July 10, 1998
Oneida Valley Bancshares, Inc.
000 Xxxx Xxxxxx
Xxxxxx, Xxx Xxxx 00000
Gentlemen:
The undersigned is a director of Cortland First Financial Corporation
("CFF") and a director of its subsidiary bank, and is the beneficial holder of
shares of common stock, par value $1.6667 per share, of CFF ("CFF Common
Stock"). The undersigned is executing this Agreement for the purpose of ensuring
compliance with certain federal securities law requirements and certain
requirements for the application of "pooling" accounting treatment in connection
with the transaction described below.
CFF and Oneida Valley Bancshares, Inc. ("OVB") are considering execution
of an Agreement and Plan of Reorganization and a related Plan of Merger
(collectively, the "Merger Agreement") contemplating a merger of OVB with and
into CFF (the "Merger"), with the resulting corporation to assume a new name
(the "Continuing Corporation"), such execution being subject in the case of OVB
to the execution and delivery of this Agreement. In consideration of the
substantial expenses that OVB will incur in connection with the transactions
contemplated by the Merger Agreement and in order to induce OVB to execute the
Merger Agreement and to proceed to incur such expenses, the undersigned agrees,
undertakes and represents, in his capacity as a shareholder of CFF and not in
his capacity as a director of CFF, as follows:
1. VOTING OF SHARES. The undersigned will vote or cause to be voted for
approval of the Merger Agreement all of the shares of CFF Common Stock the
undersigned is entitled to vote with respect thereto, unless by a two-thirds
vote the Board of Directors of CFF, in accordance with Section 4.8(12) of the
Reorganization Agreement, votes to pursue a superior proposal.
2. NO TRANSFER OF SHARES. The undersigned will not effect any transfer or
other disposition of any of the undersigned's shares of CFF Common Stock until
CFF's shareholders have voted to approve the Merger Agreement or until the
Merger Agreement has been terminated pursuant to the terms thereof. In the case
of any transfer by operation of law, this Agreement shall be binding upon and
inure to the benefit of the transferee. Any transfer or other disposition in
violation of the terms of this paragraph 2 shall be null and void. The terms of
this paragraph 2 shall not apply to any transfer or other disposition pursuant
to the terms of any pledge of CFF Common Stock made by the undersigned and
existing at the date
Oneida Valley Bancshares, Inc.
July 10, 1998
Page 2
hereof, provided that the undersigned will not pledge or otherwise encumber any
additional shares of CFF Common Stock during the period specified in the first
sentence of this paragraph.
3. FURTHER RESTRICTIONS. Notwithstanding the foregoing, the undersigned
agrees not to sell, or in any other way reduce the risk of the undersigned
relative to, any shares of CFF common stock or shares of OVB common stock,
during the period commencing 30 days prior to the effective date of the Merger
and ending on the date on which financial results covering at least 30 days of
post-Merger combined operations of CFF and OVB have been published within the
meaning of Topic 2-E of the Staff Accounting Bulletin Series of the SEC,
provided, however, that excluded from the foregoing undertaking shall be such
sales, pledges, transfers or other dispositions of shares of CFF common stock or
shares of OVB common stock which, in OVB's sole judgment, are individually and
in the aggregate de minimis within the meaning of Topic 2-E of the Staff
Accounting Bulletin Series of the SEC. The undersigned agrees to confer with OVB
and CFF prior to engaging in any transactions or agreements related to shares of
CFF Common Stock in order to insure compliance with this Agreement.
4. STOP TRANSFER ORDERS. The Undersigned agrees that neither CFF nor OVB
shall be bound by any attempted sale or other transfer of any shares of CFF
common stock or shares of OVB common stock, and CFF's and OVB's respective
transfer agents shall be given appropriate stop transfer orders and shall not be
required to register any such attempted sale or other transfer, unless the sale
has been effected in compliance with the terms of this Agreement.
5. AFFILIATES OBLIGATED. The undersigned acknowledges and agrees that the
provisions of paragraphs 3 and 4 hereof also apply to shares of OVB common stock
and shares of CFF common stock owned by (a) his or her spouse, (b) any of his or
her relatives or relatives of his or her spouse occupying his or her home, and
(c) any trust or estate in which he or she, his or her spouse, or any such
relative owns at least a 10% beneficial interest or of which any of them serves
as trustee, executor or in any similar capacity, and (d) any corporation or
other organization in which the undersigned, any affiliate of the undersigned,
his or her spouse, or any such relative owns at least 10% of any class of equity
securities or of the equity interest.
6. NO INTENT TO SELL. The undersigned represents that he or she has no
plan or intention to sell, exchange, or otherwise dispose of any shares of OVB
common stock or shares of CFF common stock prior to expiration of the time
period referred to in paragraph 3 hereof.
Oneida Valley Bancshares, Inc.
July 10, 1998
Page 3
7. ENFORCEMENT. The undersigned represents that he or she has the capacity
to enter into this Agreement and that it is a valid and binding obligation
enforceable against the undersigned in accordance with its terms, subject to
bankruptcy, insolvency and other laws affecting creditors' rights and general
equitable principles.
8. REMEDIES. The undersigned acknowledges and agrees that any remedy at
law for breach of the foregoing provisions shall be inadequate and that, in
addition to any other relief which may be available, OVB shall be entitled to
temporary and permanent injunctive relief without the necessity of proving
actual damages.
IN WITNESS WHEREOF, the undersigned has executed this Agreement as of the
date first above written.
Very truly yours,
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Accepted and agreed to as of the date first above written:
ONEIDA VALLEY BANCSHARES, INC.
By:
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Xxxx X. Xxxx
President
