AGREEMENT AND PLAN OF MERGER among KEYCORP, KYCA CORPORATION and U.S.B. HOLDING CO., INC. dated as of July 26, 2007
EXECUTION
COPY
AGREEMENT
AND PLAN OF MERGER
among
KEYCORP,
KYCA
CORPORATION
and
U.S.B.
HOLDING CO., INC.
dated
as of July 26, 2007
TABLE
OF CONTENTS
RECITALS
Page
A.
|
Acquiror
|
1
|
B.
|
Acquiror
Sub
|
1
|
C.
|
Company
|
1
|
D.
|
Approvals
|
1
|
E.
|
Intended
Tax Treatment
|
1
|
F.
|
Voting
Agreements
|
1
|
G.
|
Noncompetition
Agreement
|
1
|
ARTICLE
I
|
||
THE
MERGER
|
||
1.1
|
The
Merger
|
2
|
1.2
|
Directors
of the Surviving Corporation
|
2
|
1.3
|
Officers
of the Surviving Corporation
|
2
|
1.4
|
Effective
Time
|
2
|
1.5
|
Closing
|
3
|
ARTICLE
II
|
||
CONVERSION
OR CANCELLATION OF SHARES; OPTIONS AND OTHER STOCK-BASED
AWARDS
|
||
2.1
|
Conversion
or Cancellation of Shares
|
3
|
2.2
|
Exchange
of Old Certificates; Payment of the Consideration.
|
4
|
2.3
|
Adjustments
to Acquiror Common Stock
|
6
|
2.4
|
Options
and Other Stock-Based Awards.
|
6
|
2.5
|
Dissenting
Stockholders
|
7
|
2.6
|
Withholding
Taxes
|
7
|
ARTICLE
III
|
||
REPRESENTATIONS
AND WARRANTIES OF COMPANY
|
||
3.1
|
Disclosure
Letter
|
8
|
3.2
|
Standards
|
8
|
3.3
|
Corporate
Organization and Qualification
|
9
|
3.4
|
Subsidiaries
|
9
|
3.5
|
Capital
Stock.
|
9
|
3.6
|
Corporate
Authority and Action.
|
10
|
3.7
|
Governmental
Filings; No Violations.
|
11
|
3.8
|
Reports
and Financial Statements.
|
11
|
3.9
|
Absence
of Certain Events and Changes
|
12
|
3.10
|
Compliance
with Laws and Other Matters
|
13
|
3.11
|
Litigation
|
14
|
3.12
|
Taxes.
|
14
|
3.13
|
Internal
Controls
|
15
|
3.14
|
Insurance
|
16
|
i
3.15
|
Books
and Records
|
16
|
3.16
|
Labor
Matters
|
16
|
3.17
|
Employee
Benefits.
|
16
|
3.18
|
Environmental
Matters
|
18
|
3.19
|
Agreements.
|
19
|
3.20
|
Knowledge
as to Conditions
|
19
|
3.21
|
Fairness
Opinion
|
20
|
3.22
|
Brokers
and Finders
|
20
|
3.23
|
Certain
Agreements
|
20
|
3.24
|
Owned
Real Property
|
20
|
3.25
|
Undisclosed
Liabilities
|
20
|
ARTICLE
IV
|
||
REPRESENTATIONS
AND WARRANTIES OF ACQUIROR AND ACQUIROR SUB
|
||
4.1
|
Disclosure
Letter
|
20
|
4.2
|
Standards
|
21
|
4.3
|
Corporate
Organization and Qualification
|
21
|
4.4
|
Corporate
Authority and Action
|
21
|
4.5
|
Capital
Stock.
|
22
|
4.6
|
Governmental
Filings; No Violations.
|
22
|
4.7
|
Reports
and Financial Statements.
|
23
|
4.8
|
Absence
of Certain Events and Changes
|
23
|
4.9
|
Compliance
with Laws and Other Matters
|
23
|
4.10
|
Litigation
|
25
|
4.11
|
Taxes
|
25
|
4.12
|
Undisclosed
Liabilities
|
26
|
4.13
|
Knowledge
as to Conditions
|
26
|
4.14
|
Brokers
and Finders
|
26
|
4.15
|
Financing
|
26
|
4.16
|
Interim
Operations of Acquiror Sub
|
26
|
ARTICLE
V
|
||
COVENANTS
|
||
5.1
|
Conduct
of Business Pending the Effective Time.
|
27
|
5.2
|
Dividends
|
31
|
5.3
|
Acquisition
Proposals
|
31
|
5.4
|
Stockholder
Approval
|
34
|
5.5
|
Filings;
Other Actions.
|
34
|
5.6
|
Information
Supplied
|
36
|
5.7
|
Access
and Investigations
|
36
|
5.8
|
Certain
Modifications; Restructuring Charges
|
37
|
5.9
|
Takeover
Laws
|
37
|
5.10
|
Benefit
Plans
|
37
|
5.11
|
Indemnification
and Insurance.
|
39
|
5.12
|
Publicity
|
40
|
5.13
|
Reasonable
Best Efforts; Additional Agreements
|
40
|
ii
5.14
|
Notification
of Certain Matters
|
40
|
5.15
|
Expenses
|
40
|
5.16
|
Section
16(b) Exemption
|
40
|
5.17
|
Environmental
Assessments
|
41
|
5.18
|
Registration
and Merger Consideration
|
41
|
5.19
|
Affiliates
|
42
|
5.20
|
Stock
Exchange Listing
|
42
|
5.21
|
Compliance
Policies and Procedures
|
42
|
ARTICLE
VI
|
||
CONDITIONS
|
||
6.1
|
Conditions
to Each Party’s Obligation to Effect the Merger
|
42
|
6.2
|
Conditions
to Obligations of Acquiror and Acquiror and Acquiror Sub
|
43
|
6.3
|
Conditions
to Obligation of Company
|
44
|
ARTICLE
VII
|
||
TERMINATION
|
||
7.1
|
Termination
|
45
|
7.2
|
Fee
|
47
|
7.3
|
Effect
of Termination and Abandonment
|
47
|
ARTICLE
VIII
|
||
MISCELLANEOUS
|
||
8.1
|
Survival
|
48
|
8.2
|
Modification
or Amendment
|
48
|
8.3
|
Waiver
of Conditions
|
48
|
8.4
|
Counterparts
|
48
|
8.5
|
Governing
Law
|
48
|
8.6
|
Notices
|
48
|
8.7
|
Entire
Agreement, Etc
|
49
|
8.8
|
Definition
of “subsidiary” and “affiliate”; Covenants with Respect to Subsidiaries
and Affiliates
|
49
|
8.9
|
Interpretation;
Effect
|
50
|
8.10
|
No
Third Party Beneficiaries
|
50
|
8.11
|
Waiver
of Jury Trial
|
50
|
EXHIBITS
A. |
List
of Stockholders Signing Voting Agreements and Form of Voting
Agreement
|
B. |
Form
of Affiliate Agreement
|
iii
INDEX
OF
DEFINED TERMS
Location
of
|
|
Term
|
Definition
|
Acquiror
|
Preamble
|
Acquiror
Benefit Plan
|
5.10(a)
|
Acquiror
Common Stock
|
Recital
A
|
Acquiror
Disclosure Letter
|
4.1
|
Acquiror
Financial Statements
|
4.7(c)
|
Acquiror
Ratio
|
7.1(f)
|
Acquiror
Ratio Determination Date
|
7.1(f)
|
Acquiror
Regulatory Approvals
|
4.6(a)
|
Acquiror
Share Price
|
2.1(c)
|
Acquiror
Sub Common Stock
|
Recital
B
|
Acquiror
Sub
|
Preamble
|
Acquisition
Proposal
|
5.3(a)
|
Acquisition
Proposal Interest
|
5.3(a)
|
affiliate
|
8.8(a)
|
Agreement
|
Preamble
|
BHC
Act
|
3.7(a)
|
Certificate
of Merger
|
1.4(a)
|
Change
in Company’s Recommendation
|
5.3(c)
|
Closing
|
1.5
|
Closing
Date
|
1.5
|
Code
|
Recital
E
|
Company
|
Preamble
|
Company
Benefit Plans
|
3.17(a)
|
Company
Common Stock
|
Recital
C
|
Company
Disclosure Letter
|
3.1
|
Company
Financial Statements
|
3.8(c)
|
Company
Insiders
|
5.16
|
Company
Meeting
|
5.4
|
Company
Option
|
2.4(a)
|
Company
Regulatory Approvals
|
3.7(a)
|
Company
Section 16 Information
|
5.16
|
Confidentiality
Agreement
|
5.3(b)
|
Continuing
Employees
|
5.10(a)
|
Contracts
|
3.7(b)
|
Designated
Amount
|
2.1(a)
|
Designated
Ratio
|
2.1(a)
|
DGCL
|
1.1(b)
|
Dissenting
Shares
|
2.1(a)
|
Dissenting
Stockholder
|
2.5(a)
|
Effective
Time
|
1.4(a)
|
Ending
Price
|
7.1(f)
|
Environmental
Assessments
|
5.17(b)
|
Environmental
Laws
|
3.18
|
iv
ERISA
|
3.17(a)
|
ERISA
Affiliate
|
3.17(c)
|
ERISA
Plan
|
3.17(b)
|
Exception
Shares
|
2.1(a)
|
Exchange
Act
|
3.7(a)
|
Exchange
Agent
|
2.2(a)
|
Federal
Reserve Board
|
3.7(a)
|
Form
S-4
|
5.5(a)
|
Governmental
Entity
|
3.7(a)
|
Indemnified
Party
|
5.11(a)
|
Index
Price
|
7.1(f)
|
Index
Ratio
|
7.1(f)
|
IRS
|
3.17(b)
|
Just
Cause
|
5.1(a)(ix)
|
KSOP
|
5.1(a)(viii)
|
Liens
|
3.5(e)
|
Material
Adverse Effect
|
3.2(b)
|
Maximum
Amount
|
5.11(b)
|
Merger
|
1.1(a)
|
Merger
Consideration
|
2.1(a)
|
New
Certificates
|
2.2(a)
|
New
Option
|
2.4(a)
|
Old
Certificate
|
2.1(b)
|
Old
Share
|
2.1(b)
|
Option
Conversion Ratio
|
2.4(b)
|
Owned
Real Property
|
3.24
|
Pension
Plan
|
3.17(b)
|
Per
Share Cash Consideration
|
2.1(a)
|
Per
Share Stock Consideration
|
2.1(a)
|
Person
|
2.2(b)
|
Phase
I Assessments
|
5.17(a)
|
Phase
II Assessments
|
5.17(b)
|
Proxy
Statement/Prospectus
|
5.5(a)
|
Regulatory
Approvals
|
4.6(a)
|
Reports
|
3.8(a)
|
Representatives
|
5.3(a)
|
Rights
|
3.5(d)
|
SEC
|
3.8(a)
|
Securities
Act
|
3.8(a)
|
Securities
Laws
|
3.8(a)
|
Severance
Plan
|
5.10(e)
|
Starting
Date
|
7.1(f)
|
Starting
Price
|
7.1(f)
|
subsidiary
|
8.8(a)
|
Superior
Proposal
|
5.3(b)
|
Surviving
Corporation
|
1.1(a)
|
v
Takeover
Laws
|
3.6(b)
|
Tax
|
3.12
|
Termination
Date
|
7.1(d)
|
Unlawful
Gains
|
3.10(e)
|
Voting
Agreement
|
Recital
F
|
vi
AGREEMENT
AND PLAN OF MERGER, dated as of July 26, 2007 (this “Agreement”), by and among
KEYCORP (“Acquiror”), KYCA CORPORATION (“Acquiror
Sub”) and
U.S.B. HOLDING CO., INC. (“Company”).
RECITALS
A. Acquiror.
Acquiror is an Ohio corporation with its principal executive offices located
in
Cleveland, Ohio. Acquiror has (i) 1,400,000,000 authorized shares of common
stock, par value $1.00 per share (“Acquiror Common Stock”), of which 389,849,743
shares are outstanding as of June 30, 2007; and (ii) 25,000,000 authorized
shares of preferred stock, par value $1.00 per share, none of which are
outstanding as of the date of this Agreement.
B. Acquiror
Sub.
Acquiror Sub is a Delaware corporation and a wholly owned subsidiary of Acquiror
that has been organized for the purpose of effecting the Merger (as defined
below). As of the date hereof, Acquiror Sub has 1,000 authorized shares of
common stock, par value $0.001 per share (“Acquiror Sub Common
Stock”).
C. Company.
Company
is a Delaware corporation with its principal executive offices located in
Orangeburg, Rockland County, New York. As of the date hereof, Company has
(i)
50,000,000 authorized shares of common stock, $0.01 par value per share
(“Company Common Stock”), of which 21,939,569 shares are outstanding as of the
date of this Agreement; and (ii) 10,000,000 authorized shares of preferred
stock, with no par value per share, none of which are outstanding as of the
date
of this Agreement.
D. Approvals.
The
Board of Directors of each of Acquiror and Company has (i) determined that
this
Agreement and the transactions contemplated hereby are advisable and in the
best
interests of Acquiror and Company, respectively, and in the best interests
of
their respective stockholders, (ii) determined that this Agreement and the
transactions contemplated hereby are consistent with, and in furtherance
of, its
respective business strategies and (iii) authorized and approved this
Agreement.
E. Intended
Tax Treatment.
The
parties intend the Merger to be treated as a reorganization under Section
368(a)
of the Internal Revenue Code of 1986, as amended (the “Code”) and the rules and
regulations thereunder and intend for this Agreement to constitute a “plan of
reorganization” within the meaning of the Code.
F. Voting
Agreements.
The
stockholders of Company identified on Exhibit A have each executed a Voting
Agreement (each, a “Voting Agreement”) in the form of Exhibit A on or prior to
the date hereof.
G. Consulting
Agreement and Non-disclosure and Non-solicitation Agreement.
Each of
Xxxxxx X. Xxxxx and Xxxxxxx X. Xxxxxx has executed a consulting agreement
and a
settlement and separation agreement and Xxxxxx X. Buonaiuoto has executed
a
settlement and separation agreement, each in a form satisfactory to Acquiror,
on
or prior to the date hereof.
NOW,
THEREFORE, in consideration of their mutual promises and obligations, the
parties hereto approve, adopt and make this Agreement and Plan of Merger
and
prescribe the terms and conditions hereof and the manner and mode of carrying
it
into effect, which are as follows:
ARTICLE
I
THE
MERGER
1.1 The
Merger.
(a)
Subject
to the terms and conditions of this Agreement, at the Effective Time (as
hereinafter defined), Company shall merge with and into Acquiror Sub (the
“Merger”). Acquiror Sub shall be the surviving corporation in the Merger
(hereinafter sometimes referred to as the “Surviving Corporation”) and shall
continue to be governed by the laws of the State of Delaware. Acquiror may
at
any time prior to the Effective Time change the method of effecting the
combination of Company and Acquiror (including the provisions of this Article
I)
if and to the extent it deems such change to be necessary, appropriate or
desirable; provided,
however,
that no
such change shall (i) alter or change the Merger Consideration (as hereinafter
defined), (ii) adversely affect the tax treatment of Acquiror’s stockholders or
Company’s stockholders pursuant to this Agreement, (iii) adversely affect the
tax treatment of Company or Acquiror pursuant to this Agreement or (iv)
materially impede or delay consummation of the transactions contemplated
by this
Agreement. In the event Acquiror makes such a change, Company agrees to execute
an appropriate amendment to this Agreement in order to reflect such
change.
(b) The
Merger shall have the effects specified in this Agreement and the Delaware
General Corporation Law (the “DGCL”).
(c) The
certificate of incorporation and bylaws of Acquiror Sub as in effect immediately
prior to the Effective Time shall be the certificate of incorporation and
bylaws
of the Surviving Corporation.
1.2 Directors
of the Surviving Corporation.
Immediately after the Effective Time, the directors of the Surviving Corporation
shall consist of the directors of Acquiror Sub in office immediately prior
to
the Effective Time, until their respective successors are duly elected and
qualified.
1.3 Officers
of the Surviving Corporation.
Immediately after the Effective Time, the officers of the Surviving Corporation
shall consist of the officers of Acquiror Sub in office immediately prior
to the
Effective Time.
1.4 Effective
Time.
(a) Subject
to the terms and conditions of this Agreement, on or before the Closing Date
(as
hereinafter defined), Acquiror will cause a certificate of merger to be filed
with the Office of the Secretary of State of the State of Delaware as provided
in Section 251 of the DGCL (the “Certificate of Merger”). The Merger shall
become effective at such time as the Certificate of Merger has been filed,
or at
such other time as may be specified therein. The date and time at which the
Merger becomes effective is herein referred to as the “Effective
Time.”
(b) Acquiror
and Company each will use reasonable best efforts to cause the Effective
Time to
occur on (i) the last day of the month in which the satisfaction or waiver
of
the last of the conditions specified in Sections 6.1, 6.2 and 6.3 of this
Agreement has occurred (other than conditions relating solely to the delivery
of
documents dated the Closing Date) (provided, however,
that if
the Effective Time would occur less than three business days after the
satisfaction or waiver of such last condition, Acquiror and Company will
cause
the Effective Time to occur on the fifteenth day of the immediately following
month (or if such fifteenth day is not a business day, the next business
day
thereafter), or (ii) such other date to which the parties may agree in
writing.
2
1.5 Closing.
The
closing of the Merger (the “Closing”) shall take place at the offices of
Xxxxxxxx & Xxxxxxxx LLP, at such time as Acquiror and Company shall agree,
on the date when the Effective Time is to occur (the “Closing
Date”).
ARTICLE
II
CONVERSION
OR CANCELLATION OF SHARES;
OPTIONS
AND OTHER STOCK-BASED AWARDS
2.1 Conversion
or Cancellation of Shares.
At the
Effective Time, by virtue of the Merger and without any action on the part
of
any stockholder:
(a) Company
Common Stock.
Each
share of Company Common Stock issued and outstanding immediately prior to
the
Effective Time, other than Exception Shares and Dissenting Shares, shall
be
converted into and constitute the right to receive, as provided in and subject
to the provisions of Section 2.1(c), (i) an amount of shares of Acquirer
Common
Stock equal to 0.65 times the Designated Ratio (the “Per Share Stock
Consideration”), and (ii) subject to adjustment pursuant to Section 7.1(f),
$8.925 in cash (the “Per Share Cash Consideration,” and together with the Per
Share Stock Consideration, the “Merger Consideration”).
For
purposes of this Agreement, the following terms have the meanings
indicated:
“Designated
Ratio” means 0.70, subject to adjustment in accordance with Section 2.3 and/or
Section 7.1(f).
“Dissenting
Shares” shall mean shares of Company Common Stock, the holders of which have
perfected and not withdrawn or lost their appraisal rights with respect to
such
shares under Section 262 of the DGCL.
“Exception
Shares” means shares of Company Common Stock owned or held, other than in a bona
fide fiduciary or agency capacity or in satisfaction of a debt previously
contracted in good faith, by Company or by Acquiror.
(b) Rights
as Stockholders; Stock Transfers.
Each
Exception Share shall cease to be outstanding, shall be canceled and retired
and
shall cease to exist, and no consideration shall be delivered in exchange
therefor. Each share of Company Common Stock issued and outstanding immediately
prior to the Effective Time, other than Exception Shares and Dissenting Shares,
is hereinafter defined as an “Old Share.” Old Shares shall cease to be
outstanding, shall be canceled and retired and shall cease to exist, and
each
holder of a certificate (an “Old Certificate”) formerly representing Old Shares
shall thereafter cease to have any rights with respect to such shares, except
the right to receive, as applicable, without interest, upon exchange of such
Old
Certificate in accordance with this Article II (i) any dividends with respect
to
Company Common Stock with a record date prior to the Effective Time but unpaid
as of the Effective Time and (ii) the consideration to which such holder
may be
entitled pursuant to this Article II.
3
(c) No
Fractional Shares.
Notwithstanding any other provision of this Agreement, neither certificates
nor
scrip for fractional shares of Acquiror Common Stock shall be issued in the
Merger. Each holder who otherwise would have been entitled to a fraction
of a
share of Acquiror Common Stock shall receive in lieu thereof cash (without
interest) in an amount determined by multiplying the fractional share interest
to which such holder would otherwise be entitled (after taking into account
all
shares of Company Stock owned by such holder at the Effective Time) by the
last
reported closing sale price of one share of Acquiror Common Stock as reported
on
the NYSE Composite Transactions Reporting System (as reported in the Wall
Street
Journal or, if not reported therein, in another authoritative source) (the
“Acquiror Share Price”). No such holder shall be entitled to dividends, voting
rights or any other rights in respect of any fractional share.
(d) Acquiror
Sub Common Stock.
Each
share of Acquiror Sub Common Stock outstanding immediately prior to the
Effective Time shall be unchanged and shall remain issued and outstanding
as one
share of common stock of the Surviving Corporation.
2.2 Exchange
of Old Certificates; Payment of the Consideration.
(a) Appointment
of Exchange Agent.
Until
the first anniversary of the Effective Time, Acquiror shall make available
on a
timely basis or cause to be made available to an exchange agent agreed upon
by
Acquiror and Company (the “Exchange Agent”) (1) cash in an amount sufficient to
allow the Exchange Agent to make all payments that may be required pursuant
to
this Article II and (2) certificates, or at Acquiror’s option, evidence of
shares in book entry form, representing the shares of Acquiror Common Stock
(“New Certificates”), each to be given to the holders of Company Common Stock in
exchange for Old Certificates pursuant to this Article II. Upon such
anniversary, any such cash or New Certificates remaining in the possession
of
the Exchange Agent (together with any earnings in respect thereof) shall
be
delivered to Acquiror. Any holder of Old Certificates who has not theretofore
exchanged such Old Certificates pursuant to this Article II shall thereafter be
entitled to look exclusively to Acquiror, and only as a general creditor
thereof, for the consideration to which such holder may be entitled upon
exchange of such Old Certificates pursuant to this Article II. Notwithstanding
the foregoing, neither the Exchange Agent nor any party hereto, shall be
liable
to any holder of Old Certificates for any amount properly delivered to a
public
official pursuant to applicable abandoned property, escheat or similar
laws.
(b) Exchange
Procedures.
Promptly after the Effective Time, but in no event later than ten days
thereafter, Acquiror shall cause the Exchange Agent to mail or deliver to
each
individual, bank, corporation, partnership, trust, association or other entity
or organization (a “Person”) who was, immediately prior to the Effective Time, a
holder of record of Company Common Stock, a form of letter of transmittal
(which
shall specify that delivery shall be effected, and risk of loss and title
to Old
Certificates shall pass, only upon proper delivery of such certificates to
the
Exchange Agent) containing instructions for use in effecting the surrender
of
Old Certificates in exchange for the consideration to which such holder may
be
entitled pursuant to this Article II. After completion of the allocation
procedure set forth in Section 2.1(c) and upon surrender to the Exchange
Agent
of an Old Certificate for cancellation together with such letter of transmittal
or Election Form, as the case may be, duly executed and completed in accordance
with the instructions thereto, the holder of such Old Certificate shall promptly
be provided in exchange therefor, but in no event later than ten business
days
after due surrender, a New Certificate representing the New Shares and/or
a
check in the amount to which such holder is entitled pursuant to this Article
II, and the Old Certificate so surrendered shall forthwith be canceled. No
interest will accrue or be paid with respect to any property to be delivered
upon surrender of Old Certificates.
4
(c) Transfer
to Holder other than Existing Holder.
If any
cash payment is to be made in a name other than that in which the Old
Certificate surrendered in exchange therefor is registered, it shall be a
condition of such exchange that the Person requesting such exchange shall
pay
any transfer or other taxes required by reason of the making of such cash
payment in a name other than that of the registered holder of the Old
Certificate surrendered, or required for any other reason relating to such
holder or requesting person, or shall establish to the reasonable satisfaction
of the Exchange Agent that such tax has been paid or is not payable. If any
New
Certificate representing shares of Acquiror Common Stock is to be issued
in the
name of other than the registered holder of the Old Certificate surrendered
in
exchange therefor, it shall be a condition of the issuance thereof that the
Old
Certificate so surrendered shall be properly endorsed (or accompanied by
an
appropriate instrument of transfer) and otherwise in proper form for transfer,
and that the person requesting such exchange shall pay to the Exchange Agent
in
advance any transfer or other taxes required by reason of the issuance of
a
certificate representing shares of Acquiror Common Stock in a name other
than
that of the registered holder of the Old Certificate surrendered, or required
for any other reason relating to such holder or requesting person, or shall
establish to the reasonable satisfaction of the Exchange Agent that such
tax has
been paid or is not payable.
(d) Dividends.
No
dividends or other distributions with a record date after the Effective Time
with respect to Acquiror Common Stock shall be paid to the holder of any
unsurrendered Old Certificate until the holder thereof shall surrender such
Old
Certificate in accordance with this Article II. After the surrender of a
Certificate in accordance with this Article II, the record holder thereof
shall
be entitled to receive any such dividends or other distributions, without
any
interest thereon, which theretofore had become payable with respect to shares
of
Acquiror Common Stock represented by such New Certificate.
(e) Transfers.
At or
after the Effective Time, there shall be no transfers on the stock transfer
books of the Surviving Corporation of Old Shares.
(f) Lost,
Stolen or Destroyed Certificates.
If any
Old Certificate shall have been lost, stolen or destroyed, upon the making
of an
affidavit of that fact by the Person claiming such Old Certificate to be
lost,
stolen or destroyed and, if required by the Surviving Corporation or the
Exchange Agent, the posting by such Person of a bond in such reasonable amount
as the Surviving Corporation or the Exchange Agent may direct as indemnity
against any claim that may be made against it with respect to such Old
Certificate, the Surviving Corporation or the Exchange Agent shall, in exchange
for such lost, stolen or destroyed Old Certificate, pay or cause to be paid
the
consideration deliverable in respect of the Old Shares formerly represented
by
such Old Certificate pursuant to this Article II.
5
2.3 Adjustments
to Acquiror Common Stock.
If
Acquiror changes (or Acquiror’s Board of Directors sets a related record date
that will occur before the Effective Time for a change in) the number or
kind of
shares of Acquiror Common Stock outstanding by way of a stock split, stock
dividend, recapitalization, reclassification, reorganization or similar
transaction, then the Designated Ratio will be adjusted proportionately to
account for such change.
2.4 Options
and Other Stock-Based Awards.
(a) At
the
Effective Time, by virtue of the Merger and without any action on the part
of
any holder thereof, each option to purchase shares of Company Common Stock
(a
“Company Option”) that is outstanding and unexercised, whether vested or
unvested, exercisable or unexercisable, immediately prior thereto shall be
deemed to constitute a fully vested option (a “New Option”) to purchase, on the
same terms and conditions as were applicable under the terms of the stock
option
plan under which the Company Option was granted, such number of shares of
Acquiror Common Stock and at such an exercise price per share determined
as
follows:
(A) Number
of Shares.
The
number of shares of Acquiror Common Stock subject to a New Option shall be
equal
to the product of (I) the number of shares of Company Common Stock purchasable
upon exercise of the Company Option and (II) the Option Conversion Ratio
(as
defined below), the product being rounded to the nearest whole share;
and
(B) Exercise
Price.
The
exercise price per share of Acquiror Common Stock purchasable upon exercise
of a
New Option shall be equal to (I) the exercise price per share of Company
Common
Stock under the Company Option divided by (II) the Option Conversion Ratio,
the
quotient being rounded to the nearest cent.
The
exercise price and the number of shares of Acquiror Common Stock purchasable
pursuant to the Company Options shall be determined in a manner consistent
with
the requirements of Section 409A of the Code. With respect to any such
Company Options that are “incentive stock options” (as defined in Section 422(b)
of the Code), the foregoing adjustments shall be effected in a manner consistent
with Section 424(a) of the Code and the regulations promulgated thereunder.
Notwithstanding the foregoing, any Company Options (whether vested or unvested)
that are held by employees of the Company who are not Continuing Employees
(as
such term is Defined in Section 5.10(a)) or that are held by directors of
Company shall be entitled to a cash payment from the Company at the Effective
Time in an amount equal to the excess of (i) the sum of (A) the Per Share
Cash
Consideration plus (B) (1) the Designated Ratio multiplied by (2) the Acquiror
Share Price over (ii) the per share exercise price of such Company Option,
subject to any required withholding of taxes. Prior to the Effective Time,
Company, or Company’s Board of Directors or an appropriate committee thereof,
will take all action necessary on its part to give effect to the provisions
of
this Section 2.4(a) and shall take such other actions reasonably requested
by Acquiror to give effect to the foregoing.
6
(b) For
purposes of this Agreement, “Option Conversion Ratio” shall mean the sum of (i)
(A) 0.65 times (B) the Designated Ratio plus (ii) (A) the Per Share Cash
Consideration divided by (B) the Acquiror Share Price.
(c) Prior
to
the Effective Time, Acquiror shall take all corporate action necessary to
reserve for future issuance a sufficient additional number of shares of Acquiror
Common Stock to provide for the satisfaction of its obligations, if any,
with
respect to the New Options. On the Closing Date, or the next Business Day
thereafter if necessary, Acquiror shall file a registration statement on
Form
S-8 (or any successor or other appropriate form) with respect to the Acquiror
Common Stock issuable upon exercise of the New Options and shall use its
reasonable efforts to maintain the effectiveness of such registration statement
(and to maintain the current status of the prospectus or prospectuses contained
therein) for so long as such New Options remain outstanding.
2.5 Dissenting
Stockholders.
(a)
Each
Dissenting Share shall not be converted into or represent a right to receive
the
Merger Consideration hereunder, and the holder thereof shall be entitled
only to
such rights as are granted by Section 262 of the DGCL. Company shall give
Acquiror prompt notice upon receipt by Company of any such demands for payment
of the fair value of such shares of Company Common Stock and of withdrawals
of
such notice and any other instruments provided pursuant to applicable law
(any
stockholder duly making such demand being hereinafter called a “Dissenting
Stockholder”), and Acquiror shall have the right to participate in all
negotiations and proceedings with respect to any such demands. Any payments
made
in respect of Dissenting Shares shall be made by the Surviving
Company.
(b) If
any
Dissenting Stockholder shall effectively withdraw or lose (through failure
to
perfect or otherwise) the right to dissent under Section 262 of the DGCL
at or
prior to the Effective Time, each of such holder’s shares of Company Common
Stock shall be converted into a right to receive the Merger Consideration
in
accordance with the applicable provisions of this Agreement.
2.6 Withholding
Taxes.
Acquiror or the Exchange Agent, as applicable, shall be entitled to deduct
and
withhold from the Merger Consideration or other amounts otherwise payable
pursuant to this Agreement to holders of Company Common Stock such
amounts as Acquiror or the Exchange Agent, as applicable, reasonably
determines in good faith it is required to deduct and withhold with respect
to
the making of such payment under the Code, or any provision of state, local
or
non-U.S. Tax law. To the extent that amounts are so withheld, such
withheld amounts (i) shall be remitted by Purchaser or the Exchange Agent,
as applicable, to the applicable taxing authority, and (ii) shall be
treated for all purposes of this Agreement as having been paid to
the holder of the Company Common Stock in respect of which such
deduction and withholding was made.
7
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES OF COMPANY
3.1 Disclosure
Letter.
Prior
to the execution and delivery hereof, Company has delivered to Acquiror and
Acquiror Sub a letter (the “Company Disclosure Letter”) setting forth, among
other things, items the disclosure of which is necessary or appropriate either
in response to an express disclosure requirement contained in a provision
hereof
or as an exception to one or more of Company’s representations or warranties
contained in this Article III or to one or more of its covenants contained
in
Article V.
3.2 Standards.
(a) No
representation or warranty of Company contained in this Article III, other
than:
(i) the
representations and warranties in Sections 3.3, 3.4, 3.6, 3.7(b), 3.8(a)
and
(b), clause (a) of the first sentence of Section 3.9, and Sections 3.13,
3.15,
3.16, 3.19(a) and 3.23, which shall be true and correct in all material respects
(without duplicative effect being given to any materiality, Material Adverse
Effect or similar qualifier);
(ii) the
representations and warranties in Section 3.11, when made as of the date
of this
Agreement, which shall be true and correct in all material respects;
and
(iii) the
representations and warranties in Sections 3.5 (except for de minimis errors),
clause (b) of the first sentence of Section 3.9, and Sections 3.21, 3.22
and
3.24 which shall be true and correct in all respects;
shall
be
deemed untrue or incorrect, and Company shall not be deemed to have breached
a
representation or warranty, as a consequence of the existence or absence
of any
fact, circumstance or event unless such fact, circumstance or event,
individually or taken together with all other facts, circumstances or events
inconsistent with any representation or warranty contained in this Article
III,
has had or is reasonably likely to have a Material Adverse Effect on Company
(without duplicative effect being given to any materiality, Material Adverse
Effect or similar qualifier).
(b) The
term
“Material Adverse Effect” means, with respect to Company or Acquiror, as the
case may be, an effect which (A) is materially adverse to the business,
properties, financial condition or results of operations of Acquiror or Company,
as the context may dictate, and its subsidiaries, taken as a whole, (B)
materially impairs or delays the ability of Acquiror or Company to consummate
the Merger or (C) enables any Person to prevent or impair the consummation
by
Acquiror or Company of the Merger; provided,
however,
that in
determining whether a Material Adverse Effect has occurred there shall be
excluded any effect to the extent attributable to or resulting after the
date of
this Agreement from (i) any changes in laws, regulations or interpretations
of
laws or regulations generally affecting the banking or bank holding company
businesses, (ii) any change in generally accepted accounting principles or
regulatory accounting requirements, generally affecting the banking or bank
holding company businesses, (iii) events, conditions or trends in economic,
business or financial conditions generally or affecting the banking or bank
holding company businesses specifically, (iv) changes in national or
international political or social conditions including the engagement by
the
United States in hostilities, whether or not pursuant to the declaration
of a
national emergency or war, or the occurrence of any military or terrorist
attack
upon or within the United States, or any of its territories, possessions
or
diplomatic or consular offices or upon any military installation, equipment
or
personnel of the United States, (v) the effects of the actions contemplated
by
Section 5.8, (vi) changes resulting from transaction expenses, including
legal,
accounting and investment bankers’ fees incurred in connection with this
Agreement and (vii) any changes in Federal and/or State tax laws generally
affecting bank or bank holding company businesses.
8
Except
as
set forth in the Company Disclosure Letter, Company hereby represents and
warrants to Acquiror and Acquiror Sub the following (as set forth in Sections
3.3 through 3.25 (inclusive)):
3.3 Corporate
Organization and Qualification.
It is a
corporation duly organized, validly existing and in good standing under the
laws
of the state of its incorporation. It has the requisite corporate power and
authority to own or lease its properties and assets and to carry on its
businesses as they are now being conducted. It has made available to Acquiror
a
complete and correct copy of its governing documents, each as amended to
the
date hereof and as in full force and effect as of the date hereof. It is
duly
qualified to do business as a foreign corporation in each jurisdiction where
the
properties owned, leased or operated or the business conducted by it require
such qualification.
3.4 Subsidiaries.
Each of
its subsidiaries is duly organized, and (to the extent applicable) validly
existing and in good standing under the laws of the jurisdiction of
incorporation or organization of such subsidiary, and is duly qualified to
do
business in each jurisdiction where the property owned, leased or operated,
or
the business conducted, by such subsidiary requires such qualification. Each
of
its subsidiaries has the requisite corporate power and authority to own or
lease
its properties and assets and to carry on its business as it is now being
conducted. A true and complete list of its direct and indirect subsidiaries
as
of the date hereof is set forth in Section
3.4 of the Company Disclosure Letter.
3.5 Capital
Stock.
(a) The
information in Recital C hereof is true and correct.
(b) As
of the
date hereof, except as set forth in Section
3.5(b) of the Company Disclosure Letter,
no
shares of its common stock or preferred stock were held in treasury by it
or
otherwise owned by it or its subsidiaries for its own account.
(c) All
the
outstanding shares of its common stock, and its preferred stock, if any,
have
been duly authorized and validly issued and are fully paid and nonassessable
and
were not issued in violation of any preemptive or similar rights.
(d) As
of the
date hereof, except as set forth in Section
3.5(d) of the Company Disclosure Letter
(i)
there are no shares of its common stock or its preferred stock authorized
and
reserved for issuance, (ii) it does not have any Rights issued or outstanding
with respect to any of its capital stock and (iii) no Person has any Contract
or
any right or privilege (whether pre-emptive or contractual) capable of becoming
a Right or a Contract for the purchase, subscription or issuance of any
securities of it. As used herein, “Rights” means, with respect to any Person,
securities or obligations convertible into or exercisable or exchangeable
for,
or giving any Person any right to subscribe for or acquire, or any options,
warrants, conversion rights, redemption rights, repurchase rights, agreements,
arrangements, calls, commitments or rights of any kind relating to, or any
stock
appreciation right or other instrument the value of which is determined in
whole
or in part by reference to the market price or value of, shares of capital
stock
or earnings of such Person. Section
3.5 (d) of the Company Disclosure Letter
contains
a correct and complete list of each Company Option, including the holder,
date
of grant, exercise price, number of shares subject thereto and plan under
which
such option was issued.
9
(e) All
the
outstanding shares of capital stock of each of its subsidiaries owned by
it or a
subsidiary of it have been duly authorized and validly issued and are fully
paid
and (except, with respect to bank subsidiaries, as provided in 12 U.S.C.
§ 55 or under applicable state law) nonassessable, and, other than as set
forth in Section
3.5(e) of the Company Disclosure Letter,
are
owned by it or a direct or indirect wholly owned subsidiary of it free and
clear
of all liens, pledges, security interests, claims, proxies, preemptive or
subscriptive rights or other encumbrances or restrictions of any kind or
Rights
(“Liens”).
(f) Company
does not have outstanding any bonds, debentures, notes or other obligations
the
holders of which have the right to vote (or convertible into or exercisable
for
securities having the right to vote) with the stockholders of Company on
any
matter.
(g) Each
Company Option (A) was granted in compliance with all applicable Laws and
all of
the terms and conditions of the applicable plan pursuant to which it was
issued,
(B) has an exercise price per share equal to or greater than the fair market
value of a share of Company Common Stock at the close of business on the
date of
such grant, (C) has a grant date identical to the date on which the Company’s
Board of Directors or compensation committee actually awarded it, (D) is
exempt
from the Section 409A of the Code, and (E) qualifies for the tax and accounting
treatment afforded to such award in the Company’s tax returns and the Company’s
financial statements, respectively.
3.6 Corporate
Authority and Action.
(a) It
has
the requisite corporate power and authority and has taken all corporate action
necessary in order to authorize the execution and delivery of, and performance
of its obligations under, this Agreement and to consummate the Merger, subject
only to receipt of the requisite approval of the holders of at least a majority
of the outstanding shares of Company Common Stock. This Agreement is its
valid
and legally binding agreement enforceable in accordance with its terms, subject
to applicable bankruptcy, insolvency and similar laws affecting creditors’
rights generally and to general principles of equity. Its stockholders have
no
dissenters’ or similar rights in connection with the Merger except pursuant to
Section 262 of the DGCL.
(b) It
has
taken all action required to be taken by it in order to exempt this Agreement,
the Voting Agreements and the transactions contemplated hereby from, and
this
Agreement and the transactions contemplated hereby are exempt from, the
requirements of (A) any “moratorium”, “control share”, “fair price”,
“supermajority”, “affiliate transactions”, “business combination” or other state
anti-takeover laws and regulations (collectively, “Takeover Laws”), and (B) the
provisions of Article 8 of its certificate of incorporation. As of the date
hereof, its Board of Directors has approved the transactions contemplated
by
this Agreement by more than a two-thirds majority.
10
3.7 Governmental
Filings; No Violations.
(a) Other
than (i) the applications, notices, reports and other filings required to
be
made by it in connection with the approval of the Board of Governors of the
Federal Reserve System (the “Federal Reserve Board”) under the Bank Holding
Company Act of 1956, as amended (the “BHC Act”), the approval of the
Superintendent of Banks and the Banking Board of the State of New York under
the
Banking Law of the State of New York, the approval of the Office of the
Comptroller of the Currency under the National Bank Act and the Bank Merger
Act
and the approvals of other federal, state and local, domestic and foreign
authorities regulating financial institutions and (ii) as required under
the
Securities Exchange Act of 1934, as amended (including the rules and regulations
thereunder, the “Exchange Act”), the rules of the National Association of
Securities Dealers, Inc. and other applicable securities exchanges and
self-regulatory organizations (collectively, the “Company Regulatory
Approvals”), no applications, notices, reports or other filings are required to
be made by it with, nor are any consents, registrations, approvals, permits
or
authorizations required to be obtained by it from, any governmental or
regulatory authority, administrative agency, court, commission, self-regulatory
authority, agency, other entity, domestic or foreign, or other body acting
in an
adjudicative capacity (“Governmental Entity”), in connection with the execution,
delivery or performance of this Agreement by it and the consummation by it
of
the transactions contemplated hereby.
(b) The
execution, delivery and performance of this Agreement does not and will not,
and
the consummation by it of any of the transactions contemplated hereby will
not
(individually or in conjunction with any other event), constitute or result
in
(i) a breach or violation of, or a default under, its articles of incorporation
or by-laws, or the comparable governing instruments of any of its subsidiaries,
or (ii) a breach or violation of, or a default under, or the acceleration
of or
the creation of a Lien (with or without the giving of notice, the lapse of
time
or both) pursuant to any provision of any agreement, lease, contract, note,
mortgage, indenture, arrangement or other obligation (written or oral)
(“Contracts”) of it or any of its subsidiaries or (iii) subject to the receipt
of all Company Regulatory Approvals, a violation of any law, rule, ordinance
or
regulation or judgment, decree, order, award or governmental or non-governmental
permit or license to which it or any of its subsidiaries is subject, or any
change in the rights or obligations of any party under any of the
Contracts.
3.8 Reports
and Financial Statements.
(a) It
has
made available to Acquiror each registration statement, offering circular,
report, definitive proxy statement or information statement filed, used or
circulated by it under the Securities Act of 1933, as amended (including
the
rules and regulations thereunder, the “Securities Act”), the Exchange Act and
state securities and “Blue Sky” laws (together with the Securities Act and state
securities and “Blue Sky” laws, the “Securities Laws”) with respect to periods
since December 31, 2004 through
the date of this Agreement and will promptly deliver each such registration
statement, offering circular, report, definitive proxy statement or information
statement filed, used or circulated after the date hereof (collectively,
whether
filed before or after the date hereof, its “Reports”), each in the form
(including exhibits and any amendments thereto) filed with the Securities
and
Exchange Commission (the “SEC”) (or if not so filed, in the form used or
circulated).
11
(b) As
of
their respective dates (and without giving effect to any amendments or
modifications filed after the date of this Agreement), each of the Reports,
including the financial statements, exhibits and schedules thereto, filed,
used
or circulated prior to the date hereof complied (and each of the Reports
filed
after the date of this Agreement, will comply) with applicable Securities
Laws
and did not (or in the case of Reports filed after the date of this Agreement,
will not) contain any untrue statement of a material fact or omit to state
a
material fact required to be stated therein or necessary to make the statements
made therein, in light of the circumstances under which they were made, not
misleading.
(c) Each
of
its consolidated statements of condition or balance sheets included in or
incorporated by reference into its Reports, including the related notes and
schedules, fairly presented (or, in the case of Reports prepared after the
date
of this Agreement, will fairly present) the consolidated financial position
of
it and its subsidiaries as of the date of such statement of condition or
balance
sheet and each of the consolidated statements of income, cash flows and changes
in stockholders’ equity included in or incorporated by reference into its
Reports, including any related notes and schedules, fairly presented (or,
in the
case of Reports prepared after the date of this Agreement, will fairly present)
the consolidated results of operations, retained earnings and cash flows,
as the
case may be, of it and its subsidiaries for the periods set forth therein
(subject, in the case of unaudited statements, to normal year-end audit
adjustments), in each case in accordance with generally accepted accounting
principles consistently applied during the periods involved, except as may
be
noted therein. Collectively, its foregoing consolidated statements of condition
or balance sheets, statements of income, cash flows and stockholders’ equity are
referred to as its “Company Financial Statements.” Its auditor is independent
within the meaning of generally accepted accounting principles and related rules
of the SEC. It is in compliance with the provisions of the Xxxxxxxx-Xxxxx
Act of
2002 and the certifications provided and to be provided pursuant to Sections
302, 404 and 906 thereof are accurate.
3.9 Absence
of Certain Events and Changes.
Since
March 31, 2007, except as disclosed in its Reports filed on or prior to the
date
hereof, (a) it and its subsidiaries have conducted their respective businesses
only in the ordinary and usual course of such businesses, and (b) there has
not
been any change or development or combination of changes or developments
which,
individually or in the aggregate, has resulted in, or is reasonably likely
to
result in, a Material Adverse Effect on it. Since March 31, 2007, except
as
provided for herein, as set forth in Section
3.9 of the Company Disclosure Schedule
or as
disclosed in the Reports filed prior to the date hereof, there has not been
any
increase in the compensation payable or that could become payable by Company
or
any of its subsidiaries to officers having a title of “Vice President” or more
senior or any amendment of any of the Company Benefit Plans other than increases
or amendments in the ordinary course.
12
3.10 Compliance
with Laws and Other Matters.
Other
than as set forth in Section
3.10 of the Company Disclosure Letter,
it and
each of its subsidiaries:
(a) is
in
compliance, in the conduct of its business, with all applicable federal,
state,
local and foreign statutes, laws, regulations, ordinances, rules, judgments,
orders or decrees applicable thereto or to the employees conducting such
businesses, including the Xxxxxxxx-Xxxxx Act of 2002, the Equal Credit
Opportunity Act, the Fair Housing Act, the Community Reinvestment Act, the
Home
Mortgage Disclosure Act, the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT
ACT)
Act of 2001, all other applicable fair lending laws or other laws relating
to
discrimination and the Bank Secrecy Act, and, as of the date hereof, each
of its
subsidiaries that is an insured depository institution has a Community
Reinvestment Act rating of “satisfactory” or better and is “well managed” and
“well capitalized,” as defined in Regulation Y of the Federal Reserve
Board;
(b) has
all
permits, licenses, franchises, certificates of authority, orders, and approvals
of, and has made all filings, applications, and registrations with, Governmental
Entities that are required in order to permit it or such subsidiary to carry
on
its business as currently conducted;
(c) has,
since December 31, 2004, received no notification or communication from any
Governmental Entity (i) asserting that it or any of its subsidiaries is not
in
compliance with any statutes, regulations or ordinances (or indicating, in
the
absence of any such assertion, a possible investigation or inquiry with respect
to any of the foregoing), (ii) threatening to revoke any permit, license,
franchise, certificate of authority or other governmental authorization,
or
(iii) threatening or contemplating revocation or limitation of, or which
would
have the effect of revoking or limiting, federal deposit insurance;
(d) is
not a
party to or subject to any order, decree, agreement, memorandum of understanding
or similar arrangement with, or a commitment letter, supervisory letter or
similar submission to, any Governmental Entity charged with the supervision
or
regulation of depository institutions or engaged in the insurance of deposits
or
the supervision or regulation of it or any of its subsidiaries and neither
it
nor any of its subsidiaries has been advised by any such Governmental Entity
that such Governmental Entity is contemplating issuing or requesting (or
is
considering the appropriateness of issuing or requesting) any such order,
decree, agreement, memorandum of understanding, commitment letter, supervisory
letter or similar submission;
(e) has
not,
since January 1, 2004, nor to its knowledge, has 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, knowingly acted, by
itself or in conjunction with another, in any act in connection with the
concealment of any currency, securities or 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; and
(f) to
the
extent it qualifies as a “financial institution” under the U.S. Anti-Money
Laundering laws, has implemented in all material respects such anti-money
laundering mechanisms and kept and filed all material reports and other
necessary material documents as required by, and otherwise complied in all
material respects with, the U.S. Anti-Money Laundering laws and the rules
and
regulations issued thereunder.
13
3.11 Litigation.
Other
than as set forth in Section
3.11 of the Company Disclosure Letter,
there
are no criminal or administrative investigations or hearings of, before or
by
any Governmental Entity, or civil, criminal or administrative actions, suits,
claims or proceedings of, before or by any Person (including any Governmental
Entity) pending or, to its knowledge, threatened, against or affecting it
or any
of its subsidiaries (including under the Equal Credit Opportunity Act, the
Fair
Housing Act, the Community Reinvestment Act, the Home Mortgage Disclosure
Act or
any other fair lending law or other law relating to discrimination, or the
Bank
Secrecy Act).
3.12 Taxes.
(a) All
federal, state, local and foreign Tax (as hereinafter defined) returns,
including all information returns, required to be filed by or on behalf of
Company or any of its subsidiaries have been timely filed or requests for
extensions have been timely filed and any such extension has been granted
and
has not expired, and all such filed returns are complete and accurate. Company
has made available to Acquiror true and correct copies of the United States
federal income Tax returns filed by it or its subsidiaries for each of the
two
most recent fiscal years ended on or before December 31, 2006.
(b) All
Taxes
due and owing by Company or any of its subsidiaries have been paid other
than
Taxes that have been reserved or accrued on Company’s balance sheet or which
Company is contesting in good faith or any other Taxes that would not reasonably
be expected to have a Material Adverse Effect.
(c) As
of the
date of this Agreement there is no outstanding audit examination (except
a New
York State examination presently being conducted as described in Section
3.12(c) of the Company Disclosure Letter),
deficiency, refund or other tax litigation or outstanding waivers or agreements
extending the applicable statute of limitations for the assessment or collection
of any Taxes for any period with respect to any Taxes of Company or its
subsidiaries. All Taxes due with respect to completed and settled examinations
or concluded litigation relating to Company or any of its subsidiaries have
been
paid in full or have been recorded on Company’s or such subsidiary’s balance
sheet and consolidated statement of earnings or income (in accordance with
generally accepted accounting principles).
(d) Neither
Company nor any of its subsidiaries is a party to a Tax sharing, indemnification
or similar agreement, is or has been a member of an affiliated group filing
consolidated or combined tax returns (other than a group over which Company
is
or was the common parent) or otherwise has any liability for the Taxes of
any
party (other than its own Taxes and those of its subsidiaries).
(e) Each
of
Company and its subsidiaries has withheld and paid all Taxes required to
have
been withheld and paid in connection with any amounts paid or owing to any
employee, independent contractor, creditor, stockholder or other third
party.
14
(f) Neither
Company nor any of its subsidiaries has been a party to any distribution
occurring during the last three (3) years in which the parties to such
distribution treated the distribution as one to which Section 355 of the
Code
applied.
(g) Neither
Company nor any of its subsidiaries is a party to any “listed transaction” as
defined in Treasury Regulation Section 1.6011-4(b)(2).
(h) No
Liens
for Taxes exist with respect to Company or its subsidiaries, except for
statutory Liens for Taxes not yet due and payable or that are being contested
in
good faith and reserved for (in accordance with generally accepted accounting
principles).
(i) There
are
no closing agreements, private letter rulings, technical advance memoranda
or
similar agreements or rulings that have been entered into or issued by any
taxing authority with respect to Company.
(j) Other
than as set forth in Section
3.12(j) of Company Disclosure Letter,
neither
Company nor any of its subsidiaries will be required to include any item
of
income in, or exclude any item of deduction from, taxable income for any
taxable
period (or portion thereof) ending after the Closing Date as a result of
any:
(A) change in method of accounting for a taxable period ending on or prior
to
the Closing Date; (B) “closing agreement” as described in Section 7121 of the
Code (or any corresponding or similar provision of state, local or foreign
income Tax law) executed on or prior to the Closing Date; (C) intercompany
transactions or any excess loss account described in Treasury Regulations
under
Section 1502 of the Code (or any corresponding or similar provision of state,
local or foreign income Tax law); (D) installment sale or open transaction
disposition made on or prior to the Closing Date; or (E) prepaid amounts
received on or prior to the Closing Date.
(k) No
tax is
required to be withheld pursuant to Section 1445 of the Code as a result
of the
transfer contemplated by this Agreement.
The
term
“Tax” includes any tax or similar governmental charge, impost or levy (including
income taxes, franchise taxes, transfer taxes or fees, stamp taxes, sales
taxes,
use taxes, excise taxes, ad valorem taxes, withholding taxes, employee
withholding taxes, worker’s compensation, payroll taxes, unemployment insurance,
social security, minimum taxes or windfall profits taxes), together with
any
related liabilities, penalties, fines, additions to tax or interest, imposed
by
any federal, state or local, domestic or foreign government or subdivision
or
agency thereof.
3.13 Internal
Controls.
Other
than as set forth in Section
3.13 of the Company Disclosure Letter,
none of
its 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. It 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
generally accepted accounting principles.
15
3.14 Insurance.
It and
its subsidiaries are insured with reputable insurers against such risks and
in
such amounts as its management reasonably has determined to be prudent in
accordance with industry practices.
3.15 Books
and Records.
Its and
its subsidiaries’ books and records have been fully, properly and accurately
maintained, and there are no inaccuracies or discrepancies of any kind contained
or reflected therein, and they fairly present their financial
position.
3.16 Labor
Matters.
Neither
it nor any of its subsidiaries is a party to, or is otherwise bound by, any
collective bargaining agreement, contract or other agreement or understanding
with a labor union or labor organization. Neither it nor any of its subsidiaries
is the subject of any proceeding asserting that it or any such subsidiary
has
committed an unfair labor practice or seeking to compel it or such subsidiary
to
bargain with any labor union or labor organization. No strike, dispute,
walk-out, work stoppage, slow-down or lockout involving it or any of its
subsidiaries is pending or, to its knowledge, threatened, nor has there been
for
the past five years, and Company is not aware of any activity involving its
or
any of its subsidiaries’ employees seeking to certify a collective bargaining
unit or engaging in any other organizational activity. Except as provided
for
herein or set forth in Section
3.16 of the Company Disclosure Letter,
the
consummation of the Merger and the other transactions contemplated by this
Agreement will not entitle any third party (including any labor union or
labor
organization) to any payments under this Agreement or otherwise. The Company
and
any subsidiary has paid or made provision for payment of all salaries, wages,
and vacation pay accrued through the Closing Date, are (a) in compliance
in all
material respects with (i) all federal and state laws respecting employment
and
employment practices, terms and conditions of employment, collective bargaining,
immigration, wages, hours and benefits, non-discrimination in employment,
workers compensation, the collection and payment of withholding and/or payroll
taxes and similar taxes (except for non-compliance which, individually or
in the
aggregate, would not have a Material Adverse Effect), including but not limited
to the Civil Rights Act of 1964, the Age Discrimination in Employment Act
of
1967, the Equal Employment Opportunity Act of 1972, the Employee Retirement
Income Security Act of 1974, the Fair Labor Standards Act, the Equal
Pay Act, the National Labor Relations Act, the Americans with Disabilities
Act
of 1990, the Vietnam Era Veterans Reemployment Act, and any and all similar
applicable state and local laws; and (ii) all material applicable requirements
of the Occupational Safety and Health Act of 1970 within the United States
and
comparable regulations and orders thereunder; and (b) are not engaged in
any
unfair employment practice.
3.17 Employee
Benefits.
(a) Section
3.17(a) of the Company Disclosure Letter
lists
all written benefit and compensation plans, contracts, policies or arrangements
covering current or former employees of Company and its subsidiaries and
current
or former directors of Company, including “employee benefit plans” within the
meaning of Section 3(3) of the Employee Retirement Income Security Act of
1974,
as amended (“ERISA”), and deferred compensation, stock option, stock purchase,
stock appreciation rights or stock-related award incentive and bonus plans
(“Company Benefit Plans”), and each Company Benefit Plan which has received a
favorable opinion letter from the Internal Revenue Service National Office,
including, but not limited to, any master or prototype plan, has been separately
identified. True and complete copies of all Company Benefit Plans, including
any
trust instruments, insurance contracts and with respect to any employee stock
ownership plan, loan agreements, forming a part of any Company Benefit Plans,
and all amendments thereto have been provided to Acquiror.
16
(b) All
Company Benefit Plans are in substantial compliance, in form and operation,
with
ERISA, including the Pension Protection Act of 2006, and the Code, to the
extent
applicable, and other applicable laws. Each Company Benefit Plan which is
subject to ERISA (an “ERISA Plan”) that is an “employee pension benefit plan”
within the meaning of Section 3(2) of ERISA (a “Pension Plan”) and that is
intended to be qualified under Section 401(a) of the Code, has received a
favorable determination letter from the Internal Revenue Service (the “IRS”)
covering all tax law changes, including those changes under the Economic
Growth
and Tax Relief Reconciliation Act of 2001 and has applied or will apply to
the
IRS for such favorable determination letter within the applicable period
under
Section 401(b) of the Code, and Company is not aware of any circumstances
likely
to result in the loss of the qualification of such Plan under Section 401(a)
of
the Code. No Company Benefit Plan is funded by a trust described in Section
501(c)(9) of the Code. Neither Company nor any of its subsidiaries has engaged
in a transaction with respect to any ERISA Plan that, assuming the taxable
period of such transaction expired as of the date hereof, could subject Company
or any subsidiary to a tax or penalty imposed by either Section 4975 of the
Code
or Section 502(i) of ERISA. Neither Company nor any of its subsidiaries has
incurred or reasonably expects to incur a tax or penalty imposed by Section
4980F of the Code or Section 502 of ERISA.
(c) No
liability under Subtitle C or D of Title IV of ERISA has been or is expected
to
be incurred by Company or any of its subsidiaries with respect to any ongoing,
frozen or terminated “single-employer plan”, within the meaning of Section
4001(a)(15) of ERISA, currently or formerly maintained by any of them, or
any
entity which is a member of a “controlled group” with Company under Section
4001(a)(14) of ERISA or considered one employer with Company under Section
414(b), (c), (m) or (o) of the Code (“ERISA Affiliate”). Company and its
subsidiaries have not incurred and do not expect to incur any withdrawal
liability with respect to a “multiemployer plan”, within the meaning of Sections
3(37) and 4001(a)(3) of ERISA, under Subtitle E of Title IV of ERISA (regardless
of whether based on contributions of an ERISA Affiliate). No notice of a
“reportable event”, within the meaning of Section 4043 of ERISA for which the
30-day reporting requirement has not been waived or extended, other than
pursuant to Pension Benefit Guaranty Corporation Reg. Section 4043.66, has
been
required to be filed for any Pension Plan or by any ERISA Affiliate within
the
12-month period ending on the date hereof or will be required to be filed
in
connection with the transaction contemplated by this Agreement.
(d) All
contributions required to be made under each Company Benefit Plan, as of
the
date hereof, have been timely made and all obligations in respect of each
Company Benefit Plan have been properly accrued and reflected in its Company
Financial Statements. Neither any Pension Plan nor any single-employer plan
sponsored by an ERISA Affiliate has an “accumulated funding deficiency” (whether
or not waived) within the meaning of Section 412 of the Code or Section 302
of
ERISA and no ERISA Affiliate has an outstanding funding waiver. It is not
reasonably anticipated that the required minimum contributions to any Pension
Plan under Section 412 of the Code will be increased by application of Section
412(l) of the Code. Neither Company nor any of its subsidiaries has provided,
or
is required to provide, security to any Pension Plan or to any single-employer
plan of an ERISA Affiliate pursuant to Section 401(a)(29) of the
Code.
17
(e) Under
each Pension Plan that is a single-employer plan, as of the date hereof,
the
actuarially determined present value of all “benefit liabilities”, within the
meaning of Section 4001(a)(16) of ERISA (as determined on the basis of the
actuarial assumptions contained in such Pension Plan’s most recent actuarial
valuation), did not exceed the then current value of the assets of such Pension
Plan, and there has been no material change in the financial condition of
such
Pension Plan since the last day of the most recent plan year.
(f) As
of the
date hereof, there is no pending or, to the knowledge of Company threatened,
litigation relating to the Company Benefit Plans. Other than as set forth
in
Section
3.17(f) of the Company Disclosure Letter,
neither
Company nor any of its subsidiaries has any obligations for retiree health
and
life benefits under any ERISA Plan or collective bargaining agreement other
than
as required to comply with Section 4980B of the Code or Part 6 of Title I
of
ERISA. Other than as set forth in Section
3.17(f) of the Company Disclosure Letter,
Company
or its subsidiaries may amend or terminate any such plan at any time without
incurring any liability thereunder other than in respect of benefits accrued
and
claims incurred prior to such amendment or termination.
(g) There
has
been no amendment to, announcement by Company or any of its subsidiaries
relating to, or change in employee participation or coverage under, any Company
Benefit Plan which would materially increase the expense of maintaining such
plan above the level of the expense incurred therefor for the most recent
fiscal
year, except to the extent required by law. Other than as set forth in
Section
3.17(g) of the Company Disclosure Letter,
none of
the execution of this Agreement, stockholder approval of this Agreement or
the
consummation of the transactions contemplated hereby will (i) entitle any
employees to severance pay or any increase in severance pay upon any termination
of employment after the date hereof, (ii) accelerate the time of payment
or
vesting or result in any payment or funding (through a grantor trust or
otherwise) of compensation or benefits under, increase the amount payable
or
result in any other obligation pursuant to, any of the Company Benefit Plans,
(iii) limit or restrict the right of Company or, after the consummation of
the
transactions contemplated hereby, Acquiror, to merge, amend or terminate
any of
the Company Benefit Plans or (iv) result in payments under any of the Company
Benefit Plans which would not be deductible under Section 162(m) or Section
280G
of the Code.
(h) Each
Company Benefit Plan that is a deferred compensation plan is in substantial
compliance with Section 409A of the Code, to the extent applicable. Any
voluntary election by a participant to defer post-2004 compensation into
any
such plan was effected in a time and manner in compliance with Section 409A
of
the Code.
3.18 Environmental
Matters.
(i) To
Company’s knowledge, there is no environmental condition, situation, or incident
on, at, or concerning any property currently owned, leased or used by Company
or
its subsidiaries that could give rise to an action or liability under any
Environmental Law or common law theory; (ii) there are no state or federal
liens
on property owned by Company or its subsidiaries resulting from an environmental
cleanup by any federal or state authority; (iii) neither Company nor any
of its
subsidiaries is subject to any decree, order, writ, judgment or injunction
issued pursuant to any applicable Environmental Laws and, to Company’s
knowledge, there is no event, cause or condition which would reasonably be
expected to give rise to or form the basis of such a decree, order, writ,
judgment or injunction; (iv) neither Company nor any of its subsidiaries
has
received any written or oral notice under the citizen suit provision of any
Environmental Laws; (v) neither Company nor any of its subsidiaries has received
any unresolved written or oral request for information, notice of violation,
demand letter, administrative inquiry, complaint or claim from any person,
including any governmental entity, involving the alleged violation of any
Environmental Laws. “Environmental Laws” means all applicable local, state and
federal environmental, health and safety laws and regulations, including
the
Resource Conservation and Recovery Act, the Comprehensive Environmental
Response, Compensation and Liability Act, and the Occupational Safety and
Health
Act, each as amended, regulations promulgated thereunder, and state
counterparts.
18
3.19 Agreements.
(a) Except
for this Agreement or as may be specifically required or contemplated by
this
Agreement or as set forth in Section
3.19 of the Company Disclosure Letter,
it and
its subsidiaries are not a party to or bound by (i) any material Contract
(as
defined in Item 601(b)(10) of Regulation S-K under the Securities Act) to
be
performed after the date hereof that has not been filed with or incorporated
by
reference in its Reports filed on or prior to the date hereof; (ii) any Contract
containing covenants that limit the ability of it or any of its subsidiaries
to
compete in any line of business or with any Person, or that involve any
restriction of the geographic area in which, or method by which, it or any
of
its subsidiaries may carry on its business; (iii) any Contract which is not
terminable without cause on 60 days or less notice without penalty or payment
in
excess of $100,000; (iv) any Contract that involves performance of services
or
delivery of goods or materials to or by it or any of its subsidiaries of
an
amount or value in excess of $100,000; (v) any Contract that was not entered
into in the ordinary course of business and that involves expenditures or
receipts of it or any of its subsidiaries in excess of $100,000; (vi) any
lease,
rental or occupancy agreement, license, installment and conditional sale
agreement or other Contract affecting the ownership of, leasing of, title
to,
use of, or any leasehold or other interest in, any real or personal property
having a value or providing for aggregate payments in excess of $100,000;
(vii)
any Contract for capital expenditures in excess of $100,000; (viii) any joint
venture, partnership or similar Contract providing for the sharing of profits,
losses, costs or liabilities by it or any of its subsidiaries with any other
Person, (ix) any agreement providing for the indemnification by Company or
any
of its subsidiaries of any Person; (x) any agreement providing for any future
payments that are conditioned, in whole or in part, on a change of control
of
Company or any of its subsidiaries; or (xi) any material agreement that contains
a “most favored nation” clause.
(b) None
of
it or any of its subsidiaries is, with or without the giving of notice or
lapse
of time or both, in default under any material Contract.
3.20 Knowledge
as to Conditions.
As of
the date of this Agreement, it knows of no reason why (i) the Regulatory
Approvals should not be obtained in time for the Closing to take place prior
to
the Termination Date or (ii) the opinion of tax counsel referred to in
Section 6.3(c) will not be obtained on the Closing Date.
19
3.21 Fairness
Opinion.
As of
the date of this Agreement, it has received the opinion, dated the date of
this
Agreement, of its financial advisor, Xxxxx, Xxxxxxxx & Xxxxx, Inc., to the
effect that the Consideration is fair, from a financial point of view, to
the
holders of Company Common Stock.
3.22 Brokers
and Finders.
None of
it, its subsidiaries or any of their officers, directors or employees has
employed any broker or finder or incurred any liability for any brokerage
fees,
commissions or finder’s fees in connection with the transactions contemplated
herein, except that it has retained Xxxxx, Xxxxxxxx & Xxxxx, Inc. as its
financial advisors, whose fees in connection with the transactions contemplated
hereby shall not exceed the amounts set forth in Section
3.22 of the Company Disclosure Letter.
True
and correct copies of Company’s engagement letters with such financial advisors
have been set forth in Section
3.22 of the Company Disclosure Letter.
3.23 Certain
Agreements.
Set
forth in Section
3.23 of the Company Disclosure Letter
is a
true and complete list of each employment agreement, non-competition agreement,
agreement with respect to the non-solicitation of customers and agreement
with
respect to the non-solicitation of employees to which any of the Company,
any of
its subsidiaries or any of their respective officers is a party, each of
which
has been duly authorized, executed and delivered by it and none of which
shall
be modified, amended or supplemented without the prior written consent of
Acquiror.
3.24 Owned
Real Property.
As of
the date hereof, Section
3.24 of the Company Disclosure Letter
contains
a true and complete list of each parcel of real property owned by Company
or its
subsidiaries, whether by foreclosure or acquisition of deeds in lieu of
foreclosure of mortgages or otherwise, other than any real property held
as
“other real-estate owned” or “OREO” (the “Owned Real Property”).
3.25 Undisclosed
Liabilities.
Except
for those liabilities that are fully reflected or reserved against on Company’s
consolidated balance sheet included in Company’s Form 10-Q for the quarter ended
March 31, 2007 and for liabilities incurred in the ordinary course of business
consistent with past practice since March 31, 2007, neither Company nor any
of
its subsidiaries has incurred any liability of any nature whatsoever (whether
absolute, accrued, contingent or otherwise and whether due or to become due)
that, either alone or when combined with all similar liabilities, has had,
or
would reasonably be expected to have, a Material Adverse Effect.
ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES
OF
ACQUIROR AND ACQUIROR SUB
4.1 Disclosure
Letter.
Prior
to the execution and delivery hereof, Acquiror and Acquiror Sub have delivered
to Company a letter (the “Acquiror Disclosure Letter”) setting forth, among
other things, items the disclosure of which is necessary or appropriate either
in response to an express disclosure requirement contained in a provision
hereof
or as an exception to one or more of Acquiror’s and Acquiror Sub’s
representations or warranties contained in this Article IV or to one or more
of
Acquiror’s covenants contained in Article V.
20
4.2 Standards.
(a) No
representation or warranty of Acquiror or Acquiror Sub contained in this
Article
IV, other than:
(i) the
representations and warranties in Sections 4.3, 4.4, 4.6(b), 4.7(a) and (b)
and
clause (a) of the first sentence of Section 4.8, which shall be true and
correct
in all material respects (without duplicative effect being given to any
materiality, Material Adverse Effect or similar qualifier);
(ii) the
representations and warranties in Section 4.10, when made as of the date
of this
Agreement, which shall be true and correct in all material respects;
and
(iii) the
representations and warranties in Section 4.5 (except for de minimis errors),
clause (b) of the first sentence of Section 4.8 and Section 4.14, which shall
be
true and correct in all respects;
shall
be
deemed untrue or incorrect, and neither Acquiror nor Acquiror Sub shall be
deemed to have breached a representation or warranty, as a consequence of
the
existence or absence of any fact, circumstance or event unless such fact,
circumstance or event, individually or taken together with all other facts,
circumstances or events inconsistent with any representation or warranty
contained in this Article IV has had or is reasonably likely to have a Material
Adverse Effect on Acquiror (without duplicative effect being given to any
materiality, Material Adverse Effect or similar qualifier).
Except
as
set forth in the Acquiror Disclosure Letter, each of Acquiror and Acquiror
Sub
hereby represents and warrants to Company the following (as set forth in
Sections 4.3 through 4.16 (inclusive)):
4.3 Corporate
Organization and Qualification.
It is a
corporation duly organized, validly existing and in good standing under the
laws
of the state of its incorporation. It has the requisite corporate power and
authority to own or lease its properties and assets and to carry on its
businesses as they are now being conducted. It has made available to Company
a
complete and correct copy of its governing documents, each as amended to
the
date hereof and as in full force and effect as of the date hereof. It is
duly
qualified to do business as a foreign corporation in each jurisdiction where
the
properties owned, leased or operated or the business conducted by it require
such qualification.
4.4 Corporate
Authority and Action.
It has
the requisite corporate power and authority and has taken all corporate action
necessary in order to authorize the execution and delivery of, and performance
of its obligations under, this Agreement and to consummate the Merger. This
Agreement is its valid and legally binding agreement enforceable in accordance
with its terms, subject to applicable bankruptcy, insolvency and similar
laws
affecting creditors’ rights generally and to general principles of equity. Its
stockholders have no dissenters’ or similar rights in connection with the
Merger. As of the date hereof, its Board of Directors or Executive Committee,
as
the case may be, has unanimously approved the transactions contemplated by
this
Agreement.
21
4.5 Capital
Stock.
(a) The
information in Recitals A and B hereof are true and correct.
(b) All
of
the issued and outstanding shares of Acquiror Common Stock and Acquiror Sub
Common Stock have been duly authorized and validly issued and are fully paid,
nonassessable and free of preemptive rights, with no personal liability
attaching to the ownership thereof. As of the date of this Agreement, neither
Acquiror nor Acquiror Sub has or is bound by any outstanding subscriptions,
options, warrants, calls, commitments or agreements of any character calling
for
the purchase or issuance of any shares of Acquiror Common Stock, Acquiror
preferred stock, Acquiror Sub Common Stock or any other equity securities
of
Acquiror or Acquiror Sub or any securities representing the right to purchase
or
otherwise receive any shares of Acquiror Common Stock, Acquiror preferred
stock
or Acquiror Sub Common Stock. The shares of Acquiror Common Stock to be issued
pursuant to the Merger will be duly authorized and validly issued and, at
the
Effective Time, all such shares will be fully paid, nonassessable and free
of
preemptive rights, with no personal liability attaching to the ownership
thereof.
4.6 Governmental
Filings; No Violations.
(a) Other
than (i) the applications, notices, reports and other filings required to
be
made by it in connection with the approval of the Federal Reserve Board under
the BHC Act, the approval of the Superintendent of Banks and the Banking
Board
of the State of New York under the Banking Law of the State of New York,
the
approval of the Office of the Comptroller of the Currency under the National
Bank Act and the Bank Merger Act and the approvals of other federal, state
and
local, domestic and foreign authorities regulating financial institutions
and
(ii) as required under the Exchange Act, the rules of the National Association
of Securities Dealers, Inc. and other applicable securities exchanges and
self-regulatory organizations (collectively, the “Acquiror Regulatory Approvals”
and together with the Company Regulatory Approvals, the “Regulatory Approvals”),
no applications, notices, reports or other filings are required to be made
by it
with, nor are any consents, registrations, approvals, permits or authorizations
required to be obtained by it from, any Governmental Entity, in connection
with
the execution, delivery or performance of this Agreement by it and the
consummation by it of the transactions contemplated hereby.
(b) The
execution, delivery and performance of this Agreement does not and will not,
and
the consummation by it of any of the transactions contemplated hereby will
not
(individually or in conjunction with any other event), constitute or result
in
(i) a breach or violation of, or a default under, its articles of incorporation
or by-laws, or the comparable governing instruments of any of its subsidiaries,
or (ii) a breach or violation of, or a default under, or the acceleration
of or
the creation of a Lien (with or without the giving of notice, the lapse of
time
or both) pursuant to, any provision of any Contracts of it or any of its
subsidiaries or (iii) subject to the receipt of all Acquiror Regulatory
Approvals, a violation of any law, rule, ordinance or regulation or judgment,
decree, order, award or governmental or non-governmental permit or license
to
which it or any of its subsidiaries is subject, or any change in the rights
or
obligations of any party under any of the Contracts.
22
4.7 Reports
and Financial Statements.
(a) Acquiror
has made available to Company each registration statement, offering circular,
report, definitive proxy statement or information statement filed, used or
circulated by Acquiror under the Securities Laws with respect to periods
since
December 31, 2004 through the date of this Agreement and will promptly deliver
each such Report, each in the form (including exhibits and any amendments
thereto) filed with the SEC (or if not so filed, in the form used or
circulated).
(b) As
of
their respective dates (and without giving effect to any amendments or
modifications filed after the date of this Agreement), each of the Reports,
including the financial statements, exhibits and schedules thereto, filed,
used
or circulated prior to the date hereof complied (and each of the Reports
filed
after the date of this Agreement, will comply) with applicable Securities
Laws
and did not (or in the case of Reports filed after the date of this Agreement,
will not) contain any untrue statement of a material fact or omit to state
a
material fact required to be stated therein or necessary to make the statements
made therein, in light of the circumstances under which they were made, not
misleading.
(c) Each
of
Acquiror’s consolidated statements of condition or balance sheets included in or
incorporated by reference into Acquiror’s Reports, including the related notes
and schedules, fairly presented (or, in the case of Reports prepared after
the
date of this Agreement, will fairly present) the consolidated financial position
of Acquiror and its subsidiaries as of the date of such statement of condition
or balance sheet and each of the consolidated statements of income, cash
flows
and changes in stockholders’ equity included in or incorporated by reference
into Acquiror’s Reports, including any related notes and schedules, fairly
presented (or, in the case of Reports prepared after the date of this Agreement,
will fairly present) the consolidated results of operations, retained earnings
and cash flows, as the case may be, of Acquiror and its subsidiaries for
the
periods set forth therein (subject, in the case of unaudited statements,
to
normal year-end audit adjustments), in each case in accordance with generally
accepted accounting principles consistently applied during the periods involved,
except as may be noted therein. Collectively, Acquiror’s foregoing consolidated
statements of condition or balance sheets, statements of income, cash flows
and
stockholders’ equity are referred to as “Acquiror Financial Statements.”
Acquiror’s auditor is independent within the meaning of generally accepted
accounting principles and related rules of the SEC. Acquiror is in compliance
with the provisions of the Xxxxxxxx-Xxxxx Act of 2002 and the certifications
provided and to be provided pursuant to Sections 302, 404 and 906 thereof
are
accurate.
4.8 Absence
of Certain Events and Changes.
Since
March 31, 2007, except as disclosed in Acquiror’s Reports filed on or prior to
the date hereof, (a) Acquiror and its subsidiaries have conducted their
respective businesses only in the ordinary and usual course of such businesses,
and (b) there has not been any change or development or combination of changes
or developments which, individually or in the aggregate, has resulted in,
or is
reasonably likely to result in, a Material Adverse Effect on
Acquiror.
4.9 Compliance
with Laws and Other Matters.
Except
as set forth in Section
4.9 of the Acquiror Disclosure Letter,
Acquiror and each of its subsidiaries:
23
(a) is
in
compliance, in the conduct of its business, with all applicable federal,
state,
local and foreign statutes, laws, regulations, ordinances, rules, judgments,
orders or decrees applicable thereto or to the employees conducting such
businesses, including the Xxxxxxxx-Xxxxx Act of 2002, the Equal Credit
Opportunity Act, the Fair Housing Act, the Community Reinvestment Act, the
Home
Mortgage Disclosure Act, the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT
ACT)
Act of 2001, all other applicable fair lending laws or other laws relating
to
discrimination and the Bank Secrecy Act, and, as of the date hereof, each
of its
subsidiaries that is an insured depository institution has a Community
Reinvestment Act rating of “satisfactory” or better and is “well managed” and
“well capitalized,” as defined in Regulation Y of the Federal Reserve
Board;
(b) has
all
permits, licenses, franchises, certificates of authority, orders, and approvals
of, and has made all filings, applications, and registrations with, Governmental
Entities that are required in order to permit it or such subsidiary to carry
on
its business as currently conducted;
(c) has,
since December 31, 2004, received no notification or communication from any
Governmental Entity (i) asserting that it or any of its subsidiaries is not
in
compliance with any statutes, regulations or ordinances (or indicating, in
the
absence of any such assertion, a possible investigation or inquiry with respect
to any of the foregoing), (ii) threatening to revoke any permit, license,
franchise, certificate of authority or other governmental authorization,
or
(iii) threatening or contemplating revocation or limitation of, or which
would
have the effect of revoking or limiting, federal deposit insurance;
(d) is
not a
party to or subject to any order, decree, agreement, memorandum of understanding
or similar arrangement with, or a commitment letter, supervisory letter or
similar submission to, any Governmental Entity charged with the supervision
or
regulation of depository institutions or engaged in the insurance of deposits
or
the supervision or regulation of it or any of its subsidiaries and neither
it
nor any of its subsidiaries has been advised by any such Governmental Entity
that such Governmental Entity is contemplating issuing or requesting (or
is
considering the appropriateness of issuing or requesting) any such order,
decree, agreement, memorandum of understanding, commitment letter, supervisory
letter or similar submission;
(e) has
not,
since January 1, 2004, nor to its knowledge, has any other person acting
on
behalf of Acquiror or any of its subsidiaries that qualifies as a “financial
institution” under the U.S. Anti-Money Laundering laws, 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; and
(f) to
the
extent it qualifies as a “financial institution” under the U.S. Anti-Money
Laundering laws, has implemented in all material respects such anti-money
laundering mechanisms and kept and filed all material reports and other
necessary material documents as required by, and otherwise complied in all
material respects with, the U.S. Anti-Money Laundering laws and the rules
and
regulations issued thereunder.
24
4.10 Litigation.
Other
than as set forth in Acquiror’s Reports, there are no material criminal or
administrative investigations or hearings of, before or by any Governmental
Entity, or material civil, criminal or administrative actions, suits, claims
or
proceedings of, before or by any Person (including any Governmental Entity)
pending or, to Acquiror’s knowledge, threatened, against or affecting Acquiror
or any of its subsidiaries (including under the Equal Credit Opportunity
Act,
the Fair Housing Act, the Community Reinvestment Act, the Home Mortgage
Disclosure Act or any other fair lending law or other law relating to
discrimination, or the Bank Secrecy Act).
4.11 Taxes.
Except
as set forth in Section
4.11 of the Acquiror Disclosure Schedule:
(i) All
federal, state, local and foreign Tax returns, including all information
returns, required to be filed by or on behalf of Acquiror or any of its
subsidiaries have been timely filed or requests for extensions have been
timely
filed and any such extension has been granted and has not expired, and all
such
filed returns are complete and accurate;
(ii) All
Taxes
due and owing by Acquiror or any of its Subsidiaries have been paid other
than
Taxes that have been reserved or accrued on Acquiror’s balance sheet or which
Acquiror is contesting in good faith or any other Taxes that would not
reasonably be expected to have a Material Adverse Effect;
(iii) As
of the
date of this Agreement there is no outstanding audit examination, deficiency,
refund or other tax litigation or outstanding waivers or agreements extending
the applicable statute of limitations for the assessment or collection of
any
Taxes for any period with respect to any Taxes of Acquiror or its subsidiaries
which, individually or in the aggregate, could reasonably be expected to
result
in a Material Adverse Effect on Acquiror. All Taxes due with respect to
completed and settled examinations or concluded litigation relating to Acquiror
or any of its subsidiaries have been paid in full or have been recorded on
Acquiror’s or such subsidiary’s balance sheet and consolidated statement of
earnings or income (in accordance with generally accepted accounting
principles);
(iv) Neither
Acquiror nor any of its subsidiaries is a party to a Tax sharing,
indemnification or similar agreement, is or has been a member of an affiliated
group filing consolidated or combined tax returns (other than a group over
which
Acquiror is or was the common parent) or otherwise has any liability for
the
Taxes of any party (other than its own Taxes and those of its
subsidiaries);
(v) Each
of
Acquiror and its subsidiaries has withheld and paid all Taxes required to
have
been withheld and paid in connection with any amounts paid or owing to any
employee, independent contractor, creditor, stockholder or other third
party;
(vi) Neither
Acquiror nor any of its subsidiaries has been a party to any distribution
occurring during the last three (3) years in which the parties to such
distribution treated the distribution as one to which Section 355 of the
Code
applied;
(vii) Neither
Acquiror nor any of its subsidiaries is a party to any “listed transaction” as
defined in Treasury Regulation Section 1.6011-4(b)(2);
25
(viii) No
Liens
for Taxes exist with respect to Acquiror or its subsidiaries, except for
statutory Liens for Taxes not yet due and payable or that are being contested
in
good faith and reserved for (in accordance with generally accepted accounting
principles);
(ix) There
are
no closing agreements, private letter rulings, technical advance memoranda
or
similar agreements or rulings that have been entered into or issued by any
taxing authority with respect to Acquiror or its subsidiaries, that are not
reflected in the Acquiror Financial Statements; and
(x) Neither
Acquiror
nor
any
of its subsidiaries will be required to include any item of income in, or
exclude any item of deduction from, taxable income for any taxable period
(or
portion thereof) ending after the Closing Date as a result of any: (A) change
in
method of accounting for a taxable period ending on or prior to the Closing
Date; (B) “closing agreement” as described in Section 7121 of the Code (or any
corresponding or similar provision of state, local or foreign income Tax
law)
executed on or prior to the Closing Date; (C) intercompany transactions or
any
excess loss account described in Treasury Regulations under Section 1502
of the
Code (or any corresponding or similar provision of state, local or foreign
income Tax law); (D) installment sale or open transaction disposition made
on or
prior to the Closing Date; or (E) prepaid amounts received on or prior to
the
Closing Date.
4.12 Undisclosed
Liabilities.
Except
for those liabilities that are fully reflected or reserved against on Acquiror’s
consolidated balance sheet included in Acquiror’s Form 10-Q for the quarter
ended March 31, 2007 and for liabilities incurred in the ordinary course
of
business consistent with past practice since March 31, 2007, neither Acquiror
nor any of its subsidiaries has incurred any liability of any nature whatsoever
(whether absolute, accrued, contingent or otherwise and whether due or to
become
due) that, either alone or when combined with all similar liabilities, has
had,
or would reasonably be expected to have, a Material Adverse Effect.
4.13 Knowledge
as to Conditions.
As of
the date of this Agreement, Acquiror knows of no reason why (i) the Regulatory
Approvals should not be obtained in time for the Closing to take place prior
to
the Termination Date or (ii) the opinion of tax counsel referred to in
Section 6.2(d) will not be obtained on the Closing Date.
4.14 Brokers
and Finders.
None of
it, its subsidiaries or any of their officers, directors or employees has
employed any broker or finder or incurred any liability for any brokerage
fees,
commissions or finder’s fees in connection with the transactions contemplated
herein.
4.15 Financing.
Acquiror has, and will have, as and when required, the funds necessary to
consummate the Merger and pay the Consideration in accordance with the terms
of
this Agreement.
4.16 Interim
Operations of Acquiror Sub.
Acquiror Sub has been formed solely for the purpose of engaging in the
transactions contemplated hereby and, as of the Closing Date, will have engaged
in no business other than in connection with the transactions contemplated
by
this Agreement.
26
ARTICLE
V
COVENANTS
5.1 Conduct
of Business Pending the Effective Time.
(a) Company
Conduct of Business Pending the Effective Time.
Company
agrees, as to itself and its subsidiaries, that, except insofar as Acquiror
shall otherwise consent in writing (such consent not to be unreasonably withheld
or delayed) or except as otherwise expressly contemplated by this Agreement,
as
required by law or as set forth in Section
5.1(a) of the Company Disclosure Letter:
(i) The
business of it and its subsidiaries will be conducted only in the ordinary
and
usual course and, to the extent consistent therewith, it and its subsidiaries
will use all reasonable best efforts to preserve intact their business
organizations and assets and maintain their rights, franchises and existing
relations with customers, suppliers, employees and business
associates.
(ii) Except
as
required by law, it and its subsidiaries will not knowingly take any action
that, individually or in the aggregate, would (1) adversely affect the ability
of anyone to obtain any Regulatory Approval; (2) materially adversely affect
its
ability to perform its obligations under this Agreement; or (3) reasonably
be
expected to have a Material Adverse Effect.
(iii) It
will
not (1) sell or pledge, agree to sell or pledge, or permit any Lien to exist
on,
any stock of any of its subsidiaries as of the date hereof; (2) amend or
restate
its articles of incorporation or by-laws; (3) split, combine or reclassify
any
outstanding capital stock; (4) except as permitted by Section 5.2, split,
declare, set aside or pay any dividend or distribution payable in cash, stock
or
other property with respect to any of its capital stock; or (5) repurchase,
redeem or otherwise acquire, or permit any subsidiary to purchase or otherwise
acquire, directly or indirectly, any shares of its capital stock or any
securities convertible into or exercisable for any shares of its capital
stock.
(iv) Neither
it nor any of its subsidiaries will (1) other than pursuant to the exercise
of
stock options and stock appreciation rights disclosed in Section
3.5(d) of the Company Disclosure Letter,
issue,
sell, pledge, dispose of or encumber, or authorize or propose the issuance,
sale, pledge, disposition or encumbrance of, any shares of, or securities
convertible or exchangeable for, or options, warrants, calls, commitments
or
rights of any kind to acquire, any shares of its capital stock of any class;
(2)
other than in the ordinary course of business consistent with past practice
and
in accordance with Company’s policies and capital budget (as in effect on the
date hereof), transfer, lease, license, guarantee, sell, mortgage, pledge
or
dispose of any other material property or assets or encumber any property
or
assets, other than to a direct or indirect wholly owned subsidiary of it,
or
authorize capital expenditures (provided,
however,
that in
no case shall Company make any capital expenditure in excess of $250,000
individually or in excess of $1,000,000 in the aggregate); or (3) acquire
any
interest in real estate with any such capital expenditure.
27
(v) Other
than in the ordinary course of its banking business consistent with past
practice and consistent with Company policy (as in effect on the date hereof)
and consistent with Section
5.1(a)(v) of the Company Disclosure Letter
with
respect to debt and marketable securities, neither it nor any of its
subsidiaries will make any investment either by purchase of stock or securities,
contributions to capital, property transfers, or purchase of any property
or
assets of any Person.
(vi) Other
than as set forth in Section
5.1(a)(vi) of the Company Disclosure Letter,
neither
it nor any of its subsidiaries will (1) make, increase or purchase any loan,
lease, advance, credit enhancement or other extension of credit, or make
any
commitment in respect of any of the foregoing, except (A) loans, advances
or
commitments in individual amounts equal to or less than $2,500,000 (except,
in the case of home equity lines, equal to or less than $250,000 and except,
in
the case of residential mortgage loans, equal to or less than $500,000) made
in
the ordinary course of business consistent with past practice and made in
conformity with all applicable policies and procedures or (B) loans or advances
as to which Company has a legally binding obligation to make as of the date
hereof and, with respect to loans or advances in individual amounts equal
to or
greater than $2,500,000 (or, in the case of home equity lines, equal to or
greater than $250,000 or, in the case of residential mortgage loans, equal
to or
greater than $500,000), a description of which is set forth in Section
5.1(a)(iv) of the Company Disclosure Letter;
or (2)
renegotiate, renew or extend the term of any loan, lease, advance, credit
enhancement or other extension of credit, or make any commitment in respect
of
any of the foregoing, except renegotiations, renewals or extensions of loans,
advances or commitments in each case in amounts equal to or less than $5,000,000
on market terms, with a maturity or expiration date no later than December
31,
2025, with a loan to value ratio no greater than 80% (with value being the
lower
of cost or appraised value), and with an interest rate that resets at least
every five years, in the ordinary course of business consistent with past
practice and in conformity with all applicable policies and procedures or
renegotiations, renewals or extensions of overdraft loans or passbook loans
made
in the ordinary course of business consistent with past practice and made
in
conformity with all applicable policies and procedures.
(vii) Other
than in the ordinary course of business consistent with past practice (including
borrowings from the Federal Home Loan Bank of New York and borrowings under
securities repurchase agreements), neither it nor any of its subsidiaries
will
incur any indebtedness for borrowed money or assume, guarantee, endorse or
otherwise as an accommodation become responsible for the obligations of any
other Person or make any loan or advance.
(viii) Neither
it nor its subsidiaries shall: (A) increase the salary, wage, bonus or other
compensation of any Employee or director or independent contractor of Company
or
any of its subsidiaries other than in the ordinary course of business consistent
with past practice; provided,
however, that
Company shall not increase the salary, wage, bonus or other compensation
of any
person if such person’s aggregate annual compensation from Company or any of its
subsidiaries is $100,000 or more prior to such increase; or (B) terminate,
adopt, enter into, make any new grants or awards under or amend any Company
Benefit Plan; provided,
however,
notwithstanding the foregoing, (1) prior to the Effective Time, Company may
establish a retention pool of no greater than $1,000,000 in the aggregate,
to be
distributed to such persons, in such amounts, and payable at such times,
as
shall be mutually agreed upon by Company and Acquiror, (2) for the plan year
in
which the Effective Time occurs, Company shall make a matching contribution
to
the U.S.B. Holding Co., Inc. Employee Stock Ownership Plan (with 401(k)
Provisions) (“KSOP”) participants’ accounts in accordance with Section 5.1 of
the KSOP, for the portion of the plan year that precedes the Effective Time;
(3)
Company may amend the KSOP prior to the Effective Time to provide that; at
the
election of a participant or beneficiary, cash received by the KSOP for the
participant’s or beneficiary’s account in payment of consideration received
pursuant to Article II shall be invested in Acquiror Common Stock as soon
as
practicable and in any event within 90 days after the Effective Time and,
at
Acquiror’s request, amend the KSOP prior to the Effective Time to provide that
as of the Effective Time, no further contributions will be made to the KSOP;
(4)
employees entitled to an annual profit sharing bonus under Company’s Executive
Incentive Bonus Plan during the year in which the Effective Time occurs shall
retain any quarterly advances made prior to the Effective Time and shall
be
paid, prior to the Effective Time, a pro rated advance for the quarter in
which
the Effective Time occurs based on budgeted results for such quarter (including
any amounts withheld by Company, other than such amounts that are withheld
by
Company for Taxes); and (5) Company shall have the right to terminate the
Key
Employees’ Supplemental Investment Plan and the Key Employees’ Supplemental
Diversified Investment Plan prior to the Effective Time.
28
(ix) Neither
it nor any of its subsidiaries shall (i) terminate the employment of an employee
except for Just Cause or (ii) hire any person as an employee, except persons
hired to fill any vacancies in existence as of the date of this Agreement
or
arising after the date hereof, in each case whose employment is terminable
at
the will of Company or a subsidiary and who would have a base salary, including
any guaranteed bonus or any similar bonus, considered on an annual basis
of no
more than $100,000. For purposes of this Agreement, “Just Cause” will be
afforded the definition provided in Section 9 of the U.S.B. Holding Co.,
Inc.
Severance Plan, as amended, pursuant to Section 5.10(e) of this
Agreement.
(x) Neither
it nor any of its subsidiaries will implement or adopt any change in its
accounting principles, practices or methods, other than as may be required
by
generally accepted accounting principles or regulatory accounting principles
or
applicable law.
(xi) Except
in
the ordinary course of business consistent with past practice, and except
as set
forth in Section
5.1(a)(xi) of the Company Disclosure Letter,
neither it nor any of its subsidiaries will settle any claim, action or
proceeding against it, except for any claim, action or proceeding which involves
solely money damages in an amount, individually or in the aggregate for all
such
settlements, that is not material to Company and its subsidiaries, taken
as a
whole, and that does not involve or create precedent for claims, actions
or
proceedings that are reasonably likely to be material to Company and its
subsidiaries taken as a whole.
29
(xii) Other
than with the cooperation of and in consultation with Acquiror, and except
as
set forth in Section
5.1(a)(xii) of the Company Disclosure Letter,
make or
change 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.
(xiii) Neither
it nor any of its subsidiaries will take any action that is intended or may
reasonably be expected to result in any of its representations and warranties
set forth in this Agreement being or becoming untrue in any material respect
at
any time prior to the Effective Time, or in any of the conditions to the
Merger
set forth in Article VI not being satisfied or in a material violation of
any
provision of this Agreement.
(xiv) Neither
it nor any of its subsidiaries will take any action which would, or is
reasonably likely to, prevent or impede the Merger from qualifying as a tax
free
reorganization within the meaning of Section 368(a) of the Code.
(xv) Neither
it nor any of its subsidiaries will authorize or enter into an agreement
to take
any of the actions referred to in paragraphs (i) through (xiv)
above.
Company
may request Acquiror’s consent to any action that is not permitted by this
Section 5.1(a) by notifying both (1) Acquiror in accordance with Section
8.6 and (2) in the case of any request relating to Section 5.1(a)(vi), that
involves (x) a commercial loan or extension of credit, Xxxxxxx Xxxxxxx, KeyBank
National Association, 00 X. Xxxxx Xxxxxx, Xxxxxx, Xxx Xxxx, 00000; facsimile
000-000-0000, (y) a real estate loan or extension of credit, Xxxxx Xxxxxxx,
KeyCorp, 000 Xxxxxx Xxxxxx, Xxxxxxxxx, Xxxx 00000; facsimile 000-000-0000,
or
(z) any other loan or extension of credit, Xxxxx Xxxxxxxxxx, KeyBank National
Association, KeyBank National Association, 000 Xxxxxxxx Xxxxxx, Xxxxxxxxx,
Xxxx
00000; facsimile 000-000-0000 (or in each case (x), (y) and (z) a replacement
individual to be notified to Company designated by Acquiror within three
business days after the date of this Agreement in accordance with the procedure
set forth in Section 8.6). With respect to any such request by Company, Company
shall be entitled to conclusively presume that Acquiror has consented to
the
action specified in the request if Company has not received Acquiror’s objection
to such request within five business days after the date Acquiror receives
such
request; provided that such time period shall be three business days in the
case
of any request by Company to take any action not permitted by Section
5.1(a)(vi).
(b) Acquiror
Conduct of Business Pending the Effective Time.
Acquiror agrees, as to itself and its subsidiaries, that, except insofar
as
Company shall otherwise consent in writing (such consent not to be unreasonably
withheld or delayed) or except as otherwise expressly contemplated by this
Agreement, except as required by law, it and its subsidiaries will
not:
(i) amend
its
articles of incorporation or bylaws in a manner that would materially and
adversely affect the economic benefits of the Merger to the holders of Company
Common stock,
30
(ii) take
any
action that is intended or may reasonably be expected to result in any of
its
representations and warranties set forth in this Agreement being or becoming
untrue in any material respect at any time prior to the Effective Time, or
in
any of the conditions to the Merger set forth in Article VI not being satisfied
or in a material violation of any provision of this Agreement,
(iii) take
any
action which would, or is reasonably likely to, prevent or impede the Merger
from qualifying as a tax free reorganization within the meaning of Section
368(a) of the Code,
(iv) take
any
action that would adversely affect the ability of anyone to obtain any
Regulatory Approval;
(v) take
any
action that would materially and adversely affect its ability to perform
its
obligations under this Agreement; or
(vi) take
any
actions which would reasonably be expected to have a Material Adverse
Effect.
None
of
the foregoing shall be deemed to prohibit Acquiror from making any disposition
or acquisition or from agreeing to issue capital stock of Acquiror in connection
therewith, provided that any such transaction would not reasonably be expected
to (1) have a Material Adverse Effect on Acquiror’s financial condition, (2)
materially delay the Closing Date, (3) materially adversely affect the ability
of Company or Acquiror to obtain any Regulatory Approval or (4) prevent or
impede the Merger from qualifying as a tax-free reorganization within the
meaning of Section 368(a) of the Code.
5.2 Dividends.
Company
agrees that, from and after the date hereof until the Effective Time, (a)
direct
and indirect wholly owned subsidiaries of Company may (to the extent legally
and
contractually permitted to do so), but shall not be obligated to, declare
and
pay dividends in cash, stock or other property; and (b) Company may pay
quarterly dividends on outstanding shares of Company Common Stock at a rate
not
to exceed $0.15 per share per quarter, on substantially the same record and
payment date schedules as have been utilized in the past (provided that the
declaration of the last quarterly dividend by Company prior to the Effective
Time and the payment thereof shall be coordinated with Acquiror so that,
with
respect to such quarter, a holder of Company Common Stock will receive a
dividend on either such holder’s shares of Company Common Stock or the shares of
Acquiror Common Stock received by such holder in the Merger, but will not
receive dividends on both Company Common Stock and Acquiror Common Stock
received in the Merger).
5.3 Acquisition
Proposals.
d)
Company
shall immediately cease and cause to be terminated all existing discussions,
negotiations and communications with any third parties with respect to any
Acquisition Proposal. Neither Company nor any of its subsidiaries nor any
of its
respective executive officers and directors or the executive officers and
directors of any of its subsidiaries shall, and it shall direct and use all
reasonable best efforts to cause its executive officers and agents, including
any investment banker, attorney or accountant retained by it or by any of
its
subsidiaries (collectively, its “Representatives”), not to, initiate, solicit or
encourage, directly or indirectly, any inquiries or the making or implementation
of any Acquisition Proposal, or engage in any negotiations concerning, or
provide any confidential information or data to, or have any discussions
with,
any Person relating to an Acquisition Proposal or otherwise facilitate any
effort or attempt to implement or make an Acquisition Proposal.
31
“Acquisition
Proposal” means any proposal or offer with respect to the following involving
Company or any of its material subsidiaries: (i) any merger, consolidation,
share exchange, business combination or other similar transaction; (ii) any
sale, lease, exchange, pledge, transfer or other disposition of 35% or more
of
its consolidated assets or liabilities in a single transaction or series
of
transactions; (iii) any tender offer or exchange offer for 10% or more of
the
outstanding shares of its capital stock; or (iv) any public announcement
of a
proposal, plan or intention to do any of the foregoing or any agreement to
engage in any of the foregoing, other than the Merger provided for in this
Agreement.
Company
shall ensure that the executive officers, directors and agents of Company
and
its subsidiaries and its other Representatives are aware of the restrictions
described in this Section 5.3 as reasonably necessary to avoid violations
thereof. It is understood that any violation of the restrictions set forth
in
this Section 5.3 by any executive officer, director, agent or other
Representative of Company or its subsidiaries, at the direction or with the
consent of Company or its subsidiaries, shall be deemed to be a breach of
this
Section 5.3 by Company. Notwithstanding anything in this Agreement to the
contrary, Company shall (i) immediately, and in any event within twenty-four
hours, advise Acquiror, orally and in writing, of (A) the receipt by it (or
any
of the other Persons referred to above) of any Acquisition Proposal, any
request
for information from, or any request for, or initiation or continuation of,
any
negotiations or discussions with Company or any of its subsidiaries or any
of
their respective Representatives, in connection with any Acquisition Proposal
or
the possibility or consideration of making an Acquisition Proposal or any
inquiry which could reasonably be expected to lead to an Acquisition Proposal
(any of the foregoing “Acquisition Proposal Interest”), (B) the material terms
and conditions of such Acquisition Proposal or Acquisition Proposal Interest
(whether written or oral), and (C) the identity of the Person making such
Acquisition Proposal or expressing any such Acquisition Proposal Interest,
(ii)
prior to providing any such Person from whom an Acquisition Proposal or
Acquisition Proposal Interest has been received with any material non-public
information, notify Acquiror of the receipt of the same (and promptly provide
to
Acquiror any material non-public information regarding Company provided to
any
other Person that was not previously provided to Acquiror, such additional
information to be provided no later than the next business day after the
date of
provision of such information to such other Person) and (iii) keep Acquiror
fully informed of the status and details of any such Acquisition Proposal
or
Acquisition Proposal Interest and any developments with respect thereto.
Company
shall use its reasonable best efforts to enforce any existing confidentiality
or
standstill agreements in accordance with the terms thereof.
(b) Notwithstanding
Section 5.3(a), Company (i) may permit any Person to make an Acquisition
Proposal to the Board of Directors of Company, if the Board of Directors
of
Company with the advice of independent counsel (who may be Company’s regularly
engaged independent counsel) determines in good faith that the failure to
do so
would be inconsistent with the fiduciary duty of the Board of Directors of
Company under applicable law, (ii) may furnish information concerning its
business, properties or assets to any Person pursuant to a customary
confidentiality agreement with terms no less favorable to Company than those
contained in the Confidentiality Agreement dated June 2, 2007, entered into
between Acquiror and Company (the “Confidentiality Agreement”) if, and only if,
such Person has on an unsolicited basis, and in the absence of any violation
of
this Section 5.3 by Company or any of its Representatives, submitted an
Acquisition Proposal or Acquisition Proposal Interest that constitutes or,
that
in the good faith opinion of Company’s Board of Directors, is reasonably likely
to result in a Superior Proposal and (iii) may negotiate and participate
in
discussions and negotiations with such Person concerning an Acquisition Proposal
if, and only if, (x) such Person has on an unsolicited basis, and in the
absence
of any violation of this Section 5.3 by Company or any of its Representatives,
or by such Person or any of its Representatives of any confidentiality or
standstill agreement, submitted a bona fide written Superior Proposal (as
defined below) to Company and (y) in the good faith opinion of Company’s Board
of Directors, only after consultation with independent outside legal counsel
to
Company, the Board of Directors of Company has determined that engaging in
such
discussions or negotiations is in the best interests of Company and its
stockholders and the failure to engage in such discussions or negotiations
would
be inconsistent with the Board’s fiduciary duties to Company’s stockholders
under applicable law.
32
A
“Superior Proposal” means any Acquisition Proposal that is not conditioned upon
the ability to obtain financing (or dependent upon financing that is subject
to
contingencies) (A) which is for not less than 80% of the issued and outstanding
shares of Company Common Stock or 80% of the consolidated assets of Company
and
(B) which Company’s Board of Directors determines in good faith, after
consultation with its investment bankers, is (I) superior to Company’s
stockholders from a financial point of view and, taking into account relevant
legal, financial and regulatory aspects of the proposal and any other factors
that Company’s Board of Directors determines to be relevant, the identity of the
third party making such proposal, and the conditions for completion of such
proposal, a more favorable transaction than the Merger and (II) in the
reasonable opinion of Company’s Board of Directors, based on discussions with
Company’s investment bankers and other information known to Company’s Board of
Directors, is at least as likely to be approved and completed as the
Merger.
(c) Except
as
expressly permitted by this Section 5.3(c), neither Company’s Board of Directors
nor any committee thereof shall (i) approve or recommend, or propose to approve
or recommend, any Acquisition Proposal or (ii) withdraw or modify, or propose
to
withdraw or modify, in a manner adverse to Acquiror, the approval or
recommendation referred to in Section 5.4 by Company’s Board of Directors or any
such committee of this Agreement, the Merger or the other matters contemplated
hereby or take any action or make any statement inconsistent with such approval
(any action described in the foregoing clauses (i) and (ii), a “Change in
Company’s Recommendation”), or (iii) enter into any letter of intent, agreement
in principle or agreement with respect to any Acquisition Proposal.
Notwithstanding the foregoing, Company’s Board of Directors, subject to the
terms of this and the following two sentences, to the extent that it determines
in good faith, after consultation with independent outside legal counsel,
that
the failure to do so would be inconsistent with the Board’s fiduciary duties to
Company’s stockholders under applicable law, may make a Change in Company’s
Recommendation. Company may make a Change in Company’s Recommendation (A) at a
time that is after the third day following Company’s delivery to Acquiror of
written notice advising Acquiror that Company’s Board of Directors has
determined that it has received a Superior Proposal, specifying the material
terms and conditions of such Superior Proposal, identifying the Person making
such Superior Proposal and indicating that it intends to make a Change in
Company’s Recommendation and (B) if, during such three (3) day period, Company
and its advisors shall have negotiated in good faith with Acquiror to make
adjustments in the terms and conditions of this Agreement such that such
Acquisition Proposal would no longer constitute a Superior Proposal, and
such
negotiations fail to result in the necessary adjustments to this Agreement.
Notwithstanding any Change in Company’s Recommendation, unless otherwise
directed in writing by Acquiror, this Agreement and the Merger shall be
submitted to the stockholders of Company for the purpose of adopting this
Agreement and approving the Merger and the other matters contemplated hereby
at
the meeting called by Company pursuant to Section 5.4, and nothing in this
Agreement shall be deemed to relieve Company of such obligation. Any Change
in
Company’s Recommendation shall not permit Company’s Board of Directors to
rescind or amend the resolutions adopting this Agreement or otherwise change
the
approval of Company’s Board of Directors for purposes of causing any state
takeover statute or other state law or provision of Company’s articles of
incorporation or by-laws to be inapplicable to the transactions contemplated
thereby.
33
(d) Notwithstanding
the foregoing, nothing contained in this Section 5.3 or any other provision
hereof shall prohibit Company or Company’s Board of Directors from taking and
disclosing to Company’s stockholders a position contemplated by Rule 14e-2 or
Rule 14d-9 promulgated under the Exchange Act or from making any disclosure
if,
in the good faith judgment of the Board of Directors of Company, after
consultation with outside counsel, failure to do so would be inconsistent
with
the Board’s fiduciary duties to Company’s stockholders under applicable law;
provided,
however,
that
Company’s Board of Directors shall not in any case make a Change in Company’s
Recommendation except in accordance with Section 5.3(c).
5.4 Stockholder
Approval.
Company
agrees to take, in accordance with applicable law and its articles of
incorporation and by-laws, all action necessary to convene a meeting of its
stockholders (including any adjournment or postponement, the “Company Meeting”),
as promptly as practicable to consider and vote upon the adoption and approval
of this Agreement and the Merger and the other matters contemplated hereby.
The
Board of Directors of Company shall recommend such adoption and approval,
and
Company shall use its reasonable best efforts to solicit the adoption and
approval of this Agreement by its stockholders; provided that the Board of
Directors of Company may withdraw, modify, condition or refuse to make such
recommendation only in accordance with Section 5.3(c) in connection with
the
receipt of a Superior Proposal.
5.5 Filings;
Other Actions.
(a) As
promptly as reasonably practicable following the date hereof, Acquiror and
Company shall cooperate in preparing and shall cause to be filed with the
SEC
mutually acceptable proxy materials which shall constitute the proxy
statement/prospectus relating to the matters to be submitted to Company’s
stockholders at the Company Meeting (such proxy statement/prospectus, and
any
amendments or supplements thereto, the “Proxy Statement/Prospectus”) and
Acquiror shall prepare and file with the SEC a registration statement on
Form
S-4 (of which the Proxy Statement/Prospectus shall be a part) with respect
to
the issuance of Acquiror Common Stock in the Merger (such Form S-4, and any
amendments or supplements thereto, the “Form S-4”). Each of Acquiror and Company
shall use reasonable best efforts to have the Proxy Statement/Prospectus
cleared
by the SEC and the Form S-4 declared effective by the SEC and to keep the
Form
S-4 effective as long as is necessary to consummate the Merger and the
transactions contemplated thereby. Acquiror and Company shall, as promptly
as
practicable after receipt thereof, provide the other party copies of any
written
comments and advise the other party of any oral comments with respect to
the
Proxy Statement/Prospectus or Form S-4 received from the SEC. Each party
shall
cooperate and provide the other party with a reasonable opportunity to review
and comment on any amendment or supplement to the Proxy Statement/Prospectus
and
the Form S-4 prior to filing such with the SEC, and each party will provide
the
other party with a copy of all such filings made with the SEC. Acquiror shall
use its reasonable best efforts to take any action required to be taken under
any applicable state securities laws in connection with the Merger and each
party shall furnish all information concerning it and the others to its capital
stock as may be reasonably requested in connection with any such action.
Each
party will advise the other party, promptly after it receives notice thereof,
of
the time when the Form S-4 has become effective, the issuance of any stop
order,
the suspension of the qualification of the Acquiror Common stock issuable
in
connection with the Merger for offering or sale in any jurisdiction, or any
request by the SEC for amendment of the Proxy Statement/Prospectus or the
Form
S-4.
34
(b) If
at any
time prior to the Effective Time any information relating to either of the
parties, or their respective affiliates, officers or directors, should be
discovered by either party which should be set forth in an amendment or
supplement to any of the Form S-4 or the Proxy Statement/Prospectus so that
such
documents would not include any misstatement of a material fact or omit to
state
any material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, the party which
discovers such information shall promptly notify the other party hereto and,
to
the extent required by law, rules or regulations, an appropriate amendment
or
supplement describing such information shall be promptly filed with the SEC
and
disseminated to the stockholders of Company.
(c) Each
of
Acquiror and Company agrees to cooperate with the other and, subject to the
terms and conditions set forth in this Agreement, use reasonable best efforts
to
promptly prepare and file all necessary documentation (including making all
required initial filings in connection with the Regulatory Approvals within
45
days of the date of this Agreement), to effect all necessary applications,
notices, petitions, filings and other documents, and to obtain as promptly
as
practicable all necessary permits, consents, orders, approvals and
authorizations of, or any exemption by, all third parties and Governmental
Entities necessary or advisable to consummate the transactions contemplated
by
this Agreement, including the Regulatory Approvals. Each of Acquiror and
Company
shall have the right to review in advance, and to the extent practicable
each
will consult with the other, in each case subject to applicable laws relating
to
the exchange of information, with respect to all the material information
relating to the other party, and any of their respective subsidiaries, which
appears in any material filing made with, or written materials submitted
to, any
third party or any Governmental Entity in connection with the transactions
contemplated by this Agreement. In exercising the foregoing right, each of
the
parties hereto agrees to act reasonably and as promptly as practicable. Each
party hereto agrees that it will consult with the other party hereto with
respect to the obtaining of all permits, consents, approvals and authorizations
of all third parties and Governmental Entities necessary or advisable to
consummate the transactions contemplated by this Agreement and each party
will
keep the other party apprised of the status of matters relating to completion
of
the transactions contemplated hereby.
35
(d) Each
of
Acquiror and Company agree, upon request, to furnish the other with all
information concerning itself, its subsidiaries, directors, officers and
stockholders and such other matters as may be reasonably necessary or advisable
in connection with the Proxy Statement or any other statement, filing, notice
or
application made by or on behalf of such other party or any of its subsidiaries
to any Governmental Entity in connection with the Merger and the other
transactions contemplated by this Agreement.
5.6 Information
Supplied.
Each of
Company and Acquiror agrees, as to itself and its subsidiaries, that none
of the
information supplied or to be supplied by it for inclusion or incorporation
by
reference in the Proxy Statement and any amendment or supplement thereto,
at the
date of mailing to stockholders and at the time of the Company Meeting, will
contain any statement which, in light of the circumstances under which such
statement is made, will be false or misleading with respect to any material
fact, or will omit to state any material fact necessary in order to make
the
statements therein not false or misleading or necessary to correct any statement
in any earlier statement in the Proxy Statement or any amendment or supplement
thereto. Each of Company and Acquiror further agrees that if it shall become
aware prior to the Effective Time of any information furnished by it that
would
cause any of the statements in the Proxy Statement to be false or misleading
with respect to any material fact, or to omit to state any material fact
necessary to make the statements therein not false or misleading, to promptly
inform the other party thereof and to take the necessary steps to correct
the
Proxy Statement. The Proxy Statement shall not be filed, and, prior to the
termination of this Agreement, no amendment or supplement to the Proxy Statement
shall be filed, by Acquiror or Company, without consultation with the other
party and its counsel.
5.7 Access
and Investigations.
e)
Upon
reasonable notice, each party agrees to (and shall cause each of its
subsidiaries and affiliates to) afford the other party and its Representatives
access, during normal business hours throughout the period until the Closing
Date, to its properties, books, contracts and records and, during such period,
shall (and shall cause each of its subsidiaries and affiliates to) furnish
promptly to the other party all material information concerning its business,
properties and personnel as may reasonably be requested. Neither party nor
any
of its subsidiaries or affiliates shall be required to provide access to
or to
disclose information where such access or disclosure would violate or prejudice
the rights of such party’s (including its subsidiaries and affiliates)
customers, jeopardize the attorney-client privilege of the institution in
possession or control of such information or contravene any law, rule,
regulation, order, judgment or decree or any binding agreement entered into
prior to the date of this Agreement. The parties hereto will make appropriate
substitute disclosure arrangements under circumstances in which restrictions
of
the preceding sentence apply.
(b) Each
party agrees, and will cause its respective subsidiaries, affiliates and
Representatives not to use any information obtained from the other party
(or
such other party’s subsidiaries, affiliates or Representatives), pursuant to
this Section 5.7 or otherwise, for any purpose unrelated to the consummation
of
the transactions contemplated by this Agreement. Each party will keep, and
will
cause its subsidiaries, affiliates and Representatives to keep, all information
and documents obtained from the other party pursuant to this Section 5.7
or
during the investigation leading up to the execution of this Agreement
confidential unless such information (i) becomes available to such party
from
other sources not known by such party to be bound by a confidentiality
obligation, or (ii) is or becomes readily ascertainable from publicly available
information or trade sources (other than as a result of a breach of this
Agreement by such party or its subsidiaries, affiliates or Representatives).
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 party which furnished
the
same, or (at such party’s option) confirm in writing to such party that it has
completely destroyed all such copies, documents, extracts, information and
data.
36
(c) No
investigation by either of the parties or their respective Representatives
shall
affect the representations and warranties of the other set forth herein or
preclude reliance thereon.
5.8 Certain
Modifications; Restructuring Charges.
Company
and Acquiror agree to consult with respect to their loan, litigation and
real
estate valuation policies and practices (including loan classifications and
levels of reserves) and Company shall make such modifications or changes
to its
policies and practices, if any, and at such date prior to the Effective Time,
as
Acquiror shall reasonably request; provided that (a) such modifications or
changes comply with generally accepted accounting principles and regulatory
requirements and guidelines and (b) the conditions specified in Sections
6.1(a)
and (b) have been satisfied or waived. Company and Acquiror 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 in accordance with generally accepted accounting
principles, as Acquiror shall reasonably request. No party’s representations,
warranties and covenants contained in this Agreement shall be deemed to be
untrue or breached in any respect for any purpose as a consequence of any
modifications or changes to such policies and practices which may be undertaken
on account of this Section 5.8.
5.9 Takeover
Laws.
If any
Takeover Law may become, or may purport to be, applicable to this Agreement,
the
Voting Agreements or the transactions contemplated hereby or thereby, each
of
Acquiror and Company and the members of their respective Boards of Directors
will grant such approvals and take such actions as are necessary (other than
any
action requiring the approval of its stockholders other than as contemplated
by
Section 5.4) so that the transactions contemplated by this Agreement and
the
Voting Agreements may be consummated as promptly as practicable on the terms
contemplated hereby and thereby and otherwise act to eliminate or minimize
the
effects of any Takeover Law on this Agreement, the Voting Agreements or any
of
the transactions contemplated by this Agreement.
5.10 Benefit
Plans.
f)
From and
after the Effective Time, Acquiror shall provide individuals who are employees
of the Company at the Effective Time and who continue as employees of Acquiror
or any of its subsidiaries (“Continuing Employees”) with benefits under employee
benefit plans (other than stock options and other equity-based plans)
substantially comparable in the aggregate to those provided to similarly
situated employees of Acquiror and its subsidiaries, as the case may be.
Acquiror shall cause each employee benefit plan, program, policy or arrangement
(“Acquiror Benefit Plan”) in which employees of Company or its subsidiaries are
eligible to participate to take into account for purposes of eligibility
and
vesting (but not benefit accrual under Pension Plans or retiree medical plans)
thereunder the service of such employees with Company or its subsidiaries
(including service with acquired entities for which Company and its subsidiaries
have given service credit) to the same extent as such service was credited
for
such purpose by Company or its subsidiaries under a comparable Company Benefit
Plan (including for the avoidance of doubt the Severance Plan (as defined
below)), provided,
however,
that no
employee shall be eligible to participate, at any one time, in more than
one
plan providing for severance benefits. At and after the Effective Time, to
the
extent permitted by law, until Continuing Employees commence participation
in
comparable Acquiror Benefit Plans in accordance with the terms of each Plan,
Acquiror and its subsidiaries shall continue to maintain each Company Benefit
Plan and Continuing Employees shall continue to participate in each such
Company
Benefit Plan. Nothing herein shall limit the ability of Acquiror to amend
or
terminate any of the Benefit Plans in accordance with their terms at any
time.
37
(b) Acquiror
shall cause each Acquiror Benefit Plan providing medical or dental benefits
to
Continuing Employees to (i) waive any preexisting condition limitations relating
to any conditions that were covered under the applicable medical or dental
plans
of Company or its subsidiaries, (ii) for purposes of satisfying all deductible,
coinsurance and maximum out-of-pocket requirements, take into account any
eligible expenses incurred by Continuing Employees or their covered dependents
during the portion of the plan year ending on the date on which such Continuing
Employees commence participation in a comparable Acquiror Benefit Plan, as
if
such amounts had been paid under such Acquiror Benefit Plan and (iii) waive
any
waiting period limitation or evidence of insurability requirement which would
otherwise be applicable to such Continuing Employee to the extent such
Continuing Employee had satisfied any similar limitation or requirement under
a
comparable Company Benefit Plan prior to the Effective Time.
(c) Company
shall cooperate in providing information reasonably requested by Acquiror
that
is necessary for Acquiror to prepare and distribute notices that Acquiror
may
desire to provide prior to the Effective Time under the Workers Adjustment
and
Retraining Notification Act of 1988 (WARN Act).
(d) Acquiror
shall assume and honor, or pay out, the accrued but unused vacation and sick
time of Continuing Employees.
(e) Acquiror
shall assume and honor the U.S.B. Holding Co., Inc. Severance Plan (the
“Severance Plan”) for a period of twelve months following the Effective Time,
provided that, prior to Closing, and in any case prior to the Company Meeting,
Company has adopted the amendment to the Severance Plan set forth in
Section
5.10(e) of the Company Disclosure Schedule.
(f) Concurrently
with the execution of this Agreement, Company, Acquiror and each of Xxxxxx
X.
Xxxxx, Xxxxxxx X. Xxxxxx and Xxxxxx X. Xxxxxxxxx shall enter into an agreement
substantially in the form attached as Exhibit
5.10(f) to the Company Disclosure Letter,
which
shall govern the settlement of their respective employment agreements or
termination pay arrangement.
38
5.11 Indemnification
and Insurance.
(a) Following
the Effective Time, Acquiror agrees to indemnify and hold harmless (including
the advancement of expenses as incurred) each present and former director
and
officer of Company and its subsidiaries (each, an “Indemnified Party”) following
the Effective Time, against any costs or expenses (including reasonable
attorneys’ fees), judgments, fines, losses, claims, damages or liabilities
incurred in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative,
arising
out of or pertaining to matters existing or occurring at or prior to the
Effective Time, whether asserted or claimed prior to, at or after the Effective
Time, to the extent such Indemnified Party would have been indemnified as
a
director or officer of Company or any of its subsidiaries under the DGCL
and
Company’s articles of incorporation and by-laws.
(b) Acquiror
shall cause the Persons covered by the directors’ and officers’ liability policy
currently maintained by Company immediately prior to the Effective Time to
be
covered for a period of six years after the Effective Time by Company’s
directors’ and officers’ liability insurance policy (provided that Acquiror may
substitute policies providing comparable or better coverage than such policy)
with respect to acts or omissions occurring prior to the Effective Time which
were committed by such officers and directors in their capacity as such;
provided,
however,
that in
no event shall Acquiror be required to expend more than 200% per year of
the
amount currently expended by Company per year for coverage as of the date
hereof
under its directors’ and officers’ liability insurance policy (the “Maximum
Amount”) to maintain or procure insurance coverage pursuant hereto, and
provided further
that, if
notwithstanding the use of reasonable best efforts to do so Acquiror is unable
to maintain or obtain the insurance called for by this Section 5.11(b), Acquiror
shall obtain as much comparable insurance as available for the Maximum Amount;
provided further
that
such Persons may be required to make reasonable application and provide
reasonable and customary representations and warranties to Acquiror’s insurance
carrier for the purpose of obtaining such insurance, comparable in nature
and
scope to the applications, representations and warranties required of persons
who are officers and directors of Acquiror as of the date hereof.
(c) Any
Indemnified Party wishing to claim indemnification under Section 5.11(a),
upon
learning of any claim, action, suit, proceeding or investigation described
above, shall promptly notify Acquiror thereof; provided that the failure
so to
notify shall not affect the obligations of Acquiror under Section 5.11(a)
unless
and to the extent that Acquiror is prejudiced as a result of such
failure.
(d) If
Acquiror or any of its successors or assigns consolidates with or merges
into
any other entity and is not the continuing or surviving entity of such
consolidation or merger or transfers all or substantially all of its assets
to
any other entity, then and in each case, Acquiror will cause proper provision
to
be made so that the successors and assigns of Acquiror will assume the
obligations set forth in this Section 5.11.
(e) The
provisions of this Section 5.11 are intended to be for the benefit of, and
shall
be enforceable by, each Indemnified Party and his or her heirs and
representatives.
39
5.12 Publicity.
The
initial press release relating hereto will be a joint press release and
thereafter, except as otherwise required by law or the applicable rules of
the
NYSE or any other self-regulatory organization, Company and Acquiror shall
coordinate with each other prior to issuing any press releases or otherwise
making public statements with respect to the transactions contemplated
hereby.
5.13 Reasonable
Best Efforts; Additional Agreements.
Subject
to the terms and conditions of this Agreement, each of Acquiror and Company
agrees to cooperate fully with each other and to use reasonable best efforts
to
take, or cause to be taken, all actions, and to do, or cause to be done,
all
things necessary, proper or advisable to consummate and make effective, at
the
time and in the manner contemplated by this Agreement, the Merger, including
using reasonable best efforts to lift or rescind any injunction or restraining
order or other order adversely affecting the ability of the parties to
consummate the Merger (it being understood that any amendments or supplements
to
the Proxy Statement/Prospectus or the Form S-4 or a resolicitation of proxies
as
a result of a transaction by Acquiror or its subsidiaries shall not violate
this
covenant).
5.14 Notification
of Certain Matters.
Each of
Acquiror and Company will give prompt notice to the other (and subsequently
keep
the other party informed on a current basis) upon its becoming aware of the
occurrence or existence of any fact, event or circumstance that (a) is
reasonably likely to result in any Material Adverse Effect with respect to
it,
or (b) would cause or constitute a material breach of any of its
representations, warranties, covenants or agreements contained herein; provided
that any failure to give notice in accordance with the foregoing with respect
to
any breach shall not be deemed to constitute the failure of any condition
set
forth in Section 6.2(a) or (b) or Section 6.3(a) or (b) to be satisfied,
or to
give rise to any right to terminate this Agreement pursuant to Section 7.1(b),
unless the underlying breach would independently result in a failure of the
conditions set forth in Section 6.2(a) or (b) or Section 6.3(a) or (b), as
the
case may be, to be satisfied or give rise to such termination
right.
5.15 Expenses.
Each of
the parties shall bear and pay all costs and expenses incurred by it or on
its
behalf in connection with the transactions contemplated hereunder, including
fees and expenses of its own financial or other consultants, investment bankers,
accountants and counsel.
5.16 Section
16(b) Exemption.
Acquiror 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
(i) shares of Company Common Stock into the right to receive cash and/or
shares
of Acquiror Common Stock and (ii) Company Options into the right to receive
options to purchase Acquiror Common Stock or cash, as applicable, in the
Merger,
and for that compensatory and retentive purpose agree to the provisions of
this
Section 5.16. Provided that Company delivers to Acquiror the Company Section
16
Information (as defined below) in a timely fashion prior to the Effective
Time,
the Board of Directors of Acquiror, 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
the Company Insiders (as defined below) of cash, shares of Acquiror Common
Stock
and/or options to purchase Acquiror Common Stock in exchange for shares of
Company Common Stock and Company Options, in each case pursuant to the
transactions contemplated hereby and to the extent such securities are listed
in
the 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 the Company Insiders, the number
of
shares of Company Common Stock held by each such Company Insider and expected
to
be exchanged for the right to receive cash and/or shares of Acquiror Common
Stock in the Merger, and the number and description of Company Options held
by
each such Company Insider and expected to be converted into an option to
purchase shares of Acquiror Common Stock or cash, as applicable, in connection
with 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 and who are listed in the Company Section 16
Information.
40
5.17 Environmental
Assessments.
Upon
reasonable notice, Company shall cooperate with and grant access to an
environmental consulting firm selected by Acquiror and reasonably acceptable
to
Company, during normal business hours (and at such other times as may be
agreed)
to the Owned Real Property, for the purpose of conducting:
(a) ASTM
1527
Phase I environmental assessments (“Phase I Assessments”); and
(b) ASTM
1903
Phase II environmental assessments (“Phase II Assessments” and together with the
Phase I Assessments, the “Environmental Assessments”) on any Owned Real Property
in respect of which a Recognized Environmental Condition (as such term is
defined in the ASTM Standard) is identified in a Phase I Assessment. Each
Phase
II Assessment, if any, shall include an estimate by the environmental consulting
firm preparing such Environmental Assessment of the costs of investigation,
monitoring, personal injury, property damage, clean up, remediation, penalties,
fines or other liabilities, as the case may be, relating to the Recognized
Environmental Condition(s) or other conditions which are the subject of the
Phase II Assessment.
Acquiror
shall bear and pay the environmental consulting firm’s fees and expenses. Within
15 days after the date hereof, Acquiror shall engage an environmental consultant
reasonably acceptable to Company to perform the Phase I Assessments. Acquiror
shall use reasonable efforts to cause its environmental consultant to complete
and provide Acquiror with its written Phase I Assessment(s) within 45 days
after
such consultant is retained. Promptly following the receipt of all Phase
I
Assessments (but not later than 15 days thereafter), Acquiror shall order
all
applicable Phase II Assessments. Acquiror shall use reasonable best efforts
to
have all Environmental Assessments completed within 90 days of the date of
this
Agreement.
5.18 Registration
and Merger Consideration.
At or
prior to the Effective Time, Acquiror shall take all corporate action necessary
to reserve for issuance a sufficient number of shares of Acquiror Common
Stock
and take action to deposit cash sufficient for delivery of the Merger
Consideration to Company stockholders.
41
5.19 Affiliates.
Company
shall use its reasonable best efforts to cause each director, executive officer
and other person who is an “affiliate” (for purposes of Rule 145 under the
Securities Act) of Company to deliver to Acquiror, as soon as practicable
after
the date of this Agreement, a written agreement in the form of Exhibit
B
hereto.
5.20 Stock
Exchange Listing.
Acquiror shall use reasonable best efforts to cause the shares of Acquiror
Common Stock to be issued in the Merger to be approved for listing on the
NYSE,
subject to official notice of issuance, as of the Effective Time.
5.21 Compliance
Policies and Procedures.
Prior
to the Closing Date, the Company shall use its reasonable best efforts to
make
and cooperate with Acquiror in making, and cause it applicable Subsidiaries
to
make and cooperate with Acquiror in making, as applicable, such changes and
modifications to its legal, accounting, risk management, internal audit and
other compliance policies and procedures, including anti-money laundering,
Bank
Secrecy Act, USA Patriot Act, “know your customer”, Office of Foreign Asset
Control list of Specially Designated Nationals and Blocked Entities compliance
policies and procedures, as Acquiror may from time to time request; provided;
however,
that
such changes and modifications shall comply with applicable law.
ARTICLE
VI
CONDITIONS
6.1 Conditions
to Each Party’s Obligation to Effect the Merger.
The
respective obligation of each of Acquiror, Acquiror Sub and Company to
consummate the Merger is subject to the fulfillment or written waiver by
Acquiror and Company prior to the Effective Time of each of the following
conditions:
(a) Stockholder
Approval.
This
Agreement shall have been duly adopted and approved by the requisite vote
of the
stockholders of Company.
(b) Governmental
and Regulatory Consents.
All
statutory waiting periods applicable to the consummation of the Merger shall
have expired or been terminated, and, other than the filing provided for
in
Section 1.4(a), all notices, reports and other filings required to be made
prior
to the Effective Time by Acquiror or Company or any of their respective
subsidiaries with, and all regulatory consents, registrations, approvals,
permits and authorizations required to be obtained prior to the Effective
Time
by Acquiror or Company or any of their respective subsidiaries from, any
Governmental Entity in connection with the consummation of the Merger and
the
other transactions contemplated hereby by Acquiror and Company shall have
been
made or obtained (as the case may be) and become final, provided that none
of
the foregoing shall contain any term or condition which would have, or would
be
reasonably likely to have, a Material Adverse Effect on (A) Acquiror and
its
subsidiaries taken as a whole or (B) Company and its subsidiaries taken as
a
whole.
(c) No
Prohibitions.
No
United States or state court or other Governmental Entity of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered
any
law, statute, rule, regulation, judgment, decree, injunction or other order
(whether temporary, preliminary or permanent) which is in effect and prohibits
consummation of the Merger.
42
(d) NYSE
Listing.
The
shares of Acquiror Common Stock that shall be issued to the stockholders
of
Company upon consummation of the Merger shall have been authorized for listing
on the NYSE, subject to official notice of issuance.
(e) Form
S-4.
The
Form S-4 shall have become effective under the Securities Act and no stop
order
suspending the effectiveness of the Form S-4 shall have been issued and no
proceedings for that purpose shall have been initiated or threatened by the
SEC
or any other Governmental Entity.
(f) Blue
Sky Approvals.
All
permits and other authorizations under the Securities Laws (other than that
referred to in Section 6.1(e)) and other authorizations necessary to consummate
the Merger and to issue the shares of Acquiror Common Stock to be issued
in the
Merger shall have been received and be in full force and effect.
6.2 Conditions
to Obligations of Acquiror and Acquiror and Acquiror Sub.
The
respective obligations of each of Acquiror and Acquiror Sub to consummate
the
Merger are also subject to the fulfillment, or the written waiver by Acquiror,
prior to the Effective Time of each of the following conditions:
(a) Representations
and Warranties.
The
representations and warranties of Company set forth in this Agreement shall
be,
giving effect to Sections 3.1 and 3.2, true and correct as of the date of
this
Agreement and as of the Effective Time as though made at and as of the Effective
Time (except that representations and warranties that by their terms speak
specifically as of the date of this Agreement or some other date shall be,
giving effect to Sections 3.1 and 3.2, true and correct as of such date);
and
Acquiror 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 all obligations required to
be
performed by it under this Agreement at or prior to the Effective Time, and
Acquiror 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) Third
Party Consents.
All
consents or approvals of all Persons (other than Governmental Entities) required
for consummation of the Merger shall have been obtained and shall be in full
force and effect.
(d) Federal
Income Tax Opinion.
Acquiror shall have received an opinion of Xxxxxxxx & Xxxxxxxx LLP, special
counsel to Acquiror, dated the Closing Date, in form and substance reasonably
satisfactory to Acquiror, substantially to the effect that, on the basis
of
facts, representations and assumptions set forth in such opinion:
(i) The
Merger will be treated for federal income tax purposes as a reorganization
within the meaning of Section 368(a) of the Code.
43
(ii) Each
of
Company, Acquiror and Acquiror Sub will be a party to that reorganization
within
the meaning of Section 368(b) of the Code.
In
rendering such opinion, Xxxxxxxx & Xxxxxxxx LLP may require and rely upon
representations and covenants, including those contained in certificates
of
officers of Acquiror, Company and others, reasonably satisfactory in form
and
substance to such counsel.
6.3 Conditions
to Obligation of Company.
The
obligation of Company to consummate the Merger is also subject to the
fulfillment, or the written waiver by Company prior to the Effective Time,
of
each of the following conditions:
(a) Representations
and Warranties.
The
representations and warranties of Acquiror and Acquiror Sub set forth in
this
Agreement shall be, giving effect to Sections 4.1 and 4.2, true and correct
as
of the date of this Agreement and as of the Effective Time as though made
at and
as of the Effective Time (except that representations and warranties that
by
their terms speak specifically as of the date of this Agreement or some other
date shall be, giving effect to Sections 4.1 and 4.2, true and correct as
of
such date) and Company shall have received two certificates, dated the Closing
Date, signed on behalf of Acquiror and Acquiror Sub by the Chief Administrative
Officer or the Chief Executive Officer and the Chief Financial Officer of
Acquiror and an authorized officer of Acquiror Sub, respectively, to such
effect.
(b) Performance
of Obligations of Acquiror.
Acquiror shall have performed in all material respects all obligations required
to be performed by it under this Agreement at or prior to the Effective Time;
and Company shall have received a certificate, dated the Closing Date, signed
on
behalf of Acquiror by the Chief Administrative Officer or the Chief Executive
Officer and the Chief Financial Officer of Acquiror to such effect.
(c) Federal
Income Tax Opinion.
Company
shall have received an opinion of Xxxxxxx Xxxxxxxx & Wood LLP,
dated
the Closing Date, in form and substance reasonably satisfactory to Company,
substantially to the effect that, on the basis of facts, representations
and
assumptions set forth in such opinion:
(i) The
Merger will be treated for federal income tax purposes as a reorganization
within the meaning of Section 368(a) of the Code. Each of Company, Acquiror
and
Acquiror Sub will be a party to that reorganization within the meaning of
Section 368(b) of the Code.
(ii) No
gain
or loss will be recognized by stockholders of Company who receive shares
of
Acquiror Common Stock in exchange for Company Common Stock, except with respect
to cash received in lieu of fractional share interests.
(iii) The
basis
of the Acquiror Common Stock (including any fractional shares thereof deemed
for
tax purposes to be issued and then redeemed by Acquiror) by a holder of Company
Common Stock pursuant to the Merger will be the same as the basis of the
Company
Common Stock surrendered in exchange therefor, increased by any gain recognized
by such holder of Company Common Stock (including any portion of the gain
treated as a dividend) and decreased by the amount of cash received by such
holder.
44
(iv) Provided
that the Company Common Stock surrendered in the Merger is held as a capital
asset at the Effective Time, the holding period of the Acquiror Common Stock
received by a holder of Company Common Stock in exchange for such Company
Common
Stock pursuant to the Merger will include the period during which such holder
held such Company Common Stock.
In
rendering such opinion, Xxxxxxx Xxxxxxxx & Xxxx llp
may
require and reply upon representations and covenants, including those contained
in certificates of officers of Acquiror and others, reasonably satisfactory
in
form and substance to such counsel.
ARTICLE
VII
TERMINATION
7.1 Termination.
This
Agreement may be terminated, and the Merger abandoned, prior to the Effective
Time, either before or after its approval by the stockholders of
Company:
(a) by
the
mutual consent of Acquiror and Company, if the board of directors of each
so
determines by vote of a majority of the members of its entire
board;
(b) by
Acquiror or Company, if its board of directors so determines by vote of a
majority of the members of its entire board, in the event of a breach by
the
other party hereto of any representation, warranty, covenant or agreement
contained herein which is not cured or not curable within 45 days after written
notice of such breach is given to the party committing such breach by the
other
party and which breach, individually or in the aggregate with other such
breaches, would cause the conditions set forth in Section 6.2(a) and (b),
in the
case of breaches by Company, or Section 6.3(a) and (b), in the case of breaches
by Acquiror, not to be satisfied;
(c) by
Acquiror or Company by written notice to the other if either (i) any approval,
consent or waiver of a Governmental Entity required to permit consummation
of
the transactions contemplated hereby shall have been denied in writing or
(ii)
any Governmental Entity of competent jurisdiction shall have issued a final,
unappealable order enjoining or otherwise prohibiting consummation of the
transactions contemplated by this Agreement;
(d) by
Acquiror or Company, if its board of directors so determines by vote of a
majority of the members of its entire board, in the event that the Merger
is not
consummated by January 31, 2008 (the “Termination Date”), unless the failure to
so consummate by such time is due to the breach of any representation, warranty
or covenant contained in this Agreement by the party seeking to
terminate;
(e) by
the
Board of Directors of Acquiror in the event that (i) the Board of Directors
of
Company does not continue to recommend that its stockholders adopt this
Agreement, withdraws such recommendation or modifies or changes such
recommendation in a manner adverse to the interests of Acquiror, (ii) Company
has failed to substantially comply with its obligations under Section 5.3
or 5.4
or (iii) the Board of Directors of Company has recommended or endorsed an
Acquisition Proposal;
45
(f) by
Company at any time during the three business-day period following the Acquiror
Ratio Determination Date (as defined below), if:
(i) the
Ending Price (as defined below) shall be less than the product of 0.85 and
the
Starting Price (as defined below); and
(ii) (A)
the
number obtained by dividing the Ending Price by the Starting Price (such
number
being referred to herein as the “Acquiror Ratio”) shall be less than (B) the
number obtained by dividing the Index Price on the Acquiror Ratio Determination
Date by the Index Price on the Starting Date and subtracting 0.15 from such
quotient (such number being referred to herein as the “Index Ratio”) subject to
the following. If Company elects to exercise its termination right pursuant
to
the immediately preceding sentence, it shall give prompt written notice to
Acquiror; provided that such notice of election to terminate may be withdrawn
at
any time within the aforementioned three business-day period. During the
three
business-day period commencing with its receipt of such notice, Acquiror
shall
have the option of increasing the Designated Ratio and/or Per Share Cash
Consideration in a manner such that the conditions set forth in either clause
(i) or (ii) above shall be deemed not to exist. For purposes hereof, the
condition set forth in clause (i) above shall be deemed not to exist if the
Designated Ratio and/or Per Share Cash Consideration is adjusted so that
the
aggregate value of the Merger Consideration after such increase is not less
than
the aggregate value of the Merger Consideration that would have been in effect
if the condition set forth in clause (i) above did not exist. For purposes
hereof, the condition set forth in clause (ii) above shall be deemed not
to
exist if the aggregate value of the Merger Consideration is increased so
that
the aggregate value of the Merger Consideration after such increase is not
less
than the aggregate value of the Merger Consideration that would have been
in
effect if the condition set forth in clause (ii) above did not exist. If
Acquiror makes this election, within such three business-day period, it shall
give prompt written notice to Company of such election and the revised
Designated Ratio and/or Designated Amount, whereupon no termination shall
have
occurred pursuant to this Section 7.1(f) and this Agreement shall remain
in
effect in accordance with its terms (except as the Designated Ratio and/or
Designated Amount shall have been so modified).
(iii) For
purposes of this Section 7.1(f), the following terms shall have the meanings
indicated:
“Acquiror
Ratio Determination Date” means the first date on which all Regulatory Approvals
required for consummation of the Merger have been received (disregarding
any
waiting period).
“Ending
Price” means the average of the closing sale prices of one share of Acquiror
Common Stock as reported on the NYSE Composite Transactions Reporting System
(as
reported in the Wall Street Journal or, if not reported therein, in another
authoritative source) during the 10 consecutive trading days ending on the
Acquiror Ratio Determination Date.
46
“Index
Price” on a given date means the closing price of the KBW Index (as publicly
reported by Xxxxx, Xxxxxxxx & Xxxxx, Inc. in an authoritative
source).
“Starting
Date” shall mean the calendar day this Agreement is signed, or if such calendar
day is not an NYSE trading day, then the NYSE trading day immediately preceding
such calendar day.
“Starting
Price” shall mean $36.15.
If
Acquiror declares or effects a stock dividend, reclassification,
recapitalization, split-up, combination, exchange of shares or similar
transaction between the Starting Date and the Determination Date, the prices
for
Acquiror Common Stock shall be appropriately adjusted for the purposes of
applying this Section 7.1(f).
(g) By
Acquiror if any Phase II Assessment indicates the existence of any condition
or
matter with respect to which it is reasonably likely that the cost set forth
in
the Phase II Assessment(s) of investigation, monitoring, personal injury,
property damage, clean up, remediation, penalties, fines or other liabilities
relating to the Recognized Environmental Condition(s) which resulted in the
Phase II Assessment would exceed $1,000,000 in the case of any one parcel
of
Owned Real Property or $3,000,000 in the case of all Owned Real Property
and the
existence of such condition or matter has not been cured by Company within
45
days after written notice of such condition or matter is given to Company
by
Acquiror.
7.2 Fee.
As a
condition of Acquiror’s willingness, and in order to induce Acquiror to enter
into this Agreement, and to reimburse Acquiror for incurring the costs and
expenses related to entering into this Agreement and consummating the
transactions contemplated by this Agreement, Company hereby agrees to pay
Acquiror, and Acquiror shall be entitled to payment of, a fee of $21,000,000,
within three business days after written demand for payment is made by Acquiror,
following the occurrence of any of the events set forth below:
(i) Acquiror
terminates this Agreement pursuant to Section 7.1(e); or
(ii) Company
enters into a definitive agreement relating to an Acquisition Proposal or
the
consummation of an Acquisition Proposal involving Company within twelve months
following the termination of this Agreement by Acquiror pursuant to Section
7.1(b) because of a breach (other than a non-volitional breach of a
representation or warranty) by Company after an Acquisition Proposal has
been
publicly announced or otherwise made known to Company.
7.3 Effect
of Termination and Abandonment.
In the
event of termination of this Agreement and the abandonment of the Merger
pursuant to Section 7.1, (a) no party to this Agreement shall have any liability
or further obligation to any other party hereunder; provided,
however,
termination will not relieve a breaching party from liability for any willful
breach giving rise to such termination and (b) this Agreement shall forthwith
be
void and of no further legal effect, other than the provisions of Sections
5.7(b), 5.15 and 7.2, this Section 7.3 and Article VIII.
47
ARTICLE
VIII
MISCELLANEOUS
8.1 Survival.
Except
for the agreements and covenants contained in Articles I and II, Sections
5.10
and 5.11, and this Article VIII, the representations and warranties, agreements
and covenants contained in this Agreement shall be deemed only to be conditions
of the Merger and shall not survive the Effective Time.
8.2 Modification
or Amendment.
Subject
to applicable law, at any time prior to the Effective Time, the parties hereto
may modify or amend this Agreement, by written agreement executed and delivered
by duly authorized officers of the respective parties.
8.3 Waiver
of Conditions.
The
conditions to each party’s obligation to consummate the Merger are for the sole
benefit of such party and may be waived by such party as a whole or in part
to
the extent permitted by applicable law. No waiver shall be effective unless
it
is in a writing signed by a duly authorized officer of the waiving party
that
makes express reference to the provision or provisions subject to such
waiver.
8.4 Counterparts.
For the
convenience of the parties hereto, this Agreement may be executed in any
number
of separate counterparts, each such counterpart being deemed to be an original
instrument, and all such counterparts shall together constitute the same
agreement, and may be delivered by facsimile or other electronic
means.
8.5 Governing
Law.
This
Agreement shall be governed by and construed in accordance with the laws
of the
State of Delaware applicable to contracts made and to be performed entirely
within the State of Delaware, without regard to the conflict of law principles
of the State of Delaware.
8.6 Notices.
Any
notice, request, instruction or other document to be given hereunder by any
party to the other shall be in writing and shall be deemed to have been duly
given (a) on the date of delivery if delivered personally, or by telecopy
or
facsimile, upon confirmation of receipt, (b) on the first business day following
the date of dispatch if delivered by a recognized next-day courier service,
or
(c) on the third business day following the date of mailing if delivered
by
registered or certified mail, return receipt requested, postage prepaid.
All
notices hereunder shall be delivered as set forth below, or pursuant to such
other instructions as may be designated in writing by the party to receive
such
notice.
48
To
Acquiror or Acquiror Sub:
|
To
Company:
|
KeyCorp
000
Xxxxxx Xxxxxx
Xxxxxxxxx,
XX 00000
Attention:
Xxxxxx X. Xxxxx
Facsimile:
000-000-0000
|
U.S.B.
Holding Co., Inc.
000
Xxxxx Xxxx Xxxx
Xxxxxxxxxx,
XX 00000
Attention:
Xxxxxx X. Xxxxx
Facsimile:
000-000-0000
|
with
a copy to:
|
with
a copy to:
|
KeyCorp
000
Xxxxxx Xxxxxx
Xxxxxxxxx,
XX 00000
Attention:
Xxxxxx X. Xxxxxxx
Facsimile:
000-000-0000
|
U.S.B.
Holding Co., Inc.
000
Xxxxx Xxxx Xxxx
Xxxxxxxxxx,
XX 00000
Attention:
Xxxxxx Xxxxxxxxx
Facsimile:
000-000-0000
|
and
to:
|
and
to:
|
Xxxxxxxx
& Xxxxxxxx LLP
000
Xxxxx Xxxxxx
Xxx
Xxxx, XX 00000
Attention:
Xxxxxxxx X. Xxxxx
Facsimile:
000-000-0000
|
Xxxxxxx
Xxxxxxxx & Xxxx LLP
0000
Xxxxxxxxxxxx Xxxxxx, XX
Xxxxxxxxxx,
XX 00000
Attention:
Xxxxxxx X. Xxxxxxxx
Facsimile:
000-000-0000
|
8.7 Entire
Agreement, Etc.
This
Agreement (including the Company Disclosure Letter and the Acquiror Disclosure
Letter) constitutes the entire agreement, and supersedes all other prior
agreements, understandings, representations and warranties, both written
and
oral, between the parties, with respect to the subject matter hereof and
thereof, including but not limited to the Confidentiality Agreement in its
entirety which shall hereby terminate, and this Agreement shall not be
assignable by operation of law or otherwise (any attempted assignment in
contravention of this Section 8.7 being null and void).
8.8 Definition
of “subsidiary” and “affiliate”; Covenants with Respect to Subsidiaries and
Affiliates.
(a)
When a reference is made in this Agreement to a subsidiary of a Person, the
term
“subsidiary” means those other Persons that are controlled, directly or
indirectly, by such Person within the meaning of Section 2(2) of the BHC
Act.
When a reference is made in this Agreement to an affiliate of a Person, the
term
“affiliate” means those other Persons that, directly or indirectly, control, are
controlled by, or are under common control with, such Person.
(b) Insofar
as any provision of this Agreement shall require a subsidiary or an affiliate
of
a party to take or omit to take any action, such provision shall be deemed
a
covenant by Acquiror or Company, as the case may be, to cause such action
or
omission to occur.
49
8.9 Interpretation;
Effect.
When a
reference is made in this Agreement to Sections, such reference shall be
to a
Section of this Agreement unless otherwise indicated. The table of contents
and
headings contained in this Agreement are for reference purposes only and
are not
part 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.”
8.10 No
Third Party Beneficiaries.
Nothing
contained in this Agreement, expressed or implied, is intended to confer
upon
any Person, other than the parties hereto, any benefit, right or remedies
except
that the provisions of Section 5.11 shall inure to the benefit of the Persons
referred to therein.
8.11 Waiver
of Jury Trial.
Each
party hereto acknowledges and agrees that any controversy which may arise
under
this Agreement is likely to involve complicated and difficult issues, and
therefore each party hereby irrevocably and unconditionally waives any right
such party may have to a trial by jury in respect of any litigation, directly
or
indirectly, arising out of, or relating to, this Agreement, or the transactions
contemplated by this Agreement. Each party certifies and acknowledges that
(a)
no representative, agent or attorney of any other party has represented,
expressly or otherwise, that such other party would not, in the event of
litigation, seek to enforce the foregoing waiver, (b) each party understands
and
has considered the implications of this waiver, (c) each party makes this
waiver
voluntarily, and (d) each party has been induced to enter into this Agreement
by, among other things, the mutual waivers and certifications in this Section
8.11.
[NEXT
PAGE IS A SIGNATURE PAGE]
50
IN
WITNESS WHEREOF, this Agreement has been duly executed and delivered by the
duly
authorized officers of the parties hereto as of the date first above
written.
KEYCORP
By:
/s/
Xxxxxx X.
Xxxxxxx
Name: Xxxxxx
X.
Xxxxxxx
Title:
Senior
Vice President and Deputy General Counsel
KYCA
CORPORATION
By:
/s/
Xxxxxx X.
Xxxxxxx
Name: Xxxxxx
X.
Xxxxxxx
Title: President
U.S.B.
HOLDING CO., INC.
By:
/s/
Xxxxxx X.
Xxxxx
Name: Xxxxxx
X.
Xxxxx
Title: Chairman
and Chief Executive Officer
FORM
OF VOTING AGREEMENT
VOTING
AGREEMENT, dated July __, 2007 (this “Agreement”),
between KeyCorp, an Ohio corporation (“Acquiror”),
and
[Name
of Stockholder]
(the
“Stockholder”).
Capitalized terms used but not defined herein shall have the meanings given
to
such terms in the Merger Agreement.
W
I T N E S S E T H:
WHEREAS,
U.S.B. Holding Co., Inc., a Delaware corporation (the
“Company”),
and
Acquiror are, concurrently with the execution and delivery of this Agreement,
entering into, with KYCA Corporation, a Delaware corporation and wholly
owned
subsidiary of Acquiror (“Acquiror
Sub”),
an
Agreement and Plan of Merger, dated as of the date hereof (the “Merger
Agreement”),
providing for the merger the Company with and into Acquiror Sub (the
“Merger”);
and
WHEREAS,
as of the date hereof, the Stockholder is the record and/or beneficial
owner
(or, jointly with his spouse, the record and/or beneficial owner) of the
shares
of Company Common Stock
listed on Annex A hereto (the “Existing
Shares”
and,
together with any shares of Company Common Stock or other voting capital
stock
of the Company acquired by the Stockholder after the date hereof, the
“Shares”);
NOW,
THEREFORE, in consideration of the foregoing and the mutual representations,
warranties, covenants and agreements contained herein, and intending to
be
legally bound hereby, the parties hereto hereby agree as follows:
ARTICLE
I
VOTING
1.1 Agreement
to Vote.
The
Stockholder irrevocable and unconditionally agrees that, from and after
the date
hereof and until the date on which this Agreement is terminated pursuant
to
Section 4.1, at the Company Meeting or any other meeting of the stockholders
of
the Company, however called, or in connection with any written consent
of the
stockholders of the Company, the Stockholder shall:
(a) appear
at
each such meeting or otherwise cause
the Shares (other than Shares Transferred in accordance with Section 3.1(a))
owned beneficially or of record by the Stockholder to be counted as present
thereat for purposes of calculating a quorum; and
(b) vote
(or cause
to be voted), in person or by proxy, or deliver a written consent (or
cause
a consent to be delivered) covering, all the Shares, and any other voting
securities of the Company (whenever acquired), that are owned beneficially
or of
record by the Stockholder (or owned beneficially or of record by the Stockholder
jointly with his spouse) or as to which the Stockholder has, directly or
indirectly, the right to vote or direct the voting (other than Shares
Transferred in accordance with Section 3.1(a)), (i) in favor of, and will
otherwise support, adoption of the Merger Agreement and any other action
of the
Company’s stockholders requested in furtherance thereof; (ii) against, and not
otherwise support, any action or agreement submitted for approval of the
stockholders of the Company that would result in a breach of any covenant,
representation or warranty or any other obligation or agreement of the
Company
contained in the Merger Agreement or of the Stockholder contained in this
Agreement; and (iii) against, and not otherwise support, any Acquisition
Proposal or any other action, agreement or transaction submitted for approval
to
the stockholders of the Company that
is intended, or could reasonably be expected, to materially impede, interfere
or
be inconsistent with, delay, postpone, discourage or materially and adversely
affect the Merger or this Agreement, including: (A) any extraordinary corporate
transaction, such as a merger, consolidation or other business combination
involving the Company or its subsidiaries (other than the Merger); (B)
a sale,
lease or transfer of a material amount of assets of the Company or any
of its
subsidiaries or a reorganization, recapitalization or liquidation of the
Company
or any of its subsidiaries; (C) a material change in the policies or management
of the Company; (D) an election of new members to the board of directors
of the
Company, except where the vote is cast in favor of the nominees of a majority
of
the existing directors; (E) any material change in the present capitalization
or
dividend policy of the Company or any amendment or other change to the
Certificate of Incorporation or By-Laws of the Company; or (F) any other
material change in the Company’s corporate structure or business; provided,
however,
that nothing in this Agreement shall prevent any Stockholder
or
representative of the Stockholder from discharging his or her fiduciary
duties
as a member of the board of directors of the Company;
and provided,
further,
however,
that the Stockholder shall not be obligated to vote (or cause to be voted)
or
deliver any consent with respect to (or cause any consent to be delivered
with
respect to) any Shares beneficially owned or controlled by such Stockholder
in
the Stockholder’s capacity as trustee for or participation in the U.S.B.
Holding Co, Inc. Employee Stock Ownership Plan (with 401(k) Provisions)
(the
“KSOP”)
or the Key Employees Supplemental Investment Plan (the “KSIP”).
1.2 No
Inconsistent Agreements.
The Stockholder hereby covenants and agrees that, except for this Agreement,
the
Stockholder (a) has not entered, and the Stockholder shall not enter at
any time
while this Agreement remains in effect, into any voting agreement or voting
trust with respect to the Shares owned beneficially or of record by the
Stockholder (or owned beneficially or of record by the Stockholder jointly
with
his spouse) and (b) has not granted, and the Stockholder shall not grant
at any
time while this Agreement remains in effect, a proxy, a consent or power
of
attorney with respect to the Shares owned beneficially or of record by
the
Stockholder.
1.3 Proxy.
Except
with respect to any Shares Transferred in accordance with Section 3.1(a),
the
Stockholder agrees to grant to Acquiror a proxy to vote the Shares owned
beneficially and of record by the Stockholder as indicated in Section 1.1
above if the Stockholder fails for any reason to vote such Shares in accordance
with Section 1.1. The Stockholder agrees that such a proxy would be coupled
with an interest and irrevocable for so long as this Agreement is in effect,
and
the Stockholder will take such further action or execute such other instruments
as may be necessary to effectuate the intent of such proxy.
-2-
ARTICLE
II
REPRESENTATIONS
AND WARRANTIES
2.1 Representations
and Warranties of the Stockholder.
The Stockholder hereby represents and warrants to Acquiror as
follows:
(a) Authorization;
Validity of Agreement; Necessary Action.
The Stockholder has full power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution, delivery and performance
by the
Stockholder of this Agreement and the consummation by it of the transactions
contemplated hereby have been duly and validly authorized by the Stockholder
and
no other actions or proceedings on the part of the Stockholder are necessary
to
authorize the execution and delivery by it of this Agreement and the
consummation by it of the transactions contemplated hereby. This Agreement
has
been duly executed and delivered by the Stockholder and, assuming this
Agreement
constitutes a valid and binding obligation of Acquiror, constitutes a valid
and
binding obligation of the Stockholder, enforceable against it in accordance
with
its terms (except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws affecting creditors’ rights
generally and to general equity principles).
(b) Ownership.
The Existing Shares listed on Annex A hereof are, and, other than Shares
Transferred in accordance with Section 3.1(a), such
Existing Shares and any
additional
shares of Company Common Stock acquired by the Stockholder after the date
hereof
and prior to the Effective Time will be,
(i) owned beneficially
by
the
Stockholder (or owned beneficially by the Stockholder and his spouse jointly)
and
(ii)
owned of
record
by the Stockholder
(or
owned of record by the Stockholder and his spouse jointly)
or by
nominees on the Stockholder’s behalf (or on behalf of the Stockholder and his
spouse jointly).
As of the date hereof, the Existing Shares listed on Annex A hereof constitute
all of the shares of Company Common Stock owned
beneficially
or
of
record by the
Stockholder (or
the Stockholder and his spouse jointly) other
than Shares allocated to the Stockholder under the KSOP or the KSIP.
Except
for any Shares beneficially owned or controlled by the Stockholder in connection
with his participation in or capacity as a trustee for the KSOP
or
the KSIP,
the
Stockholder (or the Stockholder jointly with his spouse) has
and will
have
at all times through the Effective Time sole voting power, sole power of
disposition, sole power to issue instructions with respect to the matters
set
forth in Article I or Section 3.1 hereof, and sole power to agree to all
of the
matters set forth in this Agreement, in each case with respect to all of
the
Existing Shares and with respect to all of the Shares at the Effective
Time,
with no limitations, qualifications or restrictions on such rights, subject
to
applicable federal securities laws and the terms of this Agreement.
Except
for any (i) Shares beneficially owned or controlled by the Stockholder in
connection with his participation in or capacity as a trustee for the KSOP
or
the KSIP or (ii) Shares Transferred in accordance with Section 3.1(a), the
Stockholder (or the Stockholder jointly with his spouse) has good and marketable
title to the Existing Shares listed on Annex A hereof, free and clear of
any
Liens and the Stockholder (or the Stockholder jointly with his spouse)
will have
good and marketable title to such Existing Shares and any additional shares
of
Company Common Stock acquired by the Stockholder after the date hereof
and prior
to the Effective Time, free and clear of any Liens.
-3-
(c) No
Violation.
The execution and delivery of this Agreement by the Stockholder does not,
and
the performance by the Stockholder of its obligations under this Agreement
will
not, (i) conflict with or violate any law, ordinance or regulation of any
Governmental Entity applicable to the Stockholder or by which any of its
assets
or properties is bound or (ii) conflict with, result in any breach of or
constitute a default (or an event that with notice or lapse of time or
both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, or require payment under, or
require
redemption or repurchase of or otherwise require the purchase or sale of
any
securities, or result in the creation of any Lien on the properties or
assets of
the Stockholder pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which the Stockholder is a party or by which the Stockholder or any
of its
assets or properties is bound, except for any of the foregoing as could
not
reasonably be expected, either individually or in the aggregate, to materially
impair the ability of the Stockholder to perform its obligations hereunder
or to
consummate the transactions contemplated hereby on a timely basis.
(d) Consents
and Approvals.
The execution and delivery of this Agreement by the Stockholder does not,
and
the performance by the Stockholder of its obligations under this Agreement
will
not, require the Stockholder to obtain any consent, approval, authorization
or
permit of, or to make any filing with or notification to, any Governmental
Entity based on the law, ordinance or regulation of any applicable Governmental
Entity, except for any of the foregoing as would not reasonably be expected,
either individually or in the aggregate, materially to impair the ability
of the
Stockholder to perform its obligations hereunder or to consummate the
transactions contemplated hereby on a timely basis.
(e) Absence
of Litigation.
There is no suit, action, investigation or proceeding pending or, to the
knowledge of the Stockholder, threatened against the Stockholder before
or by
any Governmental Entity that could reasonably be expected materially to
impair
the ability of the Stockholder to perform its obligations hereunder or
to
consummate the transactions contemplated hereby on a timely basis.
(f) Absence
of Agreements with the Company.
There are no existing agreements or
arrangements between the Stockholder or any of his affiliates (or his spouse),
on one hand, or the Company or any of its subsidiaries, on the other hand,
relating to the Shares owned beneficially
or
of
record by the Stockholder or any other securities of or investment in the
Company.
2.2 Representations
and Warranties of Acquiror.
Acquiror hereby represents and warrants to the Stockholder as
follows:
(a) Organization;
Authorization; Validity of Agreement; Necessary Action.
Acquiror is an Ohio corporation and is validly existing and in good standing
under the laws of Ohio. Acquiror has full corporate power and authority
to
execute and deliver this Agreement, to perform its obligations hereunder
and to
consummate the transactions contemplated hereby. The execution, delivery
and
performance by Acquiror of this Agreement and the consummation by it of
the
transactions contemplated hereby have been duly and validly authorized
by
Acquiror and no other corporate actions or proceedings on the part of Acquiror
are necessary to authorize the execution and delivery by it of this Agreement
and the consummation by it of the transactions contemplated hereby. This
Agreement has been duly executed and delivered by Acquiror and, assuming
this
Agreement constitutes a valid and binding obligation of the Stockholder,
constitutes a valid and binding obligation of Acquiror, enforceable against
it
in accordance with its terms (except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other
laws
affecting creditors’ rights generally and to general equity
principles).
-4-
(b) No
Violation.
The execution and delivery of this Agreement by Acquiror does not, and
the
performance by Acquiror of its obligations under this Agreement will not,
(i)
conflict with or violate the constitutive documents of Acquiror, (ii) conflict
with or violate any law, ordinance or regulation of any Governmental Entity
applicable to Acquiror or by which any of its assets or properties is bound
or
(iii) conflict with, result in any breach of or constitute a default (or
an
event that with notice or lapse of time or both would become a default)
under,
or give to others any rights of termination, amendment, acceleration or
cancellation of, or require payment under, or require redemption or repurchase
of or otherwise require the purchase or sale of any securities, or result
in the
creation of any Lien on the properties or assets of Acquiror pursuant to,
any
note, bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which Acquiror is a party
or by
which Acquiror or any of its assets or properties is bound, except for
any of
the foregoing as could not reasonably be expected, either individually
or in the
aggregate, to materially impair the ability of Acquiror to perform its
obligations hereunder or to consummate the transactions contemplated hereby
on a
timely basis.
ARTICLE
III
OTHER
COVENANTS
3.1 Further
Agreements of Stockholder.
a) Except
for any Shares beneficially owned or controlled by the Stockholder in connection
with his participation in or capacity as a trustee for the KSOP
or
the KSIP, the
Stockholder hereby agrees, while this Agreement is in effect, and except
as
expressly contemplated hereby, not to (i)
sell,
transfer, pledge, encumber, assign, distribute, gift or otherwise dispose
of
(collectively, a “Transfer”),
(ii)
enforce
or permit the execution of the provisions of any redemption, share purchase
or
sale, recapitalization or other agreement with the Company or any other
person
or (iii)
enter
into any
contract, option or other arrangement or understanding with respect to
any
Transfer of
(whether
by actual disposition or effective economic disposition due to hedging,
cash
settlement or otherwise) any
of
the Existing Shares or any other Shares owned beneficially or
of
record
by the Stockholder
(or
owned beneficially or of record jointly by the Stockholder and his
spouse);
provided,
however,
that
the foregoing shall not prohibit:
(A)
any
Transfer made in accordance with the Securities Act or an exemption thereto;
to
charities, charitable trusts, or other charitable organizations under Section
501(c)(3) of the Internal Revenue Code, lineal descendants or the spouse
of the
undersigned, or to a trust or other entity for the benefit of one or more
of the
foregoing persons;
-5-
(B)
Transfers
to immediate family members or lineal descendants of the Stockholder, in
accordance with the Stockholder’s past practice;
provided
further that
the
aggregate number of Shares Transferred shall not exceed, during the term
of this
Agreement, the percentage indicated on Annex A hereto of the number of
Existing
Shares
and the
Stockholder shall receive (i) an irrevocable proxy, in form and substance
identical to the provisions of Section 1.1 hereof, to vote such Existing
Shares
with respect to the Merger Agreement and the Merger and otherwise, and
the
Stockholder will vote such proxy as provided in Section 1.1 hereof and
(ii) an
agreement identical in all material respects to this Agreement executed
by the
transferee of the Transferred Shares.
(b) In
case of a stock dividend or distribution, or any change in Company Common
Stock
by reason of any stock dividend or distribution, split-up, recapitalization,
combination, exchange of shares or the like, the term “Shares”
shall be deemed to refer to and include the Shares as well as all such
stock
dividends and distributions and any securities into which or for which
any or
all of the Shares may be changed or exchanged or which are received in
such
transaction.
(c) The
Stockholder hereby agrees, while this Agreement is in effect, to notify
Acquiror
promptly in writing of (i)
the
number of any additional shares of Company Common Stock or other securities
of
the Company acquired by the Stockholder, if any, after the date
hereof
and (ii)
any inquiries or proposals which are received by, any information which
is
requested from, or any negotiations or discussions which are sought to
be
initiated or continued with, the Stockholder with respect to any Transfer
of
Shares other than a Transfer of Shares permitted under Section
3.1(a).
3.2 No
Solicitation. Neither
the Stockholder nor, if applicable, any of the Stockholder’s subsidiaries nor
any of the respective officers and directors of the Stockholder or its
subsidiaries shall, and the Stockholder shall direct and use its reasonable
best
efforts to cause the Stockholder’s employees, agents and representatives
(including, without limitation, any investment banker, attorney or accountant
retained by it or any of its subsidiaries) not to, knowingly initiate,
solicit
or encourage, directly or indirectly, any inquiries or the making of any
Acquisition Proposal (as defined in the Merger Agreement) or engage in
any
negotiations concerning, or provide any confidential information or data
to, or
have any discussions with, any person relating to an Acquisition Proposal,
or
otherwise knowingly facilitate any effort or attempt to make or implement
an
Acquisition Proposal.
ARTICLE
IV
MISCELLANEOUS
4.1 Termination.
This Agreement shall terminate and no party shall have any rights or duties
hereunder if this Agreement is terminated in accordance with the terms
of this
Section 4.1. This Agreement and
any
proxy granted pursuant to Section 1.3 shall
terminate upon the earlier of (i)
the
later of (A)
the
date on which the Merger Agreement is terminated in
accordance with Article VII thereof and
(B) the
date six months after the date of this Agreement, or (ii) the
Effective Time
of the
Merger
(such
earlier date the “Termination
Date”).
Nothing in this Section 4.1 shall relieve or otherwise limit any party
of
liability for breach of this Agreement.
-6-
4.2 Stop
Transfer Order.
In furtherance of this Agreement, the Stockholder shall
and
hereby does authorize and instruct the Company to instruct its transfer
agent to
enter a stop transfer order with respect to all of the Existing Shares
owned
beneficially and of record by the Stockholder and all Shares acquired by
the
Stockholder after the date hereof other than Shares permitted to be Transferred
in accordance with Section 3.1(a).
4.3 Further
Assurances.
From
time to time, at the other party’s request and without further consideration,
each party shall execute and deliver such additional documents and take
all such
further action as may be reasonably necessary or desirable to consummate
the
transactions contemplated by this Agreement.
4.4 No
Ownership Interest.
Nothing contained in this Agreement shall be deemed to vest in Acquiror
any
direct or indirect ownership or incidence of ownership of or with respect
to any
Shares. All rights, ownership
and economic benefits of and relating to the Shares shall remain vested
in and
belong to the Stockholder, and Acquiror shall have no authority to manage,
direct, superintend, restrict, regulate, govern or administer any of the
policies or operations of the Company or exercise any power or authority
to
direct the Stockholder in the voting of any of the Shares, except as otherwise
provided herein.
4.5 Notices.
All notices and other communications hereunder shall be in writing and
shall be
deemed given if delivered
personally, telecopied (with confirmation) or delivered by an overnight
courier
(with confirmation) to the parties at the following addresses (or at such
other
address for a party as shall be specified by like notice):
(a) if
to Acquiror to:
KeyCorp
000
Xxxxxx Xxxxxx
Xxxxxxxxx,
Xxxx 00000-0000
Fax:
(000) 000-0000
Attention:
Xxxxxx X. Xxxxx
with
copies to:
KeyCorp
000
Xxxxxx Xxxxxx
Xxxxxxxxx,
Xxxx 00000-0000
Fax:
(000) 000-0000
Attention:
Xxxxxx X. Xxxxxxx
and
-7-
Xxxxxxxx
& Xxxxxxxx LLP
000
Xxxxx Xxxxxx
Xxx
Xxxx, Xxx Xxxx 00000
Fax:
(000) 000-0000
Attention:
Xxxxxxxx X. Xxxxx
(b) if
to Stockholder to the address listed next to the Stockholder’s name on the
signature page hereto.
4.6 Interpretation.
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, and Section references are to this Agreement unless
otherwise
specified. 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 headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. No provision of this Agreement shall be construed to require
Acquiror, the Stockholder or any of its respective subsidiaries or affiliates
to
take any action which would violate any applicable law (whether statutory
or
common), rule or regulation.
4.7 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 party, it being understood that both parties need not sign the same
counterpart.
4.8 Entire
Agreement.
This Agreement (together with the Merger Agreement, to the extent referred
to herein) constitutes the entire agreement and supersedes all prior agreements
and understandings, both written and oral, between the parties with respect
to
the subject matter hereof.
4.9 Governing
Law.
This Agreement shall be governed and construed in accordance with the laws
of
the State of Delaware applicable to contracts made and performed entirely
within
such
State. The parties hereby irrevocably submit to the jurisdiction of the
courts
of the State of Delaware and the federal courts of the United States of
America
located in the State of Delaware solely in respect of the interpretation
and
enforcement of the provisions of this Agreement and in respect of the
transactions contemplated hereby, and hereby waive, and agree not to assert,
as
a defense in any action, suit or proceeding for the interpretation or
enforcement hereof, that it is not subject thereto or that such action,
suit or
proceeding may not be brought or is not maintainable in said courts or
that the
venue thereof may not be appropriate or that this Agreement may not be
enforced
in or by such courts, and the parties hereto irrevocably agree that all
claims
with respect to such action or proceeding shall be heard and determined in such
a Delaware State or federal court. The parties hereby consent to and grant
any
such court jurisdiction over the person of such parties and over the subject
matter of such dispute (solely for purposes of this Section 4.9
with respect to matters involving this Agreement and the transactions provided
for herein) and agree that mailing of process or other papers in connection
with
any such action or proceeding in the manner provided in Section 4.5
or in such other manner as may be permitted by law shall be valid and sufficient
service thereof.
-8-
4.10 Amendment.
This Agreement may not be amended except by an instrument in writing signed
on
behalf of each of the parties hereto.
4.11 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. It is accordingly agreed
that the parties shall be entitled to specific performance of the terms
hereof,
this being in addition to any other remedy to which they are entitled at
law or
in equity. Each of the parties further agrees to waive any requirements
for the
securing or posting of any bond in connection with obtaining any such equitable
relief.
4.12 Severability.
Any term or provision of this Agreement which is determined by a court
of
competent jurisdiction to be invalid or unenforceable in any jurisdiction
shall,
as to that jurisdiction, be ineffective to the extent of such invalidity
or
unenforceability without rendering invalid or unenforceable the remaining
terms and provisions of this Agreement or affecting the validity or
enforceability of any of the terms or provisions of this Agreement in any
other
jurisdiction, and if any provision of this Agreement is determined to be
so
broad as to be unenforceable, the provision shall be interpreted to be
only so
broad as is enforceable, in all cases so long as neither the economic nor
legal
substance of the transactions contemplated hereby is affected in any manner
materially adverse to any party or its stockholders or limited partners.
Upon
any such determination, the parties shall negotiate in good faith in an
effort
to agree upon a suitable and equitable substitute provision to effect the
original intent of the parties.
4.13 Assignment;
Third Party Beneficiaries.
Neither this Agreement nor any of the rights, interests or obligations
of any
party hereunder shall be assigned by any of the parties hereto (whether
by
operation
of law or otherwise) without the prior written consent of the other party.
Subject to the preceding sentence, this Agreement will be binding upon,
inure to
the benefit of and be enforceable by the parties and their respective successors
and permitted assigns. This Agreement is not intended to confer upon any
person
other than the parties hereto any rights or remedies hereunder.
4.14 Survival.
None
of the representations, warranties, covenants and agreements of the parties
herein shall survive beyond the Termination Date.
4.15 Fiduciary
Capacity.
Nothing in this Agreement shall have any effect on the Stockholder’s actions
when he is acting solely in his capacity as an officer or director of the
Company or Union State Bank.
* * *
-9-
IN
WITNESS WHEREOF,
the parties hereto have signed or caused this Agreement to be signed by
their
respective officers or other authorized persons thereunto duly authorized
as of
the date first written above.
KEYCORP
By
________________________
Name:
Title:
[STOCKHOLDER]
________________________
Name:
Address
for Notices:
FORM
OF AFFILIATE AGREEMENT
July
__,
2007
KeyCorp
000
Xxxxxx Xxxxxx
Xxxxxxxxx,
XX 00000
Ladies
and Gentlemen:
I
have
been advised that I might be considered to be an “affiliate” of U.S.B. Holding
Co., Inc., a Delaware corporation (“USB”), for purposes of paragraphs (c) and
(d) of Rule 145 of the Securities and Exchange Commission (the “SEC”) under the
Securities Act of 1933, as amended (the “Securities Act”).
KeyCorp
(“Acquiror”), KYCA Corporation and USB have entered into an Agreement and Plan
of Merger, dated as of July __, 2007 (the “Agreement”). Upon consummation of the
merger contemplated by the Agreement (the “Merger”), I may receive shares of
common stock of Acquiror (“Acquiror Common Stock”) in exchange for my shares of
common stock, par value $.01 per share, of USB (“USB Common Stock”). This
agreement is hereinafter referred to as the “Letter Agreement.”
I
represent and warrant to, and agree with, Acquiror as follows:
1. I
have
read this Letter Agreement and the Agreement and have discussed their
requirements and other applicable limitations upon my ability to sell,
pledge,
transfer or otherwise dispose of shares of Acquiror Common Stock that
I may
receive pursuant to the Merger, to the extent I felt necessary, with
my counsel
or counsel for USB.
2. I
have
been advised that any issuance of shares of Acquiror Common Stock to
me pursuant
to the Merger will be registered with the SEC. I have also been advised,
however, that, because I may be an “affiliate” of USB at the time the Merger
will be submitted for a vote of the stockholders of USB and my disposition
of
such shares has not been registered under the Securities Act, I must
hold such
shares indefinitely unless (i) the disposition of such shares is subject
to an
effective registration statement and to the availability of a prospectus
under
the Securities Act, (ii) the disposition of such shares is made in
conformity
with the provisions of Rule 145(d) under the Securities Act (as such
rule may be
amended from time to time) or (iii) in an opinion of counsel, in form
and
substance reasonably satisfactory to Acquiror, the disposition of such
shares is
otherwise exempt from registration under the Securities Act.
3. I
understand that the Acquiror is under no obligation to register the
sale,
transfer or other disposition of shares of Acquiror Common Stock by
me or on my
behalf under the Securities Act or to take any other action necessary
in order
to make compliance with an exemption from such registration
available.
4. I
understand and agree that stop transfer instructions will be given
to the
transfer agent of Acquiror with respect to the shares of Acquiror Common
Stock I
receive pursuant to the Merger and that there will be placed on the
certificate
representing such shares, or any certificates delivered in substitution
therefor, a legend stating in substance:
“The
shares represented by this certificate were issued in a transaction
to which
Rule 145 under the Securities Act of 1933 applies. The shares represented
by
this certificate may only be transferred in accordance with the terms
of a
letter agreement between the registered holder hereof and KeyCorp,
a copy of
which is on file at the principal offices of KeyCorp.”
5. Acquiror
reserves the right to put an appropriate legend on the certificate
issued to my
transferee unless (i) a transfer of my shares of the Acquiror Common
Stock is a
sale made in conformity with the provisions of Rule 145(d) or made
pursuant to
any effective registration statement under the Securities Act, or (ii)
I shall
have delivered to Acquiror an opinion of counsel reasonably satisfactory
to
Acquiror to the effect that such legend is not required for purposes
of the
Securities Act.
6. I
recognize and agree that the foregoing provisions also apply to (i)
my spouse,
(ii) any relative of mine or my spouse’s occupying my home, (iii) any trust or
estate in which I, my spouse or any such relative owns at least 10% beneficial
interest or of which any of us serves as trustee, executor or in any
similar
capacity and (iv) any corporation or other organization in which I,
my spouse
and any such relative collectively own at least 10% of any class of
equity
securities or of the equity interest. It is understood that this Letter
Agreement shall be binding upon and enforceable against my administrators,
executors, representatives, heirs, legatees and devisees, and any pledge
holding
securities restricted pursuant to the Letter Agreement.
7. I
further
recognize that in the event I become a director or officer of Acquiror
upon
consummation of the Merger, any sale of Acquiror Common Stock by me
may subject
me to liability pursuant to Section 16(b) of the Exchange Act.
8. Without
limiting or abrogating the agreements that I have made as set forth
above,
execution of this Letter Agreement should not be construed as an admission
on my
part that I am an “affiliate” of USB as described in the first paragraph of this
Letter Agreement or as a waiver of any rights I may have to object
to any claim
that I am such an affiliate on or after the date of this Letter
Agreement.
It
is
understood and agreed that this Letter Agreement shall terminate and
be of no
further force and effect if the Agreement is terminated in accordance
with its
terms. It is also understood and agreed that this Letter Agreement
shall
terminate and be of no further force and effect and the stop transfer
instructions set forth above shall be lifted forthwith upon the delivery
by the
undersigned to Acquiror of an opinion of counsel in form and substance
reasonably satisfactory to Acquiror, or other evidence reasonably satisfactory
to Acquiror, to the effect that a transfer of my shares of Acquiror
Common Stock
will not violate the Securities Act or any of the rules and regulations
of the
SEC thereunder. In addition, it is understood and agreed that the legend
set
forth in Paragraph 4 above shall be removed forthwith from the certificate
or
certificates representing my shares of Acquiror Common Stock upon (i)
expiration
of the restrictive period set forth in Rule 145(d)(2), so long as Acquiror
is
then in compliance with SEC Rule 144(c), or the restrictive period
set forth in
Rule 145(d)(3) or (ii) if Acquiror shall have received an opinion of
counsel, in
form and substance reasonably satisfactory to Acquiror, or other evidence
satisfactory to Acquiror that a transfer of my shares of the Acquiror
Common
Stock represented by such certificate or certificates will be a sale
made in
conformity with the provisions of Rule 145(d), made pursuant to an
effective
registration statement under the Securities Act or made pursuant to
an exemption
from registration under the Securities Act.
This
Letter Agreement shall be binding on my heirs, legal representatives
and
successors.
Very
truly yours,
__________________________
[NAME]
Accepted
as of the date first above written
KeyCorp
By:
Name:
Title: