar relationships with respect to lines of business, (xi) any
material agreement that contains a "most favored nation" clause or other term
providing preferential pricing or treatment to a third party, (xii) any
agreement material to Company pertaining to the use of or granting any right to
use or practice any rights under any Intellectual Property, whether Company is
the licensee or licensor thereunder, (xiii) any material agreements pursuant to
which Company or any of its Subsidiaries leases any real property, (xiv) any
contract or agreement material to Company providing for the outsourcing or
provision of servicing of customers, technology or product offerings of Company
or its Subsidiaries, or (xv) any contract or other agreement not made in the
ordinary course of business consistent with past practice which (A) is material
to Company or (B) which would reasonably be expected to materially delay the
consummation of the Merger or any of the transactions contemplated by this
Agreement. Each agreement, contract and obligation of the type described in
clauses (i) through (xv) above, whether or not set forth in Section 3.1(f) of
the Company Disclosure Schedule, is herein referred to as a "COMPANY MATERIAL
CONTRACT"). Each Company Material Contract is valid and binding on Company (or,
to the extent a Subsidiary of Company is a party, such Subsidiary) and, to the
knowledge of Company, any other party thereto, and is in full force and effect.
Neither Company nor any of its Subsidiaries is in breach or default under any
-15-
Company Material Contract except where any such breach or default would not,
individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect on Company. As of the date hereof, neither Company nor any
Subsidiary of Company has knowledge of any violation or default under, or any
condition which with the passage of time or the giving of notice or both would
result in such a violation or default under, any Company Material Contract by
any other party thereto except where any such violation or default would not,
individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect on Company. Prior to the date hereof, Company has made available
to Newco true and complete copies of all Company Material Contracts, except for
any Company Material Contracts set forth as Item 10 exhibits to the Company
Filed SEC Documents; provided, however, that if any such exhibit has been
redacted or is otherwise incomplete, Company has made available true and correct
copies of the underlying agreement pertaining to such exhibit. There are no
provisions in any Instrument of Indebtedness that provide any restrictions on
the repayment of the outstanding Indebtedness thereunder, or that require that
any financial payment (other than payment of outstanding principal and accrued
interest) be made in the event of the repayment of the outstanding Indebtedness
thereunder prior to expiration. For purposes of this Agreement, "INDEBTEDNESS"
of a Person shall mean (i) all obligations of such Person for borrowed money,
(ii) all obligations of such Person evidenced by bonds, debentures, notes and
similar instruments, (iii) all leases of such Person capitalized in accordance
with GAAP, and (iv) all obligations of such Person under sale-and-lease back
transactions, agreements to repurchase securities sold and other similar
financing transactions.
(g) Absence of Certain Changes or Events. Except for liabilities
incurred in connection with this Agreement or the transactions contemplated
hereby, and except as set forth in Section 3.1(g) of the Company Disclosure
Schedule, or as disclosed in Company SEC Documents filed and publicly available
prior to the date hereof (as amended to the date hereof, "COMPANY FILED SEC
DOCUMENTS"), since December 31, 2002, Company and its Subsidiaries have
conducted their respective businesses in all material respects only in the
ordinary course of business consistent with past practice and (1) with respect
to subsections (i), (iii), (iv), (vi), (vii), (viii) and (ix) (in the case of
subsection (ix), as it pertains to such other subsections) below, since December
31, 2002, and (2) with respect to subsections (ii), (v) and (ix) (in the case of
subsection (ix), as it pertains to such other subsections) below, from September
30, 2003 to the date hereof, there has not been:
(i) any Material Adverse Change in Company,
(ii) any issuance of Company Stock Options or restricted shares of
Company Common Stock, or any other equity-based award, to any directors,
officers, Employees or consultants of Company or any of its Subsidiaries,
(iii) any declaration, setting aside or payment of any dividend or
other distribution (whether in cash, stock or property) with respect to any of
the capital stock of Company or its Subsidiaries, other than regular quarterly
cash dividends not in excess of $0.25 per share on Company Common Stock, and
other than dividends paid by any wholly owned Subsidiary of Company to Company
or any other wholly owned Subsidiary of Company,
(iv) any split, combination or reclassification of any of Company's
capital stock, or any issuance or the authorization of any issuance of any other
securities in respect of, in lieu of or in substitution for shares of Company's
capital stock, except for issuances of Company Common Stock pursuant to Company
Stock Plans or upon the exercise of Company Stock Options awarded prior to the
date hereof in accordance with their present terms,
(v) (A) any granting by Company or any of its Subsidiaries to any
current or former directors, executive officers, Employees or consultants of any
increase in compensation, bonus or other benefits, except for (x) increases to
Employees who are not current or former directors
-16-
or officers that were made in the ordinary course of business consistent with
past practice, (y) as required from time to time by applicable law affecting
wages and (z) as required by the terms of plans or arrangements existing prior
to such date and listed in Section 3.1(k) of the Company Disclosure Schedule,
(B) any granting by Company or any of its Subsidiaries to any such current or
former directors, executive officers, Employees or consultants of any increase
in severance or termination pay, or (C) any entry by Company or any of its
Subsidiaries into, or any amendment of, any employment, deferred compensation,
consulting, severance, termination or indemnification agreement with any such
current or former directors, Employees, officers or consultants, except as
required from time to time by applicable law,
(vi) other than as described in Company Filed SEC Documents, any change
in any material respect in accounting methods, principles or practices by
Company affecting its assets, liabilities or business, including any reserving,
renewal or residual method, or estimate of practice or policy, other than
changes after the date hereof to the extent required by a change in GAAP or
regulatory accounting principles,
(vii) any Tax election or change in or revocation of any Tax election,
amendment to any Tax Return (as defined in Section 3.1(j)), closing agreement
with respect to Taxes, or settlement or compromise of any Tax liability by
Company or its Subsidiaries, except as would be permitted under Section 4.1(ix),
(viii) any material change in investment policies, or
(ix) any agreement or commitment (contingent or otherwise) to do any of
the foregoing.
(h) Licenses; Compliance with Applicable Laws.
(i) Section 3.1(h) of the Company Disclosure Schedule sets forth a true
and complete listing of all states in which Company and each of its Subsidiaries
are licensed to conduct business. To the Knowledge of Company, each of Company,
its Subsidiaries and Employees hold all material permits, licenses, variances,
authorizations, exemptions, orders, registrations and approvals of all
Governmental Entities (the "Permits") that are required for the operation of the
respective businesses of Company and its Subsidiaries as presently conducted.
Each of Company and its Subsidiaries is, and for the last five years has been,
in compliance in all respects with the terms of such Permits and all such
Permits are in full force and effect and no suspension, modification or
revocation of any of them is pending or, to the knowledge of Company, threatened
nor, to the knowledge of Company, do grounds exist for any such action, except
where non-compliance or such suspension, modification or revocation would not,
individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect on Company.
(ii) Except where failure to comply would not, individually or in the
aggregate, reasonably be expected to result in a Material Adverse Effect on
Company, each of Company and its Subsidiaries is, and for the last five years
has been, in compliance with all applicable statutes, laws, regulations,
ordinances, Permits, rules, judgments, orders, decrees or arbitration awards of
any Governmental Entity applicable to Company or its Subsidiaries.
(iii) Neither Company nor any of its Subsidiaries is subject to any
outstanding order, injunction or decree or is a party to any written agreement,
consent agreement or memorandum of understanding with, or is a party to any
commitment letter or similar undertaking to, or is subject to any written (or,
to the knowledge of Company, unwritten) order or directive by, or is a recipient
of any supervisory letter from or has adopted any resolutions at the request of
(in each case other than orders, directives, supervisory letters and the like of
general application), any
-17-
Governmental Entity that restricts in any respect the
conduct of its business or that in any respect relates to its capital adequacy,
its policies, its management or its business (each, a "COMPANY REGULATORY
AGREEMENT"), nor has Company or any of its Subsidiaries or Affiliates (as
defined in Section 8.3(a)) (A) to Company's knowledge, been advised since
January 1, 2001 by any Governmental Entity that it is considering issuing or
requesting any such Company Regulatory Agreement or (B) have knowledge of any
pending or threatened investigation by any Governmental Entity. Neither Company
nor any of its Subsidiaries is in breach or default under any Company Regulatory
Agreement in any material respect. Prior to the date hereof, Company has made
available to Newco true and complete copies of all Company Regulatory
Agreements.
(iv) Except for filings with the SEC, which are the subject of Section
3.1(e), since January 1, 2001, Company and each of its Subsidiaries have timely
filed all regulatory reports, schedules, forms, registrations and other
documents, together with any amendments required to be made with respect
thereto, that they were required to file with any Governmental Entity (the
"OTHER COMPANY DOCUMENTS"), and have timely paid all fees and assessments due
and payable in connection therewith, except where the failure to make such
payments and filings would not, individually or in the aggregate, reasonably be
expected to result in a Material Adverse Effect on Company. There is no material
unresolved violation or exception by any of such Governmental Entities with
respect to any report or statement relating to any examinations of Company or
any of its Subsidiaries. Company has delivered or made available to Newco a true
and complete copy of each material Other Company Document requested by Newco.
(v) Neither Company nor any of its Subsidiaries, nor any of their
respective directors, officers or Employees has been the subject of any
disciplinary proceedings or orders of any Governmental Entity arising under
applicable laws or regulations which would be required to be disclosed in any
Other Company Document except as disclosed therein, and no such disciplinary
proceeding or order is pending, nor to the knowledge of Company threatened,
except where non-disclosure, or such preceding or order, would not, individually
or in the aggregate, reasonably be expected to result in a Material Adverse
Effect on Company.
(vi) BSB Bank is "well-capitalized" and "well managed" under applicable
regulatory definitions, and its examination rating under the Community
Reinvestment Act of 1977 is "satisfactory".
(vii) Neither Company or any of its Affiliates, nor, to the knowledge
of Company, any "affiliated person" (as defined in the Investment Company Act)
of Company or any of its Affiliates, is ineligible pursuant to Section 9(a) or
9(b) of the Investment Company Act of 1940 to act as, or subject to any
disqualification which would form a reasonable basis for any denial, suspension
or revocation of the registration of or licenses or for any limitation on the
activities of Company or any of its Affiliates as, an investment advisor (or in
any other capacity contemplated by said Act) to a registered investment company.
Neither Company or any of its Affiliates, nor to the knowledge of Company, any
"associated person of a broker or dealer" (as defined in the Exchange Act) of
Company or any of its Affiliates, is ineligible pursuant to Section 15(b) of the
Exchange Act to act as a broker-dealer or as an associated person to a
registered broker-dealer or is subject to a "statutory disqualification" as
defined in Section 3(a)(39) of the Exchange Act or otherwise ineligible to serve
as a broker-dealer or as an associated person to a registered broker-dealer.
(viii) The business and operations of Company and of each of Company's
Subsidiaries through which Company conducts its finance activities have been
conducted in compliance with all applicable statutes and regulations regulating
the business of consumer lending, including state usury laws, the Truth in
Lending Act, the Real Estate Settlement Procedures Act, the Consumer Credit
Protection Act, the Equal Credit Opportunity Act, the Fair Credit Reporting Act,
the Homeowners Ownership and Equity Protection Act, the Fair Debt Collections
Act and other
-18-
Federal, state, local and foreign laws regulating lending ("FINANCE LAWS"), and
have complied with all applicable collection practices in seeking payment under
any loan or credit extension of such Subsidiaries, except in each case where
non-compliance would not, individually or in the aggregate, reasonably be
expected to result in a Material Adverse Effect on Company. In addition, there
is no pending or, to the knowledge of Company, threatened charge by any
Governmental Entity that Company or any of its Subsidiaries has violated any
applicable Finance Laws, except insofar as would not, individually or in the
aggregate, reasonably be expected to result in a Material Adverse Effect on
Company.
(ix) Since January 1, 2001, neither Company nor any of its
Subsidiaries, nor to the knowledge of Company any other Person acting on behalf
of Company or any of its Subsidiaries that qualifies as a "financial
institution" under the U.S. Anti-Money Laundering laws has knowingly acted, by
itself or in conjunction with another, in any act in connection with the
concealment of any currency, securities, other proprietary interest that is the
result of a felony as defined in the U.S. Anti-Money Laundering laws ("UNLAWFUL
GAINS"), nor knowingly accepted, transported, stored, dealt in or brokered any
sale, purchase or any transaction of other nature for Unlawful Gains, except
insofar as would not individually or in the aggregate reasonably be expected to
result in a Material Adverse Effect on Company. Company and each of its
Subsidiaries that qualifies as a "financial institution" under the U.S.
Anti-Money Laundering laws has, during the past three years, implemented such
anti-money laundry mechanisms and kept and filed all material reports and other
necessary material documents as required by, and otherwise complied with, the
U.S. Anti-Money Laundering laws and the rules and regulations issued thereunder,
except insofar as would not, individually or in the aggregate, reasonably be
expected to result in a Material Adverse Effect on Company.
(i) LITIGATION. Except as set forth in Section 3.1(i) of the Company
Disclosure Schedule, which contains a true and current (as of the date hereof)
list of any pending and, to Company's knowledge, threatened litigation, action,
suit, proceeding, investigation or arbitration, no action, demand, charge,
requirement or investigation by any Governmental Entity and no litigation,
action, suit, proceeding, investigation or arbitration by any Person or
Governmental Entity, in each case with respect to Company or any of its
Subsidiaries or any of their respective properties or Permits, is pending or, to
the knowledge of Company, threatened, except as would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect on
Company.
(j) TAXES. For purposes of this Section 3.1(j) any reference to Company
or Company's Subsidiaries shall be deemed to include a reference to Company's
predecessors or Company's Subsidiaries' predecessors, respectively, except where
inconsistent with the language of this Section 3.1(j).
(i) Each of Company and its Subsidiaries has (A) timely filed (or there
have been timely filed on its behalf) with the appropriate Governmental Entities
all income and other material Tax Returns required to be filed by it (giving
effect to all extensions), all of which are true, correct and complete in all
material respects; (B) timely paid in full (or there has been timely paid in
full on its behalf) all material Taxes required to be paid by it and (C) made
adequate provision in accordance with GAAP in all material respects (or adequate
provision in accordance with GAAP in all material respects has been made on its
behalf) for all accrued Taxes not yet due. The accruals and reserves for Taxes
reflected in Company's audited consolidated balance sheet as of December 31,
2002 (and the notes thereto) and the most recent quarterly financial statements
(and the notes thereto) are adequate in accordance with GAAP in all material
respects to cover all Taxes accrued or accruable through the date thereof.
(ii) There are no material Liens for Taxes upon any property or assets
of Company or any of its Subsidiaries, except for Company Permitted Liens.
-19-
(iii) Each of Company and its Subsidiaries has complied in all material
respects with all applicable laws, rules and regulations relating to the
withholding and payment over of Taxes and has, within the time and in the manner
prescribed by law, withheld and paid over to the proper Governmental Entities
all amounts required to be so withheld and paid over under applicable laws.
(iv) There are no Federal, state, local or foreign audits or other
administrative proceedings, disputes or court proceedings presently pending with
regard to any Taxes or Tax Returns of Company or any of its Subsidiaries, and
neither Company nor any of its Subsidiaries has received a written notice of any
pending or proposed claims, audits or proceedings with respect to Taxes that are
material to Company.
(v) Neither Company nor any of its Subsidiaries has granted in writing
any power of attorney which is currently in force with respect to any Taxes or
Tax Returns.
(vi) Except as set forth in Section 3.1(j) of the Company Disclosure
Schedule, neither Company nor any of its Subsidiaries has requested an extension
of time within which to file any Tax Return which has not since been filed and
no currently effective waivers, extensions, or comparable consents regarding the
application of the statute of limitations with respect to Taxes or Tax Returns
have been given by or on behalf of Company or any of its Subsidiaries.
(vii) Neither Company nor any of its Subsidiaries is a party to any
agreement providing for the allocation, sharing or indemnification of Taxes
(other than such an agreement exclusively between or among Company and any of
its Subsidiaries).
(viii) Neither Company nor any of its Subsidiaries has been included in
any consolidated, unitary or combined Tax Return (other than Tax Returns which
include only Company and any of its Subsidiaries) provided for under the laws of
the United States, any foreign jurisdiction or any state or locality.
(ix) Neither Company nor any of its Subsidiaries has constituted either
a "distributing corporation" or a "controlled corporation" (within the meaning
of Section 355(a)(1)(A) of the Code) in a distribution of stock to which Section
355 of the Code (or so much of Section 356 of the Code as relates to Section 355
of the Code) applies and which occurred within five years of the date of this
Agreement.
(x) Neither Company nor any of its Subsidiaries has agreed to make any
material adjustment under Section 481 of the Code affecting any taxable year.
(xi) There have not been, within two years of the date of this
Agreement, any (i) redemptions by Company or any of its Subsidiaries, (ii)
transfers or dispositions of property by Company or any of its Subsidiaries for
which Company or its Subsidiary did not receive adequate consideration, or (iii)
distributions to the holders of Company Common Stock, in the case of clauses (i)
through (iii) above, with respect to their stock other than distributions of
cash in the ordinary course of business consistent with past practice.
(xii) No material claim has been made by any Governmental Entities in a
jurisdiction where Company or any of its Subsidiaries does not file Tax Returns
that any such entity is, or may be, subject to taxation by that jurisdiction.
(xiii) Company and each of its Subsidiaries has made available to Newco
correct and complete copies of (i) all Tax Returns filed within the past three
years, (ii) all audit
-20-
reports, letter rulings, technical advice memoranda and similar
documents issued by a Governmental Entity within the past three years relating
to the Federal, state, local or foreign Taxes due from or with respect to
Company or any of its Subsidiaries and (iii) any closing letters or agreements
entered into by Company or any of its Subsidiaries with any Governmental
Entities within the past three years with respect to Taxes.
(xiv) As of the date hereof, neither Company nor any of its Affiliates
or Subsidiaries has taken or agreed to take any action, has failed to take any
action or knows of any fact, agreement, plan or other circumstance that could
reasonably be expected to prevent the Merger from qualifying as a
"reorganization" within the meaning of Section 368(a) of the Code.
(xv) Neither Company nor any of its Subsidiaries has received any
written notice of deficiency or assessment from any Governmental Entity for any
material amount of Tax that has not been fully settled or satisfied.
(xvi) Neither Company nor any of its Subsidiaries has been a party to a
"listed transaction" or other "reportable transaction" within the meaning of
Treasury Regulations Section 1.6011-4(b)(2).
(xvii) For purposes of this Agreement (A) "TAX" or "TAXES" shall mean
(x) any and all taxes, customs, duties, tariffs, imposts, levies or other like
governmental charges, including income, gross receipts, excise, real or personal
property, ad valorem, value added, estimated, alternative minimum, stamp, sales,
withholding, social security, occupation, use, service, service use, license,
net worth, payroll, franchise, transfer and recording taxes and charges, imposed
by the IRS or any other taxing authority (whether domestic or foreign including
any state, county, local or foreign government or any subdivision or taxing
agency thereof (including a United States possession)), whether computed on a
separate, consolidated, unitary, combined or any other basis; and such term
shall include any interest, fines, penalties or additional amounts attributable
to, or imposed upon, or with respect to, any such amounts, and (B) "TAX RETURN"
shall mean any report, return, document, declaration, election or other
information or filing required to be supplied to any taxing authority or
jurisdiction (foreign or domestic) with respect to Taxes, including information
returns and any documents required to accompany payments of estimated Taxes or
requests for the extension of time in which to file any such report, return,
document, declaration or other information.
(k) Employee Benefit Plans.
(i) Section 3.1(k)(i) of the Company Disclosure Schedule includes a
complete list of all material Company Plans and all Employment Agreements. As
used herein, (A) "COMPANY PLAN" means any material employee benefit plan,
program, policy, practices, or other arrangement providing benefits to any
current or former employee, officer or director of Company or any of its
Subsidiaries or any beneficiary or dependent thereof that was or is sponsored or
maintained by Company or any of its Subsidiaries or to which Company or any of
its Subsidiaries contributed or contributes, or was or is obligated to
contribute, whether or not written, including without limitation any employee
welfare benefit plan within the meaning of Section 3(1) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), any employee
pension benefit plan within the meaning of Section 3(2) of ERISA (whether or not
such plan is subject to ERISA) and any bonus, incentive, deferred compensation,
vacation, stock purchase, stock option, severance, employment, change of control
or fringe benefit plan, program or policy, (B) "EMPLOYMENT AGREEMENT" means a
contract, offer letter or agreement of Company or any of its Subsidiaries with
or addressed to any individual who is rendering or has rendered services thereto
as an employee or consultant pursuant to which Company or any of its
Subsidiaries has any actual or contingent liability or obligation to provide
compensation and/or benefits in consideration for past,
-21-
present or future services.
(ii) With respect to each Plan, Company has delivered or made available
to Parent a true, correct and complete copy of each of the following documents:
(A) each Plan, and any amendments thereto (or if the Plan is not a written plan,
a description thereof), (B) the most recent Annual Report (Form 5500 Series) and
accompanying schedule, if any, (C) the most recent Summary Plan Description
(required under ERISA, if any), (D) the most recent annual financial report, if
any; (E) the most recent actuarial report, if any, and (F) the most recent
determination letter from the IRS, if any. Company has delivered or made
available to Parent a true, correct and complete copy of each Employment
Agreement. Except as specifically provided in the foregoing documents delivered
to Parent or as contemplated by the transactions under the Agreement, there are
no amendments to any Plan or Employment Agreement that have been adopted or
approved nor has Company or any of its Subsidiaries undertaken to make any such
amendments or to adopt or approve any new Plan or Employment Agreement. As used
herein, (A) "PLAN" means any Company Plan other than a Multiemployer Plan or a
Multiple Employer Plan (as defined in Section 3.1(k)(x)) and (B) "MULTIEMPLOYER
Plan" means any "multiemployer plan" within the meaning of Section 4001(a)(3) of
ERISA.
(iii) Section 3.1(k)(iii) of the Company Disclosure Schedule identifies
each Plan that is intended to be a "qualified plan" within the meaning of
Section 401(a) of the Code ("QUALIFIED PLANS"). The Internal Revenue Service has
issued a favorable determination letter with respect to each Qualified Plan and
the related trust that has not been revoked, and to Company's knowledge no
circumstances exist that could adversely affect the qualified status of any
Qualified Plan or the related trust. No trust funding any Plan is intended to
meet the requirements of Code Section 501(c)(9).
(iv) All contributions required to be made with respect to any Plan by
applicable law or regulation or by any plan document or other contractual
undertaking, and all premiums due or payable with respect to insurance policies
funding any Plan, for any period through the date hereof have been timely made
or paid in full or, to the extent not required to be made or paid on or before
the date hereof, have been fully reflected on the Company financial statements
to the extent required by GAAP. Each Plan that is an employee welfare benefit
plan under Section 3(1) of ERISA either (A) is funded through an insurance
company contract and is not a "welfare benefit fund" with the meaning of Section
419 of the Code or (B) is unfunded.
(v) With respect to each Plan, Company and its Subsidiaries have
complied, and are now in compliance, in all material respects, with all
provisions of ERISA, the Code and all laws and regulations applicable to such
Plans, and each Plan has been administered in all material respects in
accordance with its terms. There is not now, nor, to the knowledge of Company,
do any circumstances exist that could reasonably be expected to give rise to,
any requirement for the posting of security with respect to a Plan or the
imposition of any lien on the assets of Company or any of its Subsidiaries under
ERISA or the Code.
(vi) Except as disclosed in Section 3.1(k)(vi) of the Company
Disclosure Schedule, no Plan is subject to Title IV or Section 302 of ERISA or
Section 412 or 4971 of the Code (a "COMPANY TITLE IV PLAN").
(vii) With respect to any Company Title IV Plan to which Company or any
trade or business, whether or not incorporated, that together with Company is a
"single employer" within the meaning of Section 4001(b) of ERISA (a "COMPANY
ERISA AFFILIATE") made, or was required to make, contributions on behalf of any
current or former employee or director during the five (5) year period ending on
the last day of the most recent plan year ended prior to the date hereof, (a) no
liability under Title IV or Section 302 of ERISA has been incurred by Company or
any
-22-
Company ERISA Affiliate that has not been satisfied in full, except where
failure to satisfy such liability would not, individually or in the aggregate,
reasonably be expected to result in a Material Adverse Effect on Company, and
(b) to the knowledge of Company, no condition exists that presents a risk to
Company or any Company ERISA Affiliate of incurring any such liability, other
than liability for premiums due to the PBGC (which premiums have been paid when
due), except insofar as would not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect on Company.
(viii) The PBGC has not, to the knowledge of Company, instituted
proceedings to terminate any Company Title IV Plan and, to the knowledge of
Company, no condition exists that presents a material risk that such proceedings
will be instituted, except insofar as would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on Company.
No Company Title IV Plan or any trust established thereunder has incurred any
"accumulated funding deficiency" (as defined in Section 302 of ERISA of Section
412 of the Code), whether or not waived, as of the last day of the most recently
ended fiscal year, except insofar as would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on Company.
(ix) There are no pending or, to the knowledge of Company, threatened
or anticipated claims by or on behalf of any Plan by any employee or beneficiary
covered under any such Plan, or otherwise involving any such Plan (other than
routine claims for benefits), except for claims which, individually or in the
aggregate, would not reasonably be expected to result in a Material Adverse
Effect on Company.
(x) No Company Plan is a Multiemployer Plan or a plan that has two or
more contributing sponsors at least two of whom are not under common control,
within the meaning of Section 4063 of ERISA (a "MULTIPLE EMPLOYER PLAN"). None
of Company and its Subsidiaries nor any of their respective ERISA Affiliates
has, at any time during the last six years, contributed to or been obligated to
contribute to any Multiemployer Plan or Multiple Employer Plan. None of Company
and its Subsidiaries nor any ERISA Affiliates has incurred any Withdrawal
Liability that has not been satisfied in full. As used herein, (A) "ERISA
AFFILIATE" means, with respect to any entity, trade or business, any other
entity, trade or business that is, or was at the relevant time, a member of a
group described in Section 414(b), (c), (m) or (o) of the Code or Section
4001(b)(1) of ERISA that includes or included the first entity, trade or
business, or that is, or was at the relevant time, a member of the same
"controlled group" as the first entity, trade or business pursuant to Section
4001(a)(14) of ERISA and (B) "WITHDRAWAL LIABILITY" means liability to a
Multiemployer Plan or a Multiple Employer Plan as a result of a complete or
partial withdrawal from such Multiemployer Plan or Multiple Employer Plan, as
those terms are defined in Subtitle D and in Part I of Subtitle E of Title IV of
ERISA.
(xi) There does not now exist, nor, to the knowledge of Company, do any
circumstances exist that could reasonably be expected to result in, any
Controlled Group Liability that would be a material liability of Company or any
of its Subsidiaries following the Closing. As used herein, "CONTROLLED GROUP
LIABILITY" means any and all liabilities (i) under Title IV of ERISA, (ii) under
Section 302 of ERISA, (iii) under Sections 412 and 4971 of the Code, (iv) as a
result of a failure to comply with the continuation coverage requirements of
Section 601 et seq. of ERISA and Section 4980B of the Code and (v) under
corresponding or similar provisions of foreign laws or regulations. Without
limiting the generality of the foregoing, neither Company nor any of its
Subsidiaries, nor any of their respective ERISA Affiliates, has engaged in any
transaction described in Section 4069 or Section 4204 or 4212 of ERISA.
(xii) Except as set forth in Section 3.1(k)(xii) of the Company
Disclosure Schedule, Company and its Subsidiaries have no liability for life,
health, medical or other welfare
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benefits to former employees or beneficiaries or dependents thereof, except for
health continuation coverage as required by Section 4980B of the Code or Part 6
of Title I of ERISA and at no expense to Company and its Subsidiaries. Company
and each of its Subsidiaries has reserved the right to amend, terminate or
modify at any time all plans or arrangements providing for retiree health or
life insurance coverage.
(xiii) Section 3.1(k)(xiii) of the Company Disclosure Schedule sets
forth an accurate list of any Plan or Employment Agreement under which the
execution and delivery of this Agreement or the consummation of the transactions
contemplated hereby could reasonably be expected to (either along or in
conjunction with any other event) (A) result in, cause the accelerated vesting,
funding or delivery of, or increase the amount or value of, any payment or
benefit to any Employee, officer or director of Company or any of its
Subsidiaries, (B) limit the right of Company or any of its Subsidiaries to
amend, merge, terminate or receive a reversion of assets from any Plan or
related trust or any Employment Agreement or related trust, or (C) result in any
"excess parachute payments" within the meaning of Section 280G of the Code that
could become payable by Company or any of its Subsidiaries.
(xiv) None of Company and its Subsidiaries nor any other person,
including any fiduciary, has engaged in any "prohibited transaction" (as defined
in Section 4975 of the Code or Section 406 of ERISA), which could reasonably be
expected to subject any of the Plans or their related trusts, Company, any of
its Subsidiaries or any person that Company or any of its Subsidiaries has an
obligation to indemnify, to any material tax or penalty imposed under Section
4975 of the Code or Section 502 of ERISA.
(xv) There are no pending or, to the knowledge of Company, threatened
claims (other than claims for benefits in the ordinary course), lawsuits or
arbitrations which have been asserted or instituted, and, to Company's
knowledge, no set of circumstances exists which may reasonably give rise to a
claim or lawsuit against the Plans, any fiduciaries thereof with respect to
their duties to the Plans or the assets of any of the trusts under any of the
Plans which could reasonably be expected to result in any material liability of
Company or any of its Subsidiaries to the United States Pension Benefit Guaranty
Corporation (the "PBGC"), the United States Department of Treasury, the United
States Department of Labor, any Multiemployer Plan, any Plan, any participant in
a Plan or any other party.
(xvi) Company, its Subsidiaries and each member of their respective
business enterprises have complied in all material respects with the Worker
Adjustment and Retraining Notification Act and all similar state, local and
foreign laws.
(xvii) Each individual who renders services to Company or any of its
Subsidiaries who is classified by Company or such Subsidiary, as applicable, as
having the status of an independent contractor or other non-employee status for
any purpose (including for purposes of taxation and tax reporting and under
Company Plans) is properly so characterized.
(xviii) With respect to each Company Plan that is a Multiple Employer
Plan, (i) none of Company or any of its Subsidiaries, nor any of their
respective ERISA Affiliates, has received any notification, nor has any
knowledge, that if Company or any of its Subsidiaries or any of their respective
ERISA Affiliates were to experience a withdrawal or partial withdrawal from such
plan, it would incur Withdrawal Liability that would be reasonably likely to
have a Material Adverse Effect on Company; and (ii) none of Company and its
Subsidiaries, nor any of their respective ERISA Affiliates has received any
notification, nor has any knowledge, that any such Company Plan is in
reorganization, has been terminated, is insolvent, or may reasonably be expected
to be in reorganization, to be insolvent, or to be terminated.
-24-
(l) Labor Matters. There are no labor or collective bargaining
agreements to which Company or any Subsidiary of Company is a party. To the
knowledge of the Company, there is no union organizing effort pending or
threatened against Company or any Subsidiary of Company. There is no labor
strike, labor dispute (other than routine Employee grievances that are not
related to union Employees), work slowdown, stoppage or lockout pending or, to
the knowledge of the Company, threatened against Company or any Subsidiary of
Company. There is no unfair labor practice or labor arbitration proceeding
pending or, to the knowledge of the Company, threatened against Company or any
Subsidiary of Company (other than routine Employee grievances that are not
related to union Employees) which would, individually or in the aggregate,
reasonably be expected to result in a Material Adverse Effect on Company.
Company and its Subsidiaries are in compliance with all applicable laws
respecting employment and employment practices, terms and conditions of
employment and wages and hours, and are not engaged in any unfair labor
practice, except insofar as would not, individually or in the aggregate,
reasonably be expected to result in a Material Adverse Effect on Company.
(m) Environmental Liability.
(i) Each of Company and its Subsidiaries is in material compliance with
all applicable federal and state laws and regulations relating to pollution or
protection of the environment (including without limitation, laws and
regulations relating to emissions, discharges, releases and threatened releases
of Hazardous Materials (as hereinafter defined)), or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling by each of Company and its Subsidiaries of Hazardous
Materials;
(ii) There is no suit, claim, action, proceeding, investigation or
notice pending or, to the knowledge of Company, threatened (or past or present
actions or events that, to the knowledge of the Company, could form the basis of
any such suit, claim, action, proceeding, investigation or notice), in which
Company or any Subsidiary of Company has been or, with respect to threatened
suits, claims, actions, proceedings, investigations or notices may be, named as
a defendant (x) for alleged material noncompliance (including by any
predecessor) with any environmental law, rule or regulation or (y) relating to
any material release or threatened release into the environment of any Hazardous
Material, occurring at or on a site owned, leased or operated by Company or any
Subsidiary of Company, or to the knowledge of Company, relating to any material
release or threatened material release into the environment of any Hazardous
Material, occurring at or on a site not owned, leased or operated by Company or
any Subsidiary of Company;
(iii) During the period of Company's or any of its Subsidiaries'
ownership or operation of any of its properties, there has not been any material
release by Company or any of its Subsidiaries of Hazardous Materials in, on,
under or affecting any such property;
(iv) To the knowledge of Company, neither Company nor any Subsidiary of
Company has made or participated in any loan to any person who is subject to any
suit, claim, action, proceeding, investigation or notice, pending or threatened,
with respect to (i) any alleged material noncompliance as to any property
securing such loan with any environmental law, rule or regulation or (ii) the
material release or threatened material release into the environment of any
Hazardous Material at a site owned, leased or operated by such person on any
property securing such loan.
(v) For purposes of this Agreement, the term "HAZARDOUS MATERIAL" means
any hazardous waste, petroleum product, polychlorinated biphenyl, chemical,
pollutant, contaminant, pesticide, radioactive substance or other toxic
material, or other material or substance (in each such case, other than small
quantities of such substances in retail containers) regulated under any
applicable environmental or public health statute, law, ordinance, rule or
regulation.
-25-
(n) INTELLECTUAL PROPERTY.
(i) Company or one of its Subsidiaries owns or has the valid right to
use all such patents and patent applications, trademarks, service marks,
trademark or service xxxx registrations and applications, trade names, logos,
designs, Internet domain names, slogans and general intangibles of like nature,
together with all goodwill related to the foregoing, copyrights, copyright
registrations, renewals and applications, Software (as defined in this Section
3.1(n)), hardware, technology, trade secrets and other confidential information,
know-how, proprietary processes, formulae, algorithms, models and methodologies,
licenses, agreements and other proprietary rights material to Company and its
Subsidiaries, taken as a whole (collectively, the "INTELLECTUAL PROPERTY"), used
in the business of Company as it currently is conducted, except in each case as
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on Company. "SOFTWARE" means any and all (A) computer
programs, including any and all software implementations of algorithms, models
and methodologies, whether in source code or object code, (B) databases and
compilations, including any and all data and collections of data, whether
machine readable or otherwise, (C) descriptions, flow-charts and other work
product used to design, plan, organize and develop any of the foregoing, (D) the
technology supporting and content contained on any owned or operated Internet
site(s) and (E) all documentation, including user manuals and training
materials, relating to any of the foregoing.
(ii) All of the material Intellectual Property owned by Company or one
of its Subsidiaries is free and clear of all Liens other than Company Permitted
Liens.
(iii) All registrations pertaining to any Intellectual Property of
Company are valid, subsisting, enforceable, in full force and effect and have
not been cancelled, expired, abandoned or otherwise terminated and all renewal
fees in respect thereof have been duly paid, except insofar as non-payment would
not, individually or in the aggregate, reasonably be expected to result in a
Material Adverse Effect on Company. There is no pending or, to Company's
knowledge, threatened opposition, interference or cancellation proceeding before
any court or registration authority in any jurisdiction against the
registrations and applications pertaining to the Intellectual Property of
Company or, to Company's knowledge, against any other Intellectual Property used
by Company or its Subsidiaries, other than any such proceeding which would not,
individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect on Company.
(iv) To Company's knowledge, the conduct of Company's and its
Subsidiaries' business as currently conducted or proposed by Company to be
conducted does not, in any respect, infringe upon (either directly or indirectly
such as through contributory infringement or inducement to infringe), dilute,
misappropriate or otherwise violate any Intellectual Property owned or
controlled by any third party, except insofar as would not, individually or in
the aggregate, reasonably be expected to result in a Material Adverse Effect on
Company, and neither Company nor its Subsidiaries have received written notice
alleging such infringement, dilution, misappropriation or violation.
(v) To the Company's knowledge, no third party is misappropriating,
infringing, diluting or violating any material Intellectual Property owned by or
licensed to or by Company or its Subsidiaries, except insofar as would not.
individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect on Company, and no such claims have been made against a third
party by Company or its Subsidiaries.
(o) INSURANCE MATTERS. Company and its Subsidiaries have all material
primary, excess and umbrella policies of general liability, fire, workers'
compensation, products liability, completed operations, employers, liability,
health, bonds, earthquake and other forms of insurance providing insurance
coverage that is customary in amount and scope for other companies in the
-26-
industry in which they operate, and each of such policies and other forms of
insurance is in full force and effect on the date hereof and shall (or
comparable replacements or substitutions therefore shall) be kept in full force
and effect by Company through the Effective Time. All such policies, considered
collectively with other such policies providing the same type of coverage, are
sufficient for compliance with all requirements of law and of all requirements
under contracts or leases to which Company is a party, except where
non-compliance would not, individually or in the aggregate, reasonably be
expected to result in a Material Adverse Effect on Company. All premiums
currently payable or previously due and payable with respect to all periods up
to and including the Effective Time have been paid to the extent such premiums
are due and payable on or prior to the date hereof and, with respect to premiums
not due or payable at or prior to the date hereof, all premiums due and payable
prior to the Effective Time, will have been paid prior to the Effective Time and
no notice of cancellation or termination has been received with respect to any
such policy material to Company and its Subsidiaries, taken as a whole.
(p) INFORMATION SUPPLIED. None of the information supplied or to be
supplied by Company in writing specifically for inclusion or incorporation by
reference in the Form S-4 will, at the time the Form S-4 becomes effective under
the Securities Act, at the date it is first mailed to Company's stockholders or
at the time of Company Stockholders Meeting, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, except that no
representation or warranty is made by Company with respect to statements made or
incorporated by reference therein based on information supplied by Newco
specifically for inclusion or incorporation by reference in the Form S-4.
(q) TRANSACTIONS WITH AFFILIATES. Other than as disclosed in the
Company SEC Documents as of the date hereof there are no outstanding amounts
payable to or receivable from, or advances by Company or any of its Subsidiaries
to, and neither Company nor any of its Subsidiaries is otherwise a creditor or
debtor to, any Affiliated Person (as defined in Section 8.3) of Company other
than as part of the normal, customary terms of such person's employment or
service as a director or Employee with Company or any of its Subsidiaries; and
neither Company nor any Subsidiary of Company is a party to any transaction or
agreement with any Affiliated Person of Company.
(r) VOTING REQUIREMENTS. The affirmative vote at the Company
Stockholders Meeting (the "COMPANY STOCKHOLDER APPROVAL") of a majority of the
outstanding shares of Company Common Stock issued and outstanding and entitled
to vote at Company Stockholders Meeting to approve and adopt this Agreement is
the only vote of the holders of any class or series of Company's capital stock
necessary to approve and adopt this Agreement and the transactions contemplated
hereby, including the Merger.
(s) OPINIONS OF FINANCIAL ADVISOR. Company has received the written
opinion of Xxxxx, Xxxxxxxx & Xxxxx, Inc. ("KBW") dated the date hereof, to the
effect that, as of such date, the Merger Consideration is fair from a financial
point of view to the stockholders of Company (the "KBW FAIRNESS OPINION") and
KBW has consented to the inclusion of the KBW Fairness Opinion in the Form S-4.
(t) BROKERS. Except for KBW, whose fees in connection with the
transactions contemplated hereby shall not exceed the amounts set forth on
Section 3.1(t) of the Company Disclosure Schedule, no broker, investment banker,
financial advisor or other Person is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Company or any of its Subsidiaries. Company has delivered to Newco
complete and correct copies of such arrangements set forth on Section 3.1(t) of
the Company Disclosure Schedule.
-27-
(u) TAKEOVER LAWS. Company and the Board of Directors of Company
have taken all action required to be taken by it in order to exempt this
Agreement and the transactions contemplated hereby from, and this Agreement and
the transactions contemplated hereby are exempt from, the requirements of (i)
any "moratorium," "control share," "fair price," "supermajority," "affiliate
transactions," "business combination" or other state antitakeover laws and
regulations, including Section 203 of the DGCL, and (ii) the applicable
provisions of Company's certificate of incorporation.
(v) DERIVATIVE TRANSACTIONS.
(i) Except as would not, individually or in the aggregate, reasonably
be expected to result in a Material Adverse Effect on Company, all Derivative
Transactions entered into by Company or any of its Subsidiaries were entered
into in accordance with applicable rules, regulations and policies of all
regulatory authorities, and in accordance with the investment, securities,
commodities, risk management and other Policies, Practices and Procedures (as
defined in Section 3.1(w)) employed by Company and its Subsidiaries, and were
entered into with counter-parties believed at the time to be financially
responsible and able to understand (either alone or in consultation with their
advisers) and to bear the risks of such Derivative Transactions; and Company and
each of its Subsidiaries have duly performed their obligations under the
Derivative Transactions to the extent that such obligations to perform have
accrued, and there are no material breaches, violations or defaults or
allegations or assertions of such by any party thereunder.
(ii) For purposes of this Agreement, "DERIVATIVE TRANSACTIONS" means
any swap transaction, option, warrant, forward purchase or sale transaction,
futures transaction, cap transaction, floor transaction or collar transaction
relating to one or more currencies, commodities, bonds, equity securities,
loans, interest rates, credit-related events or conditions or any indexes, or
any other similar transaction or combination of any of these transactions,
including collateralized mortgage obligations or other similar instruments or
any debt or equity instruments evidencing or embedding any such types of
transactions, and any related credit support, collateral or other similar
arrangements related to such transactions.
(w) INVESTMENT SECURITIES AND COMMODITIES.
(i) Except as would not, individually or in the aggregate, reasonably
be expected to result in a Material Adverse Effect on Company, each of Company
and its Subsidiaries has good title to all securities and commodities owned by
it (except those sold under repurchase agreements or held in any fiduciary or
agency capacity), free and clear of any Lien, except for Company Permitted Liens
and except to the extent such securities or commodities are pledged in the
ordinary course of business consistent with past practice to secure obligations
of Company or its Subsidiaries. Such securities and commodities are valued on
the books of Company in accordance with GAAP in all material respects.
(ii) Company and its Subsidiaries and their respective businesses
employ investment, securities, commodities, risk management and other policies,
practices and procedures (the "POLICIES, PRACTICES AND PROCEDURES") which
Company believes are prudent and reasonable in the context of such businesses.
Prior to the date hereof, Company has made available to Newco the material
Policies, Practices and Procedures.
(x) LOAN PORTFOLIO; SERVICING.
(i) All loans owned by Company or any Subsidiary of Company, or in
which Company or any Subsidiary of Company has an interest, comply in all
material respects with
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all applicable laws, including, but not limited to, applicable usury statutes,
underwriting and recordkeeping requirements and all Finance Laws and other
applicable consumer protection statutes and the regulations thereunder.
(ii) All loans owned by Company or any Subsidiary of Company, or in
which Company or any Subsidiary of Company has an interest, have been made or
acquired by Company in accordance with board of director-approved loan policies.
As of the date hereof, each of Company and each Subsidiary of Company holds
mortgages contained in its loan portfolio for its own benefit to the extent of
its interest shown therein; such mortgages evidence liens having the priority
indicated by the terms of such mortgages, including the associated loan
documents, subject, as of the date of recordation or filing of applicable
security instruments, only to such exceptions as are discussed in attorneys'
opinions regarding title or in title insurance policies in the mortgage files
relating to the loans secured by real property or are not material as to the
collectability of such loans; and all loans owned by Company and each Subsidiary
of Company are with full recourse to the borrowers, and each of Company and any
Subsidiary of Company has taken no action which would result in a waiver or
negation of any rights or remedies available against the borrower or guarantor,
if any, on any loan. All applicable remedies against all borrowers and
guarantors are enforceable except as may be limited by bankruptcy, insolvency,
moratorium or other similar applicable laws affecting creditors' rights and
except as may be limited by the exercise of judicial discretion in applying
principles of equity. All loans purchased or originated by Company or any
Subsidiary of Company and subsequently sold by Company or any Subsidiary of
Company have been sold without recourse to Company or any Subsidiary of Company
and without any liability under any yield maintenance or similar obligation.
True, correct and complete copies of loan delinquency reports as of November 30,
2003 prepared by Company and each Subsidiary of Company, which reports include
all loans delinquent or otherwise in default, have been furnished to Newco.
True, correct and complete copies of the currently effective lending policies
and practices of Company and each Subsidiary of Company also have been furnished
or made available to Newco.
(iii) Except as set forth at Section 3.1(x) of the Company Disclosure
Schedule, each outstanding loan participation sold by Company or any Subsidiary
of Company was sold with the risk of non-payment of all or any portion of that
underlying loan to be shared by each participant (including Company or any
Subsidiary of Company) proportionately to the share of such loan represented by
such participation without any recourse of such other lender or participant to
Company or any Subsidiary of Company for payment or repurchase of the amount of
such loan represented by the participation or liability under any yield
maintenance or similar obligation. Company and any Subsidiary of Company have
properly fulfilled in all material respects its contractual responsibilities and
duties in any loan in which it acts as the lead lender or servicer and has
complied in all material respects with its duties as required under applicable
regulatory requirements.
(iv) Company and each Subsidiary of Company have properly perfected or
caused to be properly perfected all security interests, liens, or other
interests in any material collateral securing any material loans made by it.
(v) There is no material pending or threatened cancellation or
reduction of any loan purchase commitment or other loan sale contract or
arrangement to which Company or any of its Subsidiaries is a party, and the
obligations of Company and its Subsidiaries under each such commitment, contract
or arrangement are being performed by Company or its applicable Subsidiaries in
accordance with its terms in all material respects.
-29-
(y) REAL PROPERTY.
(i) Section 3.1(y)(i) of the Company Disclosure Schedule sets forth a
list of all real property owned by each of Company and its Subsidiaries (the
"OWNED PROPERTIES"), other than the Owned Properties identified in the Form 10-K
for the year ended December 31, 2002 filed by Company with the SEC on March 28,
2003. Each of Company and its Subsidiaries has good title free and clear of all
Liens to all Owned Properties, except for Company Permitted Liens.
(ii) Section 3.1(y)(ii) of the Company Disclosure Schedule sets forth a
list of each agreement pursuant to which Company or any of its Subsidiaries
leases any real property (such agreements, together with any amendments,
modifications and other supplements thereto, collectively, the "LEASES"), other
than the Leases for which the subject property is identified in the Form 10-K
for the year ended December 31, 2002 filed by Company with the SEC on March 28,
2003. A true and complete copy of each Lease has heretofore been made available
to Newco. Each Lease is valid, binding and enforceable against Company or its
applicable Subsidiary in accordance with its terms and is in full force and
effect, except that (x) such enforceability may be subject to applicable
bankruptcy, insolvency or other similar laws now or hereafter in effect
affecting creditors' rights generally and (y) the availability of the remedy of
specific performance or injunction or other forms of equitable relief may be
subject to equitable defenses and would be subject to the discretion of the
court before which any proceeding therefor may be brought. There are no defaults
by Company or any of its Subsidiaries, as applicable, under any of the Leases,
which, in the aggregate, would result in the termination of such Leases and a
Material Adverse Effect on Company. The consummation of the transactions
contemplated by this Agreement will not cause defaults under the Leases, except
for any such default that would not, individually or in the aggregate, have a
Material Adverse Effect on Company.
(iii) The Owned Properties and the properties leased pursuant to the
Leases (the "LEASED PROPERTIES") constitute all of the real estate on which
Company and its Subsidiaries maintain their facilities or conduct their business
as of the date of this Agreement, except for locations the loss of which would
not constitute a Material Adverse Effect on Company. The Owned Properties and
the Leased Properties are in compliance with all laws, except where
non-compliance would not, individually or in the aggregate, reasonably be
expected to result in a Material Adverse Effect on Company. Neither any
agreement relating to the Owned Properties nor any of the Leases requires
consent of any third party for the consummation of the transactions contemplated
hereby except for (i) such consents which will be obtained prior to Closing and
are listed in Section 3.1(y)(iii) to the Company Disclosure Schedule or (ii)
such consents the failure of which to obtain would not, individually or in the
aggregate, reasonably be expected to result in a Material Adverse Effect on
Company.
(iv) A true and complete copy of each agreement pursuant to which
Company or any of its Subsidiaries leases real property to a third party (such
agreements, together with any amendments, modifications and other supplements
thereto, collectively, the "THIRD PARTY LEASES") has heretofore been made
available to Newco. Each Third Party Lease is valid, binding and enforceable in
accordance with its terms and is in full force and effect, except that (x) such
enforceability may be subject to applicable bankruptcy, insolvency or other
similar laws now or hereafter in effect affecting creditors' rights generally
and (y) the availability of the remedy of specific performance or injunction or
other forms of equitable relief may be subject to equitable defenses and would
be subject to the discretion of the court before which any proceeding therefor
may be brought. To the knowledge of Company, there are no existing defaults by
the tenant under any Third Party Lease, which, in the aggregate, would result in
the termination of such Third Party Leases except for any such default that
would not reasonably be expected to result in a Material Adverse Effect on
Company. The consummation of the transactions contemplated by this Agreement
-30-
will not cause defaults under the Third Party Leases, except for any such
default which would not, individually or in the aggregate, have a Material
Adverse Effect on Company.
(z) ADMINISTRATION OF ACCOUNTS. Company and each of its
Subsidiaries has properly administered all accounts for which it acts as a
fiduciary or agent, 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, except where the
failure to do so would not, individually or in the aggregate, reasonably be
expected to result in a Material Adverse Effect on Company. Neither Company nor
any of its Subsidiaries, nor any of their directors, officers, agents or
Employees, has committed any breach of trust with respect to any such fiduciary
or agency account, and the accountings for each such fiduciary or agency account
are true and correct and accurately reflect the assets of such fiduciary or
agency account, except for such breaches and failures to be true, correct and
accurate which would not, individually or in the aggregate, reasonably be
expected to result in a Material Adverse Effect on Company.
(aa) INTERNAL CONTROLS. None of Company or its Subsidiaries'
records, systems, controls, data or information are recorded, stored,
maintained, operated or otherwise wholly or partly dependent on or held by any
means (including any electronic, mechanical or photographic process, whether
computerized or not) which (including all means of access thereto and therefrom)
are not under the exclusive ownership and direct control of it or its
Subsidiaries or accountants except as would not, individually or in the
aggregate, reasonably be expected to result in a materially adverse effect on
the system of internal accounting controls described in the next sentence.
Company and its Subsidiaries have devised and maintain a system of internal
accounting controls sufficient to provide reasonable assurances regarding the
reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with GAAP.
(bb) RESERVES FOR LOSSES. All reserves or other allowances for
possible losses reflected in Company's financial statements referred to in
Section 3.1(e) as of and for the year ended December 31, 2002 and the quarter
ended September 30, 2003, as of the dates of such financial statements complied
with the standards established by applicable Governmental Entities and were
adequate under GAAP. Neither Company nor BSB Bank has been notified by the
Federal Reserve, NYSBD, the FDIC or Company's independent auditor, in writing or
otherwise, that such reserves are inadequate or that the practices and policies
of Company or BSB Bank, as the case may be, in establishing its reserves for the
year ended December 31, 2002 and the quarter ended September 30, 2003, and in
accounting for delinquent and classified assets generally fail to comply with
applicable accounting or regulatory requirements, or that the Federal Reserve,
NYSBD, the FDIC or Company's independent auditor believes such reserves to be
inadequate or inconsistent with the historical loss experience of Company.
Company has previously furnished Newco with a complete list of all extensions of
credit and other real estate owned ("OREO") that have been classified by any
bank or trust examiner (regulatory or internal) as other loans specially
mentioned, special mention, substandard, doubtful, loss, classified or
criticized, credit risk assets, concerned loans or words of similar import.
Company agrees to update such list at the request of Parent (but no more
frequently than monthly) after the date of this Agreement until the earlier of
the Closing Date or the date that this Agreement is terminated in accordance
with its terms. All OREO held by Company is being carried net of reserves at the
lower of cost or net realizable value.
(cc) RIGHTS AGREEMENT. The Board of Directors of Company
has taken such action as is necessary to render the Series A junior
participating preferred stock purchase rights of Company under the Company
Rights Agreement inapplicable to the Merger and the other transactions
contemplated by this Agreement.
-31-
3.2 REPRESENTATIONS AND WARRANTIES OF PARENT. Except as set forth on
the Disclosure Schedule delivered by the Parent Parties to Company prior to the
execution of this Agreement (the "PARENT DISCLOSURE SCHEDULE") and making
reference to the particular subsection of this Agreement to which exception is
being taken, each of the Parent Parties, severally and not jointly, represents
and warrants to Company as follows:
(a) ORGANIZATION, STANDING AND CORPORATE POWER.
(i) Parent is a federal corporation duly organized, validly existing
and in good standing under federal law. Parent has the corporate power and
authority to own or lease all of its properties and assets and to carry on its
business as it is now being conducted, and is duly licensed or qualified to do
business in each jurisdiction in which the nature of the business conducted by
it or the character or location of the properties and assets owned or leased by
it makes such licensing or qualification necessary. Parent is duly registered as
a savings and loan holding company with the Office of Thrift Supervision.
(ii) SBU Bank is a federally chartered savings bank duly organized and
validly existing and in good standing under the laws of the United States.
Deposit accounts in SBU Bank are insured to the applicable limits by the FDIC
through the BIF (as defined in Section 8.3) to the fullest extent permitted by
law, and all premiums and assessments required in connection therewith have been
paid by SBU Bank. SBU Bank has the corporate power and authority to own or lease
all of its properties and assets and to carry on business as is now being
conducted, and is duly licensed or qualified to do business in each jurisdiction
in which the nature of the business conducted by it or the character or location
of the properties and assets owned or leased by it makes such licensing or
qualification necessary.
(iii) Newco is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware. Newco has the corporate
power and authority to own or lease all of its properties and assets and to
carry on its business as it is now being conducted, and is duly licensed or
qualified to do business in each jurisdiction in which the nature of the
business conducted by it or the character or location of the properties and
assets owned or leased by it makes such licensing or qualification necessary.
Newco was organized to succeed to the rights and obligations of the MHC and
Parent in connection with the Conversion and, upon completion of the Conversion,
Newco will be duly registered as a savings and loan holding company under the
HOLA.
(iv) MHC is a federally chartered mutual holding company duly organized
and validly existing and in good standing under the laws of the United States.
MHC has the corporate power and authority to own or lease all of its properties
and assets and to carry on its business as it is now being conducted, and is
duly licensed or qualified to do business in each jurisdiction in which the
nature of the business conducted by it or the character or location of the
properties and assets owned or leased by it makes such licensing or
qualification necessary.
(v) Prior to the date hereof, Parent has delivered or made available to
Company complete and correct copies of the certificate of incorporation and
by-laws or other organizational documents, as amended to date, of Parent, Newco,
SBU Bank and MHC.
(b) CAPITAL STRUCTURE.
(i) The authorized capital stock of Parent consists of 35,000,000
shares of common stock, par value $0.10 per share ("PARENT COMMON STOCK"), of
which 14,190,806 shares are outstanding, validly issued, fully-paid and
non-assessable and free of preemptive rights, and 5,000,000 shares of preferred
stock, par value $0.10 per share, none of which are outstanding. Neither Parent,
SBU Bank nor Newco has or is bound by any rights of any character relating to
the
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purchase, sale or issuance or voting of, or right to receive dividends or
other distributions on any shares of Newco Common Stock, or any other security
of Newco or any other securities representing the right to vote, purchase or
otherwise receive any shares of Newco Common Stock, other than subscription
rights issuable in connection with the Conversion or shares issuable under any
stock option plans of Newco.
(ii) The authorized capital stock of Newco consists of 190,000,000
shares of Newco Common Stock, none of which are outstanding, and 10,000,000
shares of preferred stock, par value $0.0001 per share, none of which are
outstanding.
(iii) Parent owns all of the capital stock of SBU Bank free and clear
of any lien or encumbrance. Following completion of the Conversion, Newco will
own all of the capital stock of SBU Bank free and clear of any lien or
encumbrance. Except as disclosed in Section 3.2(b) of the Parent Disclosure
Schedule, to the knowledge of Parent, no Person or "group" (as that term is used
in Section 13(d)(3) of the Exchange Act), is the beneficial owner (as defined in
Section 13(d) of the Exchange Act) of five percent or more of the outstanding
shares of Parent Common Stock.
(c) AUTHORITY; NON-CONTRAVENTION; REGULATORY APPROVALS.
(i) Parent, SBU Bank, Newco and MHC each have all requisite corporate
power and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly approved by the Board of Directors of Parent, SBU Bank, Newco and MHC,
by SBU Bank as the sole stockholder of Newco and by Parent as the sole
stockholder of SBU Bank. Except for stockholder/member approvals in connection
with the Conversion as described in the Plan of Conversion and the stockholder
approval referred to in Section 3.2(g), no other corporate proceedings on the
part of Parent, SBU Bank, Newco and MHC are necessary to approve this Agreement
or to consummate the transactions contemplated hereby. This Agreement has been
duly and validly executed and delivered by Parent, SBU Bank, Newco and MHC and
(assuming due authorization, execution and delivery by Company) constitutes the
legal, valid and binding obligations of Parent, SBU Bank, Newco and MHC,
enforceable against Parent, SBU Bank, Newco and MHC in accordance with its
terms, except as enforcement may be limited by general principles of equity
whether applied in a court of law or a court of equity and by bankruptcy,
insolvency and similar law affecting creditors' rights and remedies generally.
(ii) SBU Bank has all requisite corporate power and authority to
execute and deliver the Bank Merger Agreement and, subject to receipt of the
required regulatory approvals specified herein, to consummate the transactions
contemplated thereby. The execution and delivery of the Bank Merger Agreement
and the consummation of the transactions contemplated thereby have been duly and
validly approved by the Board of Directors of SBU Bank and by Parent as the sole
stockholder of SBU Bank. All corporate proceedings on the part of SBU Bank
necessary to consummate the transactions contemplated thereby have been taken.
The Bank Merger Agreement, upon execution and delivery by SBU Bank, will be duly
and validly executed and delivered by SBU Bank and will (assuming due
authorization, execution and delivery by BSB Bank) constitute a valid and
binding obligation of SBU Bank, enforceable against SBU Bank in accordance with
its terms, except as enforcement may be limited by general principles of equity
whether applied in a court of law or a court of equity and by bankruptcy,
insolvency and similar laws affecting creditors' rights and remedies generally.
(iii) Neither the execution and delivery of this Agreement by Parent,
SBU Bank, Newco or MHC, or the Bank Merger Agreement by SBU Bank, nor the
consummation by Parent, SBU Bank, Newco or MHC, as the case may be, of the
transactions contemplated hereby or thereby, nor compliance by Parent, SBU Bank,
Newco or MHC with any of the terms or provisions hereof or thereof,
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will (A) subject to the governmental filings and other matters referred to in
Section 3.2(c)(iv), violate or conflict with any provision of the Certificate of
Incorporation or Bylaws of Parent, SBU Bank, Newco or MHC, or any of their
respective Subsidiaries, as the case may be, or (B) assuming that the consents
and approvals referred to in Section 3.2(c)(iv) are duly obtained, (x) violate
any Laws applicable to Parent, SBU Bank, Newco or MHC or any of their respective
properties or assets, or (y) violate, conflict with, result in a breach of any
provision of or the loss of any benefit under, constitute a default (or an event
which, with notice or lapse of time, or both, would constitute a default) under,
result in the termination of or a right of termination or cancellation under,
accelerate the performance required by, or result in the creation of any lien,
pledge, security interest, charge or other encumbrance upon any of the
respective properties or assets of Parent, SBU Bank, Newco or MHC under any of
the terms, conditions or provisions of any note, bond, mortgage, indenture, deed
of trust, license, lease, agreement or other instrument or obligation to which
Parent, SBU Bank, Newco or MHC is a party, or by which they or any of their
respective properties or assets may be bound or affected.
(iv) Except for (i) all regulatory and stockholder/member approvals in
connection with the Conversion as described in the Plan of Conversion and the
stockholder approval referred to in Section 3.2(g), (ii) the Bank Regulatory
Approvals, (iii) the filing by the applicable Parent Parties of (A) the Form S-4
with the SEC in connection with the registration under the Securities Act of the
shares of Newco Common Stock to be issued in the Merger, and including the proxy
statement and other proxy solicitation materials of Parent constituting a part
thereof, and the declaration of effectiveness of the Form S-4 by the SEC, and
(B) such reports under the Exchange Act as may be required in connection with
this Agreement and the transactions contemplated by this Agreement, (iv) the
filing of the Certificate of Merger with the Office of the Secretary of State of
the State of Delaware and such filings with Governmental Entities to satisfy the
applicable requirements of the laws of states in which Company and its
Subsidiaries do business or state securities or "blue sky" laws, no consents or
approvals of or filings or registrations with any Governmental Entity or with
any third party are necessary in connection with (1) the execution and delivery
by Parent, SBU Bank, Newco and MHC of this Agreement, (2) the consummation by
the Parent Parties of the Merger and the other transactions contemplated hereby,
(3) the execution and delivery by SBU Bank of the Bank Merger Agreement, and (4)
the consummation by SBU Bank of the Bank Combination and the other transactions
contemplated thereby, except for such consents, approvals or filings the failure
of which to be obtained will not have a Material Adverse Effect on the ability
of Parent, SBU Bank, Newco or MHC, as the case may be, to consummate the
transactions contemplated thereby, provided that none of the Parent Parties make
any representation or warranty with respect to filings or other actions to be
taken or required to be taken by Company or its Subsidiaries in respect of
consents or approvals required in connection with the transactions contemplated
hereby.
(v) Parent, SBU Bank, Newco and MHC hereby represent to Company that
they have no knowledge of any reason why approval or effectiveness of any of the
applications, notices or filings referred to in Section 3.2(c)(iv), or any
required in connection with the consummation of the transactions contemplated by
the Plan of Conversion, cannot be obtained or granted on a timely basis.
(d) PARENT DOCUMENTS; UNDISCLOSED LIABILITIES.
(i) Since February 14, 2003, Parent and each of its Subsidiaries
subject to reporting under Section 13 or Section 15(d) of the Exchange Act have
filed all required reports with the SEC and all required schedules, forms,
statements and other documents (including exhibits and all other information
incorporated therein) with the SEC (collectively, the "PARENT SEC DOCUMENTS").
As of their respective filing dates, (i) except as set forth in Section 3.2(d)
of the Parent Disclosure Schedule, the Parent SEC Documents complied in all
material respects with the requirements of the Securities Act or the Exchange
Act, as the case may be, and the rules and regulations of the SEC promulgated
thereunder applicable to such Parent SEC Documents and (ii)
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none of the Parent SEC Documents as of its date, except as amended or
supplemented by a subsequent Parent Filed SEC Document (as defined in Section
3.2 (l)), contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading, and no Parent SEC Document filed subsequent to the date hereof
will contain as of its date, any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading (provided that, with respect to any filing made on or
after the date hereof in connection with the transactions contemplated hereby,
neither Parent nor any of its Subsidiaries subject to reporting under Section 13
or Section 15(d) of the Exchange Act makes any representation or warranty with
respect to information regarding or supplied for inclusion in such filing by
Company).
(ii) The financial statements of Parent and its consolidated
Subsidiaries included in the Parent SEC Documents (including the related notes)
complied as to form, as of their respective dates of filing with the SEC, in all
material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, have been prepared in
accordance with GAAP (except, in the case of unaudited statements, as permitted
by Form 10-Q of the SEC) applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto) and fairly present in
all material respects the consolidated financial position of Parent and its
consolidated Subsidiaries as of the dates thereof and the consolidated results
of their operations and cash flows for the periods then ended (subject in the
case of unaudited statements, to the absence of footnotes and to recurring
year-end audit adjustments normal in nature and amount).
(iii) Except (A) as reflected in Parent's unaudited balance sheet as of
November 30, 2003 or liabilities described in any notes thereto (or liabilities
for which neither accrual nor footnote disclosure is required pursuant to GAAP)
or (B) for liabilities incurred in the ordinary course of business consistent
with past practice since November 30, 2003 or in connection with this Agreement
or the transactions contemplated hereby, Parent and its Subsidiaries, taken as a
whole, do not have any material liabilities or obligations of any nature,
whether absolute, accrued, contingent or otherwise.
(iv) The Parent Parties' books and records fairly reflect in all
material respects the transactions to which each of the Parent Parties is a
party or by which any of the Parent Parties' properties or assets 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.
(e) INFORMATION SUPPLIED. None of the information supplied or to
be supplied by Newco in writing specifically for inclusion or incorporation by
reference in the Form S-4 will, at the time the Form S-4 becomes effective under
the Securities Act and through the Effective Time, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, except that
no representation or warranty is made by Newco with respect to statements made
or incorporated by reference therein based on information supplied by Company
specifically for inclusion or incorporation by reference in the Form S-4.
(f) BROKERS. NO BROKER, investment broker, financial advisor or other
Person is entitled to a broker's, finder's, financial advisor's or other similar
fee or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of Parent, except a fee
to be paid to Sandler X'Xxxxx & Partners, L.P. ("SOP"), as financial advisor to
Parent and Newco.
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(g) VOTING REQUIREMENTS. The affirmative vote of a majority of the
outstanding shares of Parent Common Stock issued and outstanding and entitled to
vote with respect to this Agreement and the Conversion is the only vote of the
holders of any class or series of Parent's capital stock necessary to approve
and adopt this Agreement and the transactions contemplated hereby, including the
Merger.
(h) OPINIONS OF FINANCIAL ADVISOR. Parent has received the written
opinion of SOP dated the date hereof, to the effect that, as of such date, the
Merger Consideration is fair from a financial point of view to the stockholders
of Parent (the "SOP OPINION") and SOP has consented to the inclusion of the SOP
Fairness Opinion in the Form S-4.
(i) TAX MATTERS. For purposes of this Section 3.2(i) any reference
to Parent, SBU Bank or the Parent Parties shall be deemed to include a reference
to such persons' predecessors, except where inconsistent with the language of
this Section 3.2(i).
(i) As of the date hereof, none of the Parent Parties have taken or
agreed to take any action, have failed to take any action or know of any fact,
agreement, plan or other circumstance that could reasonably be expected to
prevent the Merger from qualifying as a "reorganization" within the meaning of
Section 368(a) of the Code.
(ii) Each of Parent and SBU Bank has (A) timely filed (or there have
been timely filed on Parent's or SBU Bank's behalf) with the appropriate
Governmental Entities all income and other material Tax Returns required to be
filed by Parent or SBU Bank (giving effect to all extensions), all of which are
true, correct and complete in all material respects; (B) timely paid in full (or
there has been timely paid in full on its behalf) all material Taxes required to
be paid by it and (C) made adequate provision in accordance with GAAP in all
material respects (or adequate provision in accordance with GAAP in all material
respects has been made on its behalf) for all accrued Taxes not yet due. The
accruals and reserves for Taxes reflected in Parent's audited consolidated
balance sheet as of December 31, 2002 (and the notes thereto) and the most
recent quarterly financial statements (and the notes thereto) are adequate in
accordance with GAAP in all material respects to cover all Taxes accrued or
accruable through the date thereof.
(iii) Neither Parent nor SBU Bank has received any written notice of
deficiency or assessment from any Governmental Entity for any material amount of
Tax that has not been fully settled or satisfied.
(iv) Neither Parent nor SBU Bank has been a party to a "listed
transaction" or other "reportable transaction" within the meaning of Treasury
Regulations section 1.6011-4(b)(2).
(j) COMPLIANCE WITH APPLICABLE LAWS.
(i) Section 3.2(j) of the Parent Disclosure Schedule sets forth a true
and complete listing of all states in which the Parent Parties
are licensed to conduct business. To the knowledge of Parent, each of the Parent
Parties and their respective employees hold all material permits, licenses,
variances, authorizations, exemptions, orders, registrations and approvals of
all Governmental Entities (the "PARENT PERMITS") that are required for the
operation of the respective businesses of the Parent Parties as presently
conducted. To the knowledge of Parent, each of the Parent Parties is, and for
the last five years has been, in compliance with the terms of such Parent
Permits and all such Parent Permits are in full force and effect and no
suspension, modification or revocation of any such Parent Permit is pending or,
to the knowledge of Parent, threatened nor, to the knowledge of Parent, do
grounds exist for any such action, except where non-compliance or such
suspension, modification or revocation would not, individually or in the
aggregate, reasonably be
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expected to result in a Material Adverse Effect on any Parent Party.
(ii) Except where failure to comply would not, individually or in the
aggregate, reasonably be expected to result in a Material Adverse Effect on any
Parent Party, to the knowledge of Parent, each of the Parent Parties is, and for
the last five years has been, in compliance with all applicable statutes, laws,
regulations, ordinances, permits, rules, judgments, orders, decrees or
arbitration awards of any Governmental Entity applicable to such Parent Party.
(iii) None of the Parent Parties is subject to any outstanding order,
injunction or decree or is a party to any written agreement, consent agreement
or memorandum of understanding with, or is a party to any commitment letter or
similar undertaking to, or is subject to any written (or, to the knowledge of
Parent, unwritten) order or directive by, or is a recipient of any supervisory
letter from or has adopted any resolutions at the request of (in each case other
than orders, directives, supervisory letters and the like of general
application) any Governmental Entity that restricts in any respect the conduct
of its business or, that in any manner currently relates to its capital
adequacy, its policies, its management or its business (each, a "PARENT
REGULATORY AGREEMENT"), nor has any Parent Party or its respective Subsidiaries
or Affiliates (A) to its knowledge, been advised since January 1, 2001 by any
Governmental Entity that it is considering issuing or requesting any Parent
Regulatory Agreement or (B) had knowledge of any pending or threatened
investigation by any Governmental Entity. None of the Parent Parties are in
breach or default under any Parent Regulatory Agreement in any material respect.
Prior to the date hereof, the Parent Parties have made available to Company true
and complete copies of all Parent Regulatory Agreements.
(iv) Except for filings with the SEC, which are the subject of Section
3.2(d), since January 1, 2001, each of the Parent Parties has timely filed all
regulatory reports, schedules, forms, registrations and other documents,
together with any amendments required to be made with respect thereto, that they
were required to file with any Governmental Entity (the "OTHER PARENT
DOCUMENTS"), and have timely paid all fees and assessments due and payable in
connection therewith, except where the failure to make such payments and filings
would not, individually or in the aggregate, reasonably be expected to result in
a Material Adverse Effect on any such Parent Party. There is no material
unresolved violation or exception by any of such Governmental Entities with
respect to any report or statement relating to any examinations of any of the
Parent Parties. Parent has delivered or made available to Company a true and
complete copy of each material Other Parent Document requested by Company.
(v) None of the Parent Parties, nor any of their respective directors,
officers or Employees has been the subject of any disciplinary proceedings or
orders of any Governmental Entity arising under applicable laws or regulations
which would be required to be disclosed in any Other Parent Document except as
disclosed therein, and no such disciplinary proceeding or order is pending, nor
to the knowledge of Parent threatened, except where non-disclosure, or such
preceding or order, would not, individually or in the aggregate, reasonably be
expected to result in a Material Adverse Effect on Parent.
(vi) SBU Bank is "well-capitalized" and "well managed" under applicable
regulatory definitions, and its examination rating under the Community
Reinvestment Act of 1977 is "satisfactory."
(vii) Neither Parent or any of its Affiliates, nor, to the knowledge of
Parent, any "affiliated person" (as defined in the Investment Company Act) of
Parent or any of its Affiliates, is ineligible pursuant to Section 9(a) or 9(b)
of the Investment Company Act of 1940 to act as, or subject to any
disqualification which would form a reasonable basis for any denial, suspension
or revocation of the registration of or licenses or for any limitation on the
activities of Parent or any
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of its Affiliates as, an investment advisor (or in any other capacity
contemplated by said Act) to a registered investment company. Neither Parent nor
any of its Affiliates, nor to the knowledge of Parent, any "associated person of
a broker or dealer" (as defined in the Exchange Act) of Company or any of its
Affiliates, is ineligible pursuant to Section 15(b) of the Exchange Act to act
as a broker-dealer or as an associated person to a registered broker-dealer or
is subject to a "statutory disqualification" as defined in Section 3(a)(39) of
the Exchange Act or otherwise ineligible to serve as a broker-dealer or as an
associated person to a registered broker-dealer.
(viii) The business and operations of Parent and of each of the Parent
Parties through which Parent conducts its finance activities have been conducted
in compliance with all applicable Finance Laws, and have complied with all
applicable collection practices in seeking payment under any loan or credit
extension of such Parent Parties, except in each case where non-compliance would
not, individually or in the aggregate, reasonably be expected to result in a
Material Adverse Effect on Parent. In addition, there is no pending or, to the
knowledge of Parent, threatened charge by any Governmental Entity that any of
the Parent Parties has violated any applicable Finance Laws, except insofar as
would not, individually or in the aggregate, reasonably be expected to result in
a Material Adverse Effect on Parent.
(ix) Since January 1, 2001, none of the Parent Parties, nor to the
knowledge of any other Person acting on behalf of any Parent Party that
qualifies as a "financial institution" under the U.S. Anti-Money Laundering
laws, has knowingly acted, by itself or in conjunction with another, in any act
in connection with the concealment of any Unlawful Gains, nor knowingly
accepted, transported, stored, dealt in or brokered any sale, purchase or any
transaction of other nature for Unlawful Gains except insofar as would not,
individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect on any Parent Party. Each of the Parent Parties that qualifies as
a "financial institution" under the U.S. Anti-Money Laundering laws has, during
the past three years, implemented such anti-money laundry mechanisms and kept
and filed all material reports and other necessary material documents as
required by, and otherwise complied with, the U.S. Anti-Money Laundering laws
and the rules and regulations issued thereunder, except insofar as would not,
individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect on any such Parent Party.
(k) LITIGATION. Except as set forth in Section 3.2(k) of the Parent
Disclosure Schedule, which contains a true and current (as of the date hereof)
list of any pending and, to Parent's knowledge, threatened litigation, action,
suit, proceeding, investigation or arbitration, no action, demand, charge,
requirement or investigation by any Governmental Entity and no litigation,
action, suit, proceeding, investigation or arbitration by any Person or
Governmental Entity, in each case with respect to any of the Parent Parties or
any of their respective properties or Permits, is pending or, to the knowledge
of any Parent Party, threatened, except insofar as would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect on any
such Parent Party.
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(l) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except for liabilities
incurred in connection with this Agreement or the transactions contemplated
hereby, and except as set forth in Section 3.2(l) of the Parent Disclosure
Schedule, or as disclosed in the Parent SEC Documents filed and publicly
available prior to the date hereof ("PARENT FILED SEC DOCUMENTS"), since
December 31 2002, the Parent Parties have conducted their respective businesses,
in all material respects, only in the ordinary course of business consistent
with past practice and (1) with respect to subsections (i), (iii), (iv), (v),
(vi) and (vii) (in the case of subsection (vii), as it pertains to subsection
(ii)) below, since December 31, 2002, and (2) with respect to subsections (ii)
and (vii) (in the case of subsection (vii), as it pertains to such other
subsections) below, from September 30, 2003 to the date hereof, there has not
been:
(i) any Material Adverse Change in Parent,
(ii) any issuance of stock options to acquire shares of Parent Common
Stock ("PARENT STOCK OPTIONS") or restricted shares of Parent Common Stock, or
any other equity-based award, to any directors, officers, Employees or
consultants of any of the Parent Parties (in any event identifying in Section
3.2(l) of the Parent Disclosure Schedule the issue date, exercise price and
vesting schedule, as applicable, for issuances thereto since December 31, 2002),
(iii) any declaration, setting aside or payment of any dividend or
other distribution (whether in cash, stock or property) with respect to any of
the capital stock of the Parent Parties, other than regular quarterly cash
dividends not in excess of $0.10 per share on Parent Common Stock, and other
than dividends paid by any wholly owned Subsidiary of Parent to Parent or any
other wholly owned Subsidiary of Parent,
(iv) any split, combination or reclassification of any of Parent's
capital stock, or any issuance or the authorization of any issuance of any other
securities in respect of, in lieu of or in substitution for shares of Parent's
capital stock, except for issuances of Parent Common Stock pursuant to Parent
Stock Plans or upon the exercise of Parent Stock Options awarded prior to the
date hereof in accordance with their present terms,
(v) other than as described in Parent Filed SEC Documents, any change
in any material respect in accounting methods, principles or practices by Parent
affecting its assets, liabilities or business, including any reserving, renewal
or residual method, or estimate of practice or policy, other than changes after
the date hereof to the extent required by a change in GAAP or regulatory
accounting principles,
(vi) any material change in investment policies, or
(vii) any agreement or commitment (contingent or otherwise) to do any
of the foregoing.
(m) INTERNAL CONTROLS. None of the Parent or SBU Bank records, systems,
controls, data or information are recorded, stored, maintained, operated or
otherwise wholly or partly dependent on or held by any means (including any
electronic, mechanical or photographic process, whether computerized or not)
which (including all means of access thereto and therefrom) are not under the
exclusive ownership and direct control of it or its accountants except as would
not, individually or in the aggregate, reasonably be expected to result in a
Material Adverse Effect on the system of internal accounting controls described
in the next sentence. Each of the Parent and SBU Bank has devised and maintain a
system of internal accounting controls sufficient to provide reasonable
assurances regarding the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with GAAP.
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(n) Employee Benefit Plans.
(i) For purposes of this Section 3.2(n), "PARENT PLANS" shall mean
Parent's deferred compensation and each bonus or other incentive compensation,
stock purchase, stock option and other equity compensation plan, program or
arrangement; each severance or termination pay, medical, surgical,
hospitalization, life insurance and other "welfare" plan, fund or program
(within the meaning of Section 3(1) of ERISA; each profit-sharing, stock bonus
or other "pension" plan, fund or program (within the meaning of Section 3(2) of
ERISA); each employment, termination or severance agreement or arrangement with
any director or former director of Parent or any of its Subsidiaries or any
employee or executive officer thereof and each other material employee benefit
plan, fund or program, or arrangement applicable to current and former
directors, executive officers or employees or Parent or any of its Subsidiaries,
in each case that is sponsored, maintained or contributed to or required to be
contributed to by Parent or any of its Subsidiaries, or to which Parent or any
of its Subsidiaries is a party for, the benefit of any current or former
employee, executive officer or director of Parent or any of its Subsidiaries;
each Parent Plan that is subject to Section 302 or Title IV of ERISA or Section
412 of the Code, being the "PARENT TITLE IV PLANS".
(ii) All contributions required to have been made with respect to any
Parent Plan have been paid when due, except insofar as would not, individually
or in the aggregate, reasonably be expected to result in a Material Adverse
Effect on Parent.
(iii) Each Parent Plan has been operated and administered in accordance
with its terms and applicable law, including but not limited to ERISA and the
Code, except insofar as the failure to do so would not, individually or in the
aggregate, reasonably be expected to result in a Material Adverse Effect on
Parent.
(iv) The IRS has issued a favorable determination letter with respect
to each Parent Plan intended to be "qualified" within the meaning of Section
401(a) of the Code that has not been revoked, and, to the knowledge of Parent,
no circumstances exist that could adversely affect the qualified status of any
such plan and the exemption under Section 501(a) of the Code of the trust
maintained thereunder. Each Parent Plan intended to satisfy the requirements of
Section 510(c)(9) of the Code has satisfied such requirements in all material
respects.
(v) With respect to any Parent Title IV Plan to which Parent or any
trade or business, whether or not incorporated, that together with Parent is a
"single employer" within the meaning of Section 4001(b) of ERISA (a "PARENT
ERISA AFFILIATE") made, or was required to make, contributions on behalf of any
current or former employee or director during the five (5) year period ending on
the last day of the most recent plan year ended prior to the date hereof, (a) no
liability under Title IV or Section 302 of ERISA has been incurred by Parent or
any Parent ERISA Affiliate that has not been satisfied in full, except where
failure to satisfy such liability would not, individually or in the aggregate,
reasonably be expected to result in a Material Adverse Effect on Parent, and (b)
to the knowledge of Parent, no condition exists that presents a risk to Parent
or any Parent ERISA Affiliate of incurring any such liability, other than
liability for premiums due to the PBGC (which premiums have been paid when due),
except insofar as would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on Parent.
(vi) The PBGC has not, to the knowledge of Parent, instituted
proceedings to terminate any Parent Title IV Plan and, to the knowledge of
Parent, no condition exists that presents a material risk that such proceedings
will be instituted, except insofar as would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on Parent.
No Parent Title IV Plan or any trust established thereunder has incurred any
"accumulated funding deficiency" (as defined in Section 302 of ERISA of Section
412 of the Code), whether or not
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waived, as of the last day of the most recently ended fiscal year, except
insofar as would not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect on Parent.
(vii) There are no pending or, to the knowledge of Parent, threatened
or anticipated claims by or on behalf of any Parent Plan by any employee or
beneficiary covered under any such Parent Plan, or otherwise involving any such
Parent Plan (other than routine claims for benefits), except for claims which,
individually or in the aggregate, would not reasonably be expected to result in
a Material Adverse Effect on Parent.
(viii) No Parent Plan is a Multiemployer Plan or a Multiple Employer
Plan. None of Parent and its Subsidiaries nor any of their respective ERISA
Affiliates has, at any time during the last six years, contributed to or been
obligated to contribute to any Multiemployer Plan or Multiple Employer Plan.
None of Parent and its Subsidiaries nor any of their respective ERISA Affiliates
has incurred any Withdrawal Liability that has not been satisfied in full.
(ix) There does not now exist, nor, to the knowledge of Parent, do any
circumstances exist that could reasonably be expected to result in, any
Controlled Group Liability that would be a liability of Parent or any of its
Subsidiaries following the Closing. Without limiting the generality of the
foregoing, neither Parent nor any of its Subsidiaries, nor any of their
respective ERISA Affiliates, has engaged in any transaction described in Section
4069 or Section 4204 or 4212 of ERISA.
(x) Section 3.2(n)(x) of the Parent Disclosure Schedule sets forth an
accurate list of any Parent Plan under which the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby could
reasonably be expected to (either along or in conjunction with any other event)
(A) result in, cause the accelerated vesting, funding or delivery of, or
increase the amount or value of, any payment or benefit to any employee, officer
or director of Parent or any of its Subsidiaries, or (B) limit the right of
Parent or any of its Subsidiaries to amend, merge, terminate or receive a
reversion of assets from any Parent Plan or related trust.
(o) LABOR MATTERS. There are no labor or collective bargaining
agreements to which any Parent Party is a party. To the knowledge of Parent,
there is no union organizing effort pending or threatened against any Parent
Party. There is no labor strike, labor dispute (other than routine Employee
grievances that are not related to union Employees), work slowdown, stoppage or
lockout pending or, to the knowledge of Parent, threatened against any Parent
Party. There is no unfair labor practice or labor arbitration proceeding pending
or, to the knowledge of Parent, threatened against any Parent Party (other than
routine Employee grievances that are not related to union Employees) which
would, individually or in the aggregate, reasonably be expected to result in a
Material Adverse Effect on Parent. The Parent Parties are in compliance with all
applicable laws respecting employment and employment practices, terms and
conditions of employment and wages and hours, and are not engaged in any unfair
labor practice, except insofar as would not, individually or in the aggregate,
reasonably be expected to result in a Material Adverse Effect on Parent.
(p) INTEREST RATE RISK MANAGEMENT INSTRUMENTS. Except as would
not, individually or in the aggregate, reasonably be expected to result in a
Material Adverse Effect on Parent or any of its Subsidiaries, all Derivative
Transactions entered into by Parent or any of its Subsidiaries were entered into
in accordance with applicable rules, regulations and policies of all regulatory
authorities, and in accordance with the investment, securities, commodities,
risk management and other Policies, Practices and Procedures employed by such
Parent Party, and were entered into with counter-parties believed at the time to
be financially responsible and able to understand (either alone or in
consultation with their advisers) and to bear the risks of such Derivative
Transactions; and each such Parent Party has duly performed their obligations
under the Derivative Transactions to the extent that such obligations to perform
have accrued, and, to such
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Parent Party's knowledge, there are no material breaches, violations or defaults
or allegations or assertions of such by any party thereunder.
(q) LOAN PORTFOLIO; SERVICING.
(i) All loans owned by any of the Parent Parties, or in which any of
the Parent Parties has an interest, comply in all material respects with all
applicable laws, including, but not limited to, applicable usury statutes,
underwriting and recordkeeping requirements and all Finance Laws and other
applicable consumer protection statutes and the regulations thereunder.
(ii) All loans owned by any of the Parent Parties, or in which any of
the Parent Parties has an interest, have been made or acquired by Parent in
accordance with board of director-approved loan policies. As of the date hereof,
each of the Parent Parties holds mortgages contained in its loan portfolio for
its own benefit to the extent of its interest shown therein; such mortgages
evidence liens having the priority indicated by the terms of such mortgages,
including the associated loan documents, subject, as of the date of recordation
or filing of applicable security instruments, only to such exceptions as are
discussed in attorneys' opinions regarding title or in title insurance policies
in the mortgage files relating to the loans secured by real property or are not
material as to the collectability of such loans; and all loans owned by each of
the Parent Parties are with full recourse to the borrowers, and each of the
Parent Parties has taken no action which would result in a waiver or negation of
any rights or remedies available against the borrower or guarantor, if any, on
any loan. All applicable remedies against all borrowers and guarantors are
enforceable except as may be limited by bankruptcy, insolvency, moratorium or
other similar applicable laws affecting creditors' rights and except as may be
limited by the exercise of judicial discretion in applying principles of equity.
All loans purchased or originated by any of the Parent Parties and subsequently
sold by any of the Parent Parties have been sold without recourse to any of the
Parent Parties and without any liability under any yield maintenance or similar
obligation. True, correct and complete copies of loan delinquency reports as of
September 30, 2003 prepared by each of the Parent Parties, which reports include
all loans delinquent or otherwise in default, have been furnished to Company.
True, correct and complete copies of the currently effective lending policies
and practices of each of the Parent Parties also have been furnished or made
available to Company.
(iii) Each of the Parent Parties has properly perfected or caused to be
properly perfected all security interests, liens, or other interests in any
material collateral securing any loans made by it.
(r) ADMINISTRATION OF ACCOUNTS. Each of the Parent Parties has
properly administered all accounts for which it acts as a fiduciary or agent,
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, except where the failure to do so
would not, individually or in the aggregate, reasonably be expected to result in
a Material Adverse Effect on Parent. None of the Parent Parties, nor any of
their directors, officers, agents or Employees, has committed any breach of
trust with respect to any such fiduciary or agency account, and the accountings
for each such fiduciary or agency account are true and correct and accurately
reflect the assets of such fiduciary or agency account, except for such breaches
and failures to be true, correct and accurate which would not, individually or
in the aggregate, reasonably be expected to result in a Material Adverse Effect
on Parent.
(s) RESERVES FOR LOSSES. All reserves or other allowances for possible
losses reflected in Parent's financial statements referred to in Section 3.2(d)
as of and for the year ended December 31, 2002 and the quarter ended September
30, 2003, as of the date of such financial statements, complied with the
standards established by applicable Governmental Entities and were
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adequate under GAAP. Parent has not been notified by the OTS, the FDIC or
Parent's independent auditor, in writing or otherwise, that such reserves are
inadequate or that the practices and policies of Parent in establishing its
reserves for the year ended December 31, 2002 and the quarter ended September
30, 2003 and in accounting for delinquent and classified assets generally fail
to comply with applicable accounting or regulatory requirements, or that the
OTS, the FDIC or Parent's independent auditor believes such reserves to be
inadequate or inconsistent with the historical loss experience of Parent. Parent
has made available to Company a true and complete list of all extensions of
credit and OREO that have been classified by any bank or trust examiner
(regulatory or internal) as other loans specially mentioned, special mention,
substandard, doubtful, loss, classified or criticized, credit risk assets,
concerned loans or words of similar import. Parent agrees to update such list at
the request of Company (but no less frequently than monthly) after the date of
this Agreement until the earlier of the Closing Date or the date that this
Agreement is terminated in accordance with its terms. All OREO held by Parent is
being carried net of reserves at the lower of cost or net realizable value.
(t) ENVIRONMENTAL LIABILITY.
(i) Each of Parent and its Subsidiaries is in material compliance with
all applicable federal and state laws and regulations relating to pollution or
protection of the environment (including without limitation, laws and
regulations relating to emissions, discharges, releases and threatened releases
of Hazardous Materials (as hereinafter defined)), or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling by each of Parent and its Subsidiaries of Hazardous
Materials;
(ii) There is no suit, claim, action, proceeding, investigation or
notice pending or, to the knowledge of Parent, threatened (or past or present
actions or events that, to the knowledge of Parent, could form the basis of any
such suit, claim, action, proceeding, investigation or notice), in which Parent
or any Subsidiary of Parent has been or, with respect to threatened suits,
claims, actions, proceedings, investigations or notices may be, named as a
defendant (x) for alleged material noncompliance (including by any predecessor)
with any environmental law, rule or regulation or (y) relating to any material
release or threatened release into the environment of any Hazardous Material,
occurring at or on a site owned, leased or operated by Parent or any Subsidiary
of Parent, or to the knowledge of Parent, relating to any material release or
threatened release into the environment of any Hazardous Material, occurring at
or on a site not owned, leased or operated by Parent or any Subsidiary of
Parent;
(iii) During the period of Parent's or any of its Subsidiaries'
ownership or operation of any of its properties, there has not been any material
release by Parent or any of its Subsidiaries of Hazardous Materials in, on,
under or affecting any such property;
(iv) To the knowledge of Parent, neither Parent nor any Subsidiary of
Parent has made or participated in any loan to any person who is subject to any
suit, claim, action, proceeding, investigation or notice, pending or threatened,
with respect to (i) any alleged material noncompliance as to any property
securing such loan with any environmental law, rule or regulation or (ii) the
release or the threatened release into the environment of any Hazardous Material
at a site owned, leased or operated by such person on any property securing such
loan.
(u) MERGER CONSIDERATION. Following the completion of the transactions
contemplated by the Plan of Conversion and immediately prior to the Closing,
Newco shall have sufficient immediately available cash on hand to fund the Cash
Consideration and sufficient shares of Newco Common Stock reserved for issuance
to the holders of Company Common Stock to provide the Stock Consideration in
connection with the Merger, collectively to enable the Merger Consideration to
be paid in full in accordance with the terms hereof.
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ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
4.1 CONDUCT OF BUSINESS BY COMPANY. Except (i) as set forth in Section
4.1 of the Company Disclosure Schedule, (ii) as otherwise expressly contemplated
by this Agreement, (iii) as consented to by Parent in writing (which consent
shall not be unreasonably withheld), or (iv) as required by applicable law or
regulation, during the period from the date of this Agreement and continuing
until the earlier of the termination of this Agreement or the Effective Time,
Company shall, and shall cause its Subsidiaries to, carry on their respective
businesses in the usual, regular and ordinary course consistent with past
practice and in compliance in all material respects with all applicable laws and
regulations, pay their respective debts and Taxes when due, pay or perform their
other respective obligations when due, use all commercially reasonable efforts
consistent with the other terms of this Agreement to preserve intact their
current business organizations, and use all commercially reasonable efforts
consistent with the other terms of this Agreement to keep available the services
of their current officers and Employees and preserve their relationships with
those Persons having business dealings with them, all with the goal of
preserving unimpaired in all material respects their goodwill and ongoing
businesses at the Effective Time. Without limiting the generality of the
foregoing, senior officers of Parent and Company shall meet on a reasonably
regular basis to review the financial and operational affairs of Company and its
Subsidiaries, in accordance with applicable law, and Company shall give due
consideration to Parent's input on such matters, consistent with Section 4.4
hereof, with the understanding that, notwithstanding any other provision
contained in this Agreement, neither Parent, SBU Bank nor Newco shall under any
circumstance be permitted to exercise control of Company prior to the Effective
Time. Except as (i) expressly contemplated by this Agreement, (ii) disclosed in
Section 4.1 of the Company Disclosure Schedule, (iii) consented to by Parent in
writing (which consent shall not be unreasonably withheld) or (iv) required by
applicable law or regulation, after the date hereof Company shall not, and shall
not permit any of its Subsidiaries to:
(i) other than dividends and distributions by a direct or indirect
wholly owned Subsidiary of Company to its parent, (x) declare or pay any
dividends on, or make other distributions in respect of, any of its capital
stock (except for the payment of regular quarterly cash dividends by Company not
to exceed $0.25 per share on the Company Common Stock with declaration, record
and payment dates corresponding to the quarterly dividends paid by Company
during its fiscal year ended December 31, 2002 and except that any Subsidiary of
Company may declare and pay dividends and distributions to Company); provided,
however, that under no circumstances shall Company declare, set aside or pay any
dividends if it would result in the holders of Company Common Stock receiving
more than four cash dividend payments in fiscal 2003 or more than one cash
dividend payment per quarter in fiscal 2004, (y) split, combine or reclassify
any of its capital stock or issue or authorize the issuance of any other
securities in respect of, in lieu of, or in substitution for, shares of its
capital stock, except upon the exercise of Company Stock Options that are
outstanding as of the date hereof in accordance with their present terms, or (z)
purchase, redeem or otherwise acquire any shares of capital stock or other
securities of Company or any of its Subsidiaries, or any rights, warrants or
options to acquire any such shares or other securities (other than the issuance
of Company Common Stock upon the exercise of Company Stock Options that are
outstanding as of the date hereof in accordance with their present terms);
(ii) issue, deliver, sell, pledge or otherwise encumber or subject to
any Lien (other than Company Permitted Liens) any shares of its capital stock,
any other voting securities, including any restricted shares of Company Common
Stock, or any securities convertible into, or any rights, warrants or options to
acquire, any such shares, voting securities or convertible securities, including
any Company Stock Options (other than the issuance of Company Common Stock upon
the exercise of Company Stock Options that are outstanding as of the date hereof
in accordance with their present terms);
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(iii) amend its certificate of incorporation, by-laws or other
comparable organizational documents;
(iv) (A) acquire or agree to acquire by merging or consolidating
with, or by purchasing any assets or any equity securities of or by any other
manner, any business or any Person, or otherwise acquire or agree to acquire any
assets except in the ordinary course of business consistent with past practice,
(B) open, close, relocate, purchase, lease, sell or acquire any banking or other
offices, or file an application with a Governmental Entity pertaining to any
such action or (C) enter into any new line of business;
(v) sell, lease, license, mortgage or otherwise encumber or
subject to any Lien (other than Company Permitted Liens) or otherwise dispose of
any of its properties or assets other than in the ordinary course of business
consistent with past practices or enter into securitization transactions or
create any security interest in such assets or properties (other than Company
Permitted Liens);
(vi) except for borrowings having a maturity of not more than
thirty-six months under existing credit facilities (or renewals, extensions or
replacements therefor that do not provide for any termination fees or penalties,
prohibit pre-payments or require any pre-payment penalties, or contain any like
provisions limiting or otherwise affecting the ability of Company or its
applicable Subsidiaries or successors from terminating or pre-paying such
facilities, or contain financial terms less advantageous than existing credit
facilities, such existing credit facilities, and as they may be so renewed,
extended or replaced, "CREDIT FACILITIES") that are incurred in the ordinary
course of business consistent with past practice, or for borrowings under Credit
Facilities or other lines of credit or refinancing of indebtedness outstanding
on the date hereof in the ordinary course but in any event not to exceed
$5,000,000 per transaction, and except for the incurring of deposit liabilities
in the ordinary course of business consistent with past practice, incur any
Indebtedness for borrowed money or issue any debt securities or assume,
guarantee or endorse, or otherwise become responsible for the obligations of any
Person (other than Company or any wholly owned Subsidiary thereof), or, other
than in the ordinary course of business consistent with past practice, make any
loans, advances or capital contributions to, or investments in, any Person other
than its wholly owned Subsidiaries and as a result of ordinary advances and
reimbursements to Employees and endorsements of banking instruments;
(vii) change in any material respect its accounting methods (or
underlying assumptions), principles or practices affecting its assets,
liabilities or business, including any reserving, renewal or residual method,
practice or policy, in each case, in effect on the date hereof, except as
required by changes in GAAP or regulatory accounting principles, or change any
of its methods of reporting income and deductions for federal income tax
purposes from those employed in the preparation of the federal income tax
returns of Company for the taxable year ending December 31, 2002, except as
required by changes in law or regulation;
(viii) change in any material respects its investment or risk
management or other similar policies of Company or any of its Subsidiaries;
(ix) make, change or revoke any Tax election, file any amended Tax
Return, enter into any closing agreement, settle or compromise any liability
with respect to Taxes, agree to any adjustment of any Tax attribute, file any
claim for a refund of Taxes, or consent to any extension or waiver of the
limitation period applicable to any Tax claim or assessment;
(x) create, renew or amend, or take any other action that may
result in the creation, renewal, or amendment, of any agreement or contract or
other binding obligation of Company or its Subsidiaries containing (A) any
restriction on the ability of Company and its
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Subsidiaries, taken as a whole, to conduct its business as it is presently being
conducted or (B) any restriction on Company or its Subsidiaries engaging in any
type or activity or business;
(xi) (A) incur any capital expenditures in excess of $25,000
individually or $100,000 in the aggregate, other than pursuant to binding
commitments existing on the date hereof and listed in Section 4.1(xi) and other
expenditures necessary (following consultation with Parent) to maintain existing
assets in good repair or to pay applicable Taxes when due, (B) enter into any
agreement obligating Company to spend more than $50,000 individually or in the
aggregate, or (C) enter into any agreement, contract, lease or other arrangement
of the type described in Section 3.1(f) or Section 3.1(y) of this Agreement
except for any such agreements, contracts, leases or other arrangements (w) of
the type described in Section 3.1(f)(i) to the extent not prohibited under
Section 4.1(vi) and to the extent not pursuant to any agreement containing
provisions that restrict, or may restrict, the conduct of the business of the
issuer thereof as currently conducted in a manner more adverse to Company than
the current Credit Facilities, (x) of the type described in Section 3.1(f)(ii)
to the extent not prohibited by Section 4.1(xi)(A) or (B), (y) of the type
described in Section 3.1(f)(xii) or (xiv) and that is terminable on not less
than 30 days' notice without penalty, but only following prior consultation with
Parent, or (z) of the type described in Section 3.1(f)(xiii) to the extent
required by the expiration of the term of an existing lease unless reasonably
objected to by Parent;
(xii) terminate, amend or otherwise modify, except in the ordinary
course of business consistent with past practice, or knowingly violate the terms
of, any of Company Material Contracts, any of the leases for the Leased
Properties or the Third Party Leases or any other material binding obligations,
and except for terminations, amendments or other modifications that would not
result in the incurrence of additional costs or expenses, or in the loss of
revenue, in excess of $50,000 on an annual basis in the aggregate, and are not
made with respect to any of Company Material Contracts described in Section
3.1(f)(iii), (vi), (vii), (ix), (x), (xi) or (xv) (B);
(xiii) except as required by agreements or instruments in effect on
the date hereof, alter in any material respect, or enter into any commitment to
alter in any material respect, any interest in any corporation, association,
joint venture, partnership or business entity in which Company directly or
indirectly holds any equity or ownership interest on the date hereof (other than
any interest arising from any foreclosure, settlement in lieu of foreclosure or
troubled loan or debt restructuring in the ordinary course of business
consistent with past practice);
(xiv) (A) grant to any current or former director, officer, Employee
or consultant any increase in compensation, bonus or other benefits, except for
any such salary, wage, bonus or benefit increases (x) as required from time to
time by applicable law affecting wages, (y) as required by the terms existing
prior to the date hereof of plans or arrangements described in Section 3.1(k) of
the Company Disclosure Schedule, or (z) annual or merit-based compensation
increases to Employees who are not executive officers undertaken in the ordinary
course of business consistent with past practice, (B) grant to any such current
or former director, officer, Employee or consultant any increase in severance or
termination pay (other than as a result of compensation increases or payments
permitted hereunder), (C) enter into, or amend, or take any action to clarify
any provision of, any Plan or any employment, deferred compensation, consulting,
severance, termination or indemnification agreement with any such current or
former director, officer, Employee or consultant, except as required by
applicable law, (D) modify any Company Stock Option, (E) make any discretionary
contributions to any pension plan, (F) hire any new employee at an annual
compensation in excess of $30,000, (G) hire or promote any employee to a new
rank having a title of vice president or other more senior rank or (H)
accelerate the vesting or payment of compensation payable or benefits provided
or to become payable or provided to any of current or former directors,
officers, Employees, consultants or service providers or otherwise pay as
compensation thereto any amounts, grant any awards or provide any benefits not
otherwise due except to the extent expressly permitted above;
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(xv) except for loans made on terms generally available to the
public and otherwise in compliance with applicable law, make any new loans to,
modify the terms of any existing loan to, or engage in any other transactions
(other than routine banking transactions) with, any Affiliated Person of Company
or of any of its Subsidiaries;
(xvi) agree or consent to any material agreement or material
modifications of existing agreements with any Governmental Entity in respect of
the operations of its business, except (i) as required by law or (ii) to effect
the consummation of the transactions contemplated hereby;
(xvii) pay, discharge, settle or compromise any claim, action,
litigation, arbitration or proceeding, other than any such payment, discharge,
settlement or compromise in the ordinary course of business consistent with past
practice that involves solely money damages in an amount not in excess of
$50,000 individually or in the aggregate, and that does not create precedent for
other pending or potential claims, actions, litigation, arbitration or
proceedings;
(xviii) incur deposit liabilities, other than liabilities incurred in
the ordinary course of business consistent with past practice (including its
deposit pricing policies);
(xix) make any equity investment or commitment to make such an
investment in real estate or in any real estate development project, other than
in the ordinary course of business consistent with past practice in connection
with foreclosure, settlement in lieu of foreclosure, or troubled loan or debt
restructuring;
(xx) originate (i) any loans except in accordance with existing
Company lending policies and practices, (ii) residential mortgage loans in
excess of $340,000, (iii) 30-year residential mortgage loans whose interest
rate, terms, appraisal, and underwriting do not make them immediately available
for sale in the secondary market, (iv) unsecured consumer loans in excess of
$10,000, (v) commercial business loans (a) made to any borrower located outside
of any county in which BSB Bank maintains a branch office or (b) in excess of
$1,500,000 as to any loan or in the aggregate as to any related loans or loans
to related persons, (vi) commercial real estate first mortgage loans (a) made
upon the security of any property located outside of any county in which BSB
Bank maintains a branch office or (b) in excess of $500,000 as to any loan or in
the aggregate as to any related loans or loans to related borrowers, (vii)
modifications and/or extensions of any commercial business or commercial real
estate loans in the amounts set forth in items (v) and (vi) above;
(xxi) purchase or sell any mortgage loan servicing rights other than
in the ordinary course of business consistent with past practice;
(xxii) issue any broadly distributed communication of a general
nature to Employees (including general communications relating to benefits and
compensation) without prior consultation with Parent and, to the extent relating
to post-Closing employment, benefit or compensation information without the
prior consent of Parent (which shall not be unreasonably delayed or withheld) or
issue any broadly distributed communication of a general nature to customers
without the prior approval of Parent (which shall not be unreasonably delayed or
withheld), except for communications in the ordinary course of business
consistent with past practice that do not relate to the Merger or other
transactions contemplated hereby;
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(xxiii) without prior consultation with Parent: create, renew, amend
or permit to expire, lapse or terminate or knowingly take any action reasonably
likely to result in the creation, renewal, amendment, expiration, lapse or
termination of any insurance policies referred to in Section 3.1(o);
(xxiv) knowingly take any action or knowingly fail to take any action
which would result in any of the conditions of Article VI not being satisfied;
(xxv) take or cause to be taken any action or actions that,
individually or in the aggregate, would reasonably be expected to prevent the
Merger from qualifying as a reorganization under Section 368(a) of the Code;
(xxvi) purchase any loans or sell, purchase or lease any real
property, except for the sale of real estate that is the subject of a casualty
loss or condemnation or the sale of OREO on a basis consistent with past
practices;
(xxvii) make any investments, other than securities (i) rated "A" or
higher by either Standard & Poor's Ratings Services or Xxxxx'x Investors
Service, (ii) having a face amount of not more than $5,000,000, (iii) with a
weighted average life of not more than five years and (iv) otherwise in the
ordinary course of business consistent with past practice;
(xxviii) make any investment in any equity or derivative securities, or
engage in any forward commitment, futures transaction, financial options
transaction, hedging or arbitrage transaction or covered asset trading;
(xxix) foreclose upon or take a deed or title to any commercial real
estate without first conducting a Phase I environmental assessment of the
property or foreclose upon any commercial real estate if such environmental
assessment indicates the presence of a Hazardous Material; or
(xxx) authorize, or commit or agree to take, any of the actions
prohibited under Sections 4.1(i) through (xxix), unless otherwise permitted
thereunder.
4.2 ADVICE OF CHANGES. Except to the extent prohibited by applicable
law or regulation, Company and Parent shall promptly advise the other party
orally and in writing to the extent it has knowledge of (i) any representation
or warranty made by it contained in this Agreement that is qualified as to
materiality becoming untrue or inaccurate in any respect or any such
representation or warranty that is not so qualified becoming untrue or
inaccurate in any material respect, (ii) the failure by it to comply in any
material respect with or satisfy in any material respect any covenant, condition
or agreement to be complied with or satisfied by it under this Agreement and
(iii) any change or event having, or which, insofar as can reasonably be
foreseen, could have a Material Adverse Effect on such party or on the truth of
their respective representations and warranties or the ability of the conditions
set forth in Article VI to be satisfied; provided, however, that no such
notification shall affect the representations, warranties, covenants or
agreements of the parties (or remedies with respect thereto) or the conditions
to the obligations of the parties under this Agreement; provided further that a
failure to comply with this Section 4.2 shall not constitute a failure to be
satisfied of any condition set forth in Article VI unless the underlying
untruth, inaccuracy, failure to comply or satisfy, or change or event would
independently result in a failure to be satisfied of a condition set forth in
Article VI.
4.3 No Solicitation by Company.
(a) Except as otherwise provided in this Section 4.3, until the
earlier of the Effective Time and the date of termination of this Agreement,
neither Company, nor any of its
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Subsidiaries or any of the officers, directors, agents, or representatives of it
or its Subsidiaries (including any investment banker, attorney or accountant
retained by it or any of its Subsidiaries) shall (i) solicit, initiate or
encourage (including by way of furnishing information), or take any other action
designed to facilitate, any inquiries or the making of any proposal which
constitutes a Company Takeover Proposal (as defined in this Section 4.3), (ii)
participate in any discussions or negotiations regarding any Company Takeover
Proposal, (iii) enter into any agreement regarding any Company Takeover Proposal
or (iv) make or authorize any statement, recommendation or solicitation in
support of any Company Takeover Proposal. If and only to the extent that (i)
Company Stockholders Meeting shall not have occurred, (ii) the Board of
Directors of Company determines in good faith, after consultation with outside
counsel, that it is necessary to do so in order to comply with its fiduciary
duties to Company's stockholders under applicable law in light of a bona fide
Company Takeover Proposal that has not been withdrawn, (iii) such Company
Takeover Proposal was not solicited by it and did not otherwise result from a
breach of this Section 4.3(a), and (iv) Company provides prior written notice to
Parent of its decision to take such action, Company shall be permitted to (A)
furnish information with respect to Company and any of its Subsidiaries to such
Person pursuant to a customary confidentiality agreement consistent with the
confidentiality agreement dated December 12, 2003 between Company and Parent
(the "CONFIDENTIALITY AGREEMENT"), (B) participate in discussions and
negotiations with such Person and (C) effect a Change in Company Recommendation
(as defined below). For purposes of this Agreement, "COMPANY TAKEOVER PROPOSAL"
means any proposal or offer from any Person (other than from Parent and its
Affiliates) relating to (A) any direct or indirect acquisition or purchase of
(x) assets of Company and its Subsidiaries that generate 20% or more of the net
revenues or net income, or that represent 20% or more of the total assets, of
Company and its Subsidiaries, taken as a whole, or (y) 20% or more of any class
of equity securities of Company, (B) any tender offer or exchange offer that if
consummated would result in any Person beneficially owning 20% or more of any
class of any equity securities of Company, or (C) any merger, consolidation,
business combination, recapitalization, liquidation, dissolution or similar
transaction involving Company (or any one or more Subsidiaries of Company,
individually or taken together, whose business constitutes 20% or more of the
net revenues, net income or total assets of Company and its Subsidiaries, taken
as a whole), other than the transactions contemplated by this Agreement.
(b) Except as expressly permitted by this Section 4.3 or Section
5.1(a) or (d), neither the Board of Directors of Company nor any committee
thereof shall (i) withdraw, modify or qualify, or propose publicly to withdraw,
modify or qualify, in a manner adverse to Parent and Newco, the approval of the
Agreement, the Merger or Company Recommendation (as defined in Section 5.1(d))
or take any action or make any statement in connection with Company Stockholders
Meeting inconsistent with such approval or Company Recommendation (collectively,
a "CHANGE IN THE COMPANY RECOMMENDATION"), or (ii) approve or recommend, or
propose publicly to approve or recommend, or fail to recommend against, any
Company Takeover Proposal.
(c) In addition to the obligations of Company set forth in
paragraphs (a) and (b) of this Section 4.3, Company shall promptly (and in any
event within 24 hours) advise Parent orally and in writing of any request for
information relating to a Company Takeover Proposal, or of any Company Takeover
Proposal, the material terms and conditions of such request or Company Takeover
Proposal and the identity of the person making such request or Company Takeover
Proposal, and shall promptly (and in any event within 24 hours) provide a copy
of any written request or Company Takeover Proposal to Parent. Company will keep
Parent promptly informed of the status and details (including amendments or
proposed amendments) of any such request or Company Takeover Proposal.
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(d) Nothing contained in this Section 4.3 shall prohibit Company from
taking and disclosing to its stockholders a position contemplated by Rule
14e-2(a) promulgated under the Exchange Act or from making a Change in company
Recommendation or any other disclosure if, in the good faith judgment of the
Board of Directors of Company, after consultation with outside counsel, failure
so to disclose would violate its obligations under applicable law; provided,
however, any such disclosure relating to a Company Takeover Proposal shall be
deemed to be a Change in Company Recommendation unless the Board of Directors of
Company reaffirms Company Recommendation in such disclosure.
4.4 TRANSITION.
(a) Commencing following the date hereof, Company shall, and shall
cause its Subsidiaries to, use commercially reasonable efforts to facilitate the
integration of Company and its Subsidiaries, including BSB Bank, with the
businesses of Parent, SBU Bank and Newco to be effective as of the Closing Date
or such later date as may be determined by Parent.
(b) Parent and Company agree to consult with respect to
their loan, litigation and real estate valuation policies and practices
(including loan classifications and levels of reserves). Parent and Company
shall also consult with respect to the character, amount and timing of
restructuring charges to be taken by each of them in connection with the
transactions contemplated hereby and shall take such charges as Parent shall
reasonably request, provided that no such actions need be effected until Parent
shall have irrevocably certified to Company that all conditions set forth in
Article VI to the obligation of any Parent Party to consummate the transactions
contemplated hereby (other than the delivery of certificates to Newco by
officers of the Company) have been satisfied or, where legally permissible,
waived.
4.5 NO FUNDAMENTAL CHANGES IN THE CONDUCT OF BUSINESS BY PARENT. Except
(i) as set forth in Section 4.5 of the Parent Disclosure Schedule, (ii) as
otherwise expressly contemplated by this Agreement, (iii) as consented to by
Company in writing, or (iv) as required by applicable law or regulation, during
the period from the date of this Agreement and continuing until the earlier of
the termination of this Agreement or the Effective Time, Parent shall, and shall
cause its Subsidiaries to, carry on their respective businesses in the usual,
regular and ordinary course consistent with past practice and in compliance in
all material respects with all applicable laws and regulations. Except (i) as
set forth in Section 4.5 of the Parent Disclosure Schedule, (ii) as consented to
by Company in writing or required by applicable law or regulation or (iii) as
otherwise expressly contemplated by this Agreement, none of the Parent Parties
shall:
(i) amend its certificate of incorporation or by-laws in any manner
that would adversely affect the economic benefits of the Merger to the holders
of Company Common Stock as contemplated hereby;
(ii) acquire or agree to acquire by merging or consolidating with, or
by purchasing any assets or any equity securities of or by any other manner, any
business or any Person, or otherwise acquire or agree to acquire any assets
except (x) in the ordinary course of business consistent with past practice and
(y) for such acquisitions that would not reasonably be expected to prevent,
impede or materially delay the consummation of the transactions contemplated by
this Agreement;
(iii) change in any material respect its accounting methods (or
underlying assumptions), principles or practices affecting its assets,
liabilities or business, including any reserving, renewal or residual method,
practice or policy, in each case, in effect on the date hereof, except as
required by changes in GAAP or regulatory accounting principles;
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(iv) agree or consent to any agreement or modifications of
existing agreements with any Governmental Entity in respect of the operations of
its business, except (i) as required by law, (ii) to effect the consummation of
the transactions contemplated hereby, or (iii) as would not reasonably be
expected to have a Material Adverse Effect;
(v) knowingly take any action or knowingly fail to take
any action which would result in any of the conditions of Article VI not being
satisfied;
(vi) take or cause to be taken any action or actions that,
individually or in the aggregate, would reasonably be expected to prevent the
Merger from qualifying as a reorganization under Section 368(a) of the Code; or
(vii) authorize, or commit or agree to take, any of the
foregoing actions or any other action that would be reasonably likely to prevent
any Parent Party from performing or would be reasonably likely to cause any
Parent Party not to perform its covenants hereunder in all material respects.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 PREPARATION OF THE FORM S-4, PROXY STATEMENT; STOCKHOLDERS MEETING.
(a) As promptly as practicable following the date of this Agreement,
Newco and Company shall prepare, and Newco shall file with the SEC, the Form
S-4, in which the Proxy Statement will be included as a prospectus. Each of
Newco and Company shall use all reasonable efforts to have the Form S-4 declared
effective under the Securities Act, and for the Proxy Statement to be cleared
under the Exchange Act, as promptly as practicable after such filing. Without
limiting any other provision hereinabove contained, the Form S-4 and the Proxy
Statement will contain, without limitation, such information and disclosure
reasonably requested by either Newco or Company so that (i) the Form S-4
conforms in both form and substance to the requirements of the Securities Act,
and (ii) the Proxy Statement conforms in both form and substance to the
requirements of the Exchange Act. Company shall use reasonable best efforts to
cause the Proxy Statement to be mailed to holders of Company Common Stock as
promptly as practicable after the Form S-4 is declared effective.
(b) If at any time prior to the Effective Time there shall occur (i)
any event with respect to Company or any of its Subsidiaries, or with respect to
other information supplied by Company for inclusion in the Form S-4 or the Proxy
Statement or (ii) any event with respect to Newco, or with respect to
information supplied by Newco for inclusion in the Form S-4 or the Proxy
Statement, in either case, which event is required to be described in an
amendment of, or a supplement to, the Form S-4 or the Proxy Statement, such
event shall be so described, and such amendment or supplement shall be promptly
filed with the SEC and, as required by law, disseminated to the stockholders of
Company.
(c) Each of Company and Newco shall promptly notify the other of the
receipt of any comments from the SEC or its staff or any other appropriate
government official and of any requests by the SEC or its staff or any other
appropriate government official for amendments or supplements to any of the
filings with the SEC in connection with the Merger and the other transactions
contemplated hereby or for additional information and shall supply the other
with copies of all correspondence between Company or any of its representatives,
or Newco or any of its representatives, as the case may be, on the one hand, and
the SEC or its staff or any other appropriate government official, on the other
hand, with respect thereto. Company and Newco shall use their respective
reasonable best efforts to respond to any comments of the SEC with respect to
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the Form S-4 and the Proxy Statement as promptly as practicable. Company and
Newco shall cooperate with each other and provide to each other all information
necessary in order to prepare the Form S-4 and the Proxy Statement, and shall
provide promptly to the other party any information such party may obtain that
could necessitate amending any such document.
(d) Company shall, as promptly as practicable after the Form S-4 is
declared effective under the Securities Act, duly call, give notice of, convene
and hold Company Stockholders Meeting in accordance with the DGCL for the
purpose of obtaining Company Stockholder Approval and subject to Section 4.3,
the Board of Directors of Company shall recommend to Company's stockholders the
approval and adoption of this Agreement, the Merger and the other transactions
contemplated hereby (the "COMPANY RECOMMENDATION"); provided, however, that
Company's Board of Directors shall not be required to make such Company
Recommendation to the extent that it is permitted to effect a Change in Company
Recommendation pursuant to Section 4.3. Without limiting the generality of the
foregoing, Company agrees that its obligations pursuant to the first sentence of
this Section 5.1(d) shall not be affected by the commencement, public proposal,
public disclosure or communication to Company of any Company Takeover Proposal.
Notwithstanding any Change in Company Recommendation, unless otherwise directed
in writing by Newco, this Agreement and the Merger shall be submitted to the
stockholders of Company at Company Stockholders Meeting for the purpose of
approving the Agreement and the Merger and nothing contained herein shall be
deemed to relieve Company of such obligation, provided, however, that if the
Board of Directors of Company shall have effected a Change in Company
Recommendation in accordance with this Agreement, then in submitting this
Agreement to Company's stockholders, the Board of Directors of Company may
submit this Agreement to Company's stockholders without recommendation (although
the resolutions adopting this Agreement as of the date hereof may not be
rescinded or amended), in which event the Board of Directors of Company may
communicate the basis for its lack of a recommendation to Company's stockholders
in the Proxy Statement or an appropriate amendment or supplement thereto to the
extent required by law. If required by applicable law or stock exchange
requirements, or if Parent elects in its discretion to submit this Agreement to
its stockholders or Newco stockholders for approval, Parent and/or Newco, as
applicable, shall submit this Agreement to their respective shareholders for
approval at a special meeting to be held as promptly as practicable following
effectiveness of the Form S-4 and on the timing described in Section 5.1(e), and
by approving execution of this Agreement the Board of Directors of Parent agrees
that it shall, at the time any proxy statement soliciting approval of this
Agreement and the transactions contemplated hereby is mailed to the stockholders
of Parent, recommend that Parent's stockholders vote for such approval, and it
shall cause the Board of Directors of Newco to recommend that Newco's
stockholder vote for such approval; provided that Parent's determination as to
whether it shall submit this Agreement to its and/or Newco's stockholders for
approval shall be made prior to the initial filing of the Form S-4.
(e) Company, Newco and Parent shall coordinate and cooperate with
respect to the timing of their respective stockholders meeting, and shall use
reasonable best efforts to hold each of such meetings within five business days
of each other.
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5.2 ACCESS TO INFORMATION; CONFIDENTIALITY.
(a) Subject to applicable law, each of Parent and Company shall, and
shall cause its Subsidiaries and the respective officers, employees,
accountants, counsel, financial advisors and other representatives of each such
party, to afford each other party reasonable access during normal business hours
during the period prior to the Effective Time to all its respective properties,
books, contracts, commitments, personnel and records and, during such period,
each party shall, and shall cause each of its Subsidiaries to, furnish promptly
to each other party all other information concerning its business, properties
and personnel as such other party may reasonably request. In addition, each of
Parent and the Company shall, and shall cause each of its Subsidiaries to,
furnish promptly to the other (a) a copy of each material report, schedule,
registration statement and other document filed by it with any Governmental
Entity and (b) the internal or external reports prepared by it and/or its
Subsidiaries in the ordinary course that are reasonably required by the other
party promptly after such reports are made available to such party's personnel.
No review pursuant to this Section 5.2 shall affect any representation or
warranty given by any party.
(b) Each party will keep, and will cause its Subsidiaries,
Affiliates,directors, officers, employees, agents and advisors (collectively,
such party's "REPRESENTATIVES") to keep, all information and documents obtained
from the other party or its Representatives pursuant to Section 5.2(a) or during
the investigations leading up to the execution of this Agreement confidential
unless such information (i) was already in the possession of the party receiving
the information (the "RECEIVING PARTY"), provided that such information is not
known by the Receiving Party to be subject to another confidentiality agreement
with, or other direct or indirect obligation of secrecy to, the party disclosing
the information or documents (the "DISCLOSING PARTY"), (ii) becomes generally
available to the public other than as a result of a disclosure by the Receiving
Party or its Representatives or (iii) becomes available to the Receiving Party
from a source other than the Disclosing Party or its Representatives, provided
that such source is not known by the Receiving Party to be bound by a
confidentiality agreement with, or other direct or indirect obligation of
secrecy to, the Disclosing Party. In the event that this Agreement is terminated
or the transactions contemplated by this Agreement shall otherwise fail to be
consummated, each party shall promptly cause all copies of documents or extracts
thereof containing information and data as to another party hereto to be
returned to the Disclosing Party which furnished the same or, with respect to
information contained in analyses, compilations, studies or other documents or
records prepared by the Receiving Party, destroyed (such destruction to be
confirmed in writing if requested by the Disclosing Party). In the event that
the Receiving Party or any of its Representatives become legally compelled to
disclose any such information or documents, the Receiving Party agrees to
provide, if practicable, the Disclosing Party with reasonable advance notice
under the circumstances prior to any such disclosure to enable the Disclosing
Party to seek a protective order or other appropriate remedy. In addition, each
party may, at any time, with advance notice to the other party, make disclosures
of such information and documents as may be required or requested by such
party's applicable regulatory authorities. Notwithstanding anything herein to
the contrary, any party to this Agreement (and each employee, representative, or
other agent of such party) may disclose to any and all persons, without
limitation of any kind, the tax treatment and tax structure of the transactions
and all materials of any kind (including opinions and other tax analyses) that
are provided to the party relating to such tax treatment and tax structure.
5.3 REASONABLE BEST EFFORTS.
(a) Subject to the terms and conditions set forth in this Agreement,
each of the parties hereto shall use its reasonable best efforts (subject to,
and in accordance with, applicable law) to take promptly, or cause to be taken,
all actions, and to do promptly, or cause to be done, and to assist and
cooperate with the other parties in doing, all things necessary, proper or
advisable under applicable laws and regulations to consummate and make effective
the Merger and the other
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transactions contemplated by this Agreement (including, in the case of MHC,
Parent and Newco, the Conversion), including (i) obtaining all necessary actions
or non-actions, waivers, consents and approvals from Governmental Entities and
the making of all necessary registrations and filings and the taking of all
steps as may be necessary to obtain an approval or waiver from, or to avoid an
action or proceeding by, any Governmental Entity, (ii) obtaining all necessary
consents, approvals or waivers from third parties, (iii) defending any lawsuits
or other legal proceedings, whether judicial or administrative, challenging this
Agreement or the consummation of the transactions contemplated by this
Agreement, (iv) publicly supporting this Agreement and the Merger and (iv)
executing and delivering any additional instruments necessary to consummate the
transactions contemplated by, and to fully carry out the purposes of, this
Agreement.
(b) In connection with and without limiting the foregoing, Company
shall (i) use its reasonable best efforts to ensure that no state takeover
statute or similar statute or regulation is or becomes applicable to this
Agreement or the Merger or any of the other transactions contemplated hereby,
and (ii) if any state takeover statute or similar statute or regulation becomes
applicable to this Agreement or the Merger or any other transaction contemplated
hereby, take all action necessary to ensure that the Merger and the other
transactions contemplated by this Agreement may be consummated as promptly as
practicable on the terms contemplated hereby and otherwise to minimize the
effect of such statute or regulation on the Merger and the other transactions
contemplated hereby.
(c) In connection with and without limiting the foregoing, Parent
shall use its reasonable best efforts to cause the Conversion to occur as
promptly as practicable. In addition, Parent and Company shall use their
respective reasonable best efforts prior to the Effective Time to effect upon
the Effective Time, or as soon as reasonably practicable thereafter, the
combination (the "BANK COMBINATION") of BSB Bank with SBU Bank, including
causing such banks to enter into a customary plan of bank merger on terms and
conditions reasonably satisfactory to each of the Company and Parent, which
terms and conditions shall not conflict with any of the agreements set forth in
this Agreement (the "BANK MERGER AGREEMENT"), obtaining all necessary actions or
non-actions, waivers, consents and approvals from Governmental Entities
(including all applicable Bank Regulators(as defined in Section 8.3)) and making
all necessary registrations and filings and taking all steps as may be necessary
to obtain an approval or waiver from, or to avoid an action or proceeding by,
any Governmental Entity (including all applicable Bank Regulators), with such
Bank Combination to be effective immediately following the Effective Time or at
such later time as Parent may determine.
5.4 RULE 16B-3 ACTIONS. Newco and Company agree that, in order to most
effectively compensate and retain Company Insiders (as defined below) in
connection with the Merger, both prior to and after the Effective Time, it is
desirable that Company Insiders not be subject to a risk of liability under
Section 16(b) of the Exchange Act to the fullest extent permitted by applicable
law in connection with the conversion of shares of Company Common Stock and
Company Stock Options in connection with the Merger, and for that compensatory
and retentive purpose agree to the provisions of this Section 5.4. Prior to the
Effective Time, Company shall take all such steps as may be required to cause
any dispositions of Company Common Stock or acquisitions of Newco Common Stock
(including derivative securities with respect to Company Common Stock or Newco
Common Stock) resulting from the transactions contemplated by Article I and II
of this Agreement by each Company Insider to be exempt under Section 16(b) under
the Exchange Act to the fullest extent permitted by applicable law. Assuming
that Company delivers to Newco Company Section 16 Information (as defined below)
in a timely fashion prior to the Effective Time, the Board of Directors of
Newco, or a committee of non-employee directors thereof (as such term is defined
for purposes of Rule 16b-3(d) under the Exchange Act), shall reasonably promptly
thereafter and in any event prior to the Effective Time adopt a resolution
providing in substance that the receipt by Company Insiders (as defined below)
of Newco Common Stock in exchange for shares of Company Common Stock pursuant
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to the transactions contemplated hereby, and to the extent such securities are
listed in Company Section 16 Information, are intended to be exempt from
liability pursuant to Section 16(b) under the Exchange Act to the fullest extent
permitted by applicable law. "COMPANY SECTION 16 INFORMATION" shall mean
information accurate in all material respects regarding Company Insiders, the
number of shares of Company Common Stock held by each such Company Insider and
expected to be exchanged for Newco Common Stock in the Merger. "COMPANY
INSIDERS" shall mean those officers and directors of Company who are subject to
the reporting requirements of Section 16(a) of the Exchange Act with respect to
Company and, in with respect to the foregoing obligations of Newco, who are
listed in Company Section 16 Information and who will be subject to the
reporting requirements of Section 16(a) of the Exchange Act, immediately
following the Effective Time, with respect to Newco.
5.5 INDEMNIFICATION AND EXCULPATION.
(a) All rights to indemnification and exculpation from liabilities
for acts or omissions occurring at or prior to the Effective Time now existing
in favor of the current or former directors or officers of Company and its
Subsidiaries as provided in their respective certificates of incorporation or
by-laws (or comparable organizational documents) and any existing
indemnification agreements or arrangements of Company and its Subsidiaries shall
survive the Merger and shall continue in full force and effect in accordance
with their terms, and shall not be amended, repealed or otherwise modified for a
period of six years after the Effective Time in any manner that would adversely
affect the rights thereunder of such individuals for acts or omissions occurring
at or prior to the Effective Time.
(b) In the event of any threatened or actual claim, action, suit,
proceeding or investigation, whether civil, criminal or administrative,
including any such claim, action suit, proceeding or investigation in which any
individual who is now, or has been at any time prior to the date of this
Agreement, or who becomes prior to the Effective Time, a director or officer of
Company or any of its Subsidiaries (the "INDEMNIFIED PARTIES"), is, or is
threatened to be, made a party based in whole or in part on, or arising in whole
or in part out of, or pertaining to (i) the fact that such individual is or was
a director, officer or employee of Company or any of its Subsidiaries or their
respective predecessors or (ii) this Agreement or any of the transactions
contemplated hereby, whether in any case asserted or arising before or after the
Effective Time, the parties hereto agree to cooperate and use their best efforts
to defend against and respond thereto.
(c) Newco shall use its reasonable best efforts to cause the
Indemnified Parties to be covered for a period of three years after the
Effective Time by the directors' and officers' liability insurance policy
currently maintained by Company, provided that Newco may substitute therefor
policies of at least the same coverage and amounts containing terms and
conditions that are not less advantageous to the Indemnified Parties than such
policy, with respect to acts or omissions occurring prior to the Effective Time
that were committed by such officers and directors in their capacity as such.
(d) The provisions of this Section 5.5 shall survive the Effective
Time and are intended to be for the benefit of, and shall be enforceable by,
each Indemnified Party and other Person named herein and his or her heirs and
representatives.
5.6 FEES AND EXPENSES. Except as otherwise provided in Section 7.2, all
fees and expenses incurred in connection with the Merger, this Agreement, and
the transactions contemplated by this Agreement shall be paid by the party
incurring such fees or expenses, whether or not the Merger is consummated,
except that the filing and other fees paid to the SEC in connection with this
Agreement and printing fees in connection with the Proxy Statement and the Form
S-4 shall be borne by Newco.
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5.7 PUBLIC ANNOUNCEMENTS. Parent and Company will consult with each other
before issuing, and provide each other the opportunity to review, comment upon
and concur with and use reasonable efforts to agree on, any press release or
other public statements with respect to the transactions contemplated by this
Agreement, including the Merger, and shall not issue any such press release or
make any such public statement prior to such consultation, except as either
party may in good faith determine is required by applicable law, court process
or by obligations pursuant to any listing agreement with any national securities
exchange and except for any discussions with rating agencies. The parties agree
that the initial press release to be issued with respect to the transactions
contemplated by this Agreement shall be in a form heretofore agreed to by the
parties.
5.8 AFFILIATES. Concurrently with the execution of this Agreement, Company
is delivering to Newco a written agreement substantially in the form attached as
Exhibit B hereto of all of the Persons who are "affiliates" of Company for
purposes of Rule 145 under the Securities Act. Each such affiliate, as of the
date of this Agreement, is identified in Section 5.8 of the Company Disclosure
Schedule. Section 5.8 of the Company Disclosure Schedule shall be updated by
Company as necessary to reflect changes from the date hereof and Company shall
use reasonable best efforts to cause each Person added to such schedule after
the date hereof to deliver a similar agreement.
5.9 STOCK EXCHANGE LISTING. Newco shall use its best efforts to cause the
Newco Common Stock issuable under Article II to be approved for issuance on the
Nasdaq National Market, subject to official notice of issuance, as promptly as
practicable after the date hereof, and in any event prior to the Effective Time.
5.10 STOCKHOLDER LITIGATION. Each of Company and Parent shall give the
other the reasonable opportunity to participate in the defense of any
stockholder litigation against Company or Parent, as applicable, and its
directors relating to the transactions contemplated by this Agreement; provided,
however, that this Section 5.10 will not require any party to take any action
that would reasonably be expected to violate any law or result in the loss of
the attorney-client or other material privilege.
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5.11 STANDSTILL AGREEMENTS; CONFIDENTIALITY AGREEMENTS. During the period
from the date of this Agreement through the Effective Time, Company shall not
terminate, amend, modify or waive any provision of any confidentiality or
standstill agreement to which it or any of its respective Subsidiaries is a
party and which relates to the confidentiality of information regarding Company
or its Subsidiaries or which relates to securities of Company, other than client
and customer agreements entered into by Company or its Subsidiaries in the
ordinary course of business consistent with past practice. During such period,
Company shall use reasonable best efforts to enforce, to the fullest extent
permitted under applicable law, the provisions of any such agreement, including
by using reasonable best efforts to obtain injunctions to prevent any breaches
of such agreements and to enforce specifically the terms and provisions thereof
in any court having jurisdiction.
5.12 EMPLOYEE BENEFITS.
(a) Following the Closing, Newco shall use its reasonable best
efforts to ensure that qualified branch-level employees of Company who are
employed by Company and its Subsidiaries as of the Effective Time will remain
employed in a comparable position on and immediately following the Closing Date;
provided, however, that nothing in this Agreement will be deemed to be a
guaranty of employment for any specified period and nothing herein will confer
upon any Employee (other than the Key Employees (as defined in Section 8.3) any
right of employment or any right under any specific benefit plan, program,
policy or arrangement. All employees of Company who continue employment with
Newco or any of its Subsidiaries as of the Effective Time shall be referred to
as "CONTINUING EMPLOYEES".
(b) A true and correct copy of Company's severance plan (the
"COMPANY SEVERANCE PLAN") is included in Section 5.12(b) of the Company
Disclosure Schedule. Newco agrees to honor all obligations under the Company
Severance Plan for Continuing Employees (other than Continuing Employees who are
party to an employment agreement with Parent entered into in connection with
this Agreement) whose employment is terminated during the one-year period
following the Effective Time, and the Company Severance Plan shall not be
amended or modified during such one-year period.
(c) After the Effective Time, except to the extent the Parent, the
Surviving Corporation or any Subsidiary of Parent or the Surviving Corporation
continues in effect any Company Plan providing benefits of a similar type,
Continuing Employees will be eligible for the employee benefits and compensation
that Parent, the Surviving Corporation or such Subsidiary of Parent or Surviving
Corporation, as the case may be, provides to its employees generally and, except
as otherwise required by this Agreement, on substantially the same terms and
basis as is applicable to such employees, provided that nothing in this
Agreement shall require any duplication of benefits. From and after the
Effective Time, Parent shall, or shall cause the Surviving Corporation and its
Subsidiaries to, give Continuing Employees full credit for purposes of
eligibility, vesting and benefit accruals (other than for purposes of benefit
accruals under any defined benefit pension plan maintained by Parent, the
Surviving Corporation or any of their respective Subsidiaries) under any
employee benefit and compensation plans (including the section 401(k) plan
maintained by Parent, the Surviving Corporation or any Subsidiary of Parent or
the Surviving Corporation), programs, or arrangements maintained by Parent, the
Surviving Corporation or any Subsidiary of Parent or the Surviving Corporation
(other than any plan, program or arrangement that is frozen to new participants
as of the date hereof or, prior to January 1, 2005, any employee stock ownership
plan) for such Continuing Employees' service with Company or any Subsidiary of
Company (or any predecessor entity) to the same extent recognized by Company and
its Subsidiaries, except as may result in duplication of benefits.
(d) Parent shall, or shall cause the Surviving Corporation and its
Subsidiaries to, waive all limitations as to preexisting conditions, exclusions
and waiting periods with respect to
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participation and coverage requirements applicable to the Continuing Employees
under any welfare plan that such employees may be eligible to participate in
after the Effective Time, other than limitations or waiting periods that are
already in effect with respect to such employees and that have not been
satisfied as of the Effective Time under any welfare plan providing similar
benefits maintained for the Continuing Employees immediately prior to the
Effective Time, and provide, for the year in which the Effective Time occurs (or
the Continuing Employees' participation commences), credit under any such
welfare plan for any co-payments, deductibles and out-of-pocket expenditures for
the remainder of the coverage period during which any transfer of coverage
occurs to the extent credited by Company or its Subsidiaries for such Continuing
Employees as of immediately prior to the Effective Time (or the Continuing
Employees' participation commences).
(e) Parent, Newco and the Surviving Corporation shall honor all
obligations under the employment and change-in-control agreements set forth in
Section 5.12(e) of the Company Disclosure Schedule, in each case except to the
extent superseded by agreements entered into in connection with entering into
this Agreement. For purposes of all Company plans and employment agreements
containing "change in control" (or any derivation of such term) provisions, the
transactions contemplated by this Agreement shall constitute a change in
control.
5.13 TAX MATTERS. Company and the Parent Parties shall use reasonable best
efforts to cause the Merger to qualify as a reorganization within the meaning of
Section 368(a) of the Code, and shall not take or cause to be taken any actions
that, individually, or in the aggregate, would reasonably be likely to prevent
the Merger from so qualifying. This Agreement is intended to constitute, and is
hereby adopted as, a "plan of reorganization" within the meaning of Treas. Reg.
Sec. 1.368-2(g).
5.14 BOARD OF DIRECTORS. At or prior to the Effective Time, the Board of
Directors of Newco shall take all action necessary to ensure that, effective
immediately following the Effective Time and consistent with Section 1.6(a), (a)
the size of the Newco Board of Directors shall be increased by an additional
three directors and (b) each of the Company Designees shall be nominated for
election and appointed to fill such vacancies; with Xxxxxxx Xxxxxx being
appointed to serve as the Chairman of the Newco Board of Directors.
5.15 SUBSEQUENT FINANCIAL STATEMENTS. As soon as reasonably available, but
in no event more than 30 days after the end of each calendar month following the
date hereof and before the Closing Date, Company shall deliver to Parent the
unaudited financial statements of Company as of the end of each such month.
5.16 OTHER AGREEMENTS; MHC CONVERSION FROM MUTUAL TO STOCK FORM.
Commencing promptly after the date of this Agreement, MHC, Parent, Newco and SBU
Bank will use reasonable best efforts to, and will take all reasonable steps
necessary, to effect the Conversion. In addition, without limiting the
generality of the foregoing, Parent and MHC shall cause the following to be
done:
(a) Parent will (i) as promptly as practicable after the Conversion
Registration Statement (as defined in Section 8.3) is declared effective by the
SEC, and the requisite approvals from the Bank Regulators have been obtained,
take all steps necessary to duly call, give notice of, convene and hold a
special meeting of the stockholders of Parent for the purpose of approving the
Conversion and the Plan of Conversion, and for such other purposes as may be, in
the reasonable judgment of Parent, necessary or desirable (including, if
required by law or the rule of any applicable stock exchange or stock market,
the approval or adoption by such stockholders or by the stockholders of Newco of
this Agreement and the transactions contemplated hereby, including any related
issuance or sale of Newco Common Stock), and (ii) recommend to its stockholders
the approval of the aforementioned matters to be submitted by it to its
stockholders.
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(b) MHC will (i) as promptly as practicable after the Conversion
Registration Statement is declared effective by the SEC, and the requisite
approvals from the Bank Regulators have been obtained, take all steps necessary
to duly call, give notice of, convene and hold the Special Meeting of Depositors
(as defined in the Plan of Conversion) for the purpose of approving the Plan of
Conversion, and for such other purposes as may be, in the reasonable judgment of
MHC, necessary or desirable, (ii) recommend to the Voting Depositors the
approval of the aforementioned matters to be submitted by it to the Voting
Depositors, and (iii) cooperate and consult with Company with respect to each of
the foregoing matters.
(c) MHC will use reasonable best efforts to prepare and file all
regulatory applications required to be filed in connection with the Conversion.
(d) Parent and Newco shall prepare as promptly as practicable, and
Company shall cooperate in the preparation of, the Conversion Prospectus (as
defined in Section 8.3). Such Conversion Prospectus shall be incorporated into
the Conversion Registration Statement. Newco shall file the Conversion
Registration Statement with the SEC as promptly as practicable. Newco shall use
its reasonable best efforts to have the Conversion Registration Statement
declared effective under the Securities Act as promptly as practicable after
such filing.
(e) Company shall provide Parent and Newco with any information
concerning it that Parent or Newco may reasonably request in connection with the
Conversion Prospectus, and Parent shall notify Company promptly of the receipt
of any comments of the SEC, the OTS and any other Bank Regulator with respect to
the Conversion Prospectus and of any requests by the SEC, the OTS or any other
Bank Regulator for any amendment or supplement thereto or for additional
information, and shall promptly provide to Company copies of all correspondence
between Newco or any representative of Newco and the SEC, the OTS or any other
Bank Regulator. Newco shall give Company and its counsel the opportunity to
review and comment on the Conversion Prospectus prior to its being filed with
the SEC, the OTS and any Bank Regulator and shall give Company and its counsel
the opportunity to review and comment on all amendments and supplements to the
Conversion Prospectus and all responses to requests for additional information
and replies to comments prior to their being filed with, or sent to, the SEC,
the OTS and any Bank Regulator. Each of Parent, Newco and Company agrees to use
all reasonable efforts, after consultation with the other party hereto, to
respond promptly to all such comments of and requests by the SEC, the OTS and
any Bank Regulator and to cause the Conversion Prospectus and all required
amendments and supplements thereto to be mailed to the Participants at the
earliest practicable time.
(f) Each party hereto shall promptly notify the other if at any time
it becomes aware that the Conversion Prospectus or the Conversion Registration
Statement contains any untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
contained therein, in light of the circumstances under which they were made, not
misleading. In such event, the parties shall cooperate in the preparation of a
supplement or amendment to such Conversion Prospectus, which corrects such
misstatement or omission, and Newco shall file an amended Conversion
Registration Statement with the SEC.
(g) The aggregate price for which the shares of Newco Common Stock
are sold to purchasers in the Conversion Offering shall be based on the
Independent Valuation. The Independent Valuation shall be within the Appraised
Value Range (as defined in the Plan of Conversion).
(h) If any shares of Newco Common Stock that are offered for sale in
the subscription offering that is conducted as part of the Conversion Offering
remain unsold, then, at Parent's discretion, such shares may be issued to
Company stockholders as part of the Merger Consideration if necessary to
complete the Conversion.
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5.17 ACCOUNTANT'S COMFORT LETTER. Company shall use its reasonable best
efforts to cause to be delivered to Newco a letter from its independent public
accountants addressed to Newco, dated a date within two business days before the
date on which the Form S-4 shall become effective, in form and substance
reasonably satisfactory to Newco and customary in scope and substance for
letters delivered by independent public accountants in connection with
registration statements similar to the Form S-4.
ARTICLE VI
CONDITIONS PRECEDENT
6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligation of each party to effect the Merger is subject to the
fulfillment at or prior to the Closing Date of the following conditions, none of
which may be waived:
(a) STOCKHOLDER APPROVAL. The Company Stockholder Approval shall
have been obtained and, if legally required, the approval of the stockholders of
Parent and Newco.
(b) GOVERNMENTAL AND REGULATORY APPROVALS. Other than the filing
provided for under Section 1.3, all consents, approvals and actions of, filings
with and notices to any Bank Regulator and Governmental Entity required by
Company, Parent, Newco or any of their Subsidiaries under applicable law or
regulation to consummate the Conversion and the Merger and the other
transactions contemplated hereby, shall have been obtained or made and shall
remain in full force and effect, including approval of the Merger and, if so
determined by Parent in a timely manner, the Bank Combination, by the applicable
regulatory authorities and shall not include any condition or requirement,
excluding standard conditions that are normally imposed by Bank Regulators or
Governmental Entities in bank merger transactions and mutual-to-stock
conversions that would not reasonably be expected to have a Material Adverse
Effect on Parent or the Surviving Corporation (all such approvals and the
expiration of all such waiting periods, the "REQUISITE REGULATORY APPROVALS").
(c) OTHER THIRD PARTY APPROVALS. All other notices, consents or
waivers from third parties (other than Governmental Employees) with respect to
the transactions contemplated by this Agreement shall have been made or obtained
except as would not reasonably be expected to have a Material Adverse Effect on
Company or on Parent or Newco.
(d) NO INJUNCTIONS OR RESTRAINTS. No judgment, order, decree,
statute, law, ordinance, rule or regulation, entered, enacted, promulgated,
enforced or issued by any court or other Governmental Entity of competent
jurisdiction or other legal restraint or prohibition (collectively,
"Restraints") shall be in effect preventing the consummation of the Merger or
the Bank Combination.
(e) FORM S-4; BLUE SKY LAWS. The Form S-4 shall have become
effective under the Securities Act and no stop order or proceedings seeking a
stop order shall have been entered or be pending by the SEC, and Newco shall
have received all approvals required under state securities or "blue sky" laws
with respect to the Merger.
(f) STOCK EXCHANGE LISTING. The shares of Newco Common Stock
issuable to Company's stockholders as contemplated by Article II shall have been
approved for listing on the Nasdaq National Market, subject to official notice
of issuance.
(g) CONVERSION. Newco shall have consummated the Conversion.
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6.2 CONDITIONS TO OBLIGATIONS OF THE PARENT PARTIES. The obligation of
Parent and Newco to effect the Merger is further subject to satisfaction or
waiver of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Company set forth herein shall be true and correct at and as of
the date hereof and at and as of the Closing Date, as if made at and as of such
time (except to the extent expressly made as of an earlier date, in which case
as of such date), provided that no representation or warranty of Company shall
be deemed untrue and incorrect for purposes hereunder as a consequence of the
existence of any fact, event or circumstance inconsistent with such
representation or warranty, unless such fact, event or circumstance,
individually or taken together with all other facts, events or circumstances
inconsistent with any representations or warranties of Company, has had or would
result in a Material Adverse Effect on Company, disregarding for these purposes
(x) any qualification or exception for, or reference to, materiality in any such
representation or warranty and (y) any use of the terms "material",
"materially", "in all material respects", "Material Adverse Change", "Material
Adverse Effect" or similar terms or phrases in any such representations or
warranty; and Parent and Newco shall have received a certificate, dated the
Closing Date, signed on behalf of Company by the Chief Executive Officer and the
Chief Financial Officer of Company, to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF COMPANY. Company shall have
performed in all material respects its obligations required to be performed by
it at or prior to the Closing Date under this Agreement; and Parent and Newco
shall have received a certificate, dated the Closing Date, signed on behalf of
Company by the Chief Executive Officer and the Chief Financial Officer of
Company, to such effect.
(c) NO MATERIAL ADVERSE EFFECT. From and after the date hereof, no
event shall have occurred or circumstance shall have arisen that, individually
or in the aggregate, shall have had or shall reasonably be likely to have a
Material Adverse Effect on Company or any of its Subsidiaries.
(d) FEDERAL TAX OPINION. Newco shall have received the opinion of
Xxxxx & Xxxxxxx L.L.P., in form and substance reasonably satisfactory to Newco,
dated the Closing Date, rendered on the basis of facts, representations and
assumptions set forth in such opinion and certificates obtained from officers of
Company and the Parent Parties, all of which are consistent with the state of
facts existing as of the Effective Time, to the effect that the Merger will
qualify as a reorganization within the meaning of Section 368(a) of the Code. In
rendering the tax opinion described in this Section 6.2(e), Xxxxx & Xxxxxxx
L.L.P. may require and rely upon representations contained in certificates of
officers of Company and the Parent Parties.
6.3 CONDITIONS TO OBLIGATIONS OF COMPANY. The obligation of Company to
effect the Merger is further subject to satisfaction or waiver of the following
conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of each of the Parent Parties set forth herein shall be true and
correct at and as of the date hereof and at and as of the Closing Date, as if
made at and as of such time (except to the extent expressly made as of an
earlier date, in which case as of such date), provided that no representation or
warranty of any Parent Party shall be deemed untrue and incorrect for purposes
hereunder as a consequence of the existence of any fact, event or circumstance
inconsistent with such representation or warranty, unless such fact, event or
circumstance, individually or taken together with all other facts, events or
circumstances inconsistent with any representations or warranties of any Parent
Party, has had or would result in a Material Adverse Effect on any Parent Party,
disregarding for these purposes (x) any qualification or exception for, or
reference to, materiality in any such representation or warranty and (y) any use
of the terms "material", "materially", "in all material respects", "Material
Adverse Change", "Material Adverse Effect" or similar terms or phrases in any
such representations or
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warranty; and Company shall have received a certificate, dated the Closing Date,
signed on behalf of the Parent Parties by the Chief Executive Officer and the
Chief Financial Officer of Parent, to such effect. Notwithstanding anything to
the contrary set forth in this Section 6.3(a), the representation and warranty
set forth in Section 3.2(u) shall be true and correct in all respects.
(b) PERFORMANCE OF OBLIGATIONS. Each of the Parent Parties shall
have performed in all material respects all obligations required to be performed
by it at or prior to the Closing Date under this Agreement; and Company shall
have received a certificate, dated the Closing Date, signed on behalf of the
Parent Parties by the Chief Executive Officer and the Chief Financial Officer of
Parent, to such effect.
(c) DEPOSIT OF MERGER CONSIDERATION. Newco shall have deposited with
the Exchange Agent sufficient cash and certificates representing sufficient
shares of Newco Common Stock to pay the aggregate Merger Consideration, and the
Exchange Agent shall have certified to the Company its receipt of such
sufficient cash and shares.
(d) FEDERAL TAX OPINION. Company shall have received the opinion of
Wachtell, Lipton, Xxxxx & Xxxx, in form and substance reasonably satisfactory to
Company, dated the Closing Date, rendered on the basis of facts, representations
and assumptions set forth in such opinion and certificates obtained from
officers of Company and the Parent Parties, all of which are consistent with the
state of facts existing as of the Effective Time, to the effect that the Merger
will qualify as a reorganization within the meaning of Section 368(a) of the
Code. In rendering the tax opinion described in this Section 6.3(d), Wachtell,
Lipton, Xxxxx & Xxxx may require and rely upon representations contained in
certificates of officers of Company and the Parent Parties.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
7.1 TERMINATION. This Agreement may be terminated at any time prior to
the Effective Time, and whether before or after Company Stockholder Approval
(the party desiring to terminate this Agreement pursuant to clause (b), (c), (d)
or (e) below shall give written notice of such termination to the other party in
accordance with Section 8.2, specifying the provision hereof pursuant to which
such termination is effected:
(a) by mutual written consent of Parent and Company;
(b) by either Parent or Company:
(i) if the Merger shall not have been consummated by the date that
is 12 months following the date hereof (the "TERMINATION DATE"); provided,
however, that the right to terminate this Agreement pursuant to this Section
7.1(b)(i) shall not be available to any party whose failure to perform any of
its obligations under this Agreement results in the failure of the Merger to be
consummated by such time;
(ii) if Company Stockholder Approval shall not have been obtained at
Company Stockholders Meeting duly convened therefor or at any adjournment or
postponement thereof;
(iii) if any Restraint having any of the effects set forth in Section
6.1(d) shall be in effect and shall have become final and nonappealable;
provided, that the party seeking to terminate this Agreement pursuant to this
Section 7.1(b)(iii) shall have used reasonable best efforts to prevent the entry
of and to remove such Restraint; or
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(iv) if any Governmental Entity that must grant a Requisite
Regulatory Approval required to complete the Merger has denied the applicable
Requisite Regulatory Approval and such denial has become final and
nonappealable;
(c) by Parent, if (i) Company shall have failed to make the Company
Recommendation in the Proxy Statement, (ii) Company shall have effected a Change
in Company Recommendation or (iii) Company shall have breached its obligations
under this Agreement by reason of a failure to call or convene Company
Stockholders Meeting in accordance with Section 5.1(d);
(d) by Parent, if Company shall have breached any of its
representations, warranties, covenants or other agreements contained in this
Agreement, which breach (A) would give rise to the failure of a condition set
forth in Section 6.2(a) or (b), and (B) is incapable of being cured by Company
or is not cured within 30 days of written notice thereof; or
(e) by Company, if any Parent Party shall have breached any of its
representations, warranties, covenants or other agreements contained in this
Agreement, which breach (A) would give rise to the failure of a condition set
forth in Section 6.3(a) or (b), and (B) is incapable of being cured by such
Parent Party or is not cured within 30 days of written notice thereof.
7.2 EFFECT OF TERMINATION.
(a) In the event of termination of this Agreement by either Company
or Parent as provided in Section 7.1, this Agreement shall forthwith become void
and have no effect, without any liability or obligation on the part of Parent or
Company, other than that the provisions of Section 5.2(b), Section 5.6, this
Section 7.2 and Article VIII shall survive such termination indefinitely or
otherwise in accordance with their terms, provided, however, that nothing herein
shall relieve any party from any liability for any willful breach by a party of
any of its representations, warranties, covenants or agreements set forth in
this Agreement.
(b) (i) In the event that (A) a Company Pre-Termination Takeover
Proposal Event (as defined below) shall occur after the date of this Agreement
and thereafter this Agreement is terminated by either Parent or Company pursuant
to Section 7.1(b)(ii), by Parent pursuant to Section 7.1(c), or by Parent
pursuant to Section 7.1(d) as a result of a willful breach by Company and (B)
prior to the date that is 12 months after the date of such termination Company
consummates a Company Takeover Proposal or enters into any definitive
acquisition agreement (a "COMPANY ACQUISITION AGREEMENT") related to any Company
Takeover Proposal, then Company shall: (x) in the case of a termination pursuant
to Section 7.1(b)(ii), 7.1(c)(i) or 7.1(c)(ii), on the date such Company
Acquisition Agreement is entered into, pay Parent a fee equal to $8,000,000 by
wire transfer of same day funds, and on the date such Company Takeover Proposal
is consummated, pay Parent a fee equal to $8,000,000 by wire transfer of same
day funds; (y) in the case of a termination pursuant to Section 7.1(c)(iii) or
7.1(d) as a result of a willful breach by Company, on the date such Company
Takeover Proposal is consummated or such Company Acquisition Agreement is
entered into, pay Parent a fee equal to $16,000,000 by wire transfer of same day
funds.
(ii) For purposes of this Section 7.2(b), a "PRE-TERMINATION TAKEOVER
PROPOSAL EVENT" shall be deemed to occur if, after the date hereof and prior to
the event giving rise to the right to terminate this Agreement, a bona fide
Company Takeover Proposal shall have been made known to Company or any of its
Subsidiaries or has been made directly to its stockholders generally or any
person shall have publicly announced an intention (whether or not conditional)
to make a Company Takeover Proposal, and such Company Takeover Proposal or
public announcement shall not have been irrevocably withdrawn not less than five
business days prior to Company
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Stockholders Meeting. Company acknowledges that the agreements contained in this
Section 7.2(b) are an integral part of the transactions contemplated by this
Agreement, and that, without these agreements, the Parent Parties would not
enter into this Agreement; accordingly, if Company fails promptly to pay the
amount(s) due pursuant to this Section 7.2(b), and, in order to obtain such
payment, Parent commences a suit which results in a judgment against Company for
the fee set forth in this Section 7.2(b), Company shall pay to Parent its costs
and expenses (including attorneys' fees and expenses) in connection with such
suit, together with interest on the amount of the fee at the rate on six-month
U.S. Treasury obligations plus 300 basis points in effect on the date such
payment was required to be made.
(c) In the event that this agreement is terminated (x) by either
party pursuant to Section 7.1(b)(i) and, as of the Termination Date, the
conditions set forth in Section 6.1(g) shall not have been satisfied; (y) by
either party pursuant to Section 7.1(b)(iv), provided that (1) the basis for
such termination is the failure to receive a Requisite Regulatory Approval with
respect to the Conversion or (2) the reason for the failure to receive a
Requisite Regulatory Approval is not primarily attributable to Company; or (z)
by the Company pursuant to Section 7.1(e) based on a breach by a Parent Party of
its obligations under Section 5.3 or Section 5.16, then Parent shall pay to
Company a fee equal to $8,000,000 by wire transfer of same day funds no later
than the third business day after Company shall have delivered a notice of such
termination to Parent. The Parent Parties acknowledge that the agreements
contained in this Section 7.2(c) are an integral part of the transactions
contemplated by this Agreement, and that, without these agreements, Company
would not enter into this Agreement; accordingly, if Parent fails promptly to
pay the amount(s) due pursuant to this Section 7.2(c), and, in order to obtain
such payment, Company commences a suit which results in a judgment against
Parent for the fee set forth in this Section 7.2(c), Parent shall pay to Company
its costs and expenses (including attorneys' fees and expenses) in connection
with such suit, together with interest on the amount of the fee at the rate on
six-month U.S. Treasury obligations plus 300 basis points in effect on the date
such payment was required to be made.
7.3 AMENDMENT. This Agreement may be amended by the parties at any time
before or after Company Stockholder Approval; provided, however, that after such
approval, there shall not be made any amendment that by law requires further
approval by the stockholders of Company without the further approval of such
stockholders. This Agreement may not be amended except by an instrument in
writing signed on behalf of all of the parties.
7.4 EXTENSION; WAIVER. At any time prior to the Effective Time, a party
may (a) extend the time for the performance of any of the obligations or other
acts of the other party, (b) waive any inaccuracies in the representations and
warranties of the other party contained in this Agreement or in any document
delivered pursuant to this Agreement or (c) subject to the proviso of Section
7.3, waive compliance by the other party with any of the agreements or
conditions contained in this Agreement. Any agreement on the part of a party to
any such extension or waiver shall be valid only if set forth in an instrument
in writing signed on behalf of such party. The failure of any party to this
Agreement to assert any of its rights under this Agreement or otherwise shall
not constitute a waiver of such rights.
ARTICLE VIII
GENERAL PROVISIONS
8.1 NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of the
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Effective Time, and shall expire at
the Effective Time and be of no further effect thereafter; provided, however,
that this Section 8.1 shall not limit any covenant or agreement of the parties
which by its terms contemplates performance after the Effective Time.
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8.2 NOTICES. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed
given if delivered personally, telecopied (which is confirmed) or sent by
overnight courier (providing proof of delivery) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
(a) if to Parent, SBU Bank, Newco or MHC, to:
SBU Bank
000 Xxxxxxx Xxxxxx
Xxxxx, Xxx Xxxx
Attn: Xxxx X. Xxxxxxxx
with a copy (which shall not constitute notice) to:
Xxxxx & Xxxxxxx L.L.P.
Columbia Square
000 Xxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, XX 00000-0000
Attn: Xxxxxx X. Xxxxx, Esq.
and
(b) if to Company, to:
BSB Bancorp, Inc.
00-00 Xxxxxxxx Xxxxxx
Xxxxxxxxxx, Xxx Xxxx
Attn: Xxxxxx X. Xxxxx
with a copy (which shall not constitute notice) to:
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxxx X. Xxxxx, Esq.
8.3 DEFINITIONS. For purposes of this Agreement:
(a) an "AFFILIATE" of any Person means another Person that directly
or indirectly, through one or more intermediaries, controls, is controlled by,
or is under common control with, such first person, where "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management policies of a person, whether through the ownership
of voting securities, by contract, as trustee or executor, or otherwise;
provided, that (x) any investment account advised or managed by such Person or
one of its Subsidiaries or Affiliates on behalf of third parties, or (y) any
partnership, limited liability company, or other similar investment vehicle or
entity engaged in the business of making investments of which such Person acts
as the general partner, managing member, manager, investment advisor, principal
underwriter or the equivalent shall not be deemed an Affiliate of such Person.
(b) "AFFILIATED PERSON" means any director, officer or five percent
or greater stockholder of the referenced Person, spouse or other person living
in the same household of such director, officer or stockholder, or any company,
partnership or trust in which any of the foregoing
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persons is an officer, five percent or greater stockholder, general partner or
five percent or greater trust beneficiary.
(c) "BANK REGULATORS" means any federal or state banking regulator,
including but not limited to the FDIC, the OTS, the NYSBD, and the Federal
Reserve, which regulates SBU Bank or BSB Bank, or any of their respective
holding companies or subsidiaries, as the case may be.
(d) "BIF" means the Bank Insurance Fund as administered by the FDIC.
(e) "CONVERSION OFFERING" means the offering, in connection with the
Conversion, of shares of Newco Common Stock in a subscription offering and, if
necessary, a community offering and/or a syndicated community offering.
(f) "CONVERSION PROSPECTUS" means a prospectus issued by Newco in
connection with the Offering, that meets all of the requirements of the
Securities Act, applicable state securities laws and banking laws and
regulations. The Conversion Prospectus may be combined with (i) the Proxy
Statement delivered to stockholders of Company in connection with the
solicitation of their approval of this Agreement and the transactions
contemplated hereby and the offering of the Newco Common Stock to them as Merger
Consideration, and (ii) the proxy statement delivered to Parent stockholders in
connection with the solicitation of their approval of the Conversion and the
Plan of Conversion.
(g) "CONVERSION REGISTRATION STATEMENT" means the registration
statement, together with all amendments, filed with the SEC under the Securities
Act for the purpose of registering shares of Newco Common Stock to be offered
and issued in connection with the Offering. The Merger Registration Statement
and the Conversion Registration Statement may be separate registration
statements or may be combined in one registration statement that shall register
shares of Newco Common Stock to be offered and issued in connection with the
Offering and to be offered to holders of Company Common Stock in connection with
the Merger.
(h) "EXCHANGE OFFERING" means the offer and issuance of Newco Common
Stock, in connection with the Conversion, to the existing stockholders of
Parent.
(i) "GOVERNMENTAL ENTITY" means any (i) Federal, state, local,
municipal or foreign government, (ii) governmental, quasi-governmental authority
(including any governmental agency, commission, branch, department or official,
and any court or other tribunal) or body exercising, or entitled to exercise,
any governmentally-derived administrative, executive, judicial, legislative,
police, regulatory or taxing authority, or (iii) self-regulatory organization,
administrative or regulatory agency, commission or authority.
(i) "INDEPENDENT VALUATION" means the appraised pro forma market
value of the Newco Common Stock issued in the Conversion, and any updates, as
determined by the Independent Appraiser (as defined in the Plan of Conversion).
(j) "KEY EMPLOYEE" means each of Xxxxxx X. Xxxxx, Xxxxxxx X. Le
Xxxx, and Xxxxx X. Xxxxx.
(k) "KNOWLEDGE" or "knowledge" means, (i) with respect to Company or
its Subsidiaries, the knowledge of Company's executive officers and (ii) with
respect to the Parent Parties, the knowledge of Parent's executive officers.
(l) "MATERIAL ADVERSE CHANGE" or "MATERIAL ADVERSE EFFECT" means,
when used in connection with Company or any Parent Party, any change, effect,
event, occurrence or state
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of facts that (1) is materially adverse to the business, financial condition or
results of operations of such party and its consolidated subsidiaries taken as a
whole, other than (i) any change, effect, event or occurrence relating to the
United States economy or financial or securities markets in general, (ii) any
change, effect, event or occurrence relating to the financial services industry
to the extent not affecting such Person to a materially greater extent than it
affects other Persons in industries in which such Person competes, (iii) any
change, effect, event or occurrence relating to the announcement hereof, (iv)
any change in banking, savings association and similar laws, rules or
regulations of general applicability or interpretations thereof by courts or
governmental authorities and (v) any change in GAAP or regulatory accounting
requirements applicable to banks, savings associations or their holding
companies generally or (2) materially and adversely affects the ability of such
party to timely consummate the transactions contemplated by this Agreement.
(m) "MERGER REGISTRATION STATEMENT" means the Form S-4, together
with all amendments, filed with the SEC under the Securities Act for the purpose
of registering shares of Newco Common Stock to be offered to holders of Company
Common Stock in connection with the Merger. The Merger Registration Statement
and the Conversion Registration Statement may be separate registration
statements or may be combined in one registration statement that shall register
shares of Newco Common Stock to be offered and sold in connection with the
Offering and to be offered to holders of Company Common Stock in connection with
the Merger.
(n) "OFFERING" means the Conversion Offering and the Exchange
Offering.
(o) "PERSON" means an individual, corporation, partnership, limited
liability company, joint venture, association, trust, unincorporated
organization or other entity.
(p) "SUBSIDIARY" of any Person means another Person, an amount of
the voting securities, other voting ownership or voting partnership interests of
which is sufficient to elect at least a majority of its Board of Directors or
other governing body (or, if there are no such voting interests, 50% or more of
the equity interests of which) is owned directly or indirectly by such first
Person.
8.4 INTERPRETATION. When a reference is made in this Agreement to an
Article, Section or Exhibit, such reference shall be to an Article or Section
of, or an Exhibit to, this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include," "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation". The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement. All terms defined in this
Agreement shall have the defined meanings when used in any certificate or other
document made or delivered pursuant hereto unless otherwise defined therein. The
definitions contained in this Agreement are applicable to the singular as well
as the plural forms of such terms and to the masculine as well as to the
feminine and neuter genders of such term. Any agreement, instrument or statute
defined or referred to herein or in any agreement or instrument that is referred
to herein means, in the case of any agreement or instrument, such agreement or
instrument as from time to time amended, modified or supplemented, including by
waiver or consent and, in the case of statutes, such statutes as in effect on
the date of this Agreement. References to a person are also to its permitted
successors and assigns. The parties have participated jointly in the negotiation
and drafting of this Agreement. In the event an ambiguity or question of intent
or interpretation arises, this Agreement shall be construed as if drafted
jointly by the parties and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of the authorship of any of the
provisions of this Agreement. Any reference to any federal, state, local or
foreign statute or law shall be deemed to also refer to any amendments thereto
and all rules and regulations promulgated
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thereunder, unless the context requires otherwise.
8.5 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties. A facsimile copy of a signature
page shall be deemed to be an original signature page.
8.6 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES. This Agreement
(including the documents and instruments referred to herein), together with the
Confidentiality Agreement, (a) constitutes the entire agreement, and supersedes
all prior agreements and understandings, both written and oral, between the
parties with respect to the subject matter of this Agreement and (b) except for
the provisions of Section 5.5, which shall inure to the benefit of and be
enforceable by the Persons referred to therein, is not intended to confer upon
any Person other than the parties any rights or remedies.
8.7 GOVERNING LAW. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware, regardless of the laws that
might otherwise govern under applicable principles of conflict of laws thereof.
8.8 ASSIGNMENT. Neither this Agreement nor any of the rights, interests
or obligations under this Agreement shall be assigned, in whole or in part, by
operation of law or otherwise by any of the parties hereto without the prior
written consent of the other parties. Any assignment in violation of the
preceding sentence shall be void. Subject to the preceding two sentences, this
Agreement will be binding upon, inure to the benefit of, and be enforceable by,
the parties and their respective successors and assigns.
8.9 CONSENT TO JURISDICTION. Each of the parties hereto (a) consents to
submit itself to the exclusive personal jurisdiction of any Federal court
located in the State of New York or any court of the State of New York in the
event any dispute arises out of this Agreement or any of the transactions
contemplated by this Agreement, and (b) agrees that it will not attempt to deny
or defeat such personal jurisdiction by motion or other request for leave from
any such court.
8.10 HEADINGS. The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
8.11 SEVERABILITY. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible to the fullest extent
permitted by applicable law in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.
8.12 ENFORCEMENT. The parties agree that irreparable damage would occur in
the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement, this being in addition to any other
remedy to which they are entitled at law or in equity.
[Signature Page Follows]
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IN WITNESS WHEREOF, Parent, SBU Bank, Newco, MHC and Company
have caused this Agreement to be signed by their respective officers thereunto
duly authorized, all as of the date first written above.
PARENT:
PARTNERS TRUST FINANCIAL GROUP, INC.
ATTEST:
By: /s/ XXXXXX XXXXXX By: /s/ XXXX XXXXXXXX
---------------------------- ----------------------------------
Name: Xxxxxx Xxxxxx Name: Xxxx Xxxxxxxx
Title: Executive Vice President Title: President & Chief Executive
& Chief Financial Officer Officer
COMPANY:
BSB BANCORP, INC.
ATTEST:
By: /s/ XXXXXXX X. XXXXXX By: /s/ XXXXXX X. XXXXX
---------------------------- ----------------------------------
Name: Xxxxxxx X. XxXxxx Name: Xxxxxx X. Xxxxx
Title: Executive Vice President, Title: President & Chief Executive
Risk Management Officer
NEWCO:
WICKED ACQUISITION CORPORATION
ATTEST:
By: /s/ XXXXXX XXXXXX By: /s/ XXXX XXXXXXXX
---------------------------- ----------------------------------
Name: Xxxxxx Xxxxxx Name: Xxxx Xxxxxxxx
Title: Executive Vice President Title: President & Chief Executive
& Chief Financial Officer Officer
SBU BANK:
SBU BANK
ATTEST:
By: /s/ XXXXXX XXXXXX By: /s/ XXXX XXXXXXXX
---------------------------- ----------------------------------
Name: Xxxxxx Xxxxxx Name: Xxxx Xxxxxxxx
Title: Executive Vice President Title: President & Chief Executive
& Chief Financial Officer Officer
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MHC:
PARTNERS TRUST, MHC
ATTEST:
By: /s/ XXXXXX XXXXXX By: /s/ XXXX XXXXXXXX
---------------------------- ----------------------------------
Name: Xxxxxx Xxxxxx Name: Xxxx Xxxxxxxx
Title: Executive Vice President Title: President & Chief Executive
& Chief Financial Officer Officer
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EXHIBIT B
---------
FORM OF AFFILIATE AGREEMENT
See attached.
EXHIBIT B
---------
AFFILIATES AGREEMENT
This AFFILIATES AGREEMENT, dated as of December __, 2003, is
entered into by and between Wicked Acquisition Corporation, a Delaware
corporation ("NEWCO"), and the stockholders of BSB Bancorp, Inc., a Delaware
corporation ("COMPANY"), identified on Schedule I hereto (collectively, the
"STOCKHOLDERS").
WHEREAS, Partners Trust Financial Group, Inc., a federal
corporation ("PARENT"), SBU Bank, a federally chartered savings bank and
majority owned subsidiary of Parent ("SBU BANK"), Newco, Partners Trust, MHC
("MHC"), and Company have entered into an Agreement and Plan of Merger, dated as
of December 23, 2003 (the "AGREEMENT"), which is conditioned upon the
execution of this Affiliates Agreement and which provides for, among other
things, the merger of Company with and into Newco, with Newco being the
surviving corporation (the "MERGER"); and
WHEREAS, in order to induce Newco to enter into and consummate
the Agreement, each of the Stockholders agrees to, among other things, vote in
favor of the Agreement, the Merger and the other transactions contemplated by
the Agreement in his or her capacity as a stockholder of Company;
NOW, THEREFORE in consideration of the premises, the mutual
covenants and agreements set forth herein and other good and valuable
consideration, the sufficiency of which is hereby acknowledged, the parties
hereto agree as follows:
1. Ownership of Company Common Stock. Each Stockholder represents and
warrants, severally as to such Stockholder only and not jointly, that the number
of shares of Company common stock, par value $.01 per share ("COMPANY COMMON
STOCK"), set forth opposite such Stockholder's name on Schedule I hereto is the
total number of shares of Company Common Stock over which such person has
"beneficial ownership" within the meaning of Rule 13d-3 under the Securities
Exchange Act of 1934, as amended, except that the provisions of Rule
13d-3(d)(1)(i) shall be considered without any limit as to time.
2. Agreements of the Stockholders. Each Stockholder covenants and
agrees that:
(a) Such Stockholder shall, at any meeting of the holders of
any or all classes or series of Company Common Stock called for the purpose (or
in connection with any action taken by written consent), vote or cause to be
voted all shares of Company Common Stock with respect to which such Stockholder
has voting power (including the power to vote or to direct the voting of)
whether owned as of the date hereof or hereafter acquired (the "SHARES") (i) in
favor of the Agreement, the Merger and the other transactions contemplated by
the Agreement and (ii) against any plan or proposal pursuant to which Company is
to be acquired by or merged with, or pursuant to which Company proposes to sell
all or substantially all of its assets and liabilities to, any person, entity or
group (other than Newco or any affiliate thereof) or any other action that is
inconsistent with the Agreement or the transactions contemplated thereby.
Notwithstanding the foregoing, or any other provision of this Affiliates
Agreement, Newco shall have no agreement, arrangement or understanding with any
Stockholder as to directing the voting of any shares of Company Common Stock to
the extent it would result in Newco, individually or with any of their
Affiliates (as defined in the next sentence) or Associates (as defined in the
next sentence) becoming the Beneficial Owner (as defined in the next sentence)
of five percent or more of the Voting Stock (as defined in the next sentence) of
Company. The terms "AFFILIATES", "ASSOCIATES", "BENEFICIAL OWNER", and "VOTING
STOCK" are as defined or referenced in Article 14 of the Certificate of
Incorporation of the Company. In determining which, if any, Stockholder with
whom Newco shall have no agreement, arrangement or understanding as to directing
the voting of any shares of Company Common Stock, reference shall
be made to the Stockholders in order of the amount of Company Common Stock set
forth opposite such Stockholder's name on Schedule I hereto, beginning with the
Stockholder who reports the fewest number of shares, and continuing in ascending
order therefrom.
(b) Each Stockholder hereby grants to Newco a proxy to vote
such Stockholder's Shares as indicated Section 2(a) above. Such Stockholder
intends this proxy to be irrevocable and coupled with an interest and will take
such further action or execute such other instruments as may be reasonably
necessary to effect the intent of this proxy. Such Stockholder hereby revokes
any proxy previously granted by him or her with respect to the Shares.
(c) Prior to the Effective Time (as defined in the Agreement),
except as otherwise expressly permitted hereby, such Stockholder shall not sell,
pledge, transfer or otherwise dispose of his, her or its shares of Company
Common Stock.
(d) Such Stockholder shall not in his or her capacity as a
stockholder of Company directly or indirectly encourage or solicit, initiate or
hold discussions or negotiations with, or provide any information to, any
person, entity or group (other than Newco or an affiliate thereof) concerning
any merger, sale of all or substantially all of the assets or liabilities not in
the ordinary course of business, sale of shares of capital stock or similar
transaction involving Company or otherwise inconsistent with the Agreement or
the transactions contemplated thereby. Nothing in this document shall impair
such Stockholder's ability to act or omit to act in accordance with such
Stockholder's fiduciary obligations, or to act or omit to act in any manner
permitted by the Agreement, as a director of Company.
(e) Such Stockholder shall not, prior to the public release by
Newco of an earnings report to its stockholders covering at least one month of
operations after consummation of the Merger (the "RESTRICTED PERIOD"), sell,
pledge, transfer or otherwise dispose of the shares of common stock, par value
$.0001 per share (the "NEWCO COMMON STOCK"), of Newco.
(f) Such Stockholder shall comply with all applicable federal
and state securities laws in connection with any sale of Newco Common Stock
received in exchange for Company Common Stock in the Merger, including the
trading and volume limitations as to sales by affiliates contained in Rule 145
under the Securities Act of 1933, as amended.
3. Successors and Assigns. A Stockholder may sell, pledge, transfer or
otherwise dispose of his or her shares of Company Common Stock only with the
prior written consent of Newco and if the acquirer of such Company Common Stock
agrees in writing to be bound by this Affiliates Agreement.
4. Termination. The parties agree and intend that this Affiliates
Agreement be a valid and binding agreement enforceable against the parties
hereto and that damages and other remedies at law for the breach of this
Affiliates Agreement are inadequate. This Affiliates Agreement may be terminated
at any time prior to the consummation of the Merger by the written consent of
the parties hereto and shall be automatically terminated in the event that the
Agreement is terminated in accordance with its terms.
5. Notices. Notices may be provided to Newco and the Stockholders in
the manner specified in the Agreement, with all notices to the Stockholders
being provided to them at the addresses set forth at Schedule I.
6. Governing Law. This Affiliates Agreement shall be governed by the
laws of the State of Delaware, without giving effect to the principles of
conflicts of laws thereof.
-2-
7. Counterparts. This Affiliates Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same and each of
which shall be deemed an original.
8. Headings. The Section headings contained herein are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Affiliates Agreement.
9. Regulatory Approval. If any provision of this Affiliates Agreement
requires the approval of any regulatory authority in order to be enforceable,
then such provision shall not be effective until such approval is obtained;
provided, however, that the foregoing shall not affect the enforceability of any
other provision of this Affiliates Agreement.
[SIGNATURE PAGE FOLLOWS]
-3-
IN WITNESS WHEREOF, Newco, by a duly authorized officer, and
each of the Stockholders have caused this Affiliates Agreement to be executed
and delivered as of the day and year first above written.
WICKED ACQUISITION CORPORATION
By:
----------------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
STOCKHOLDERS:
----------------------------------- --------------------------------
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----------------------------------- --------------------------------
----------------------------------- --------------------------------
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[SIGNATURE PAGE]
SCHEDULE I
NAME AND ADDRESS OF STOCKHOLDER NUMBER OF SHARES OF COMPANY
COMMON STOCK BENEFICIALLY
OWNED
