Exhibit 2.1
AGREEMENT AND PLAN
OF MERGER
BY AND BETWEEN
NBT BANCORP INC.
AND
CNB BANCORP, INC.
JUNE 13, 2005
TABLE OF CONTENTS
ARTICLE I CERTAIN DEFINITIONS.............................................1
1.1. Certain Definitions.............................................1
ARTICLE II THE MERGER......................................................7
2.1. Merger..........................................................7
2.2. Closing; Effective Time.........................................7
2.3. Certificate of Incorporation and Bylaws.........................8
2.4. Directors and Officers of Surviving Corporation.................8
2.5. Effects of the Merger...........................................8
2.6. Tax Consequences................................................8
2.7. Possible Alternative Structures.................................9
2.8. Additional Actions..............................................9
ARTICLE III CONVERSION OF SHARES............................................9
3.1. Conversion of CNB Common Stock; Merger Consideration............9
3.2. Election Procedures............................................11
3.3. Procedures for Exchange of CNB Common Stock....................13
3.4. Treatment of CNB Options.......................................15
3.5. Bank Merger....................................................17
3.6. Reservation of Shares..........................................17
3.7. Adjustment of Exchange Ratio...................................17
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF CNB..........................17
4.1. Standard.......................................................18
4.2. Organization...................................................18
4.3. Capitalization.................................................19
4.4. Authority; No Violation........................................19
4.5. Consents.......................................................20
4.6. Financial Statements...........................................20
4.7. Taxes..........................................................21
4.8. No Material Adverse Effect.....................................22
4.9. Material Contracts; Leases; Defaults...........................22
4.10. Ownership of Property; Insurance Coverage......................23
4.11. Legal Proceedings..............................................24
4.12. Compliance With Applicable Law.................................24
4.13. Employee Benefit Plans.........................................25
4.14. Brokers, Finders and Financial Advisors........................28
4.15. Environmental Matters..........................................28
4.16. Loan Portfolio.................................................29
4.17. Related Party Transactions.....................................30
4.18. Deposits.......................................................31
4.19. Antitakeover Provisions Inapplicable; Required Vote............31
4.20. Registration Obligations.......................................31
4.21. Risk Management Instruments....................................31
4.22. Fairness Opinion...............................................32
4.23. Intellectual Property..........................................32
(i)
4.24. Duties as Fiduciary............................................32
4.25. Employees; Labor Matters.......................................32
4.26. CNB Information Supplied.......................................33
4.27 Securities Documents...........................................33
4.28. Internal Controls..............................................33
4.29. Bank Owned Life Insurance......................................33
4.30. American Jobs Creation Act.....................................34
4.31. Termination of Adirondack Advisory Board.......................34
ARTICLE V REPRESENTATIONS AND WARRANTIES OF NBT..........................34
5.1. Standard.......................................................34
5.2. Organization...................................................35
5.3. Capitalization.................................................35
5.4. Authority; No Violation........................................36
5.5. Consents.......................................................36
5.6. Financial Statements...........................................37
5.7. No Material Adverse Effect.....................................37
5.8. Legal Proceedings..............................................38
5.9. Securities Documents...........................................38
5.10. Antitakeover Provisions Inapplicable...........................38
5.11. NBT Common Stock...............................................38
ARTICLE VI COVENANTS OF CNB...............................................38
6.1. Conduct of Business............................................38
6.2. Current Information............................................43
6.3. Access to Properties and Records...............................44
6.4. Financial and Other Statements.................................45
6.5. Maintenance of Insurance.......................................45
6.6. Disclosure Supplements.........................................45
6.7. Consents and Approvals of Third Parties........................46
6.8. All Reasonable Efforts.........................................46
6.9. Failure to Fulfill Conditions..................................46
6.10. No Solicitation................................................46
6.11. Reserves and Merger-Related Costs..............................47
6.12. Board of Directors and Committee Meetings......................48
6.13. Transaction Expenses of CNB....................................48
ARTICLE VII COVENANTS OF NBT...............................................48
7.1. Conduct of Business............................................48
7.2. Current Information and Consultation...........................48
7.3. Financial and Other Statements.................................49
7.4. Disclosure Supplements.........................................49
7.5. Consents and Approvals of Third Parties........................49
7.6. All Reasonable Efforts.........................................49
7.7. Failure to Fulfill Conditions..................................49
7.8. Employee Benefits..............................................49
7.9. Directors and Officers Indemnification and Insurance...........53
(ii)
7.10. Stock Listing..................................................54
7.11. Stock and Cash Reserve.........................................54
7.12. Communications to CNB Employees; Training......................55
7.13. Advisory Board.................................................55
ARTICLE VIII REGULATORY AND OTHER MATTERS...................................55
8.1. Meeting of Shareholders........................................55
8.2. Proxy Statement-Prospectus; Merger Registration Statement......56
8.3. Regulatory Approvals...........................................56
8.4. Affiliates.....................................................57
ARTICLE IX CLOSING CONDITIONS.............................................57
9.1. Conditions to Each Party's Obligations under this Agreement....57
9.2. Conditions to the Obligations of NBT under this Agreement......58
9.3. Conditions to the Obligations of CNB under this Agreement......59
ARTICLE X THE CLOSING....................................................60
10.1. Time and Place.................................................60
10.2. Deliveries at the Pre-Closing and the Closing..................60
ARTICLE XI TERMINATION, AMENDMENT AND WAIVER..............................61
11.1. Termination....................................................61
11.2. Effect of Termination..........................................64
11.3. Amendment, Extension and Waiver................................65
ARTICLE XII MISCELLANEOUS..................................................66
12.1. Confidentiality................................................66
12.2. Public Announcements...........................................66
12.3. Survival.......................................................66
12.4. Notices........................................................66
12.5. Parties in Interest............................................67
12.6. Complete Agreement.............................................67
12.7. Counterparts...................................................68
12.8. Severability...................................................68
12.9. Governing Law..................................................68
12.10. Interpretation.................................................68
12.11. Specific Performance...........................................68
12.12. Waiver of Trial by Jury........................................69
Exhibit A Form of Agreement and Plan of Bank Merger
Exhibit B Affiliates Agreement
(iii)
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "Agreement") is dated as of June
13, 2005, by and between NBT Bancorp Inc., a Delaware corporation ("NBT"),
and CNB Bancorp, Inc., a New York corporation ("CNB").
Recitals
1. The Board of Directors of each of NBT and CNB (i) has determined that
this Agreement and the business combination and related transactions
contemplated hereby are in the best interests of their respective companies
and shareholders and (ii) has determined that this Agreement and the
transactions contemplated hereby are consistent with and in furtherance of
their respective business strategies, and (iii) has approved this Agreement
at meetings of each of such Boards of Directors.
2. In accordance with the terms of this Agreement, CNB will merge with
and into NBT (the "Merger"), and immediately thereafter City National Bank
and Trust Company, which is a wholly owned subsidiary of CNB, will be merged
with and into NBT Bank, N.A., a wholly owned subsidiary of NBT.
3. The parties intend the Merger to qualify as a reorganization within
the meaning of Section 368(a) of the Internal Revenue Code of 1986, as
amended (the "Code"), and that this Agreement be and is hereby adopted as a
"plan of reorganization" within the meaning of Sections 354 and 361 of the
Code.
4. The parties desire to make certain representations, warranties and
agreements in connection with the business transactions described in this
Agreement and to prescribe certain conditions thereto.
5. In consideration of the mutual covenants, representations, warranties
and agreements herein contained, and of other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
1.1. Certain Definitions.
As used in this Agreement, the following terms have the following
meanings (unless the context otherwise requires, references to Articles and
Sections refer to Articles and Sections of this Agreement).
"Affiliate" means any Person who directly, or indirectly, through one or
more intermediaries, controls, or is controlled by, or is under common
control with, such Person and, without limiting the generality of the
foregoing, includes any executive officer or director of such Person and any
Affiliate of such executive officer or director.
"Agreement" means this agreement, and any amendment hereto.
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"BHCA" shall mean the Bank Holding Company Act of 1956, as amended.
"Bank Merger" shall mean the merger of City National Bank with and into
NBT Bank, with NBT Bank as the surviving institution, which merger shall
occur immediately following the Merger.
"Bank Regulator" shall mean any Federal or state banking regulator,
including but not limited to the OCC, FDIC, NYSBD and the FRB, which
regulates or has the statutory authority to regulate, even if only for a
moment in time, NBT Bank, City National Bank, and their respective holding
companies or subsidiaries, as the case may be.
"Certificate" shall mean a certificate or book entry stock evidencing
shares of CNB Common Stock.
"City National Bank" shall mean City National Bank and Trust Company, a
national banking association, with its principal office located at 00-00
Xxxxx Xxxx Xxxxxx, Xxxxxxxxxxxx, Xxx Xxxx 00000, and which is a wholly owned
subsidiary of CNB.
"Closing Date" shall have the meaning set forth in Section 2.2.
"CNB" shall mean CNB Bancorp, Inc., a New York corporation, with its
principal office located at 00-00 Xxxxx Xxxx Xxxxxx, Xxxxxxxxxxxx, Xxx Xxxx
00000.
"CNB Benefit Plans" shall have the meaning set forth in Section 4.13.1.
"CNB Common Stock" shall mean the common shares, par value $2.50 per
share, of CNB.
"CNB Disclosure Schedule" shall mean the collective written disclosure
schedules delivered by CNB to NBT pursuant hereto, and specifically referring
to the appropriate section of this Agreement to which such schedule relates.
"CNB Financial Statements" shall mean (i) the audited consolidated
statements of financial condition (including related notes and schedules) of
CNB as of December 31, 2004 and 2003 and the consolidated statements of
income, comprehensive income, changes in shareholders' equity and cash flows
(including related notes and schedules, if any) of CNB for each of the three
years ended December 31, 2004, 2003 and 2002, as set forth in CNB's annual
report on Form 10-K for the year ended December 31, 2004, and (ii) the
unaudited interim consolidated financial statements of CNB as of the end of
each calendar quarter following December 31, 2004, and for the periods then
ended, as filed by CNB in its Securities Documents.
"CNB Incentive Stock Option" shall have the meaning set forth in Section
3.4.1.
"CNB Nonqualified Stock Option" shall mean any CNB Option that is not a
CNB Incentive Stock Option.
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"CNB Option" shall mean an option to purchase shares of CNB Common Stock
granted pursuant to any of the CNB Stock Option Plans and the outstanding
option agreements, and outstanding as of the date hereof, as set forth in CNB
Disclosure Schedule 3.4.1.
"CNB Regulatory Reports" means the Call Reports of City National Bank,
and accompanying schedules (other than such schedules as are required to be
kept confidential pursuant to applicable law or regulatory requirements), as
filed with the FDIC with respect to each calendar quarter beginning with the
quarter ended March 31, 2005, through the Closing Date, and all Annual
Reports on Form FR Y-6 and any Current Report on Form FR Y-6A filed with the
FRB by CNB from December 31, 2004 through the Closing Date.
"CNB Shareholders Meeting" shall have the meaning set forth in Section
8.1.1.
"CNB Stock Option Plans" shall mean (i) the Adirondack Financial
Services Bancorp, Inc. 1998 Stock Option and Incentive Plan, the obligations
of Adirondack Financial Services Bancorp, Inc. under that plan having been
assumed by CNB, (ii) the CNB Bancorp, Inc. Stock Option Plan, and (iii) the
CNB Bancorp, Inc. Long-Term Incentive Compensation Plan.
"CNB Subsidiary" means any corporation, 10% or more of the capital stock
of which is owned, either directly or indirectly, by CNB or City National
Bank, except any corporation the stock of which is held in the ordinary
course of the lending activities of City National Bank.
"COBRA" shall mean the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Confidentiality Agreement" shall mean the confidentiality agreement
referred to in Section 12.1 of this Agreement.
"DGCL" shall mean the Delaware General Corporation Law.
"Dissenting Shares" shall have the meaning set forth in Section 3.1.6.
"Dissenting Shareholder" shall have the meaning set forth in Section
3.1.6.
"Effective Time" shall mean the date and time specified pursuant to
Section 2.2 as the effective time of the Merger.
"Environmental Laws" shall mean any applicable Federal, state or local
law, statute, ordinance, rule, regulation, code, license, permit,
authorization, approval, consent, order, judgment, decree, injunction or
agreement with any governmental entity relating to (1) the protection,
preservation or restoration of the environment (including, without
limitation, air, water vapor, surface water, groundwater, drinking water
supply, surface soil, subsurface soil, plant and animal life or any other
natural resource), and/or (2) the use, storage, recycling, treatment,
generation, transportation, processing, handling, labeling, production,
release or disposal of Materials of Environmental Concern. The term
Environmental Law includes without limitation (a) the Comprehensive
Environmental Response, Compensation and Liability Act, as amended, 42 U.S.C.
ss.9601, et seq; the Resource Conservation and Recovery Act, as amended,
3
42 U.S.C. ss.6901, et seq; the Clean Air Act, as amended, 42 U.S.C.
ss.7401, et seq; the Federal Water Pollution Control Act, as amended, 33
U.S.C. ss.1251, et seq; the Toxic Substances Control Act, as amended, 15
U.S.C. ss.2601, et seq; the Emergency Planning and Community Right to Know
Act, 42 U.S.C. ss.11001, et seq; the Safe Drinking Water Act, 42 U.S.C.
ss.300f, et seq; and all comparable state and local laws, and (b) any common
law (including without limitation common law that may impose strict
liability) that may impose liability or obligations for injuries or damages
due to the presence of or exposure to any Materials of Environmental Concern.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
"ERISA Affiliate" means, with respect to any Person, any other Person
that, together with such Person, would be treated as a single employer under
Section 414 of the Code or Section 4001 of ERISA.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Exchange Agent" shall mean NBT Bank, or such other bank or trust
company or other agent designated by NBT, which shall act as agent for NBT in
connection with the exchange procedures for exchanging Certificates for the
Merger Consideration.
"Exchange Fund" shall have the meaning set forth in Section 3.3.1.
"Exchange Ratio" shall have the meaning set forth in Section 3.1.3.
"FDIC" shall mean the Federal Deposit Insurance Corporation or any
successor thereto.
"FHLB" shall mean the Federal Home Loan Bank of New York or any
successor thereto.
"FRB" shall mean the Board of Governors of the Federal Reserve
System, or any designee thereof or successor thereto.
"GAAP" shall mean accounting principles generally accepted in the
United States of America.
"Governmental Entity" shall mean any Federal or state court,
administrative agency or commission or other governmental authority or
instrumentality.
"Insurance Regulator" shall mean the New York State Insurance Department.
"IRS" shall mean the United States Internal Revenue Service.
"Knowledge" as used with respect to a Person (including references
to such Person being aware of a particular matter) means those facts that are
known by the executive officers and directors of such Person, and includes
any facts, matters or circumstances set forth in any written notice from any
Bank Regulator or any other material written notice received by an executive
officer or director of that Person.
"Loan Property" shall have the meaning set forth in Section 4.15.2.
4
"Material Adverse Effect" shall mean, with respect to NBT or CNB,
respectively, any effect that (i) is material and adverse to the financial
condition, results of operations or business of NBT and its Subsidiaries
taken as a whole, or CNB and its Subsidiaries taken as a whole, respectively,
or (ii) materially impairs the ability of either CNB, on the one hand, or
NBT, on the other hand, to perform its obligations under this Agreement or
otherwise materially impedes the consummation of the transactions
contemplated by this Agreement; provided that "Material Adverse Effect" shall
not be deemed to include the impact of (a) changes in laws and regulations
affecting banking institutions and their holding companies generally, or
interpretations thereof by courts or governmental agencies, (b) changes in
GAAP or regulatory accounting principles generally applicable to financial
institutions and their holding companies, (c) actions and omissions of a
party hereto (or any of its Subsidiaries) taken with the prior written
consent of the other party, (d) compliance with this Agreement on the
business, financial condition or results of operations of the parties and
their respective Subsidiaries, including the reasonable and contemplated
expenses incurred by the parties hereto in consummating the transactions
contemplated by this Agreement, and (e) any change in the value of the
securities or loan portfolio of NBT or CNB, respectively, whether held as
available for sale or held to maturity, resulting solely from a change in
interests rates generally.
"Materials of Environmental Concern" means pollutants, contaminants,
wastes, toxic substances, petroleum and petroleum products, and any other
materials regulated under Environmental Laws.
"Merger" shall mean the merger of CNB with and into NBT pursuant to
the terms hereof.
"Merger Consideration" shall mean the cash or NBT Common Stock, or
combination thereof, in an aggregate per share amount to be paid by NBT for
each share of CNB Common Stock, as set forth in Section 3.1.
"Merger Registration Statement" shall mean the registration
statement, together with all amendments, filed with the SEC under the
Securities Act for the purpose of registering the offer of shares of NBT
Common Stock to be offered to holders of CNB Common Stock in connection with
the Merger.
"NBT" shall mean NBT Bancorp Inc., a Delaware corporation, with its
principal executive offices located at 00 Xxxxx Xxxxx Xxxxxx, Xxxxxxx, Xxx
Xxxx 00000.
"NBT Bank" shall mean NBT Bank, N.A., a national banking
association, with its principal offices located at 00 Xxxxx Xxxxx Xxxxxx,
Xxxxxxx, Xxx Xxxx 00000, and which is a wholly owned subsidiary of NBT.
"NBT Common Stock" shall mean the common stock, par value $0.01 per
share, of NBT.
"NBT Disclosure Schedule" shall mean a written disclosure schedule
delivered by NBT to CNB specifically referring to the appropriate section of
this Agreement.
"NBT Financial Statements" shall mean the (i) the audited
consolidated statements of financial condition (including related notes and
schedules) of NBT as of December 31, 2004 and 2003 and the consolidated
statements of income, comprehensive income, changes in
5
shareholders' equity and cash flows (including related notes and
schedules, if any) of NBT for each of the three years ended December 31,
2004, 2003 and 2002, as set forth in NBT's annual report on Form 10-K for the
year ended December 31, 2004, and (ii) the unaudited interim consolidated
financial statements of NBT as of the end of each calendar quarter following
December 31, 2004, and for the periods then ended, as filed by NBT in its
Securities Documents.
"NBT Rights Plan" means the Rights Agreement dated as of November 15,
2004, between NBT Bancorp Inc. and Registrar and Transfer Company.
"NBT Subsidiary" means any corporation, 50% or more of the capital
stock of which is owned, either directly or indirectly, by NBT or NBT Bank,
except any corporation the stock of which is held in the ordinary course of
the lending activities of NBT.
"NYBCL" shall mean the New York Business Corporation Law.
"NYSBD" shall mean the New York State Banking Department.
"OCC" shall mean the Office of the Comptroller of the Currency, any
district office thereof, or any successor thereto.
"Option Payment" means the product of (i) the excess of (A) the Cash
Consideration over (B) the exercise price per share of a CNB Nonqualified
Stock Option multiplied by (ii) the number of shares of CNB Common Stock
subject to such CNB Nonqualified Stock Option.
"Participation Facility" shall have the meaning set forth in Section
4.15.2.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
successor thereto.
"Person" shall mean any individual, corporation, partnership, joint
venture, association, trust or "group" (as that term is defined under the
Exchange Act).
"Proxy Statement-Prospectus" shall have the meaning set forth in Section
8.2.1.
"Regulatory Agreement" shall have the meaning set forth in Section
4.12.3.
"Regulatory Approvals" means the approval of any Bank Regulator that
is necessary in connection with the consummation of the Merger, the Bank
Merger and the related transactions contemplated by this Agreement.
"Replacement Incentive Stock Option" means an option to acquire NBT
Common Stock on the same terms and conditions as were applicable under the
terms of the related CNB Incentive Stock Option and any CNB Stock Option Plan
under which such CNB Incentive Stock Option was issued (or as near thereto as
is practicable).
"Representative" shall have the meaning set forth in Section 3.2.2.
"Rights" shall mean warrants, options, rights, convertible
securities, stock appreciation rights and other arrangements or commitments
which obligate an entity to issue or dispose of any
6
of its capital stock or other ownership interests or which provide for
compensation based on the equity appreciation of its capital stock.
"SEC" shall mean the Securities and Exchange Commission or any successor
thereto.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Securities Documents" shall mean all reports, offering circulars,
proxy statements, registration statements and all similar documents filed
pursuant to the Securities Laws.
"Securities Laws" shall mean the Securities Act; the Exchange Act;
the Investment Company Act of 1940, as amended; the Investment Advisers Act
of 1940, as amended; the Trust Indenture Act of 1939, as amended, and the
rules and regulations of the SEC promulgated thereunder.
"Significant Subsidiary" shall have the meaning set forth in Rule
1-02 of Regulation S-X of the SEC.
"Subsidiary" means any corporation, 10% or more of the capital stock
of which is owned, either directly or indirectly, except any corporation the
stock of which is held in the ordinary course of the lending activities of
either NBT Bank or City National Bank, as applicable.
"Surviving Corporation" shall have the meaning set forth in Section 2.1.
"Termination Date" shall mean March 31, 2006.
"Treasury Stock" shall have the meaning set forth in Section 3.1.2.
Other terms used herein are defined in the preamble and elsewhere in
this Agreement.
ARTICLE II
THE MERGER
2.1. Merger.
Subject to the terms and conditions of this Agreement, at the
Effective Time: (a) CNB shall merge with and into NBT, with NBT as the
resulting or surviving corporation (the "Surviving Corporation"); and (b) the
separate existence of CNB shall cease and all of the rights, privileges,
powers, franchises, properties, assets, liabilities and obligations of CNB
shall be vested in and assumed by NBT. As part of the Merger, each
outstanding share of CNB Common Stock will be converted into the right to
receive the Merger Consideration pursuant to the terms of Article III.
2.2. Closing; Effective Time.
The Merger shall be effected by the filing of a certificate of
merger with the Delaware Department of State and the New York Department of
State on the day of the Closing (the "Closing Date"), in accordance with the
DGCL and NYBCL, respectively. The "Effective Time" means the date and time
upon which the certificate of merger is filed with the Delaware
7
Department of State and the New York Department of State, or as
otherwise stated in the certificate of merger, in accordance with the DGCL
and NYBCL, respectively.
2.3. Certificate of Incorporation and Bylaws.
The Certificate of Incorporation and Bylaws of NBT as in effect
immediately prior to the Effective Time shall be the Certificate of
Incorporation and Bylaws of the Surviving Corporation, until thereafter
amended as provided therein and by applicable law.
2.4. Directors and Officers of Surviving Corporation.
Until changed in accordance with the Certificate of Incorporation
and Bylaws of the Surviving Corporation, the officers and directors of NBT
immediately prior to the Effective Time shall be the officers of Surviving
Corporation, in each case until their respective successors are duly elected
or appointed and qualified. At the Effective Time, the number of persons
constituting the Board of Directors of NBT Bank shall be increased by two
members, and Xxxxxxx X. Xxxxxxx and Xxxxx X. Xxxxxxxxx (each a "New Member"
and collectively, the "New Members") shall be appointed to the NBT Bank Board
with a term of office expiring at the annual meeting of stockholders of NBT
Bank to be held following the Effective Time; provided, however, that NBT
Bank shall not have any obligation to appoint any New Member to serve on NBT
Bank's Board if such person is not a member of either the CNB or the City
National Bank Board of Directors immediately prior to the Effective Time.
2.5. Effects of the Merger.
At and after the Effective Time, the Merger shall have the effects
as set forth in the DGCL and NYBCL.
2.6. Tax Consequences.
It is intended that the Merger shall constitute a reorganization
within the meaning of Section 368(a) of the Code, and that this Agreement
shall constitute a "plan of reorganization" as that term is used in Sections
354 and 361 of the Code. From and after the date of this Agreement and until
the Closing, each party hereto shall use its reasonable best efforts to cause
the Merger to qualify, and will not knowingly take any action, cause any
action to be taken, fail to take any action or cause any action to fail to be
taken which action or failure to act would reasonably be expected to prevent
the Merger from qualifying as a reorganization under Section 368(a) of the
Code. Following the Closing, neither NBT nor any of its affiliates shall
knowingly take any action, cause any action to be taken, fail to take any
action or cause any action to fail to be taken, which action or failure to
act would reasonably be expected to cause the Merger to fail to qualify as a
reorganization under Section 368(a) of the Code. NBT and CNB each hereby
agrees to deliver certificates substantially in compliance with IRS published
advance ruling guidelines, with customary exceptions and modifications
thereto, to enable counsel to deliver the legal opinions contemplated by
Section 9.1.6, which certificates shall be dated as of the date of such
opinions and shall be true and correct as of such date.
8
2.7. Possible Alternative Structures.
Notwithstanding anything to the contrary contained in this Agreement
and subject to the satisfaction of the conditions set forth in Article IX,
prior to the Effective Time NBT shall be entitled to revise the structure for
effecting the Merger described in Section 2.1 or the Bank Merger including,
without limitation, by substituting a wholly owned subsidiary for NBT or NBT
Bank, as applicable, provided that (i) any such subsidiary shall become a
party to, and shall agree to be bound by, the terms of this Agreement; (ii)
there are no adverse Federal or state income tax consequences to CNB
shareholders, and nothing would prevent the rendering of the opinions in
Section 9.1.6, as a result of the modification; (iii) the consideration to be
paid to the holders of CNB Common Stock under this Agreement is not thereby
changed in kind, value or reduced in amount; and (iv) such modification will
not delay materially or jeopardize receipt of any Regulatory Approvals or
other consents and approvals relating to the consummation of the Merger or
otherwise cause any condition to Closing set forth in Article IX not to be
capable of being fulfilled. The parties hereto agree to appropriately amend
this Agreement and any related documents in order to reflect any such revised
structure.
2.8. Additional Actions.
If, at any time after the Effective Time, NBT shall consider or be
advised that any further deeds, assignments or assurances in law or any other
acts are necessary or desirable to (i) vest, perfect or confirm, of record or
otherwise, in NBT its right, title or interest in, to or under any of the
rights, properties or assets of CNB or any CNB Subsidiary, or (ii) otherwise
carry out the purposes of this Agreement, CNB and its officers and directors
shall be deemed to have granted to NBT an irrevocable power of attorney to
execute and deliver, in such official corporate capacities, all such deeds,
assignments or assurances in law or any other acts as are necessary or
desirable to (a) vest, perfect or confirm, of record or otherwise, in NBT its
right, title or interest in, to or under any of the rights, properties or
assets of CNB or (b) otherwise carry out the purposes of this Agreement, and
the officers and directors of the NBT are authorized in the name of CNB or
otherwise to take any and all such action.
ARTICLE III
CONVERSION OF SHARES
3.1. Conversion of CNB Common Stock; Merger Consideration.
At the Effective Time, by virtue of the Merger and without any
action on the part of NBT, CNB or the holders of any of the shares of CNB
Common Stock, the Merger shall be effected in accordance with the following
terms:
3.1.1. Each share of NBT Common Stock that is issued and
outstanding immediately prior to the Effective Time shall remain issued
and outstanding following the Effective Time and shall be unchanged by
the Merger.
3.1.2. All shares of CNB Common Stock held in the treasury of CNB
and each share of CNB Common Stock owned by NBT prior to the Effective
Time (other than shares held in a fiduciary capacity or in connection
with debts previously contracted) ("Treasury Stock"), shall, at the
Effective Time, cease to exist, and such shares, including any
Certificates therefor,
9
shall be canceled as promptly as practicable thereafter, and no
payment or distribution shall be made in consideration therefor.
3.1.3. Each outstanding share of CNB Common Stock with respect to
which an election to receive NBT Common Stock has been effectively made
and not revoked or lost, pursuant to Section 3.2.3 (a "Stock Election"),
shall be converted into the right to receive 1.64 (the "Exchange Ratio)
shares of NBT Common Stock, subject to adjustment as provided in Section
3.1.9 (the "Stock Consideration") (collectively, the "Stock Election
Shares").
3.1.4. Each outstanding share of CNB Common Stock with respect to
which an election to receive cash has been effectively made and not
revoked or lost, pursuant to Section 3.2.3 (a "Cash Election"), shall be
converted into the right to receive a cash payment, without interest,
equal to $38.00 (the "Cash Consideration") (collectively, the "Cash
Election Shares").
3.1.5. for each share of CNB Common Stock other than as to which a
Cash Election or a Stock Election has been effectively made and not
revoked or lost, pursuant to Section 3.2.3 (collectively, "Non-Election
Shares"), the right to receive from NBT such Stock Consideration and/or
Cash Consideration as is determined in accordance with Section 3.2.
3.1.6. Each outstanding share of CNB Common Stock, the holder of
which has perfected his right to dissent under Sections 623 and 910 of
the NYBCL and has not effectively withdrawn or lost such right as of the
Effective Time (the "Dissenting Shares"), 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
Sections 623 and 910 of the NYBCL. CNB shall give NBT prompt notice upon
receipt by CNB of any such demands for payment of the fair value of such
shares of CNB Common Stock and of withdrawals of such notice and any
other instruments provided pursuant to applicable law (any shareholder
duly making such demand being hereinafter called a "Dissenting
Shareholder"), and NBT shall have the right to participate in all
negotiations and proceedings with respect to any such demands. CNB shall
not, except with the prior written consent of NBT, voluntarily make any
payment with respect to, or settle or offer to settle, any such demand
for payment, or waive any failure to timely deliver a written demand for
appraisal or the taking of any other action by such Dissenting
Shareholder as may be necessary to perfect appraisal rights under the
NYBCL. Any payments made in respect of Dissenting Shares shall be made
by the Surviving Company.
3.1.7. If any Dissenting Shareholder withdraws or loses (through
failure to perfect or otherwise) his right to such payment at or prior
to the Effective Time, such holder's shares of CNB Common Stock shall be
converted into a right to receive the Merger Consideration in accordance
with the applicable provisions of this Agreement. If such holder
withdraws or loses (through failure to perfect or otherwise) his right
to such payment after the Effective Time, each share of CNB Common Stock
of such holder shall be entitled to receive the Merger Consideration.
3.1.8. Upon the Effective Time, shares of CNB Common Stock shall no
longer be outstanding and shall automatically be canceled and shall
cease to exist, and shall thereafter by operation of this Section 3.1
represent only the right to receive the Merger Consideration and any
dividends or distributions with respect thereto or any dividends or
distributions with a record date prior to the Effective Time that were
declared or made by CNB on such shares of CNB
10
Common Stock in accordance with the terms of this Agreement on or
prior to the Effective Time and which remain unpaid at the Effective
Time.
3.1.9. In the event NBT changes (or establishes a record date for
changing) the number of, or provides for the exchange of, all shares of
NBT Common Stock issued and outstanding prior to the Effective Time as a
result of a stock split, stock dividend, recapitalization,
reclassification, or similar transaction with respect to all of the
outstanding NBT Common Stock and the record date therefor shall be prior
to the Effective Time, the NBT Common Stock portion of the Merger
Consideration shall be proportionately and appropriately adjusted;
provided, that for the avoidance of doubt the parties acknowledge that
the foregoing is not intended to result in any such adjustment as a
result of share repurchases or share issuances of NBT Common Stock by
NBT under employee benefit plans maintained by NBT, pursuant to stock
options or if NBT issues additional shares of NBT Common Stock and
receives fair market value consideration for such shares.
3.1.10. No Fractional Shares. Notwithstanding anything to the
contrary contained herein, no certificates or scrip representing
fractional shares of NBT Common Stock shall be issued upon the surrender
for exchange of Certificates, no dividend or distribution with respect
to NBT Common Stock shall be payable on or with respect to any
fractional share interest, and such fractional share interests shall not
entitle the owner thereof to vote or to any other rights of a
shareholder of NBT. In lieu of the issuance of any such fractional
share, NBT shall pay to each former holder of CNB Common Stock who
otherwise would be entitled to receive a fractional share of NBT Common
Stock, an amount in cash, rounded to the nearest cent and without
interest, equal to the product of (i) the fraction of a share to which
such holder would otherwise have been entitled and (ii) the average of
the daily closing sales prices of a share of NBT Common Stock as
reported on the NASDAQ National Market for the five consecutive trading
days immediately preceding the Closing Date. For purposes of determining
any fractional share interest, all shares of CNB Common Stock owned by a
CNB shareholder shall be combined so as to calculate the maximum number
of whole shares of NBT Common Stock issuable to such CNB shareholder.
3.2. Election Procedures.
3.2.1. Holders of CNB Common Stock may elect to receive shares of
NBT Common Stock or cash in exchange for their shares of NBT Common
Stock. The total number of shares of CNB Common Stock to be converted
into Stock Consideration pursuant to this Section 3.1 shall be equal to
the product obtained by multiplying (x) the number of shares of CNB
Common Stock outstanding immediately prior to the Effective Time by (y)
0.55 (the "Stock Conversion Number"). All other shares of CNB Common
Stock shall be converted into Cash Consideration.
3.2.2. An election form, in such form as NBT and CNB shall mutually
agree ("Election Form"), will be sent, on the date that the Proxy
Statement-Prospectus is mailed (the "Mailing Date"), or such later date
as NBT may determine, to each holder of record of CNB Common Stock
entitled to vote at the CNB Shareholders Meeting (as defined in Section
8.1.1) permitting such holder, subject to the allocation and election
procedures set forth in this Section 3.2, (i) to specify the number of
shares of CNB Common Stock owned by such holder with respect to which
such holder desires to make a Cash Election (a "Cash Election"), in
accordance
11
with the provision of Section 3.1.4, (ii) to specify the number of
shares of CNB Common Stock owned by such holder with respect to which
such holder desires to make a Stock Election, in accordance with the
provision of Section 3.1.3, or (iii) to indicate that such record holder
has no preference as to the receipt of cash or NBT Common Stock for such
shares (a "Non-Election"). Holders of record of shares of CNB Common
Stock who hold such shares as nominees, trustees or in other
representative capacities (a "Representative") may submit multiple
Election Forms, provided that each such Election Form covers all the
shares of CNB Common Stock held by each Representative for a particular
beneficial owner. Any shares of CNB Common Stock with respect to which
the holder thereof shall not, as of the Election Deadline, have made an
election by submission to the Exchange Agent on an effective, properly
completed Election Form shall be deemed Non-Election Shares. Any
Dissenting Shares shall be deemed shares subject to an All Cash
Election, and with respect to such shares the holders thereof shall in
no event receive consideration comprised of NBT Common Stock. NBT shall
make available one or more Election Forms as may reasonably be requested
in writing from time to time by all persons who become holders (or
beneficial owners) of CNB Common Stock between the CNB Shareholders
Meeting record date and the close of business on the business day prior
to the Election Deadline (as defined in Section 3.2.3), and CNB shall
provide to the Exchange Agent all information reasonably necessary for
it to perform as specified herein.
3.2.3. The term "Election Deadline", as used below, shall mean 5:00
p.m., Eastern time, on the 30th calendar day following the date the
Election Form is first mailed, or such later date as NBT shall
determine. An election shall have been properly made only if the
Exchange Agent shall have actually received a properly completed
Election Form by the Election Deadline. Any Election Form may be revoked
or changed by the person submitting such Election Form to the Exchange
Agent by written notice to the Exchange Agent only if such notice of
revocation or change is actually received by the Exchange Agent at or
prior to the Election Deadline. The Certificate or Certificates relating
to any revoked Election Form shall be promptly returned without charge
to the person submitting the Election Form to the Exchange Agent.
Subject to the terms of this Agreement and of the Election Form, NBT and
the Exchange Agent shall have discretion to determine whether any
election, revocation or change has been properly or timely made and to
disregard immaterial defects in the Election Forms, and any good faith
decisions of NBT and the Exchange Agent regarding such matters shall be
binding and conclusive. Neither NBT or the Exchange Agent shall be under
any obligation to notify any person of any defect in an Election Form.
3.2.4. As soon as reasonably practical after the Effective Time,
NBT shall cause the Exchange Agent to effect the allocation among
holders of CNB Common Stock of rights to receive the Cash Consideration
and the Stock Consideration as set forth in Sections 3.2.5 and 3.2.6.
3.2.5. If the aggregate number of shares of CNB Common Stock with
respect to which Stock Elections shall have been made (the "Stock
Election Number") exceeds the Stock Conversion Number, then all Cash
Election Shares and all Non-Election Shares of each holder thereof shall
be converted into the right to receive the Cash Consideration, and Stock
Election Shares of each holder thereof will be converted into the right
to receive the Stock Consideration in respect of that number of Stock
Election Shares equal to the product obtained by multiplying (x) the
number of Stock Election Shares held by such holder by (y) the fraction,
the numerator of
12
which is the Stock Conversion Number and the denominator of which
is the Stock Election Number, with the remaining number of such holders'
Stock Election Shares being converted into the right to receive the Cash
Consideration.
3.2.6. If the Stock Election Number is less than the Stock
Conversion Number (the amount by which the Stock Conversion Number
exceeds the Stock Election Number being referred to herein as the
"Shortfall Number"), then all Stock Election Shares shall be converted
into the right to receive the Stock Consideration and the Non-Election
Shares and Cash Election Shares shall be treated in the following
manner:
(A) If the Shortfall Number is less than or equal to the
number of Non-Election Shares, then all Cash Election Shares shall
be converted into the right to receive the Cash Consideration and
the Non-Election Shares of each holder thereof shall convert into
the right to receive the Stock Consideration in respect of that
number of Non-Election Shares equal to the product obtained by
multiplying (x) the number of Non-Election Shares held by such
holder by (y) a fraction, the numerator of which is the Shortfall
Number and the denominator of which is the total number of
Non-Election Shares, with the remaining number of such holder's
Non-Election Shares being converted into the right to receive the
Cash Consideration; or
(B) If the Shortfall Number exceeds the number of Non-Election
Shares, then all Non-Election Shares shall be converted into the
right to receive the Stock Consideration and Cash Election Shares
of each holder thereof shall convert into the right to receive the
Stock Consideration in respect of that number of Cash Election
Shares equal to the product obtained by multiplying (x) the number
of Cash Election Shares held by such holder by (y) a fraction, the
numerator of which is the amount by which (1) the Shortfall Number
exceeds (2) the total number of Non-Election Shares and the
denominator of which is the total number of Cash Election Shares,
with the remaining number of such holder's Cash Election Shares
being converted into the right to receive the Cash Consideration.
3.3. Procedures for Exchange of CNB Common Stock.
3.3.1. NBT to Make Merger Consideration Available. No later than
the Closing Date, NBT shall deposit, or shall cause to be deposited,
with the Exchange Agent for the benefit of the holders of CNB Common
Stock, for exchange in accordance with this Section 3.3, an aggregate
amount of cash sufficient to pay the aggregate amount of cash payable
pursuant to this Article III (including the estimated amount of cash to
be paid in lieu of fractional shares of CNB Common Stock) and shall
instruct the Exchange Agent to issue shares of NBT Common Stock for
exchange in accordance with this Section 3.3 (such cash and shares of
NBT Common Stock, together with any dividends or distributions with
respect thereto (without any interest thereon) being hereinafter
referred to as the "Exchange Fund").
3.3.2. Exchange of Certificates. NBT shall take all steps necessary
to cause the Exchange Agent, not later than five (5) business days after
the Effective Time, to mail to each holder of a Certificate or
Certificates who has not previously surrendered such certificates with
an Election Form, a form letter of transmittal for return to the
Exchange Agent and instructions for use in effecting the surrender of
the Certificates in exchange for the Merger Consideration and cash in
lieu of fractional shares into which the CNB Common Stock represented by
such Certificates shall have been converted as a result of the Merger,
if any. The letter of transmittal
13
shall specify that delivery shall be effected, and risk of loss and
title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent. Upon proper surrender of a
Certificate for exchange and cancellation to the Exchange Agent,
together with a properly completed letter of transmittal, duly executed,
the holder of such Certificate shall be entitled to receive in exchange
therefor the Merger Consideration and the certificate so surrendered
shall be cancelled. No interest will be paid or accrued on any Cash
Consideration or any cash payable in lieu of fractional shares or any
unpaid dividends and distributions, if any, payable to holders of
Certificates.
3.3.3. Rights of Certificate Holders after the Effective Time. The
holder of a Certificate that prior to the Merger represented issued and
outstanding CNB Common Stock shall have no rights, after the Effective
Time, with respect to such CNB Common Stock except to surrender the
Certificate in exchange for the Merger Consideration as provided in this
Agreement. No dividends or other distributions declared after the
Effective Time with respect to NBT Common Stock shall be paid to the
holder of any unsurrendered Certificate until the holder thereof shall
surrender such Certificate in accordance with this Section 3.3. After
the surrender of a Certificate in accordance with this Section 3.3, 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 NBT Common Stock represented by
such Certificate.
3.3.4. Surrender by Persons Other than Record Holders. If the
Person surrendering a Certificate and signing the accompanying letter of
transmittal is not the record holder thereof, then it shall be a
condition of the payment of the Merger Consideration that: (i) such
Certificate is properly endorsed to such Person or is accompanied by
appropriate stock powers, in either case signed exactly as the name of
the record holder appears on such Certificate, and is otherwise in
proper form for transfer, or is accompanied by appropriate evidence of
the authority of the Person surrendering such Certificate and signing
the letter of transmittal to do so on behalf of the record holder; and
(ii) the person requesting such exchange shall pay to the Exchange Agent
in advance any transfer or other similar taxes required by reason of the
payment to a Person other than the registered holder of the Certificate
surrendered, or required for any other reason, or shall establish to the
satisfaction of the Exchange Agent that such tax has been paid or is not
payable.
3.3.5. Closing of Transfer Books. From and after the Closing Date,
there shall be no transfers on the stock transfer books of CNB of the
CNB Common Stock that were outstanding immediately prior to the
Effective Time. If, after the Effective Time, Certificates representing
such shares are presented for transfer to the Exchange Agent, they shall
be exchanged for the Merger Consideration and canceled as provided in
this Section 3.3.
3.3.6. Return of Exchange Fund. At any time following the six (6)
month period after the Effective Time, NBT shall be entitled to require
the Exchange Agent to deliver to it any portions of the Exchange Fund
which had been made available to the Exchange Agent and not disbursed to
holders of Certificates (including, without limitation, all interest and
other income received by the Exchange Agent in respect of all funds made
available to it), and thereafter such holders shall be entitled to look
to NBT (subject to abandoned property, escheat and other similar laws)
with respect to any Merger Consideration that may be payable upon due
surrender of the Certificates held by them. Notwithstanding the
foregoing, neither NBT nor the Exchange Agent
14
shall be liable to any holder of a Certificate for any Merger
Consideration delivered in respect of such Certificate to a public
official pursuant to any abandoned property, escheat or other similar
law.
3.3.7. Lost, Stolen or Destroyed Certificates. In the event any
Certificate shall have been lost, stolen or destroyed, upon the making
of an affidavit of that fact by the person claiming such Certificate to
be lost, stolen or destroyed and the posting by such person of a bond in
such amount as NBT may reasonably direct as indemnity against any claim
that may be made against it with respect to such Certificate, the
Exchange Agent will issue in exchange for such lost, stolen or destroyed
Certificate the Merger Consideration deliverable in respect thereof.
3.3.8. Withholding. NBT or the Exchange Agent will be entitled to
deduct and withhold from the consideration otherwise payable pursuant to
this Agreement or the transactions contemplated hereby to any holder of
CNB Common Stock such amounts as NBT (or any Affiliate thereof) or the
Exchange Agent are required to deduct and withhold with respect to the
making of such payment under the Code, or any applicable provision of
U.S. federal, state, local or non-U.S. tax law. To the extent that such
amounts are properly withheld by NBT or the Exchange Agent, such
withheld amounts will be treated for all purposes of this Agreement as
having been paid to the holder of the CNB Common Stock in respect of
whom such deduction and withholding were made by NBT or the Exchange
Agent.
3.4. Treatment of CNB Options.
3.4.1. Assumption of CNB Incentive Stock Options. At the Effective
Time, each and every CNB Option that is an "incentive stock option"
under Section 422 of the Code and outstanding and unexercised
immediately prior thereto (a "CNB Incentive Stock Option") whether
vested or unvested, shall automatically be converted into a Replacement
Incentive Stock Option for a number of shares of NBT Common Stock equal
to (rounded down to the nearest number of whole shares) (a) the number
of shares of CNB Common Stock subject to such CNB Incentive Option as of
the Effective Time multiplied by (b) the Exchange Ratio, at an exercise
price per share (rounded down to the nearest whole cent) equal to (x)
the aggregate exercise price under such CNB Incentive Stock Option for
all of the shares of CNB Common Stock subject to such CNB Incentive
Stock Option at the Effective Time divided by (y) the number of shares
of NBT Common Stock subject to such Replacement Incentive Stock,
provided that the terms of the Replacement Incentive Stock Option into
which such CNB Incentive Stock Option is converted, including the option
price, the number of shares of NBT Common Stock purchasable pursuant to
such option, and the terms and conditions of exercise of such option
shall be determined so as to comply with section 424(a) of the Code and
the Treasury Regulations thereunder. At the Effective Time, NBT shall
assume stock plans under which CNB Incentive Stock Options have been
issued; provided, that such assumption shall only be in respect of the
Replacement Incentive Stock Options and that NBT shall have no
obligation with respect to any awards under such plans other than the
Replacement Incentive Stock Options and shall have no obligation to make
any additional grants or awards under such assumed plans.
After the Effective Time, NBT shall issue to each holder of an
outstanding CNB Incentive Stock Option a document evidencing the assumption
of such CNB Incentive Stock Option by NBT pursuant to this Section 3.4.1.
15
3.4.2. At or prior to the Effective Time, NBT shall take all
corporate action necessary to reserve for issuance a sufficient number
of shares of NBT Common Stock for delivery upon exercise of CNB
Incentive Stock Options assumed by it in accordance with this Section
3.4. As soon as reasonably practicable after the Effective Time, NBT
shall file a registration statement on Form S-8 (or any successor or
other appropriate forms), with respect to the shares of NBT Common Stock
subject to Replacement Incentive Stock Options and shall use its
reasonable best efforts to maintain the effectiveness of such
registration statement (and maintain the current status of the
prospectus or prospectuses contained therein) for so long as such
Replacement Incentive Stock Options remain outstanding.
3.4.3. Nonqualified Stock Options - CNB Bancorp, Inc. Stock Option
Plan. Prior to and effective as of the Effective Time, pursuant to the
terms of the CNB Bancorp, Inc. Stock Option Plan (the "1998 Plan"), CNB
shall take all actions necessary to terminate each CNB Nonqualified
Stock Option granted pursuant to the 1998 Plan that is outstanding and
unexercised immediately prior thereto. In accordance with the 1998 Plan
all issued and outstanding CNB Nonqualified Stock Options granted
thereto and not theretofore exercised, shall become immediately
exercisable and otherwise subject to the terms of the 1998 Plan. Holders
of CNB Nonqualified Stock Options granted under 1998 Plan will be given
the opportunity to elect to receive, in cancellation of their CNB
Nonqualified Stock Option, the Option Payment, which payment shall be
treated as compensation and shall be net of any applicable federal or
state withholding tax. Subject to the foregoing, CNB Nonqualified Stock
Options granted under the 1998 Plan and not exercised prior to the
Effective Time shall terminate, in accordance with the provisions of the
1998 Plan. CNB shall send a written notice to all holders of CNB
Nonqualified Options under the 1998 Plan informing option holders of
their right to exercise, of the Option Payment election, and of the
termination of the unexercised options as of the Effective Time.
3.4.4. Nonqualified Stock Options - CNB Bancorp, Inc. Long Term
Incentive Compensation Plan. Prior to and effective as of the Effective
Time, pursuant to the terms of the CNB Bancorp, Inc. Long-Term Incentive
Compensation Plan (the "LTIC Plan"), CNB shall take all actions
necessary to terminate each CNB Nonqualified Stock Option granted
pursuant to the LTIC Plan that is outstanding and unexercised
immediately prior thereto. In accordance with the LTIC Plan all issued
and outstanding CNB Nonqualified Stock Options granted thereto and not
theretofore exercised, shall become entitled to receive the Option
Payment, which payment shall be treated as compensation and shall be net
of any applicable federal or state withholding tax. Subject to the
foregoing, CNB Nonqualified Stock Options granted under the LTIC Plan
and not exercised prior to the Effective Time shall terminate, in
accordance with the provisions of the LTIC Plan. CNB shall send a
written notice to all holders of CNB Nonqualified Options under the LTIC
Plan informing option holders of their right to the Option Payment and
of the termination of the unexercised options as of the Effective Time.
3.4.5. Nonqualified Stock Options - Adirondack Financial Services
Bancorp, Inc. 1998 Stock Option and Incentive Plan. All CNB Nonqualified
Stock Options granted under the Adirondack Financial Services Bancorp,
Inc. 1998 Stock Option and Incentive Plan ("Adirondack Plan") that are
outstanding and unexercised immediately prior to the Effective Time will
be converted into the right to receive the Option Payment, which payment
shall be treated as compensation and shall be net of any applicable
federal or state withholding tax. CNB
16
shall send a written notice to all holders of CNB Nonqualified Options
under the Adirondack Plan informing option holders of the Option
Payment.
3.5. Bank Merger.
CNB and NBT shall use their reasonable best efforts to cause the
merger of City National Bank with and into NBT Bank, with NBT Bank as the
surviving institution (the "Bank Merger"). In addition, following the
execution and delivery of this Agreement, NBT will cause NBT Bank, and CNB
will cause City National Bank, to execute and deliver an Agreement and Plan
of Merger substantially in the form attached to this Agreement as Exhibit A.
3.6. Reservation of Shares.
NBT shall reserve for issuance a sufficient number of shares of the
NBT Common Stock for the purpose of issuing shares of NBT Common Stock to the
CNB shareholders in accordance with this Article III.
3.7 Adjustment of Exchange Ratio.
If Xxxxx & Xxxxxxx L.L.P. or Xxxxxxxx, Loop & Xxxxxxxx, LLP
reasonably determine that it cannot render the tax opinion referred to in
Section 9.1.6 and to be delivered at the Closing (the "Tax Opinion") as a
result of the Merger's potentially failing to satisfy continuity of interest
requirements under applicable federal income tax principles relating to
reorganizations under Section 368(a) of the Code, because the aggregate value
of the shares of NBT Common Stock to be issued in the Merger as of the
Effective Time is less than 40% of the value of the aggregate Merger
Consideration (including amounts payable pursuant to Sections 3.1.6 and
3.1.10), based upon the 10 day average closing price of NBT Common Stock on
the business day immediately prior to the Closing Date, then NBT shall, in
its sole discretion have the right to increase the Exchange Ratio to the
minimum extent necessary to satisfy the requirements of Section 368(a) of the
Code. Concurrent with the increase in the Exchange Ratio, the cash
consideration will be reduced by a like dollar amount so that the aggregate
Merger Consideration (including any amount payable pursuant to Sections 3.1.6
and 3.1.10) will be 40% stock and 60% cash.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF CNB
CNB represents and warrants to NBT that the statements contained in
this Article IV are correct as of the date of this Agreement and will be
correct as of the Closing Date (as though made then and as though the Closing
Date were substituted for the date of this Agreement throughout this Article
IV), subject to the standard set forth in Section 4.1 and except as set forth
in the CNB Disclosure Schedule delivered by CNB to NBT on the date hereof,
and except as to any representation or warranty which specifically relates to
an earlier date, which only need be so correct as of such earlier date. CNB
has made a good faith effort to ensure that the disclosure on each schedule
of the CNB Disclosure Schedule corresponds to the section referenced herein.
However, for purposes of the CNB Disclosure Schedule, any item disclosed on
any schedule therein is deemed to be fully disclosed with respect to all
schedules under which such item may be relevant as and to the extent that it
is reasonably clear on the face of such schedule that such
17
item applies to such other schedule. References to the Knowledge of CNB
shall include the Knowledge of City National Bank.
4.1. Standard.
No representation or warranty of CNB contained in this Article IV
shall be deemed untrue or incorrect, and CNB shall not be deemed to have
breached a representation or warranty, as a consequence of the existence 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 paragraph of this Article IV, has had or is reasonably
expected to have a Material Adverse Effect, disregarding for these purposes
(x) any qualification or exception for, or reference to, materiality in any
such representation or warranty and (y) any use of the terms "material",
"materially", "in all material respects", "Material Adverse Effect" or
similar terms or phrases in any such representation or warranty. The
foregoing standard shall not apply to representations and warranties
contained in Sections 4.2 (other than the last sentence of Sections 4.2.1 and
4.2.2), 4.3, 4.4, 4.8, 4.13.6, 4.13.7, 4.13.8, 4.13.9 and 4.28, which shall
be deemed untrue, incorrect and breached if they are not true and correct in
all material respects.
4.2. Organization.
4.2.1. CNB is a corporation duly organized, validly existing and in
good standing under the laws of the State of New York, and is duly
registered as a bank holding company under the Bank Holding Company Act
of 1956, as amended (the "BHCA"), that has elected financial holding
company status. CNB has full corporate power and authority to carry on
its business as now conducted. CNB is duly licensed or qualified to do
business in the states of the United States and foreign jurisdictions
where its ownership or leasing of property or the conduct of its
business requires such qualification.
4.2.2. City National Bank is a national banking association duly
organized, validly existing and in good standing under the laws of the
United States. The deposits in City National Bank are insured by the
FDIC to the fullest extent permitted by law, and all premiums and
assessments required to be paid in connection therewith have been paid
by City National Bank when due. City National Bank is a member in good
standing of each of the Federal Reserve Bank of New York and the FHLB
and owns the requisite amount of stock of each.
4.2.3. CNB Disclosure Schedule 4.2.3 sets forth each CNB
Subsidiary. Each CNB Subsidiary is a corporation, limited liability
company or other legal entity as set forth on CNB Disclosure Schedule
4.2.3, duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation or organization.
4.2.4. The respective minute books of CNB, City National Bank and
each other CNB Subsidiary accurately records, in all material respects,
all material corporate actions of their respective shareholders and
boards of directors (including committees).
4.2.5. Prior to the date of this Agreement, CNB has made available
to NBT true and correct copies of the certificate of incorporation or
charter and bylaws of CNB, City National Bank and each other CNB
Subsidiary.
18
4.3. Capitalization.
4.3.1. The authorized capital stock of CNB consists of 5,000,000
shares of CNB Common Stock, all of which are voting common shares $2.50
par value. There are 2,223,950 shares of CNB Common Stock validly issued
and outstanding, fully paid and non-assessable (except to the extent
assessable under Section 630 of the NYBCL) and free of preemptive
rights. There are 177,745 shares of CNB Common Stock held by CNB as
Treasury Stock as of the date hereof. Neither CNB nor any CNB Subsidiary
has or is bound by any Rights of any character relating to the purchase,
sale or issuance or voting of, or right to receive dividends or other
distributions on any shares of CNB Common Stock, or any other security
of CNB or a CNB Subsidiary or any securities representing the right to
vote, purchase or otherwise receive any shares of CNB Common Stock or
any other security of CNB or any CNB Subsidiary, other than shares of
CNB Common Stock underlying the CNB Options. CNB has granted options to
acquire 306,180 shares of CNB Common Stock. CNB Disclosure Schedule
4.3.1 sets forth: the name of each holder of a CNB Option, identifying
the number of shares each such individual may acquire pursuant to the
exercise of such options, the plan under which such options were
granted, the grant, vesting and expiration dates, and the exercise price
relating to the options held, and whether the CNB Option is a CNB
Incentive Stock Option or a CNB Nonqualified Stock Option.
4.3.2. CNB owns all of the capital stock of City National Bank,
free and clear of any lien or encumbrance. Except for the CNB
Subsidiaries and as set forth in CNB Disclosure Schedule 4.3.2, CNB does
not possess, directly or indirectly, any material equity interest in any
corporate entity, except for equity interests held in the investment
portfolios of CNB or any CNB Subsidiary (which as to any one issuer, do
not exceed 5% of such issuer's outstanding equity securities), equity
interests held by CNB Subsidiaries in a fiduciary capacity, and equity
interests held in connection with the lending activities of CNB
Subsidiaries, including stock in the FHLB. Either CNB or City National
Bank owns all of the outstanding shares of capital stock of each CNB
Subsidiary free and clear of all liens, security interests, pledges,
charges, encumbrances, agreements and restrictions of any kind or
nature.
4.3.3. To CNB's Knowledge, except as set forth on CNB Disclosure
Schedule 4.3.3, as of the date hereof no Person is the beneficial owner
(as defined in Section 13(d) of the Exchange Act) of 5% or more of the
outstanding shares of CNB Common Stock.
4.3.4. No bonds, debentures, notes or other indebtedness having the
right to vote on any matters on which CNB's shareholders may vote have
been issued by CNB and are outstanding.
4.4. Authority; No Violation.
4.4.1. CNB has full corporate power and authority to execute and
deliver this Agreement and, subject to the receipt of the Regulatory
Approvals described in Section 8.3 and the approval of this Agreement by
CNB's shareholders, to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement by CNB and the completion
by CNB of the transactions contemplated hereby, up to and including the
Merger, have been duly and validly approved by the Board of Directors of
CNB. This Agreement has been duly and validly executed and delivered by
CNB, and subject to approval by the shareholders of CNB and
19
receipt of the Regulatory Approvals and due and valid execution and
delivery of this Agreement by NBT, constitutes the valid and binding
obligation of CNB, enforceable against CNB in accordance with its terms,
subject to applicable bankruptcy, insolvency and similar laws affecting
creditors' rights generally, and subject, as to enforceability, to
general principles of equity.
4.4.2. Subject to compliance by NBT with the terms and conditions
of this Agreement, (A) the execution and delivery of this Agreement by
CNB, (B) subject to receipt of Regulatory Approvals, and CNB's and NBT's
compliance with any conditions contained therein, and subject to the
receipt of the approval of the shareholders of CNB, the consummation of
the transactions contemplated hereby, and (C) compliance by CNB with any
of the terms or provisions hereof will not (i) conflict with or result
in a breach of any provision of the Certificate of Incorporation or
Bylaws of CNB or any CNB Subsidiary or the Articles of Association and
Bylaws of City National Bank; (ii) violate any statute, code, ordinance,
rule, regulation, judgment, order, writ, decree or injunction applicable
to CNB or any CNB Subsidiary or any of their respective properties or
assets; or (iii) violate, conflict with, result in a breach of any
provisions of, constitute a default (or an event which, with notice or
lapse of time, or both, would constitute a default), under, result in
the termination of, accelerate the performance required by, or result in
a right of termination or acceleration or the creation of any lien,
security interest, charge or other encumbrance upon any of the
properties or assets of CNB or City National Bank under any of the
terms, conditions or provisions of any note, bond, mortgage, indenture,
deed of trust, license, lease, agreement or other investment or
obligation to which CNB or any CNB Subsidiary is a party, or by which
they or any of their respective properties or assets may be bound or
affected.
4.5. Consents.
Except for (a) the receipt of the Regulatory Approvals and
compliance with any conditions contained therein, (b) the filing of the
Certificate of Merger with the Delaware Department of State and the New York
Department of State, and (c) the approval of this Agreement by the requisite
vote of the shareholders of CNB, no consents, waivers or approvals of, or
filings or registrations with, any Governmental Entity or Bank Regulator are
necessary, and no consents, waivers or approvals of, or filings or
registrations with, any other third parties are necessary, in connection with
(x) the execution and delivery of this Agreement by CNB, and the completion
by CNB of the Merger or (y) the execution and delivery of the Agreement and
Plan of Bank Merger and the completion of the Bank Merger. CNB has no reason
to believe that (i) any required Regulatory Approvals or other required
consents or approvals will not be received or will include the imposition of
any condition or requirement that could reasonably be expected to result in a
Material Adverse Effect on NBT and its Subsidiaries, taken as a whole, or
that (ii) any public body or authority having jurisdiction over the affairs
of CNB or its subsidiaries, the consent or approval of which is not required
or to which a filing is not required, will object to the completion of the
transactions contemplated by this Agreement.
4.6. Financial Statements.
4.6.1. The CNB Regulatory Reports have been prepared in accordance
with applicable regulatory accounting principles and practices
throughout the periods covered by such statements, and fairly present
the consolidated financial position, results of operations and
20
changes in shareholders' equity of CNB as of and for the periods ended
on the dates thereof, in accordance with applicable regulatory
accounting principles applied on a consistent basis.
4.6.2. CNB has previously made available to NBT the CNB Financial
Statements covering periods ended prior to the date hereof. The CNB
Financial Statements have been prepared in accordance with GAAP, and
(including the related notes where applicable) fairly present in each
case (subject in the case of the unaudited interim statements to normal
year-end adjustments) the consolidated financial position, results of
operations and cash flows of CNB and the CNB Subsidiaries on a
consolidated basis as of and for the respective periods ending on the
dates thereof, in accordance with GAAP during the periods involved,
except as indicated in the notes thereto, or in the case of unaudited
statements, as permitted by Form 10-Q.
4.6.3. At the date of each balance sheet included in the CNB
Financial Statements or in the CNB Regulatory Reports, CNB did not have
any liabilities, obligations or loss contingencies of any nature
(whether absolute, accrued, contingent or otherwise) of a type required
to be reflected in such CNB Financial Statements or in the CNB
Regulatory Reports or in the footnotes thereto which are not fully
reflected or reserved against therein or fully disclosed in a footnote
thereto, except for liabilities, obligations and loss contingencies
which are not material individually or in the aggregate, and except for
liabilities, obligations and loss contingencies which are within the
subject matter of a specific representation and warranty herein and
subject, in the case of any unaudited statements, to normal, recurring
audit adjustments and the absence of footnotes.
4.7. Taxes.
(A) CNB and the CNB Subsidiaries (other than CNB REIT CORP.) are
members of the same affiliated group within the meaning of Code Section
1504(a). CNB or CNB REIT CORP. has duly filed all federal, state and material
local tax returns required to be filed by or with respect to CNB and each
Subsidiary of CNB, taking into account any extensions (all such returns being
accurate and correct in all material respects) and has duly paid all federal,
state, local and foreign taxes which have been incurred by or are due or
claimed to be due from CNB and any Subsidiary of CNB by any taxing authority
or pursuant to any written tax sharing agreement, other than taxes or other
charges which (i) are not delinquent, or (ii) are being contested in good
faith and have been adequately provided for in accordance with GAAP. As of
the date of this Agreement, CNB has received no written notice of and there
is no audit examination, deficiency assessment, tax investigation or refund
litigation with respect to any taxes of CNB or any of its Subsidiaries, and
no claim has been made by any taxing authority in a jurisdiction where CNB or
any of its Subsidiaries does not file tax returns that CNB or any such
Subsidiary is subject to taxation in that jurisdiction. CNB and its
Subsidiaries have not executed an extension or waiver of any statute of
limitations on the assessment or collection of any material tax due that is
currently in effect. CNB and each of its Subsidiaries has timely withheld and
paid all taxes required to have been withheld and paid in connection with
amounts paid or owing to any employee, independent contractor, creditor,
shareholder or other third party, and CNB and each of its Subsidiaries has
timely complied with all applicable information reporting requirements under
Part III, Subchapter A of Chapter 61 of the Code and similar applicable
state, local and foreign information reporting requirements.
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(B) CNB REIT CORP. is a subsidiary of CNB. CNB REIT CORP. (i) for
all taxable years commencing with CNB REIT CORP.'s taxable year ending
December 31, 1999 through December 31, 2004 has been subject to taxation as a
real estate investment trust (a "REIT") within the meaning of Section 856 of
the Code and has satisfied all requirements to qualify as a REIT for such
years, (ii) has operated since December 31, 2004 to the date hereof in a
manner that will permit CNB REIT CORP. to qualify as a REIT for the taxable
year that includes the date hereof, and (iii) intends to continue to operate,
in such a manner as to permit it to continue to qualify as a REIT for the
taxable year of CNB REIT CORP. that will end with the Merger (and if the
Merger is not consummated prior to January 1, 2006, for the taxable year that
will end on December 31, 2005). Since December 31, 1999, CNB REIT CORP. has
not incurred any liability for taxes under Sections 857(b), 860(c) or 4981 of
the Code, including any tax arising from a prohibited transaction described
in section 857(b)(6) of the Code or any similar provision of applicable state
or local tax statutes. No challenge to CNB REIT CORP.'s status as a REIT is
pending or has been threatened in writing.
4.8. No Material Adverse Effect.
CNB and the CNB Subsidiaries, taken as a whole, have not suffered
any Material Adverse Effect since December 31, 2004 and no event has occurred
or circumstance arisen since that date which, in the aggregate, has had or is
reasonably likely to have a Material Adverse Effect on CNB and the CNB
Subsidiaries, taken as a whole.
4.9. Material Contracts; Leases; Defaults.
4.9.1. Except as set forth in CNB Disclosure Schedule 4.9.1,
neither CNB nor any CNB Subsidiary is a party to or subject to: (i) any
employment, consulting or severance contract with any past or present
officer, director or employee of CNB or any CNB Subsidiary, except for
"at will" arrangements; (ii) any plan or contract providing for bonuses,
pensions, options, deferred compensation, retirement payments, profit
sharing or similar material arrangements for or with any past or present
officers, directors or employees of CNB or any CNB Subsidiary; (iii) any
collective bargaining agreement with any labor union relating to
employees of CNB or any CNB Subsidiary; (iv) any agreement which by its
terms limits or affects the payment of dividends by CNB or any CNB
Subsidiary; (v) any instrument evidencing or related to indebtedness for
borrowed money in excess of $50,000, whether directly or indirectly, by
way of purchase money obligation, conditional sale, lease purchase,
guaranty or otherwise, in respect of which CNB or any CNB Subsidiary is
an obligor to any person, which instrument evidences or relates to
indebtedness other than deposits, FHLB advances with a term to maturity
not in excess of one year, repurchase agreements, bankers' acceptances,
and transactions in "federal funds" or which contains financial
covenants or other material non-customary restrictions (other than those
relating to the payment of principal and interest when due) which would
be applicable on or after the Closing Date to CNB or any CNB Subsidiary;
(vi) any other agreement, written or oral, which is not terminable
without cause on 60 days' notice or less without penalty or payment, or
that obligates CNB or any CNB Subsidiary for the payment of more than
$25,000 annually or for the payment of more than $25,000 over its
remaining term; or (vii) any agreement (other than this Agreement),
contract, arrangement, commitment or understanding (whether written or
oral) that restricts or limits in any material way the conduct of
business by CNB or any CNB Subsidiary (it being understood that any
non-compete or similar provision shall be deemed material).
22
4.9.2. Each real estate lease that will require the consent of the
lessor or its agent as a result of the Merger or the Bank Merger by
virtue of the terms of any such lease, is listed in CNB Disclosure
Schedule 4.9.2 identifying the section of the lease that contains such
prohibition or restriction. Subject to any consents that may be required
as a result of the transactions contemplated by this Agreement, neither
CNB nor any CNB Subsidiary is in default in any material respect under
any material contract, agreement, commitment, arrangement, lease,
insurance policy or other instrument to which it is a party, by which
its assets, business, or operations may be bound or affected, or under
which it or its assets, business, or operations receive benefits, and
there has not occurred any event that, with the lapse of time or the
giving of notice or both, would constitute such a default.
4.9.3. True and correct copies of agreements, contracts,
arrangements and instruments referred to in Section 4.9.1 and 4.9.2 have
been made available to NBT on or before the date hereof, are listed on
CNB Disclosure Schedules 4.9.1 and 4.9.2 and are in full force and
effect on the date hereof. No plan, contract, employment agreement,
termination agreement, or similar agreement or arrangement to which CNB
or any CNB Subsidiary is a party or under which CNB or any CNB
Subsidiary may be liable contains provisions which permit an employee or
independent contractor to terminate it without cause and continue to
accrue future benefits thereunder. Except as set forth in the CNB
Disclosure Schedule 4.9.3, no such agreement, plan, contract, or
arrangement (x) provides for acceleration of the vesting of benefits or
payments due thereunder upon the occurrence of a change in ownership or
control of CNB or any CNB Subsidiary or upon the occurrence of a
subsequent event; or (y) requires CNB or any CNB Subsidiary to provide a
benefit in the form of CNB Common Stock or determined by reference to
the value of CNB Common Stock.
4.10. Ownership of Property; Insurance Coverage.
4.10.1. CNB and each CNB Subsidiary has good and, as to real
property, marketable title to all assets and properties owned by CNB or
each CNB Subsidiary in the conduct of its businesses, whether such
assets and properties are real or personal, tangible or intangible,
including assets and property reflected in the balance sheet contained
in the most recent CNB Financial Statements or acquired subsequent
thereto (except to the extent that such assets and properties have been
disposed of in the ordinary course of business, since the date of such
balance sheet), subject to no encumbrances, liens, mortgages, security
interests or pledges, except (i) those items which secure liabilities
for public or statutory obligations or any discount with, borrowing from
or other obligations to FHLB, inter-bank credit facilities, reverse
repurchase agreements or any transaction by a CNB Subsidiary acting in a
fiduciary capacity, and (ii) statutory liens for amounts not yet
delinquent or which are being contested in good faith. CNB and the CNB
Subsidiaries, as lessee, have the right under valid and existing leases
of real and personal properties used by CNB and the CNB Subsidiaries in
the conduct of their businesses to occupy or use all such properties as
presently occupied and used by each of them. Such existing leases and
commitments to lease constitute or will constitute operating leases for
both tax and financial accounting purposes and the lease expense and
minimum rental commitments with respect to such leases and lease
commitments are as disclosed in the notes to the CNB Financial
Statements.
4.10.2. With respect to all material agreements pursuant to which
CNB or any CNB Subsidiary has purchased securities subject to an
agreement to resell, if any, CNB or such
23
CNB Subsidiary, as the case may be, has a lien or security interest in
the securities or other collateral securing the repurchase agreement,
and the value of such collateral equals or exceeds the amount of the
debt secured thereby.
4.10.3. CNB and each CNB Subsidiary currently maintain insurance
considered by each of them to be reasonable for their respective
operations. Neither CNB nor any CNB Subsidiary, has received notice from
any insurance carrier on or before the date hereof that (i) such
insurance will be canceled or that coverage thereunder will be reduced
or eliminated, or (ii) premium costs with respect to such policies of
insurance will be substantially increased. There are presently no
material claims pending under such policies of insurance and no notices
have been given by CNB or any CNB Subsidiary under such policies. All
such insurance is valid and enforceable and in full force and effect
(other than insurance that expires in accordance with its terms), and
within the last three years CNB and each CNB Subsidiary has received
each type of insurance coverage for which it has applied and during such
periods has not been denied indemnification for any material claims
submitted under any of its insurance policies. CNB Disclosure Schedule
4.10.3 identifies all policies of insurance maintained by CNB and each
CNB Subsidiary, including the name of the insurer, the policy number,
the type of policy and any applicable deductibles, as well as the other
matters required to be disclosed under this Section 4.10.3.
4.11. Legal Proceedings.
Neither CNB nor any CNB Subsidiary is a party to any, and there are
no pending or, to CNB's Knowledge, threatened, legal, administrative,
arbitration or other proceedings, claims (whether asserted or unasserted),
actions or governmental investigations or inquiries of any nature, (i)
against CNB or any CNB Subsidiary, (ii) to which CNB or any CNB Subsidiary's
assets are or may be subject, (iii) challenging the validity or propriety of
any of the transactions contemplated by this Agreement, or (iv) which would
reasonably be expected to adversely affect the ability of CNB to perform
under this Agreement.
4.12. Compliance With Applicable Law.
4.12.1. Each of CNB and each CNB Subsidiary is in compliance in all
material respects with all applicable federal, state, local and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders or
decrees applicable to it, its properties, assets and deposits, its
business, and its conduct of business and its relationship with its
employees, including, without limitation, the Uniting and Strengthening
America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism (the "USA PATRIOT Act") of 2001, the Equal Credit
Opportunity Act, the Truth in Lending Act, the Real Estate Settlement
Procedures Act, the Consumer Credit Protection Act, the Fair Credit
Reporting Act, the Fair Debt Collections Act, the Fair Housing Act, the
Community Reinvestment Act of 1977 ("CRA"), the Home Mortgage Disclosure
Act, and all other applicable fair lending laws and other laws relating
to discriminatory business practices, and neither CNB nor any CNB
Subsidiary has received any written notice to the contrary.
4.12.2. Each of CNB and each CNB Subsidiary has all permits,
licenses, authorizations, orders and approvals of, and has made all
filings, applications and registrations with, all Governmental Entities
and Bank Regulators that are required in order to permit it to
24
own or lease its properties and to conduct its business as presently
conducted; all such permits, licenses, certificates of authority, orders
and approvals are in full force and effect and, to the Knowledge of CNB,
no suspension or cancellation of any such permit, license, certificate,
order or approval is threatened or will result from the consummation of
the transactions contemplated by this Agreement, subject to obtaining
the approvals set forth in Section 8.3.
4.12.3. For the period beginning July 1, 2002, neither CNB nor any
CNB Subsidiary has received any written notification or any other
communication from any Bank Regulator or Insurance Regulator (i)
asserting that CNB or any CNB Subsidiary is not in compliance with any
of the statutes, regulations or ordinances which such Bank Regulator or
Insurance Regulator enforces; (ii) threatening to revoke any license,
franchise, permit or governmental authorization which is material to CNB
or any CNB Subsidiary; (iii) requiring or threatening to require CNB or
any CNB Subsidiary, or indicating that CNB or any CNB Subsidiary may be
required, to enter into a cease and desist order, agreement or
memorandum of understanding or any other agreement with any federal or
state governmental agency or authority which is charged with the
supervision or regulation of banks or insurance agencies, or engages in
the insurance of bank deposits restricting or limiting, or purporting to
restrict or limit, in any material respect the operations of CNB or any
CNB Subsidiary, including without limitation any restriction on the
payment of dividends; or (iv) directing, restricting or limiting, or
purporting to direct, restrict or limit, in any material manner the
operations of CNB or any CNB Subsidiary (any such notice, communication,
memorandum, agreement or order described in this sentence is hereinafter
referred to as a "Regulatory Agreement"). Neither CNB nor any CNB
Subsidiary has consented to or entered into any Regulatory Agreement
that is currently in effect. The most recent regulatory rating given to
City National Bank as to compliance with the CRA is satisfactory or
better.
4.13. Employee Benefit Plans.
4.13.1 CNB Disclosure Schedule 4.13.1 contains a list of all
written and unwritten pension, retirement, profit-sharing, thrift,
savings, deferred compensation, stock option, employee stock ownership,
employee stock purchase, restricted stock, severance pay, retention,
vacation, bonus or other incentive plans, all employment, change in
control, consulting, severance and retention agreements, all other
written employee programs, arrangements or agreements, all medical,
vision, dental, disability, life insurance, workers' compensation,
employee assistance or other health or welfare plans, and all other
employee benefit or fringe benefit plans, including "employee benefit
plans" as that term is defined in Section 3(3) of ERISA, currently
adopted, maintained by, sponsored in whole or in part by, or contributed
to by CNB or any of its ERISA Affiliates for the benefit of employees,
former employees, retirees, dependents, spouses, directors, independent
contractors or other beneficiaries of CNB and under which employees,
former employees, retirees, dependents, spouses, directors, or other
beneficiaries of CNB are eligible to participate (collectively, the "CNB
Benefit Plans"). CNB has furnished or otherwise made available to NBT
true and complete copies of (i) the plan documents and summary plan
descriptions for each written CNB Benefit Plan, (ii) a summary of each
unwritten CNB Benefit Plan, (iii) the annual report (Form 5500 series)
for the three most recent years for each CNB Benefit Plan (if
applicable), (iv) the actuarial valuation reports with respect to each
tax-qualified CNB Benefit Plan that is a defined benefit plan for the
three most recent years, (v) all related trust agreements, insurance
contracts
25
or other funding agreements which implement the CNB Benefit Plans (if
applicable), (vi) the most recent IRS determination letter with respect
to each tax-qualified CNB Benefit Plan (or, for a CNB Benefit Plan
maintained under a pre-approved prototype or volume submitter plan, the
IRS determination letter on such pre-approved plan) and (vii) all
substantive correspondence relating to any CNB Benefit Plan addressed to
or received from the IRS, the Department of Labor or any other
Governmental Entity within the past 5 years. Schedule 4.13.1 sets forth
each CNB Benefit Plan that is a nonqualified deferred compensation plan
or arrangement and the aggregate amounts deferred under each such
nonqualified deferred compensation plan or arrangement as of May 31,
2005.
4.13.2 Except as set forth on the CNB Disclosure Schedule, all CNB
Benefit Plans are in compliance with (and have been managed and
administrated in accordance with) the applicable terms of ERISA, the
Code and any other applicable laws. Each CNB Benefit Plan governed by
ERISA that is intended to be a qualified retirement plan under Section
401(a) of the Code has either (i) received a favorable determination
letter from the Internal Revenue Service (and CNB is not aware of any
circumstances likely to result in revocation of any such favorable
determination letter) or timely application has been made therefore, or
(ii) is maintained under a prototype plan which has been approved by the
IRS and is entitled to rely upon the IRS National Office opinion letter
issued to the prototype plan sponsor. To the Knowledge of CNB, there
exists no fact which would adversely affect the qualification of any of
the CNB Benefit Plans intended to be qualified under Section 401(a) of
the Code, or of any threatened or pending claim against any of CNB
Benefit Plans or their fiduciaries by any participant, beneficiary or
Governmental Body.
4.13.3 Except as set forth on the CNB Disclosure Schedule 4.13.3,
no "defined benefit plan" (as defined in Section 414(j) of the Code) has
been maintained at any time by CNB or any of its ERISA Affiliates for
the benefit of CNB's employees or former employees.
4.13.4 Within the last six years, neither CNB nor any of its ERISA
Affiliates maintained or had any obligation to contribute to a CNB
Benefit Plan which is a "multiemployer plan" within the meaning of
Section 3(37) of ERISA, and within the last six years neither CNB nor
any of its ERISA Affiliates has incurred any withdrawal liability within
the meaning of Section 4201 of ERISA to any such "multiemployer plan."
Neither CNB nor any of its ERISA Affiliates has incurred any unsatisfied
liability (other than Pension Benefit Guaranty Corporation ("PBGC")
premiums) to the PBGC, the IRS or any other individual or entity under
Title IV of ERISA or Section 412 of the Code, and no event or condition
exists that could result in the imposition of any liability on CNB or
any of its ERISA Affiliates under such provisions that could have an
adverse effect on NBT.
4.13.5 CNB has materially complied with the notice and continuation
requirements of Parts 6 and 7 of Subtitle B of Title I of ERISA and
Section 4980B of the Code, and the regulations thereunder. All reports,
statements, returns and other information required to be furnished or
filed with respect to CNB Benefit Plans have been timely furnished,
filed or both in accordance with Sections 101 through 105 of ERISA and
Sections 6057 through 6059 of the Code, and they are true, correct and
complete in all material respects. Records with respect to CNB Benefit
Plans have been maintained in material compliance with Section 107 of
ERISA. Neither CNB nor any other fiduciary (as that term is defined in
Section 3(21) of ERISA) with
26
respect to any of CNB Benefit Plans has any material liability for any
breach of any fiduciary duties under Sections 404, 405 or 409 of ERISA.
4.13.6 CNB has not, with respect to any of CNB Benefit Plans, nor,
to CNB's Knowledge, has any administrator of any of CNB Benefit Plans,
the related trusts or any trustee thereof, engaged in any prohibited
transaction which would subject CNB, any ERISA Affiliate of CNB, any of
CNB Benefit Plans, any administrator or trustee or any party dealing
with any of CNB Benefit Plans or any such trusts, to a Tax or penalty on
prohibited transactions imposed by ERISA, Section 4975 of the Code, or
to any other liability under ERISA.
4.13.7 CNB has no liability for retiree health and life benefits
under any of CNB Benefit Plans.
4.13.8 Except as set forth on CNB Disclosure Schedule 4.13.8,
neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (A) result in
any payment (including severance or unemployment compensation) becoming
due to any director or any employee of CNB from CNB under any CNB
Benefit Plan, (B) materially increase any benefits otherwise payable
under any CNB Benefit Plan or (C) result in any acceleration of the time
of payment or vesting of any such benefit. Except as set forth on the
CNB Disclosure Schedule 4.13.8, no payments which is or may be made by,
from or with respect to any CNB Benefit Plan, either alone or in
conjunction with any other payment will or could properly be
characterized as an "excess parachute payment" under Section 280G of the
Code (or any corresponding provisions of state, local or foreign tax
law). No CNB Benefit Plan, either individually or collectively, provides
for any payment by CNB or any of its ERISA Affiliates that would not be
deductible under Code Sections 162(a)(1), 162(m) or 404.
4.13.9 The actuarial present values of all accrued deferred
compensation entitlements (including entitlements under any executive
compensation, supplemental retirement, or employment agreement) of
employees and former employees of CNB and their respective
beneficiaries, other than entitlements accrued pursuant to funded
retirement plans subject to the provisions of Section 412 of the Code or
Section 302 of ERISA, have been fully reflected on the Financial
Statements to the extent required by and in accordance with GAAP.
4.13.10 There is not, and has not been, any trust or fund
maintained by or contributed to by CNB or its employees to fund an
employee benefit plan which would constitute a Voluntary Employees'
Beneficiary Association or a "welfare benefit fund" within the meaning
of Section 419(a) of the Code.
4.13.11 No claim, lawsuit, arbitration or other action has been
asserted or instituted or, to the Knowledge of CNB, has been threatened
or is anticipated, against any CNB Benefit Plan (other than routine
claims for benefits and appeals of such claims), CNB, any director,
officer or employee thereof, or any of the assets of any trust of any
CNB Benefit Plan.
27
4.14. Brokers, Finders and Financial Advisors.
Neither CNB nor any CNB Subsidiary, nor any of their respective
officers, directors, employees or agents, has employed any broker, finder or
financial advisor in connection with the transactions contemplated by this
Agreement, or incurred any liability or commitment for any fees or
commissions to any such person in connection with the transactions
contemplated by this Agreement except for the retention of Austin Associates,
LLC by CNB and the fee payable pursuant thereto. A true and correct copy of
the engagement agreement with Austin Associates, LLC, setting forth the fee
payable to Austin Associates, LLC for its services rendered to CNB in
connection with the Merger and transactions contemplated by this Agreement,
is attached to CNB Disclosure Schedule 4.14.
4.15. Environmental Matters.
4.15.1. Except as may be set forth in CNB Disclosure Schedule 4.15,
with respect to CNB and each CNB Subsidiary:
(A) Each of CNB and the CNB Subsidiaries, the Participation
Facilities and to CNB's Knowledge the Loan Properties are, and have
been, in substantial compliance with, and are not liable under, any
Environmental Laws;
(B) CNB has received no written notice that there is any suit,
claim, action, demand, executive or administrative order,
directive, investigation or proceeding pending and, to CNB's
Knowledge, no such action is threatened, before any court,
governmental agency or other forum against it or any of the CNB
Subsidiaries or any Participation Facility (x) for alleged
noncompliance (including by any predecessor) with, or liability
under, any Environmental Law or (y) relating to the presence of or
release into the environment of any Materials of Environmental
Concern (as defined herein), whether or not occurring at or on a
site owned, leased or operated by it or any of the CNB Subsidiaries
or any Participation Facility;
(C) CNB has received no written notice that there is any suit,
claim, action, demand, executive or administrative order,
directive, investigation or proceeding pending and, to CNB's
Knowledge no such action is threatened, before any court,
governmental agency or other forum relating to or against any Loan
Property (or CNB or any of the CNB Subsidiaries in respect of such
Loan Property) (x) relating to alleged noncompliance (including by
any predecessor) with, or liability under, any Environmental Law or
(y) relating to the presence of or release into the environment of
any Materials of Environmental Concern, whether or not occurring at
or on a site owned, leased or operated by a Loan Property;
(D) To CNB's Knowledge, the properties currently owned or
operated by CNB or any CNB Subsidiary (including, without
limitation, soil, groundwater or surface water on, or under the
properties, and buildings thereon) are not contaminated with and do
not otherwise contain any Materials of Environmental Concern other
than as permitted under applicable Environmental Law;
(E) Neither CNB nor any CNB Subsidiary has received any
written notice, demand letter, executive or administrative order,
directive or request for information from any
28
federal, state, local or foreign governmental entity or any third
party indicating that it may be in violation of, or liable under,
any Environmental Law;
(F) To CNB's Knowledge, there are no underground storage tanks
on, in or under any properties owned or operated by CNB or any of
the CNB Subsidiaries or any Participation Facility, and to CNB's
Knowledge, no underground storage tanks have been closed or removed
from any properties owned or operated by CNB or any of the CNB
Subsidiaries or any Participation Facility; and
(G) To CNB's Knowledge, during the period of (s) CNB's or any
of the CNB Subsidiaries' ownership or operation of any of their
respective current properties or (t) CNB's or any of the CNB
Subsidiaries' participation in the management of any Participation
Facility, there has been no contamination by or release of
Materials of Environmental Concerns in, on, under or affecting such
properties. To CNB's Knowledge, prior to the period of (x) CNB's or
any of the CNB Subsidiaries' ownership or operation of any of their
respective current properties or (y) CNB's or any of the CNB
Subsidiaries' participation in the management of any Participation
Facility, there was no contamination by or release of Materials of
Environmental Concern in, on, under or affecting such properties.
(H) Neither CNB nor any other CNB Subsidiary has conducted any
environmental studies during the past ten years (other than Phase I
studies which did not indicate any contamination of the environment
by Materials of Environmental Concern) with respect to any
properties owned or leased by it or any of its Subsidiaries, or
with respect to any Loan Property or any Participation Facility.
4.15.2. "Loan Property" means any property in which the applicable
party (or a Subsidiary of it) holds a security interest, and, where
required by the context, includes the owner or operator of such
property, but only with respect to such property. "Participation
Facility" means any facility in which the applicable party (or a
Subsidiary of it) participates in the management (including all property
held as trustee or in any other fiduciary capacity) and, where required
by the context, includes the owner or operator of such property, but
only with respect to such property.
4.16. Loan Portfolio.
4.16.1. The allowance for loan losses reflected in the notes to
CNB's audited consolidated statement of financial condition at December
31, 2004 was, and the allowance for loan losses shown in the notes to
the unaudited consolidated financial statements for periods ending after
December 31, 2004 were, or will be, adequate, as of the dates thereof,
under GAAP.
4.16.2. CNB Disclosure Schedule 4.16.2 sets forth a listing, as of
the most recently available date (and in no event earlier than May 31,
2005), by account, of: (A) all loans (including loan participations) of
CNB or any other CNB Subsidiary that have been accelerated during the
past twelve months; (B) all loan commitments or lines of credit of CNB
or any other CNB Subsidiary which have been terminated by CNB or any
other CNB Subsidiary during the past twelve months by reason of a
default or adverse developments in the condition of the borrower or
other events or circumstances affecting the credit of the borrower; (C)
all loans, lines of credit and loan commitments as to which CNB or any
other CNB Subsidiary has given written
29
notice of its intent to terminate during the past twelve months; (D)
with respect to all commercial loans (including commercial real estate
loans), all notification letters and other written communications from
CNB or any other CNB Subsidiary to any of their respective borrowers,
customers or other parties during the past twelve months wherein CNB or
any other CNB Subsidiary has requested or demanded that actions be taken
to correct existing defaults or facts or circumstances which may become
defaults; (E) each borrower, customer or other party which has notified
CNB or any other CNB Subsidiary during the past twelve months of, or has
asserted against CNB or any other CNB Subsidiary, in each case in
writing, any "lender liability" or similar claim, and, to the knowledge
of CNB or any CNB Subsidiary, each borrower, customer or other party
which has given CNB or any other CNB Subsidiary any oral notification
of, or orally asserted to or against CNB or any other CNB Subsidiary,
any such claim; and (F) all loans, (1) that are contractually past due
90 days or more in the payment of principal and/or interest, (2) that
are on non-accrual status, (3) that as of May 31, 2005 are classified as
"Other Loans Specially Mentioned", "Special Mention", "Substandard",
"Doubtful", "Loss", "Classified", "Criticized", "Watch list" or words of
similar import, together with the principal amount of and accrued and
unpaid interest on each such Loan and the identity of the obligor
thereunder, (4) where a reasonable doubt exists as to the timely future
collectibility of principal and/or interest, whether or not interest is
still accruing or the loans are less than 90 days past due, (5) where
the interest rate terms have been reduced and/or the maturity dates have
been extended subsequent to the agreement under which the loan was
originally created due to concerns regarding the borrower's ability to
pay in accordance with such initial terms, or (6) where a specific
reserve allocation exists in connection therewith; and (G) all other
assets classified by CNB or any other CNB Subsidiary as real estate
acquired through foreclosure or in lieu of foreclosure, including
in-substance foreclosures, and all other assets currently held that were
acquired through foreclosure or in lieu of foreclosure.
4.16.3. All loans receivable (including discounts) and accrued
interest entered on the books of CNB and the CNB Subsidiaries arose out
of bona fide arm's-length transactions, were made for good and valuable
consideration in the ordinary course of CNB's or the appropriate CNB
Subsidiary's respective business, and the notes or other evidences of
indebtedness with respect to such loans (including discounts) are true
and genuine and are what they purport to be. The loans, discounts and
the accrued interest reflected on the books of CNB and the CNB
Subsidiaries are subject to no defenses, set-offs or counterclaims
(including, without limitation, those afforded by usury or
truth-in-lending laws), except as may be provided by bankruptcy,
insolvency or similar laws affecting creditors' rights generally or by
general principles of equity. All such loans are owned by CNB or the
appropriate CNB Subsidiary free and clear of any liens.
4.16.4. The notes and other evidences of indebtedness evidencing
the loans described above, and all pledges, mortgages, deeds of trust
and other collateral documents or security instruments relating thereto
are, in all material respects, valid, true and genuine, and what they
purport to be.
4.17. Related Party Transactions.
Neither CNB nor any CNB Subsidiary is a party to any transaction
(including any loan or other credit accommodation) with any Affiliate of CNB
or any CNB Subsidiary, except as set forth in CNB Disclosure Schedule 4.17.
All such transactions (a) were made in the ordinary
30
course of business, (b) were made on substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions with other Persons, and (c) did not involve more than
the normal risk of collectibility or present other unfavorable features. No
loan or credit accommodation to any Affiliate of CNB or any CNB Subsidiary is
presently in default or, during the three year period prior to the date of
this Agreement, has been in default or has been restructured, modified or
extended. Neither CNB nor any CNB Subsidiary has been notified that principal
or interest with respect to any such loan or other credit accommodation will
not be paid when due or that the loan grade classification accorded such loan
or credit accommodation by CNB is inappropriate.
4.18. Deposits.
None of the deposits of any CNB Subsidiary is a "brokered deposit"
as defined in 12 C.F.R. Section 337.6(a)(2).
4.19. Antitakeover Provisions Inapplicable; Required Vote.
The Board of Directors of CNB has, to the extent such statute is
applicable, taken all action (including appropriate approvals of the Board of
Directors of CNB) necessary to exclude NBT, the Merger, this Agreement and
the transactions contemplated hereby from the requirement of any
supermajority shareholder vote requirement of Section 912 of the NYBCL or any
other state "antitakeover" statute. The affirmative vote of two-thirds of the
issued and outstanding shares of CNB Common Stock is required to approve this
Agreement and the Merger under the NYBCL.
4.20. Registration Obligations.
Neither CNB nor any CNB Subsidiary is under any obligation,
contingent or otherwise, which will survive the Effective Time by reason of
any agreement to register any transaction involving any of its securities
under the Securities Act.
4.21. Risk Management Instruments.
All material interest rate swaps, caps, floors, option agreements,
futures and forward contracts and other similar risk management arrangements,
whether entered into for CNB's own account, or for the account of one or more
of CNB's Subsidiaries or their customers (all of which are set forth in CNB
Disclosure Schedule 4.21), were in all material respects entered into in
compliance with all applicable laws, rules, regulations and regulatory
policies, and to the Knowledge of CNB and each CNB Subsidiary, with
counterparties believed to be financially responsible at the time; and to
CNB's and each CNB Subsidiary's Knowledge each of them constitutes the valid
and legally binding obligation of CNB or such CNB Subsidiary, enforceable in
accordance with its terms (except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer and similar laws of general applicability relating to or affecting
creditors' rights or by general equity principles), and is in full force and
effect. Neither CNB nor any CNB Subsidiary, nor, to the Knowledge of CNB, any
other party thereto, is in breach of any of its obligations under any such
agreement or arrangement in any material respect.
31
4.22. Fairness Opinion.
CNB has received an opinion from Austin Associates, LLC to the
effect that, subject to the terms, conditions and qualifications set forth
therein, as of the date hereof, the Merger Consideration to be received by
the shareholders of CNB pursuant to this Agreement is fair to such
shareholders from a financial point of view. Such opinion has not been
amended or rescinded as of the date of this Agreement.
4.23. Intellectual Property.
CNB and each CNB Subsidiary owns or possesses valid and binding
licenses and other rights (subject to expirations in accordance with their
terms) to use all patents, copyrights, trade secrets, trade names, computer
software, servicemarks and trademarks used in their business, each without
payment, and neither CNB nor any CNB Subsidiary has received any notice of
conflict with respect thereto that asserts the rights of others. CNB and each
Significant Subsidiary of CNB have performed all the obligations required to
be performed, and are not in default in any respect, under any contract,
agreement, arrangement or commitment relating to any of the foregoing.
4.24. Duties as Fiduciary.
City National Bank has performed all of its duties in any capacity
as trustee, executor, administrator, registrar, guardian, custodian, escrow
agent, receiver, or other fiduciary in a fashion that complies with all
applicable laws, regulations, orders, agreements, xxxxx, instruments, and
common law standards. City National Bank has not received notice of any
claim, allegation, or complaint from any person that City National Bank
failed to perform these fiduciary duties in a manner that complies with all
applicable laws, regulations, orders, agreements, xxxxx, instruments, and
common law standards, except for notices involving matters that have been
resolved and any cost of such resolution is reflected in CNB's Financial
Statements.
4.25. Employees; Labor Matters.
4.25.1. CNB Disclosure Schedule 4.25.1 sets forth the following
information with respect to each CNB employee as of May 31, 2005: job
location, job title, current annual base salary, 2003 and 2004 bonuses
and 2003 and 2004 commissions, years of service, accrued but unused
vacation, personal and sick time, whether such employee is actively at
work or on leave of absence, disability or medical leave and whether
such employee is employed under written contract.
4.25.2. There are no labor or collective bargaining agreements to
which CNB or any CNB Subsidiary is a party. There is no union organizing
effort pending or, to the Knowledge of CNB, threatened against CNB or
any CNB Subsidiary. There is no labor strike, labor dispute (other than
routine employee grievances that are not related to union employees),
work slowdown, stoppage or lockout pending or, to the Knowledge of CNB,
threatened against CNB or any CNB Subsidiary. There is no unfair labor
practice or labor arbitration proceeding pending or, to the Knowledge of
CNB, threatened against CNB or any CNB Subsidiary (other than routine
employee grievances that are not related to union employees). CNB and
each CNB
32
Subsidiary is in compliance with all applicable laws respecting
employment and employment practices, terms and conditions of employment
and wages and hours, and are not engaged in any unfair labor practice.
Neither CNB nor any CNB Subsidiary is a party to, or bound by, any
agreement for the leasing of employees.
4.26. CNB Information Supplied
The information relating to CNB and any CNB Subsidiary to be
contained in the Merger Registration Statement, or in any other document
filed with any Bank Regulator or other Governmental Entity in connection
herewith, will not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in light of
the circumstances in which they are made, not misleading.
4.27 Securities Documents.
CNB has made available to NBT copies of its (i) annual report on
Form 10-K for the year ended December 31, 2004, (ii) quarterly report on Form
10-Q for the quarter ended March 31, 2005 and (iii) proxy materials used or
for use in connection with its meeting of shareholders held in 2005. Such
reports and such proxy materials complied, at the time filed with the SEC, in
all material respects, with the Securities Laws. CNB has taken, or will take,
any and all actions necessary to comply with the applicable provisions of the
Xxxxxxxx-Xxxxx Act of 2002, and all rules and regulations promulgated
thereunder, that are currently in effect or that become effective prior to
Closing and are required to be complied with prior to Closing.
4.28. Internal Controls
None of CNB or any CNB Subsidiary's records, systems, controls data
or information are recorded, stored, maintained, operated or otherwise wholly
or party 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 their
exclusive ownership and direct control except as would not reasonably be
expected to have a material adverse effect on the system of internal
accounting controls described in the next sentence. CNB has devised and
maintains 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 and the applicable provisions
of the Securities Laws.
4.29. Bank Owned Life Insurance.
CNB and each CNB Subsidiary has obtained the written consent of each
employee on whose behalf bank owned life insurance ("BOLI") has been
purchased. City National Bank has taken all actions necessary to comply with
applicable law in connection with its purchase of BOLI. CNB Disclosure
Schedule 4.29 sets forth all BOLI owned by CNB or any CNB Subsidiary.
33
4.30. American Jobs Creation Act.
CNB and each CNB Subsidiary has taken, or will take, any and all
actions necessary to comply with the provisions of the American Jobs Creation
Act of 2004, and all rules and regulations promulgated thereunder, that are
currently in effect or that become effective prior to Closing and are
required to be complied with prior to Closing; provided, however, that until
IRS regulations are promulgated under Section 409A of the Code, CNB and each
CNB Subsidiary shall only be required to make good faith efforts to comply
with Section 409A of the Code.
4.31. Termination of Adirondack Advisory Board.
4.31.1. CNB and each CNB Subsidiary has taken any and all actions
necessary to terminate the advisory board created pursuant to Section
4.13 of the Agreement and Plan of Merger by and among CNB, CNB
Acquisition Corp. and Adirondack Financial Services Bancorp, Inc., dated
as of January 23, 1999 (the "Adirondack Advisory Board"). Neither CNB
nor any CNB Subsidiary has any continuing obligations or commitments
with respect to the Adirondack Advisory Board.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF NBT
NBT represents and warrants to CNB that the statements contained in
this Article V are correct as of the date of this Agreement and will be
correct as of the Closing Date (as though made then and as though the Closing
Date were substituted for the date of this Agreement throughout this Article
V), subject to the standard set forth in Section 5.1 and except as set forth
in the NBT Disclosure Schedule delivered by NBT to CNB on the date hereof,
and except to any representation of warranty which specifically relates to an
earlier date, which only need be so correct as of such earlier date. NBT has
made a good faith effort to ensure that the disclosure on each schedule of
the NBT Disclosure Schedule corresponds to the section referenced herein.
However, for purposes of the NBT Disclosure Schedule, any item disclosed on
any schedule therein is deemed to be fully disclosed with respect to all
schedules under which such item may be relevant as and to the extent that it
is reasonably clear on the face of such schedule that such item applies to
such other schedule. References to the Knowledge of NBT shall include the
Knowledge of NBT Bank.
5.1. Standard.
No representation or warranty of NBT contained in this Article V
shall be deemed untrue or incorrect, and NBT shall not be deemed to have
breached a representation or warranty, as a consequence of the existence 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 paragraph of Article V, has had or is reasonably
expected to have a Material Adverse Effect, disregarding for these purposes
(x) any qualification or exception for, or reference to, materiality in any
such representation or warranty and (y) any use of the terms "material",
"materially", "in all material respects", "Material Adverse Effect" or
similar terms or phrases in any such representation or warranty. The
foregoing standard shall not apply to representations
34
and warranties contained in Sections 5.2 (other than the last sentence
of Sections 5.2.1 and 5.2.2), 5.3 and 5.4, which shall be deemed untrue,
incorrect and breached if they are not true and correct in all material
respects.
5.2. Organization.
5.2.1. NBT is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware, and is duly
registered as a financial holding company under the BHCA. NBT has full
corporate power and authority to carry on its business as now conducted
and is duly licensed or qualified to do business in the states of the
United States and foreign jurisdictions where its ownership or leasing
of property or the conduct of its business requires such qualification.
5.2.2. NBT Bank is a national banking association duly organized,
and validly existing under the laws of the United States. The deposits
in NBT Bank are insured by the FDIC to the fullest extent permitted by
law, and all premiums and assessments required to be paid in connection
therewith have been paid when due. NBT Bank is a member of the Federal
Reserve System and FHLB and owns the requisite amount of stock of each.
5.2.3. NBT Disclosure Schedule 5.2.3 sets forth each NBT
Subsidiary. Each NBT Subsidiary (other than NBT Bank) is a corporation
or limited liability or other legal entity, as set forth on NBT
Disclosure Schedule 5.2.3, duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation or
organization.
5.2.4. The respective minute books of NBT and each NBT Subsidiary
accurately records, in all material respects, all material corporate
actions of their respective shareholders and boards of directors
(including committees).
5.2.5. Prior to the date of this Agreement, NBT has made available
to CNB true and correct copies of the certificate of incorporation or
charter and bylaws of NBT and NBT Bank and the NBT Subsidiaries.
5.3. Capitalization.
5.3.1. The authorized capital stock of NBT consists of 50,000,000
shares of NBT Common Stock, of which 34,400,991 shares are outstanding
(net of 1,976,636 shares held in treasury), validly issued, fully paid
and nonassessable and free of preemptive rights at March 31, 2005, and
2,500,000 shares of preferred stock, $.01 par value ("NBT Preferred
Stock"), 50,000 of which are designated as Series A Junior Participating
Preferred Stock, none of which were outstanding at March 31, 2005.
Neither NBT nor any NBT Subsidiary has or is bound by any Rights of any
character relating to the purchase, sale or issuance or voting of, or
right to receive dividends or other distributions on any shares of NBT
Common Stock, or any other security of NBT or any securities
representing the right to vote, purchase or otherwise receive any shares
of NBT Common Stock or any other security of NBT, other than shares
issuable under the NBT Stock Benefit Plans and the NBT Rights Agreement.
5.3.2. NBT owns all of the capital stock of NBT Bank free and clear
of any lien or encumbrance. Except as set forth in NBT Disclosure
Schedule 5.3.2, either NBT or NBT
35
Bank owns all of the outstanding shares of capital stock of each NBT
Subsidiary free and clear of all liens, security interests, pledges,
charges, encumbrances, agreements and restrictions of any kind or
nature.
5.3.3. No bonds, debentures, notes or other indebtedness having the
right to vote on any matters on which NBT's shareholders may vote has
been issued by NBT and are outstanding.
5.4. Authority; No Violation.
5.4.1. NBT has full corporate power and authority to execute and
deliver this Agreement and, subject to receipt of the required
Regulatory Approvals, to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement by NBT and the
completion by NBT of the transactions contemplated hereby, up to and
including the Merger, have been duly and validly approved by the Board
of Directors of NBT, and no other corporate proceedings on the part of
NBT are necessary to complete the transactions contemplated hereby, up
to and including the Merger. This Agreement has been duly and validly
executed and delivered by NBT, and subject to the receipt of the
Regulatory Approvals described in Section 8.3 and approval by the
shareholders of CNB and due and valid execution and delivery of this
Agreement by CNB, constitutes the valid and binding obligations of NBT,
enforceable against NBT in accordance with its terms, subject to
applicable bankruptcy, insolvency and similar laws affecting creditors'
rights generally, and subject, as to enforceability, to general
principles of equity.
5.4.2. (A) The execution and delivery of this Agreement by NBT, (B)
subject to receipt of the Regulatory Approvals, and compliance by CNB
and NBT with any conditions contained therein, and subject to the
receipt of the approval of the shareholders of CNB, the consummation of
the transactions contemplated hereby, and (C) compliance by NBT with any
of the terms or provisions hereof will not (i) conflict with or result
in a breach of any provision of the certificate of incorporation or
bylaws of NBT or any NBT Subsidiary or the charter and bylaws of NBT;
(ii) violate any statute, code, ordinance, rule, regulation, judgment,
order, writ, decree or injunction applicable to NBT or any NBT
Subsidiary or any of their respective properties or assets; or (iii)
violate, conflict with, result in a breach of any provisions of,
constitute a default (or an event which, with notice or lapse of time,
or both, would constitute a default), under, result in the termination
of, accelerate the performance required by, or result in a right of
termination or acceleration or the creation of any lien, security
interest, charge or other encumbrance upon any of the properties or
assets of NBT, NBT Bank or any NBT Subsidiary under any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, deed of
trust, license, lease, agreement or other investment or obligation to
which any of them is a party, or by which they or any of their
respective properties or assets may be bound or affected, except for
such violations, conflicts, breaches or defaults under clause (ii) or
(iii) hereof which, either individually or in the aggregate, will not
have a Material Adverse Effect on NBT and the NBT Subsidiaries taken as
a whole.
5.5. Consents.
Except for (a) the receipt of the Regulatory Approvals and
compliance with any conditions contained therein, (b) the filing of the
Certificate of Merger with the Delaware
36
Department of State and the New York Department of State, (c) the filing
with the SEC of (i) the Merger Registration Statement and (ii) such reports
under Sections 13(a), 13(d), 13(g) and 16(a) of the Exchange Act as may be
required in connection with this Agreement and the transactions contemplated
hereby and the obtaining from the SEC of such orders as may be required in
connection therewith, (d) approval of the listing of NBT Common Stock to be
issued in the Merger on the NASDAQ National Market, (e) such notices as are
required to be made under the securities or "Blue Sky" laws of various states
in connection with the issuance of the shares of NBT Common Stock pursuant to
this Agreement, and (f) the approval of this Agreement by the requisite vote
of the shareholders of CNB, no consents, waivers or approvals of, or filings
or registrations with, any Governmental Entity or Bank Regulator are
necessary, and, to the Knowledge of NBT, no consents, waivers or approvals
of, or filings or registrations with, any other third parties are necessary,
in connection with (x) the execution and delivery of this Agreement by NBT
and the completion by NBT of the Merger or (y) the execution and delivery of
the Agreement and Plan of Bank Merger and the completion of the Bank Merger.
NBT has no reason to believe that (i) any Regulatory Approvals or other
required consents or approvals will not be received or will include the
imposition of any condition or requirement that could reasonably be expected
by NBT to result in a Material Adverse Effect on NBT and its Subsidiaries,
taken as a whole, or that (ii) any public body or authority having
jurisdiction over affairs of NBT, the consent or approval of which is not
required or to which a filing is not required, will object to the completion
of the transactions contemplated by this Agreement.
5.6. Financial Statements.
5.6.1. NBT has previously made available to CNB the NBT Financial
Statements covering periods ended prior to the date hereof. The NBT
Financial Statements have been prepared in accordance with GAAP, and
(including the related notes where applicable) fairly present (subject
in the case of the unaudited interim statements to normal year-end
adjustments) the consolidated financial position, results of operations
and cash flows of NBT and the NBT Subsidiaries on a consolidated basis
as of and for the respective periods ending on the dates thereof, in
accordance with GAAP during the periods involved, except as indicated in
the notes thereto, or in the case of unaudited statements, as permitted
by Form 10-Q.
5.6.2. At the date of each balance sheet included in the NBT
Financial Statements, NBT did not have any liabilities, obligations or
loss contingencies of any nature (whether absolute, accrued, contingent
or otherwise) of a type required to be reflected in such NBT Financial
Statements or in the footnotes thereto which are not fully reflected or
reserved against therein or fully disclosed in a footnote thereto,
except for liabilities, obligations and loss contingencies which are not
material individually or in the aggregate or which are incurred in the
ordinary course of business, consistent with past practice, and except
for liabilities, obligations and loss contingencies which are within the
subject matter of a specific representation and warranty herein and
subject, in the case of any unaudited statements, to normal, recurring
audit adjustments and the absence of footnotes.
5.7. No Material Adverse Effect.
Except as disclosed in NBT's Securities Documents filed on or prior
to the date hereof, NBT and the NBT Subsidiaries, taken as a whole, have not
suffered any Material Adverse Effect since December 31, 2004 and no event has
occurred or circumstance arisen since that date
37
which, in the aggregate, has had or is reasonably likely to have a
Material Adverse Effect on NBT and the NBT Subsidiaries, taken as a whole.
5.8. Legal Proceedings.
Except as set forth in NBT's Securities Documents or as set forth at
NBT Disclosure Schedule 5.8. neither NBT nor any NBT Subsidiary is a party to
any, and there are no pending or, to the Knowledge of NBT, threatened, legal,
administrative, arbitration or other proceedings, claims (whether asserted or
unasserted), actions or governmental investigations or inquiries of any
nature (i) against NBT or any NBT Subsidiary, (ii) to which NBT or any NBT
Subsidiary's assets are or may be subject, (iii) challenging the validity or
propriety of any of the transactions contemplated by this Agreement, or (iv)
which would reasonably be expected to adversely affect the ability of NBT to
perform under this Agreement, except for any proceeding, claim, action,
investigation or inquiry which, if adversely determined, individually or in
the aggregate, could not be reasonably expected to have a Material Adverse
Effect.
5.9. Securities Documents.
NBT has made available to CNB copies of its (i) annual report on
Form 10-K for the year ended December 31, 2004, (ii) quarterly report on Form
10-Q for the quarter ended March 31, 2005 and (iii) proxy materials used or
for use in connection with its meeting of shareholders held in 2005. Such
reports and such proxy materials complied, at the time filed with the SEC, in
all material respects, with the Securities Laws.
5.10. Antitakeover Provisions Inapplicable.
The transactions contemplated by this Agreement are not subject to
the requirements of any "moratorium," "control share," "fair price,"
"affiliate transactions," "business combination" or other antitakeover laws
and regulations of any state, including the provisions of Section 203 of the
DGCL applicable to NBT or any NBT Subsidiary.
5.11. NBT Common Stock
The shares of NBT Common Stock to be issued pursuant to this
Agreement, when issued in accordance with the terms of this Agreement, will
be duly authorized, validly issued, fully paid and non-assessable and subject
to no preemptive rights.
ARTICLE VI
COVENANTS OF CNB
6.1. Conduct of Business.
6.1.1. Affirmative Covenants. During the period from the date of
this Agreement to the Effective Time, except with the written consent of
NBT, CNB will, and it will cause each CNB Subsidiary to: operate its
business only in the usual, regular and ordinary course of business; use
reasonable efforts to preserve intact its business organization and
assets and maintain its rights and franchises; and voluntarily take no
action which would: (i) adversely affect the ability of the parties to
obtain the Regulatory Approvals or materially increase the
38
period of time necessary to obtain the Regulatory Approvals, or (ii)
adversely affect its ability to perform its covenants and agreements
under this Agreement.
6.1.2. Negative Covenants. CNB agrees that from the date of this
Agreement to the Effective Time, except as otherwise specifically
permitted or required by this Agreement or consented to by NBT in
writing (which consent shall not be unreasonably withheld, conditioned
or delayed), it will not, and it will cause each of the CNB Subsidiaries
not to:
(A) change or waive any provision of its Certificate of
Incorporation (or Articles of Association in the case of City
National Bank), Charter or Bylaws, except as required by law;
(B) change the number of authorized or issued shares of its
capital stock, issue any shares of CNB Common Stock that are held
as Treasury Shares as of the date of this Agreement, or issue or
grant any Right or agreement of any character relating to its
authorized or issued capital stock or any securities convertible
into shares of such stock, make any grant or award under the CNB
Stock Benefit Plans, or split, combine or reclassify any shares of
capital stock, or declare, set aside or pay any dividend or other
distribution in respect of capital stock, or redeem or otherwise
acquire any shares of capital stock, except that CNB may issue
shares of CNB Common Stock upon the valid exercise, in accordance
with the information set forth in CNB Disclosure Schedule 4.3.1, of
presently outstanding CNB Options issued under the CNB Stock
Benefit Plans, and (ii) CNB may declare and pay its regular
quarterly cash dividend of $0.21 per share with payment and record
dates consistent with past practice (provided that the declaration
of the last quarterly dividend by CNB prior to the Effective Time
and the payment thereof shall be coordinated with NBT so that
holders of CNB Common Stock do not receive dividends on both CNB
Common Stock and NBT Common Stock received in the Merger in respect
of such quarter or fail to receive a dividend on at least one of
the CNB Common Stock or NBT Common Stock received in the Merger in
respect of such quarter).
(C) enter into, amend in any material respect or terminate any
material contract or agreement (including without limitation any
settlement agreement with respect to litigation) except in the
ordinary course of business;
(D) Make application for the opening or closing of any, or
open or close any, branch or automated banking facility;
(E) grant or agree to pay any bonus, severance or termination
to, or enter into, renew or amend any employment agreement,
severance agreement and/or supplemental executive agreement with,
or increase in any manner the compensation or fringe benefits of,
any of its directors, officers or employees, except (i) as may be
required pursuant to commitments existing on the date hereof and
set forth on CNB Disclosure Schedules 4.9.1 and 4.13.1 or as
required pursuant to Section 7.8 of this Agreement, or (ii) as
otherwise contemplated by this Agreement. If the Closing Date shall
occur on or after January 1, 2006, CNB may provide employees
(except for officers and Current CNB Employees (as defined in
Section 7.8.2)) merit pay increases of no more than 4.0% of each
respective employee's annual base salary or hourly wage rate, as
applicable, in the ordinary course of business consistent with past
practices. If the Closing Date shall occur on or after January 1,
2006, each Current CNB Employee shall receive an increase in their
respective annual base salary based on the following
39
formula: the product of (x) .04 and (y) a fraction, the numerator
of which is the number of days from January 1, 2006 to the
respective anniversary date of the Current CNB Employee's date of
employment, and the denominator of which is 365. If the Closing
Date shall occur on or before December 30, 2005, CNB may,
immediately prior to the Closing Date, pay a prorated bonus to its
then current officers and full-time employees (except for Current
CNB Employees), in the amount of 4% of their 2005 annual base
salary, consistent with its past practices; provided, however, that
if the Closing Date shall occur on December 31, 2005, CNB may, on
or before the Closing Date, pay a bonus to all of its then current
officers and full-time employees, in the amount of 4% of their 2005
annual base salary, consistent with past practices. If the Closing
Date shall occur on or after January 1, 2006, CNB may (xx) pay a
bonus to all of its then current officers and full-time employees,
in the amount of 4% of their 2005 annual base salary, consistent
with past practices and (yy) immediately prior to the Closing Date,
pay an additional prorated bonus to its then current officers and
full-time employees (except for Current CNB Employees), in the
amount of 4% of their 2006 annual base salary, consistent with past
practices. Neither CNB nor any CNB Subsidiary shall hire or promote
any employee to a rank having a title of vice president or other
more senior rank or hire any new employee at an annual rate of
compensation in excess of $20,000; provided, however, that a CNB
Subsidiary may hire at-will, non-officer employees at an annual
compensation rate not to exceed $20,000 to fill vacancies that may
from time to time arise in the ordinary course of business;
provided, further, that that neither CNB or any CNB Subsidiary
shall hire any new employee without first seeking to fill any
position internally and, failing that, through the use of temporary
personnel. Neither CNB nor or any CNB Subsidiary shall pay expenses
of any employee or director for attending conventions or similar
meetings held after the date hereof;
(F) enter into or, except as may be required by law,
materially modify any pension, retirement, stock option, stock
purchase, stock appreciation right, stock grant, savings, profit
sharing, deferred compensation, supplemental retirement,
consulting, bonus, group insurance or other employee benefit,
incentive or welfare contract, plan or arrangement, or any trust
agreement related thereto, in respect of any of its directors,
officers or employees; or make any contributions to any defined
contribution or defined benefit plan not in the ordinary course of
business consistent with past practice, NBT acknowledging that CNB
may immediately prior to the Closing Date make a final prorated
contribution based on the number of days that have elapsed since
January 1, 2005 and until the date on which the Closing Date shall
occur, to the City National Bank and Trust Company of Gloversville
Profit Sharing Plan of amounts accrued or to be accrued consistent
with its normal prior monthly accruals for contribution to such
plan, except as may be required by applicable law;
(G) merge or consolidate CNB or any CNB Subsidiary with any
other corporation; sell or lease all or any substantial portion of
the assets or business of CNB or any CNB Subsidiary; make any
acquisition of all or any substantial portion of the business or
assets of any other Person other than in connection with
foreclosures, settlements in lieu of foreclosure, troubled loan or
debt restructuring, or the collection of any loan or credit
arrangement between CNB, or any CNB Subsidiary, and any other
Person; enter into a purchase and assumption transaction with
respect to deposits and liabilities; incur deposit liabilities,
other than liabilities incurred in the ordinary course of business
consistent with past practice and in keeping with prevailing
competitive rates; permit the revocation or surrender by any CNB
Subsidiary of its
40
certificate of authority to maintain, or file an application for
the relocation of, any existing branch office, or file an
application for a certificate of authority to establish a new
branch office;
(H) sell or otherwise dispose of the capital stock of CNB or
sell or otherwise dispose of any asset of CNB or of any CNB
Subsidiary other than in the ordinary course of business consistent
with past practice; except for transactions with the FHLB, subject
any asset of CNB or of any CNB Subsidiary to a lien, pledge,
security interest or other encumbrance (other than in connection
with deposits, repurchase agreements, bankers acceptances, "pledges
in connection with acceptance of governmental deposits, and
transactions in "federal funds" and the satisfaction of legal
requirements in the exercise of trust powers) other than in the
ordinary course of business consistent with past practice; incur
any indebtedness for borrowed money (or guarantee any indebtedness
for borrowed money), except in the ordinary course of business
consistent with past practice;
(I) take any action which would result in any of the
representations and warranties of CNB set forth in this Agreement
becoming untrue as of any date after the date hereof or in any of
the conditions set forth in Article IX hereof not being satisfied,
except in each case as may be required by applicable law;
(J) change its method, practice or principle of accounting,
except as may be required from time to time by GAAP (without regard
to any optional early adoption date) or regulatory accounting
principles or by any Bank Regulator responsible for regulating CNB,
City National Bank or any CNB Subsidiary;
(K) waive, release, grant or transfer any material rights of
value or modify or change in any material respect any existing
material agreement or indebtedness to which CNB or any CNB
Subsidiary is a party;
(L) purchase any securities, or purchase any other securities
except securities (i) rated "A" or higher by either Standard &
Poor's Ratings Services or Xxxxx'x Investors Service, (ii) having a
face amount in the aggregate of not more than $500,000, (iii) with
a weighted average life of not more than two years and (iv)
otherwise in the ordinary course of business consistent with past
practice;
(M) except as specifically provided below, and except for
commitments issued prior to the date of this Agreement which have
not yet expired and which have been disclosed on the CNB Disclosure
Schedule 6.1.2(M), and the renewal of existing lines of credit,
make any new loan or other credit facility commitment (including
without limitation, loan participations, lines of credit and
letters of credit) to any borrower or group of affiliated borrowers
in excess of $100,000 in the aggregate for unsecured loans and
$500,000 in the aggregate for loans secured by assets other than
real estate. In addition, the following require the prior consent
of NBT: a residential loan of $500,000 or greater (except for
residential loans sold as to which there is an agreement to sell on
a non-recourse basis); a construction loan of $2,000,000 or
greater; an unsecured loan of $100,000 or greater; a secured
commercial business loan of $500,000 or greater; and a commercial
real estate loan of $2,000,000 or greater; or purchase, invest in
or originate any finance lease or any loan secured by a lease of
personal property;
41
(N) enter into, renew, extend or modify any other transaction
(other than a deposit transaction) with any Affiliate;
(O) enter into any futures contract, option, interest rate
caps, interest rate floors, interest rate exchange agreement or
other agreement or take any other action for purposes of hedging
the exposure of its interest-earning assets and interest-bearing
liabilities to changes in market rates of interest;
(P) except for the execution of this Agreement, and actions
taken or which will be taken in accordance with this Agreement and
performance thereunder, take any action that would give rise to a
right of payment to any individual under any employment agreement;
(Q) make any change in policies in existence on the date of
this Agreement with regard to: the extension of credit, or the
establishment of reserves with respect to the possible loss thereon
or the charge off of losses incurred thereon; investments;
asset/liability management; or other material banking policies in
any material respect except as may be required by changes in
applicable law or regulations, GAAP or regulatory accounting
principles or by a Bank Regulator;
(R) except for the execution of this Agreement, and the
transactions contemplated therein, take any action that would give
rise to an acceleration of the right to payment to any individual
under any CNB Benefit Plan;
(S) make any capital expenditures in excess of $25,000
individually or $50,000 in the aggregate, other than pursuant to
binding commitments existing on the date hereof which are set forth
on CNB Disclosure Schedule 6.1.2(S) and other than expenditures
necessary to maintain existing assets in good repair;
(T) purchase or otherwise acquire, or sell or otherwise
dispose of, any assets or incur any liabilities other than in the
ordinary course of business consistent with past practices and
policies;
(U) sell any participation interest in any loan (other than
sales of loans secured by one- to four-family real estate that are
consistent with past practice) unless NBT has been given the first
opportunity and a reasonable time to purchase any loan
participation being sold, or purchase any participation interest in
any loan other than purchases of participation interests from NBT;
(V) undertake or enter into any lease, contract or other
commitment for its account, other than in the normal course of
providing credit to customers as part of its banking business,
involving a payment by CNB or any CNB Subsidiary of more than
$25,000 annually, or containing any financial commitment extending
beyond 12 months from the date hereof;
(W) pay, discharge, settle or compromise any claim, action,
litigation, arbitration or proceeding, other than any such payment,
discharge, settlement or compromise in the ordinary course of
business consistent with past practice that involves solely money
damages in the amount not in excess of $25,000 individually or
$50,000 in the aggregate, and that does
42
not create negative precedent for other pending or potential
claims, actions, litigation, arbitration or proceedings;
(X) foreclose upon or take a deed or title to any commercial
real estate without first conducting a Phase I environmental
assessment of the property or foreclose upon any commercial real
estate if such environmental assessment indicates the presence of
Materials of Environmental Concern;
(Y) purchase or sell any mortgage loan servicing rights other
than in the ordinary course of business consistent with past
practice;
(Z) issue any broadly distributed communication of a general
nature to employees (including general communications relating to
benefits and compensation) without prior consultation with NBT and,
to the extent relating to post-Closing employment, benefit or
compensation information without the prior consent of NBT (which
shall not be unreasonably withheld, conditioned or delayed) or
issue any broadly distributed communication of a general nature to
customers without the prior approval of NBT (which shall not be
unreasonably withheld), except as required by law or for
communications in the ordinary course of business consistent with
past practice that do not relate to the Merger or other
transactions contemplated hereby;
(AA) agree to do any of the foregoing.
6.2. Current Information.
6.2.1. During the period from the date of this Agreement to the
Effective Time, CNB will cause one or more of its representatives to
confer with representatives of NBT and report the general status of its
ongoing operations at such times as NBT may reasonably request. CNB will
promptly notify NBT of any material change in the normal course of its
business or in the operation of its properties and, to the extent
permitted by applicable law, of any governmental complaints,
investigations or hearings (or communications indicating that the same
may be contemplated), or the institution or the threat of material
litigation involving CNB or any CNB Subsidiary. Without limiting the
foregoing, senior officers of NBT and CNB shall meet on a reasonably
regular basis (expected to be at least monthly) to review the financial
and operational affairs of CNB and its Subsidiaries, in accordance with
applicable law, and CNB shall give due consideration to NBT's input on
such matters, with the understanding that, notwithstanding any other
provision contained in this Agreement, neither NBT nor any NBT
Subsidiary shall under any circumstance be permitted to exercise control
of CNB or any CNB Subsidiary prior to the Effective Time.
6.2.2. CNB and NBT shall meet on a regular basis to discuss and
plan for the conversion of data processing and related electronic
informational systems of CNB to those used by NBT, which planning shall
include, but not be limited to, discussion of the possible termination
by CNB of third-party service provider arrangements effective at the
Effective Time or at a date thereafter, non-renewal of personal property
leases and software licenses used by CNB in connection with its systems
operations, retention of outside consultants and additional employees to
assist with the conversion, and outsourcing, as appropriate, of
proprietary or self-provided system services, it being understood that
neither CNB shall be obligated to take any
43
such action prior to the Effective Time and, unless CNB otherwise agrees
and provided it is permitted by applicable law, no conversion shall take
place prior to the Effective Time. In the event that CNB takes, at the
request of NBT, any action relative to third parties to facilitate the
conversion that results in the imposition of any termination fees or
charges, NBT shall indemnify CNB for any such fees and charges, and the
costs of reversing the conversion process, if for any reason the Merger
is not consummated for any reason other than a breach of this Agreement
by CNB, or a termination of this Agreement under Section 11.1.7 or
11.1.8.
6.2.3. CNB shall provide NBT, within ten (10) business days of the
end of each calendar month, a written list of nonperforming assets (the
term "nonperforming assets," for purposes of this subsection, means (i)
loans that are "troubled debt restructuring" as defined in Statement of
Financial Accounting Standards No. 15, "Accounting by Debtors and
Creditors for Troubled Debt Restructuring," (ii) loans on nonaccrual,
(iii) real estate owned, (iv) all loans ninety (90) days or more past
due) as of the end of such month and (iv) and impaired loans. Within ten
(10) business days of the end of each calendar month, CNB shall provide
NBT with a schedule of all (x) loan grading changes and (y) loan
approvals, which schedule shall indicate the loan amount, loan type and
other material features of the loan.
6.2.4. CNB shall promptly inform NBT upon receiving notice of any
legal, administrative, arbitration or other proceedings, demands,
notices, audits or investigations (by any federal, state or local
commission, agency or board) relating to the alleged liability of CNB or
any CNB Subsidiary under any labor or employment law.
6.3. Access to Properties and Records.
Subject to Section 12.1, CNB shall permit NBT access upon reasonable
notice to its properties and those of the CNB Subsidiaries, and shall
disclose and make available to NBT during normal business hours all of its
books, papers and records relating to the assets, properties, operations,
obligations and liabilities, including, but not limited to, all books of
account (including the general ledger), tax records, minute books of
directors' (other than minutes that discuss any of the transactions
contemplated by this Agreement or any other subject matter CNB reasonably
determines should be treated as confidential) and shareholders' meetings,
organizational documents, Bylaws, material contracts and agreements, filings
with any regulatory authority, litigation files, plans affecting employees,
and any other business activities or prospects in which NBT may have a
reasonable interest; provided, however, that CNB shall not be required to
take any action that would provide access to or to disclose information where
such access or disclosure, in CNB's reasonable judgment, would interfere with
the normal conduct of CNB's business or would violate or prejudice the rights
or business interests or confidences of any customer or other person or would
result in the waiver by it of the privilege protecting communications between
it and any of its counsel or contravene any applicable law. CNB shall provide
and shall request its auditors to provide NBT with such historical financial
information regarding it (and related audit reports and consents) as NBT may
reasonably request for Securities Law disclosure purposes. NBT shall use
commercially reasonable efforts to minimize any interference with CNB's
regular business operations during any such access to CNB's property, books
and records. CNB and each CNB Subsidiary shall permit NBT, at its expense, to
cause a "phase I environmental audit" and a "phase II environmental audit" to
be performed at any physical location owned or occupied by CNB or any CNB
Subsidiary. If NBT causes a "phase I environmental audit" or a "phase II
environmental audit" to be performed, then
44
NBT agrees to use all commercially reasonable efforts to cause any such
audit to be completed as soon as reasonably practicable after commencement
and to restore the property to its original condition after completion.
6.4. Financial and Other Statements.
6.4.1. Promptly upon receipt thereof, CNB will furnish to NBT
copies of each annual, interim or special audit of the books of CNB and
the CNB Subsidiaries made by its independent accountants and copies of
all internal control reports submitted to CNB by such accountants, or by
any other accounting firm rendering internal audit services, in
connection with each annual, interim or special audit of the books of
CNB and the CNB Subsidiaries made by such accountants.
6.4.2. As soon as reasonably available, but in no event later than
the date such documents are filed with the FRB, OCC or FDIC, CNB will
deliver to NBT the documents filed by CNB or City National Bank. Within
25 days after the end of each month, CNB will deliver to NBT a
consolidated balance sheet and a consolidated statement of operations,
without related notes, for such month prepared in accordance with
current financial reporting practices, as well as a month-end and year
to date comparison to budget.
6.4.3. As soon as reasonably available, but in no event later than
the date such documents are filed with the SEC, CNB will deliver NBT the
Securities Documents filed by it with the SEC under the Securities Laws
other than those Securities Documents that are available publicly though
the SEC's XXXXX data base. CNB will advise promptly of the receipt of
any examination report of any Bank Regulator with respect to the
condition or activities of CNB or any of the CNB Subsidiaries.
6.4.4. With reasonable promptness, CNB will furnish to NBT such
additional financial data that CNB possesses and as NBT may reasonably
request, including without limitation, detailed monthly financial
statements and loan reports.
6.5. Maintenance of Insurance.
CNB shall maintain, and to cause the CNB Subsidiaries to maintain,
insurance in such amounts as are reasonable to cover such risks as are
customary in relation to the character and location of its properties and the
nature of its business, with such coverage and in such amounts not less than
that currently maintained by CNB and the CNB Subsidiaries and set forth in
CNB Disclosure Schedule 4.10.3. CNB will promptly inform NBT if CNB or any
CNB Subsidiary receives notice from an insurance carrier that (i) an
insurance policy will be canceled or that coverage thereunder will be reduced
or eliminated, or (ii) premium costs with respect to any policy of insurance
will be substantially increased.
6.6. Disclosure Supplements.
From time to time prior to the Effective Time, CNB will promptly
supplement or amend the CNB Disclosure Schedule delivered in connection
herewith with respect to any matter hereafter arising which, if existing,
occurring or known at the date of this Agreement, would have been required to
be set forth or described in such CNB Disclosure Schedule or which is
45
necessary to correct any information in such CNB Disclosure Schedule which
has been rendered materially inaccurate thereby. No supplement or amendment
to such CNB Disclosure Schedule shall have any effect for the purpose of
determining satisfaction of the conditions set forth in Article IX.
6.7. Consents and Approvals of Third Parties.
CNB shall use all commercially reasonable efforts, and shall cause
each CNB Subsidiary to use all commercially reasonable efforts to obtain as
soon as practicable all consents and approvals of any other persons necessary
or desirable for the consummation of the transactions contemplated by this
Agreement.
6.8. All Reasonable Efforts.
Subject to the terms and conditions herein provided, CNB agrees to
use, and agrees to cause each CNB Subsidiary to use, all commercially
reasonable efforts to take, or cause to be taken, all action and to do, or
cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the transactions
contemplated by this Agreement.
6.9. Failure to Fulfill Conditions.
In the event that CNB or City National Bank determines that a
condition to its obligation to complete the Merger cannot be fulfilled and
that it will not waive that condition, it will promptly notify NBT.
6.10. No Solicitation.
From and after the date hereof until the termination of this
Agreement, neither CNB, nor any CNB Subsidiary, nor any of their respective
officers, directors, employees, representatives, agents and affiliates
(including, without limitation, any investment banker, attorney or accountant
retained by CNB or any of the CNB Subsidiaries), will, directly or
indirectly, initiate, solicit or knowingly encourage (including by way of
furnishing non-public information or assistance) any inquiries or the making
of any proposal that constitutes, or may reasonably be expected to lead to,
any Acquisition Proposal (as defined below), or enter into or maintain or
continue discussions or negotiate with any Person in furtherance of such
inquiries or to obtain an Acquisition Proposal or agree to or endorse any
Acquisition Proposal, or authorize or permit any of its officers, directors,
or employees or any of its Subsidiaries or any investment banker, financial
advisor, attorney, accountant or other representative retained by any of its
Subsidiaries to take any such action, and CNB shall notify NBT orally (within
one business day) and in writing (as promptly as practicable) of all of the
relevant details relating to all inquiries and proposals which CNB or any of
its Subsidiaries or any of its officers, directors or employees, or, to CNB's
Knowledge, investment bankers, financial advisors, attorneys, accountants or
other representatives of CNB may receive relating to any of such matters,
provided, however, that nothing contained in this Section 6.10 shall prohibit
the Board of Directors of CNB from (i) complying with its disclosure
obligations under federal or state law; or (ii) furnishing information to, or
entering into discussions or negotiations with, any person or entity that
makes an unsolicited Acquisition Proposal, if, and only to the extent that,
(A) the Board of Directors of
46
CNB determines in good faith (after receipt of an opinion from its
independent financial advisor and after consultation with its legal
advisors), taking into account all legal, financial and regulatory aspects of
the proposal and the Person making the proposal, that such proposal, if
consummated, is reasonably likely to result in a transaction more favorable
to CNB's shareholders from a financial point of view than the Merger; (B) the
Board of Directors of CNB determines in good faith (after consultation with
its financial and legal advisors) that the failure to furnish information to
or enter into discussions with such Person would likely cause the Board of
Directors to breach its fiduciary duties to shareholders under applicable
law; (C) such Acquisition Proposal was not solicited by CNB and did not
otherwise result from a breach of this Section 6.10 by CNB (such proposal
that satisfies clauses (A), (B) and (C) being referred to herein as a
"Superior Proposal"); (D) CNB promptly notifies NBT of such inquiries,
proposals or offers received by, any such information requested from, or any
such discussions or negotiations sought to be initiated or continued with CNB
or any of its representatives indicating, in connection with such notice, the
name of such Person and the material terms and conditions of any inquiries,
proposals or offers, and receives from such Person an executed
confidentiality agreement in form and substance identical in all material
respects to the confidentiality agreements that CNB and NBT entered into; and
(E) the CNB Shareholders Meeting has not occurred. For purposes of this
Agreement, "Acquisition Proposal" shall mean any proposal or offer as to any
of the following (other than the transactions contemplated hereunder)
involving CNB or any of its Subsidiaries: (i) any merger, consolidation,
share exchange, business combination, or other similar transactions; (ii) any
sale, lease, exchange, mortgage, pledge, transfer or other disposition of 25%
or more of the assets of CNB and the CNB Subsidiaries, either individually or
taken as a whole, in a single transaction or series of transactions; (iii)
any tender offer or exchange offer for 25% or more of the outstanding shares
of capital stock of CNB or the filing of a registration statement under the
Securities Act in connection therewith; or (iv) any public announcement of a
proposal, plan or intention to do any of the foregoing or any agreement to
engage in any of the foregoing.
6.11. Reserves and Merger-Related Costs.
On or before the Effective Date, to the extent consistent with GAAP,
and applicable banking laws and regulations, CNB shall establish such
additional accruals and reserves as may be necessary to conform the
accounting reserve practices and methods (including credit loss practices and
methods) of CNB to those of NBT (as such practices and methods are to be
applied to CNB from and after the Closing Date) and NBT's plans with respect
to the conduct of the business of CNB following the Merger and otherwise to
reflect Merger-related expenses and costs incurred by CNB. Notwithstanding
the foregoing, CNB shall not be obligated to take in any respect any such
action pursuant to this Section 6.11 unless and until NBT acknowledges that
all conditions to its obligation to consummate the Merger in Sections 9.1 and
9.2 have been satisfied or waived (except for the expiration of any
applicable waiting periods) and NBT reasonably believes the Merger will
close. No accrual or reserve made by CNB or any CNB Subsidiary pursuant to
this subsection, or any litigation or regulatory proceeding arising out of
any such accrual or reserve, shall constitute or be deemed to be a breach or
violation of any representation, warranty, covenant, condition or other
provision of this Agreement or to constitute a termination event within the
meaning of Section 11.1.2.
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6.12. Board of Directors and Committee Meetings.
CNB and the CNB Subsidiaries shall permit a representative of NBT to
attend any meeting of their Board of Directors or the Executive Committees
thereof, and shall permit no more than two (2) representatives of NBT to
attend any meeting of their loan committee and asset liability committee, as
an observer (the "Observer"), provided that neither CNB nor any CNB
Subsidiary shall be required to permit the Observer to remain present during
any confidential discussion of this Agreement and the transactions
contemplated hereby or any third party proposal to acquire control of CNB or
during any other matter that the respective Board of Directors has been
advised of by counsel that such attendance by the Observer may violate a
confidentiality obligation or fiduciary duty or any legal or regulatory
requirements.
6.13. Transaction Expenses of CNB.
CNB has provided at CNB Disclosure Schedule 6.13 its estimated
budget of transaction-related expenses reasonably anticipated to be payable
by CNB in connection with this transaction, including the fees and expenses
of counsel, accountants, investment bankers and other professionals. Promptly
after the execution of this Agreement, CNB shall ask all of its attorneys and
other professionals to render current and correct invoices for all unbilled
time and disbursements. CNB shall accrue and/or pay all of such amounts which
are actually due and owing as soon as possible. CNB shall advise NBT monthly
of all out-of-pocket expenses which CNB has incurred in connection with this
transaction.
ARTICLE VII
COVENANTS OF NBT
7.1. Conduct of Business.
During the period from the date of this Agreement to the Effective
Time, except with the written consent of CNB, which consent will not be
unreasonably withheld, conditioned or delayed, NBT and each NBT Subsidiary
will not voluntarily take any action that would: (i) adversely affect the
ability of the parties to obtain the Regulatory Approvals or materially
increase the period of time necessary to obtain such approvals; (ii)
adversely affect its ability to perform its covenants and agreements under
this Agreement; or (iii) result in the representations and warranties
contained in Article V of this Agreement not being true and correct on the
date of this Agreement or at any future date on or prior to the Closing Date
or in any of the conditions set forth in Article IX hereof not being
satisfied.
7.2. Current Information and Consultation.
During the period from the date of this Agreement to the Effective
Time, NBT will cause one or more of its representatives to confer with
representatives of CNB and report the general status of its financial
condition, operations and business and matters relating to the completion of
the transactions contemplated hereby, at such times as CNB may reasonably
request.
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7.3. Financial and Other Statements.
As soon as reasonably available, but in no event later than the date
such documents are filed with the SEC, NBT will deliver to CNB the Securities
Documents filed by it with the SEC under the Securities Laws other than those
Securities Documents that are available publicly though the SEC's XXXXX data
base. NBT will advise CNB promptly of the receipt of any examination report
of any Bank Regulator with respect to the condition or activities of NBT or
any of the NBT Subsidiaries.
7.4. Disclosure Supplements.
From time to time prior to the Effective Time, NBT will promptly
supplement or amend the NBT Disclosure Schedule delivered in connection
herewith with respect to any matter hereafter arising which, if existing,
occurring or known at the date of this Agreement, would have been required to
be set forth or described in such NBT Disclosure Schedule or which is
necessary to correct any information in such NBT Disclosure Schedule which
has been rendered inaccurate thereby. No supplement or amendment to such NBT
Disclosure Schedule shall have any effect for the purpose of determining
satisfaction of the conditions set forth in Article IX.
7.5. Consents and Approvals of Third Parties.
NBT and NBT Bank shall use all commercially reasonable efforts to
obtain as soon as practicable all consents and approvals of any other Persons
necessary or desirable for the consummation of the transactions contemplated
by this Agreement.
7.6. All Reasonable Efforts.
Subject to the terms and conditions herein provided, NBT agrees to
use and agrees to cause NBT Bank to use all commercially reasonable efforts
to take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations
to consummate and make effective the transactions contemplated by this
Agreement.
7.7. Failure to Fulfill Conditions.
In the event that NBT determines that a condition to its obligation
to complete the Merger cannot be fulfilled and that it will not waive that
condition, it will promptly notify CNB.
7.8. Employee Benefits.
7.8.1 Definition. "Benefit Plan Determination Date" for purposes of
this Section shall mean that date selected by NBT with respect to each
material CNB Benefit Plan to be terminated or replaced with a similar
plan or program provided by NBT or its Subsidiaries (as used in this
Section, NBT and its Subsidiaries are collectively referred to as "NBT")
to other employees similarly situated, which date with respect to the
CNB Profit Sharing Plan (as defined below) shall be the date that
Current CNB Employees (as defined below) are no longer eligible to
participate in the CNB Profit Sharing Plan, and with respect to NBT's
defined benefit pension plan the day after the Closing Date; provided,
that, the definition of "Benefit Plan Determination
49
Date" shall be consistent with the premise that the compensation,
employee benefits and terms and conditions of employment that are
provided by NBT after the Closing Date to Current CNB Employees shall
only be substantially similar, in the aggregate, to those provided by
NBT to similarly situated employees of NBT.
7.8.2 General Rule: Parity in Benefits; No Gaps. Within a
reasonable period after the Closing Date, but not before the applicable
Benefit Plan Determination Date, NBT shall provide or shall cause to be
provided by a Subsidiary of NBT, to all individuals who are employees of
CNB or any CNB Subsidiary at the Closing Date and whose employment
continues following the Effective Time and who are then eligible for a
respective CNB Benefit Plan (the "Current CNB Employees"), compensation,
employee benefits and terms and conditions of employment that are
substantially similar, in the aggregate, to those provided by NBT to
similarly situated employees of NBT. Notwithstanding any of the
foregoing to the contrary, none of the provisions contained herein shall
(i) operate to duplicate any benefit provided to any Current CNB
Employees or the funding of any such benefit and (ii) be construed to
limit the ability of NBT to review employee benefit plans, programs and
arrangements from time to time, to make such changes as NBT's deems
appropriate in its sole and absolute discretion or to terminate such
employee benefit plans, programs and arrangements. NBT will use
commercially reasonable efforts to cause all pre-existing condition
limitations and proof of insurability provisions (to the extent such
limitations and provisions did not apply to a pre-existing condition
under CNB's equivalent plan) and eligibility waiting periods under such
plans that would otherwise be applicable to newly-hired employees to be
waived for all Current CNB Employees; provided that nothing in this
sentence shall limit the ability of NBT to amend or enter into new or
different employee benefit plans or arrangements provided such plans or
arrangements treat the Current CNB Employees in a substantially similar
manner as employees of NBT are treated.
7.8.3 Profit Sharing Plan Termination or Merger. If required by NBT
in writing and delivered to CNB not less than five business days before
the Closing Date, CNB shall, on or before the day immediately preceding
the Closing Date, (i) terminate the City National Bank and Trust Company
of Gloversville Profit Sharing Plan (the "CNB Profit Sharing Plan") and
no further contributions shall be made to the CNB Profit Sharing Plan
after such termination or (ii) shall cause the CNB Profit Sharing Plan
to be merged into NBT Bancorp Inc. 401(k) and Employee Stock Ownership
Plan. CNB shall provide to NBT (i) certified copies of resolutions
adopted by the Board of Directors of CNB (or other such party as may be
authorized, under the terms of the CNB Profit Sharing Plan, to amend and
terminate the CNB Profit Sharing Plan), as applicable, authorizing such
termination or merger of the CNB Profit Sharing Plan and (ii) an
executed amendment to the CNB Profit Sharing Plan in form and substance
reasonably satisfactory to NBT to conform the plan document for such
plan with all applicable requirements of the Code and ERISA, and
regulations thereunder, with regard to termination or merger of the CNB
Profit Sharing Plan, or otherwise relating to the tax-qualified status
of such plan. NBT will not be obligated to make any matching or other
employer contributions to any profit sharing or 401(k) plan after the
Closing Date.
7.8.4 NBT 401(k) Plan Participation. Each Current CNB Employee who
continues in the employment of CNB until the Closing Date, shall be
eligible to participate in
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NBT's 401(k) Plan on the day after the Benefit Plan Determination Date
for the CNB Profit Sharing Plan. All rights to participate in NBT's
401(k) Plan are subject to NBT's right to amend or terminate NBT's
401(k) Plan in its sole and absolute discretion and are subject to the
terms of NBT's 401(k) Plan including, but not limited to, the
eligibility and vesting provisions of such plan. For purposes of
administering NBT's 401(k) Plan, service with CNB shall be deemed to be
service with NBT for eligibility and vesting purposes only, but not for
purposes of benefit accrual or the allocation of employer contributions.
To the extent CNB Profit Sharing Plan is terminated as set forth in
Section 7.8.3 hereof, NBT's 401(k) plan shall accept direct rollovers
from the CNB Profit Sharing Plan, to the extent permissible under the
Code and ERISA, including for any Current CNB Employee who has an
outstanding participant loan from the CNB Profit Sharing Plan at the
Benefit Plan Determination Date or as soon as administratively feasible
thereafter, a direct rollover including such participant loan.
7.8.5 Defined Benefit Plan Participation. Each Current CNB Employee
shall be eligible to participate in NBT's defined benefit pension plan
as of the Benefit Plan Determination Date relative to that plan. All
rights to participate in NBT's defined benefit pension plan are subject
to NBT's right to amend or terminate the plan in its sole and absolute
discretion and are subject to the terms of NBT's defined benefit plan
including, but not limited to, the eligibility and vesting provisions of
such plan. For purposes of administering NBT's defined benefit pension
plan, service with CNB shall be deemed to be service with NBT for
participation and vesting purposes only and for purposes of eligibility
for normal or early retirement under NBT's defined benefit pension plan
based solely on a number of years of service, but not for purposes of
benefit accrual.
CNB shall take such steps as it or NBT may determine to be necessary
or desirable to discontinue further benefit accruals under CNB's defined
benefit pension plan effective as of the Benefit Plan Determination Date,
including but not limited to providing each Current CNB Employee with written
notice of such discontinuation of benefit accruals. After the Benefit Plan
Determination Date, NBT shall maintain such CNB Pension Plan as a frozen
tax-qualified defined benefit pension plan in accordance with all applicable
laws, unless CNB consents prior to the Benefit Plan Determination Date to a
merger of such CNB pension plan into a comparable defined benefit pension
plan of NBT, as of such time as NBT shall determine in its sole discretion
but not before the applicable Benefit Plan Determination Date. Nothing herein
shall limit the ability of NBT to terminate or amend the CNB Pension Plan as
it determines in its sole and absolute discretion.
7.8.6 Welfare Benefits. Each Current CNB Employee shall be eligible
to participate in group hospitalization, medical, dental, life,
disability and other material welfare benefit plans and programs
available to employees of NBT similarly situated, subject to the terms
of such plans and programs, as of the Benefit Plan Determination Date
for each such plan or program, conditional upon the Current CNB
Employee's being employed by NBT as of such Benefit Plan Determination
Date and subject to complying with eligibility requirements of the
respective plans and programs. With respect to any welfare benefit plan
or program of CNB that NBT determines, in its sole and absolute
discretion, provides benefits of the same type or class as a
corresponding plan or program maintained by NBT, NBT shall continue such
CNB plan or program in effect for the benefit of the Current CNB
Employees so long as they remain eligible to participate and until they
shall become eligible to become participants in the corresponding
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plan or program maintained by NBT (and, with respect to any such plan or
program, subject to complying with eligibility requirements and subject
to the right of NBT to terminate or amend such plan or program). For
purposes of all material employee welfare benefit plans, programs and
agreements maintained by or contributed to by NBT, NBT shall cause each
such plan, program or arrangement to treat the service with CNB prior to
the Closing Date of any Current CNB Employee (to the same extent such
service is recognized under analogous plans, programs or arrangements of
CNB prior to the Closing) as service rendered to NBT for all purposes;
provided, however, that such crediting of service shall not operate to
duplicate any benefit or the funding of such benefit available to any
Current CNB Employee.
7.8.7 Paid Time Off Programs. NBT will give each Current CNB
Employee credit, for purposes of NBT's vacation and/or other paid leave
benefit programs, for such Current CNB Employees' accrued and unpaid
vacation and/or paid leave balance with CNB as of the Closing Date.
7.8.8 NBT to Honor Agreements. NBT agrees to honor all Change in
Control Agreements, severance agreements, deferred compensation
agreements and consulting agreements that CNB has with its current and
former employees and which have been identified in CNB Disclosure
Schedule 4.9.1, except to the extent any such agreements shall be
superseded or terminated at the Closing Date or following the Closing
Date with the written consent of the affected parties or to the extent
such agreements may need to be amended in order to comply with IRS
guidance on the requirements of Code Section 409A at or after the
Closing Date.
CNB full-time employees who are not parties to a written employment
or consulting agreement or are not referenced in the NBT Disclosure Schedule
7.8.8, and who (i) are not offered full-time employment with NBT as of the
Closing Date or (ii) are offered and accept full-time employment with NBT as
of the Closing Date and subsequently terminated by NBT without "cause" within
one year following the Closing Date shall be eligible (x) to receive
severance benefits equal to one week base pay for each year of continuous
employment by CNB or City National at a rate of pay equal to such employee's
base pay as of such employee's termination date (less applicable
withholdings), payable in bi-weekly installments (the "Severance Payments");
provided, however, that any such Severance Payment shall be not less than an
amount equal to two weeks' base pay (less applicable withholdings); and (y)
to continue participation in NBT's group health, dental and vision plans for
a period of time that begins on the date the employee's employment is
terminated and ends on the date that the employee receives the final payment
of the Severance Payment at a cost for the severed employee that is the same
for similarly situated current employees of NBT, except that such coverage
will expire if the employee becomes eligible for coverage under a plan of
another employer ("Welfare Benefit") (collectively, the Severance Payment and
the Welfare Benefit are hereinafter referred to as the "Severance Benefit").
All determinations as to whether an employee is terminated for "cause" shall
be in the sole and absolute discretion of NBT. The Severance Benefit shall be
conditioned upon the execution and delivery, and the expiration of any
applicable revocation period, of a general release by the applicable employee
that is satisfactory to NBT.
Except for the agreements described in the preceding sentences of
this sub-Section 7.8.8 and except as otherwise provided in this Agreement,
the CNB Benefit Plans shall, in the sole and absolute discretion of NBT, be
frozen, terminated or merged into comparable plans of NBT,
52
effective at such time as NBT shall determine in its sole and absolute
discretion but not before the applicable Benefit Plan Determination Date.
7.8.9 No Guarantee of Employment. Except to the extent of
commitments herein or other contractual commitments, if any,
specifically made or assumed by NBT hereunder or by operation of law,
NBT shall have no obligation arising from and after the Closing Date to
continue any Current CNB Employees in its employ or in any specific job
or to provide to any Current CNB Employee any specified level of
compensation or any incentive payments, benefits or perquisites. Each
Current CNB Employee who is terminated by NBT one year subsequent to the
Closing Date, excluding those employees referenced in the NBT Disclosure
Schedule 7.8.8, shall be entitled to severance pay in accordance with
the general severance policy maintained by NBT, if and to the extent
that such employee is entitled to severance pay under such policy;
provided that such Current CNB Employee's service with CNB shall be
treated as service with NBT for purposes of determining the amount of
severance pay, if any, under NBT's severance policy.
7.9. Directors and Officers Indemnification and Insurance.
7.9.1. NBT shall maintain, or shall cause NBT Bank to maintain, in
effect for three years following the Effective Time, the current
directors' and officers' liability insurance policies maintained by CNB
(provided, that NBT may substitute therefor policies of at least the
same coverage containing terms and conditions which are not materially
less favorable) with respect to matters occurring prior to the Effective
Time; provided, however, that in no event shall NBT be required to
expend pursuant to this Section 7.9.1 more than an amount equal to 150%
of the current annual amount expended by CNB with respect to such
insurance, as set forth in CNB Disclosure Schedule 7.9.1 (the "Maximum
Amount"); provided, further, that if the amount of the aggregate premium
necessary to maintain or procure such insurance coverage exceeds the
Maximum Amount, NBT shall maintain the most advantageous policies of
directors' and officers' insurance obtainable for an annual premium
equal to the Maximum Amount. In connection with the foregoing, CNB
agrees in order for NBT to fulfill its agreement to provide directors
and officers liability insurance policies for three years to provide
such insurer or substitute insurer with such representations as such
insurer may request with respect to the reporting of any prior claims.
7.9.2. In addition to Section 7.9.1, for a period of six years
after the Effective Time, NBT shall indemnify, defend and hold harmless
each person who is now, or who has been at any time before the date
hereof or who becomes before the Effective Time, an officer or director
of CNB or an CNB Subsidiary (the "Indemnified Parties") against all
losses, claims, damages, costs, expenses (including attorneys' fees),
liabilities or judgments or amounts that are paid in settlement (which
settlement shall require the prior written consent of NBT, which consent
shall not be unreasonably withheld) of or in connection with any claim,
action, suit, proceeding or investigation, whether civil, criminal, or
administrative (each a "Claim"), in which an Indemnified Party is, or is
threatened to be made, a party or witness in whole or in part on or
arising in whole or in part out of the fact that such person is or was a
director, officer or employee of CNB or a CNB Subsidiary if such Claim
pertains to any matter of fact arising, existing or occurring before the
Effective Time (including, without limitation, the Merger and
53
the other transactions contemplated hereby), regardless of whether such
Claim is asserted or claimed before, or after, the Effective Time (the
"Indemnified Liabilities"), to the fullest extent permitted under
Delaware law (to the extent not prohibited by Federal law). Any
Indemnified Party wishing to claim indemnification under this Section
7.9.2 upon learning of any Claim, shall notify NBT (but the failure so
to notify NBT shall not relieve it from any liability which it may have
under this Section 7.9.2, except to the extent such failure materially
prejudices NBT). In the event of any such Claim (whether arising before
or after the Effective Time) (1) NBT shall have the right to assume the
defense thereof (in which event the Indemnified Parties will cooperate
in the defense of any such matter) and upon such assumption NBT shall
not be liable to any Indemnified Party for any legal expenses of other
counsel or any other expenses subsequently incurred by any Indemnified
Party in connection with the defense thereof, except that if NBT elects
not to assume such defense, or counsel for the Indemnified Parties
reasonably advises the Indemnified Parties that there are or may be
(whether or not any have yet actually arisen) issues which raise
conflicts of interest between NBT and the Indemnified Parties, the
Indemnified Parties may retain counsel reasonably satisfactory to them,
and NBT shall pay the reasonable fees and expenses of such counsel for
the Indemnified Parties, (2) except to the extent otherwise required due
to conflicts of interest, NBT shall be obligated pursuant to this
paragraph to pay for only one firm of counsel for all Indemnified
Parties unless there is a conflict of interest that necessitates more
than one law firm, and (3) NBT shall not be liable for any settlement
effected without its prior written consent (which consent shall not be
unreasonably withheld, conditioned or delayed).
7.9.3. In the event that either NBT or any of its successors or
assigns (i) consolidates with or merges into any other person and shall
not be the continuing or surviving CNB or entity of such consolidation
or merger or (ii) transfers all or substantially all of its properties
and assets to any person, then, and in each such case, proper provision
shall be made so that the successors and assigns of NBT shall assume the
obligations set forth in this Section 7.10.
7.9.4. The obligations of NBT provided under this Section 7.9 are
intended to be enforceable against NBT directly by the Indemnified
Parties and shall be binding on all respective successors and permitted
assigns of NBT.
7.10. Stock Listing.
NBT agrees to file a notification form for the listing on the Nasdaq
Stock Market (or such other national securities exchange on which the shares
of the NBT Common Stock shall be listed as of the Closing Date) of the shares
of NBT Common Stock to be issued in the Merger.
7.11. Stock and Cash Reserve.
NBT agrees at all times from the date of this Agreement until the
Merger Consideration has been paid in full to reserve a sufficient number of
shares of NBT Common Stock to fulfill its obligations under this Agreement.
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7.12. Communications to CNB Employees; Training
NBT and CNB agree that as promptly as practicable following the
execution of this Agreement, meetings with employees of CNB and City National
Bank shall be held at such location as NBT and CNB shall mutually agree,
provided that representatives of CNB shall be permitted to attend such
meetings, to announce the proposed Merger. NBT and CNB shall mutually agree
as to the scope and content of all communications to the employees of CNB and
City National Bank. At mutually agreed upon times following execution of this
Agreement, representatives of NBT shall be permitted to meet with the
employees of CNB and City National Bank to discuss employment opportunities
with NBT, provided that representatives of CNB shall be permitted to attend
any such meeting. From and after the Determination Date, NBT shall also be
permitted to conduct training sessions outside of normal business hours or at
other times as CNB may agree, with the employees of CNB and City National
Bank and may conduct such training seminars at any branch location of City
National Bank; provided that NBT will in good faith attempt to schedule such
training sessions in a manner which does not unreasonably interfere with City
National Bank's normal business operations.
7.13. Advisory Board
Immediately prior to the Effective Time, subject to applicable rules
and regulations, NBT Bank shall create a Xxxxxx County Advisory Board (the
"Advisory Board") to be comprised of the members of the CNB Board of
Directors, but excluding the New Members, for a period to terminate no
earlier than two years after the Effective Time; provided, however, that NBT
Bank shall not have any obligation to appoint any person to the Advisory
Board if such person is not a member of either the CNB or the City National
Bank Board of Directors immediately prior to the Effective Time. The duties
any such advisory director shall be determined from time to time at the sole
discretion of NBT Bank. Members of the Advisory Board will receive a per
meeting fee of $1,000.
ARTICLE VIII
REGULATORY AND OTHER MATTERS
8.1. Meeting of Shareholders.
8.1.1. CNB will (i) take all steps necessary to duly call, give
notice of, convene and hold a special meeting of its shareholders as
promptly as practicable after the Merger Registration Statement is
declared effective by the SEC, for the purpose of considering this
Agreement and the Merger (the "CNB Shareholders Meeting"), (ii) in
connection with the solicitation of proxies with respect to the CNB
Shareholders Meeting, have its Board of Directors recommend approval of
this Agreement to the CNB shareholders; and (iii) cooperate and consult
with NBT with respect to each of the foregoing matters. The Board of
Directors of CNB may fail to make such a recommendation referred to in
clause (ii) above, or withdraw, modify or change any such recommendation
only in connection with a Superior Proposal as set forth in Section 6.10
of this Agreement and only if such Board of Directors, after having
consulted with and considered the advice of its outside financial and
legal advisors, has determined that the making of such recommendation,
or the failure so to withdraw, modify or change its recommendation,
would constitute a breach of the fiduciary duties of such directors
under applicable law.
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8.2. Proxy Statement-Prospectus; Merger Registration Statement.
8.2.1. For the purposes (x) of registering NBT Common Stock to be
offered to holders of CNB Common Stock in connection with the Merger
with the SEC under the Securities Act and (y) of holding the CNB
Shareholders Meeting, NBT shall draft and prepare, and CNB shall
cooperate in the preparation of, the Merger Registration Statement,
including a proxy statement and prospectus satisfying all applicable
requirements of applicable state securities and banking laws, and of the
Securities Act and the Exchange Act, and the rules and regulations
thereunder (such proxy statement/prospectus in the form mailed by CNB to
the CNB shareholders, together with any and all amendments or
supplements thereto, being herein referred to as the "Proxy
Statement-Prospectus"). NBT shall provide CNB and its counsel with
appropriate opportunity to review and comment on the Proxy
Statement-Prospectus, and shall incorporate all appropriate comments
thereto, prior to the time it is initially filed with the SEC or any
amendments are filed with the SEC. NBT shall file the Merger
Registration Statement, including the Proxy Statement-Prospectus, with
the SEC. Each of NBT and CNB shall use its best efforts to have the
Merger Registration Statement declared effective under the Securities
Act as promptly as practicable after such filing, and CNB shall
thereafter promptly mail the Proxy Statement-Prospectus to its
shareholders. NBT shall also make all necessary state securities law or
"Blue Sky" notices required to carry out the transactions contemplated
by this Agreement, and CNB shall furnish all information concerning CNB
and the holders of CNB Common Stock as may be reasonably requested in
connection with any such action.
8.2.2. NBT shall, as soon as practicable, file the Merger
Registration Statement with the SEC under the Securities Act in
connection with the transactions contemplated by this Agreement. NBT
will advise CNB promptly after NBT receives notice of the time when the
Merger Registration Statement has become effective or any supplement or
amendment has been filed, of the issuance of any stop order or the
suspension of the qualifications of the shares of NBT Common Stock
issuable pursuant to the Merger Registration Statement, or the
initiation or threat of any proceeding for any such purpose, or of any
request by the SEC for the amendment or supplement of the Merger
Registration Statement, or for additional information, and NBT will
provide CNB with as many copies of such Merger Registration Statement
and all amendments thereto promptly upon the filing thereof as CNB may
reasonably request.
8.2.3. CNB and NBT shall promptly notify the other party if at any
time it becomes aware that the Proxy Statement-Prospectus or the Merger
Registration Statement contains any untrue statement of a material fact
or omits to state a material fact required to be stated therein or
necessary to make the statements contained therein, in light of the
circumstances under which they were made, not misleading. In such event,
CNB shall cooperate with NBT in the preparation of a supplement or
amendment to such Proxy Statement-Prospectus that corrects such
misstatement or omission, and NBT shall file an amended Merger
Registration Statement with the SEC, and each of CNB and NBT shall mail
an amended Proxy Statement-Prospectus to CNB's shareholders.
8.3. Regulatory Approvals.
Each of CNB and NBT will cooperate with the other and use all
reasonable efforts to promptly prepare and as soon as practicable following
the date hereof, file all necessary documentation to obtain all necessary
permits, consents, waivers, approvals and authorizations of
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the OCC, the FRB, the NYSBD and any other third parties and governmental
bodies necessary to consummate the transactions contemplated by this
Agreement. CNB and NBT will furnish each other and each other's counsel with
all information concerning themselves, their Subsidiaries, directors,
officers and shareholders and such other matters as may be necessary or
advisable in connection with any application, petition or other statement
made by or on behalf of CNB or NBT to any CNB Regulator or governmental body
in connection with the Merger, Bank Merger and the other transactions
contemplated by this Agreement. CNB shall have the right to review and
approve in advance all characterizations of the information relating to CNB
and any of its Subsidiaries which appear in any filing made in connection
with the transactions contemplated by this Agreement with any governmental
body. In addition, CNB and NBT shall each furnish to the other for review a
copy of each such filing made in connection with the transactions
contemplated by this Agreement with any governmental body prior to its
filing. To the extent any governmental body makes an inquiry or initiates any
proceeding relating to antitrust matters, NBT shall use its commercially
reasonable efforts to address such matters in order to allow for the
consummation of the transactions contemplated hereby and NBT shall be solely
responsible for its expenses and CNB's reasonable costs and expenses (as
documented pursuant to Section 6.13) related thereto.
8.4. Affiliates.
8.4.1. CNB shall use all reasonable efforts to cause each director,
executive officer and other person who is an "affiliate" (for purposes
of Rule 145 under the Securities Act) of CNB to deliver to NBT, as soon
as practicable after the date of this Agreement, and at least thirty
(30) days prior to the date of the CNB Shareholders Meeting, a written
agreement, in the form of Exhibit B hereto, providing that such person
will not sell, pledge, transfer or otherwise dispose of any shares of
NBT Common Stock to be received by such "affiliate" as a result of the
Merger otherwise than in compliance with the applicable provisions of
the Securities Act and the rules and regulations thereunder.
ARTICLE IX
CLOSING CONDITIONS
9.1. Conditions to Each Party's Obligations under this Agreement.
The respective obligations of each party under this Agreement shall
be subject to the fulfillment at or prior to the Closing Date of the
following conditions, none of which may be waived:
9.1.1. Shareholder Approval. This Agreement and the transactions
contemplated hereby shall have been approved and adopted by the
requisite vote of the shareholders of CNB.
9.1.2. Injunctions. None of the parties hereto shall be subject to
any order, decree or injunction of a court or agency of competent
jurisdiction, and no statute, rule or regulation shall have been
enacted, entered, promulgated, interpreted, applied or enforced by any
Governmental Entity or CNB Regulator, that enjoins or prohibits the
consummation of the transactions contemplated by this Agreement.
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9.1.3. Regulatory Approvals. All Regulatory Approvals required to
complete the Merger and the Bank Merger shall have been obtained and
shall remain in full force and effect and all waiting periods relating
thereto shall have expired and no such approval, authorization or
consent shall include any condition or requirement, excluding standard
conditions that are normally imposed by the regulatory authorities in
bank merger transactions, that would, in the good faith reasonable
judgment of the Board of Directors of NBT, materially and adversely
affect the business, operations, financial condition, property or assets
of the combined enterprise of CNB, City National Bank, NBT or otherwise
materially impair the value of CNB or City National Bank to NBT.
9.1.4. Effectiveness of Merger Registration Statement. The Merger
Registration Statement shall have become effective under the Securities
Act and no stop order suspending the effectiveness of the Merger
Registration Statement shall have been issued, and no proceedings for
that purpose shall have been initiated or threatened by the SEC and, if
the offer and sale of NBT Common Stock in the Merger is subject to the
blue sky laws of any state, shall not be subject to a stop order of any
state securities commissioner.
9.1.5. NASDAQ Listing. NBT shall have filed a notification form for
the listing of the NBT Common Stock to be issued in the Merger.
9.1.6. Tax Opinions. On the basis of facts, representation and
assumptions which shall be set forth in the certificates rendered
pursuant to Section 2.6 and consistent with the state of facts existing
at the Closing Date, NBT shall have received an opinion of Xxxxx &
Xxxxxxx L.L.P., reasonably acceptable in form and substance to NBT, and
CNB, shall have received an opinion of Xxxxxxxx, Loop & Xxxxxxxx, LLP,
reasonably acceptable in form and substance to CNB, each dated as of the
Closing Date, substantially to the effect that, for Federal income tax
purposes:
(A) The Merger, when consummated in accordance with the terms
hereof, either will constitute a reorganization within the meaning
of Section 368(a) of the Code or will be treated as part of a
reorganization within the meaning of Section 368(a) of the Code;
and
(B) The Bank Merger will not adversely affect the Merger
qualifying as a reorganization within the meaning of Section 368(a)
of the Code.
9.2. Conditions to the Obligations of NBT under this Agreement.
The obligations of NBT under this Agreement shall be further subject
to the satisfaction of the conditions set forth in Sections 9.2.1 through
9.2.6 at or prior to the Closing Date:
9.2.1. Representations and Warranties. Each of the representations
and warranties of CNB set forth in this Agreement shall be true and
correct as of the date of this Agreement and upon the Effective Time
with the same effect as though all such representations and warranties
had been made at the Effective Time (except to the extent such
representations and warranties speak as of an earlier date, which only
need be true and correct as of such earlier date), in any case subject
to the standard set forth in Section 4.1; and CNB shall have delivered
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to NBT a certificate to such effect signed by the Chief Executive
Officer and the Chief Financial Officer of CNB as of the Effective Time.
9.2.2. Agreements and Covenants. CNB and each CNB Subsidiary shall
have performed in all material respects all obligations and complied in
all material respects with all agreements or covenants to be performed
or complied with by each of them at or prior to the Effective Time, and
NBT shall have received a certificate signed on behalf of CNB by the
Chief Executive Officer and Chief Financial Officer of CNB to such
effect dated as of the Effective Time.
9.2.3. Regulatory Conditions. No Regulatory Approval required for
consummation the Merger and Bank Merger includes any condition or
requirement, excluding standard conditions that are normally imposed by
the regulatory authorities in bank merger transactions, that could
reasonably be expected by NBT to result in a Material Adverse Effect on
CNB and its Subsidiaries, taken as a whole.
9.2.4. Permits, Authorizations, Etc. CNB and the CNB Subsidiaries
shall have obtained any and all material permits, authorizations,
consents, waivers, clearances or approvals required for the lawful
consummation of the Merger and the Bank Merger, the failure of which to
obtain would have a Material Adverse Effect on XXX, Xxxx Xxxxxxxx Xxxx,
XXX or NBT Bank.
9.2.5. Leases. NBT shall have received written confirmation from
the lessors of City National Bank's branch facilities of NBT's right to
assume the leases on substantially the same terms and conditions as
currently exist, of City National Bank's branch facilities.
9.2.6. No Material Adverse Effect. There shall have been no
changes, other than changes contemplated by this Agreement, in the
business, operations, condition (financial or otherwise), assets or
liabilities of CNB and the CNB Subsidiaries (regardless of whether or
not such events or changes are inconsistent with the representations and
warranties given herein) that individually or in the aggregate has had
or would reasonably be expected to have a Material Adverse Effect on CNB
or the CNB Subsidiaries.
CNB will furnish NBT with such certificates of its officers or
others and such other documents to evidence fulfillment of the
conditions set forth in this Section 9.2 as NBT may reasonably request.
9.3. Conditions to the Obligations of CNB under this Agreement.
The obligations of CNB under this Agreement shall be further subject
to the satisfaction of the conditions set forth in Sections 9.3.1 through
9.3.5 at or prior to the Closing Date:
9.3.1. Representations and Warranties. Each of the representations
and warranties of NBT set forth in this Agreement shall be true and
correct as of the date of this Agreement and upon the Effective Time
with the same effect as though all such representations and warranties
had been made at the Effective Time (except to the extent such
representations and warranties speak as of an earlier date, which only
need be true and correct as of such earlier date), in any case subject
to the standard set forth in Section 5.1; and NBT shall have delivered
to
59
CNB a certificate to such effect signed by the Chief Executive Officer
or Chief Operating Officer and the Chief Financial Officer of NBT as of
the Effective Time.
9.3.2. Agreements and Covenants. NBT shall have performed in all
material respects all obligations and complied in all material respects
with all agreements or covenants to be performed or complied with by
each of them at or prior to the Effective Time, and CNB shall have
received a certificate signed on behalf of NBT by the Chief Executive
Officer or Chief Operating Officer and Chief Financial Officer of NBT to
such effect dated as of the Effective Time.
9.3.3. Permits, Authorizations, Etc. NBT and its Subsidiaries shall
have obtained any and all material permits, authorizations, consents,
waivers, clearances or approvals required for the lawful consummation of
the Merger and the Bank Merger, the failure of which to obtain would
have a Material Adverse Effect on NBT and its Subsidiaries, taken as a
whole.
9.3.4. Payment of Merger Consideration. NBT shall have delivered
the Exchange Fund to the Exchange Agent on or before the Closing Date
and the Exchange Agent shall provide CNB with a certificate evidencing
such delivery.
NBT will furnish CNB with such certificates of their officers or
others and such other documents to evidence fulfillment of the
conditions set forth in this Section 9.3 as CNB may reasonably request.
ARTICLE X
THE CLOSING
10.1. Time and Place.
Subject to the provisions of Articles IX and XI hereof, the Closing
of the transactions contemplated hereby shall take place at the offices of
Xxxxx & Xxxxxxx L.L.P., 000 Xxxxx Xxxxxx, Xxx Xxxx, XX 00000, at 10:00 a.m.
on the date determined by NBT, in its sole discretion, upon five (5) days
prior written notice to CNB, but in no event later than thirty days (30)
after the last condition precedent (other than those conditions that relate
to actions to be taken at the Closing, but subject to the fulfillment or
waiver of those conditions) pursuant to this agreement has been fulfilled or
waived (including the expiration of any applicable waiting period), or at
such other place, date or time upon which NBT and CNB mutually agree. A
pre-closing of the transactions contemplated hereby (the "Pre-Closing") shall
take place at the offices of Xxxxx & Xxxxxxx L.L.P., 000 Xxxxx Xxxxxx, Xxx
Xxxx, XX 00000, at 10:00 a.m. on the day prior to the Closing Date (the
"Pre-Closing Date").
10.2. Deliveries at the Pre-Closing and the Closing.
At the Pre-Closing there shall be delivered to NBT and CNB the
opinions, certificates, and other documents and instruments required to be
delivered at the Closing under Article IX hereof. At or prior to the Closing,
NBT shall deliver the Merger Consideration as set forth under Section 9.3.4
hereof.
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ARTICLE XI
TERMINATION, AMENDMENT AND WAIVER
11.1. Termination.
This Agreement may be terminated at any time prior to the Closing
Date, whether before or after approval of the Merger by the shareholders of
CNB:
11.1.1. At any time by the mutual written agreement of NBT and CNB;
11.1.2. By either party (provided, that the terminating party is
not then in material breach of any representation, warranty, covenant or
other agreement contained herein) if there shall have been a material
breach of any of the representations or warranties set forth in this
Agreement on the part of the other party, which breach by its nature
cannot be cured prior to the Closing Date or shall not have been cured
within 30 days after written notice of such breach by the terminating
party to the other party, conditioned upon the defaulting party promptly
commencing to cure the default and thereafter continuing to cure the
default;
11.1.3. By either party (provided, that the terminating party is
not then in material breach of any representation, warranty, covenant or
other agreement contained herein) if there shall have been a material
failure to perform or comply with any of the covenants or agreements set
forth in this Agreement on the part of the other party, which failure by
its nature cannot be cured prior to the Closing Date or shall not have
been cured within 30 days after written notice of such failure by the
terminating party to the other party, conditioned upon the defaulting
party promptly commencing to cure the default and thereafter continuing
to cure;
11.1.4. At the election of either party, if the Closing shall not
have occurred by the Termination Date, or such later date as shall have
been agreed to in writing by NBT and CNB; provided, that no party may
terminate this Agreement pursuant to this Section 11.1.4 if the failure
of the Closing to have occurred on or before said date was due to such
party's material breach of any representation, warranty, covenant or
other agreement contained in this Agreement;
11.1.5. By either party, if the shareholders of CNB shall have
voted at the CNB Shareholders Meeting on the transactions contemplated
by this Agreement and such vote shall not have been sufficient to
approve and adopt such transactions;
11.1.6. By either party if (i) final action has been taken by a
Bank Regulator whose approval is required in order to satisfy the
conditions to the parties' obligations to consummate the transactions
contemplated hereby as set forth in Article IX, which final action (x)
has become unappealable and (y) does not approve this Agreement or the
transactions contemplated hereby, (ii) any court of competent
jurisdiction or other governmental authority shall have issued an order,
decree, ruling or taken any other action restraining, enjoining or
otherwise prohibiting the Merger and such order, decree, ruling or other
action shall have become final and unappealable;
11.1.7. By the Board of Directors of NBT if CNB has received a
Superior Proposal and the Board of Directors of CNB has entered into an
acquisition agreement with
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respect to the Superior Proposal, terminated this Agreement, withdrawn
its recommendation of this Agreement, has failed to make such
recommendation or has modified or qualified its recommendation in a
manner adverse to NBT.
11.1.8. By the Board of Directors of CNB if CNB has received a
Superior Proposal and the Board of Directors of CNB has made a
determination to accept such Superior Proposal; provided that CNB shall
not terminate this Agreement pursuant to this Section 11.1.8 and enter
into a definitive agreement with respect to the Superior Proposal until
the expiration of five (5) business days following NBT's receipt of
written notice advising NBT that CNB has received a Superior Proposal,
specifying the material terms and conditions of such Superior Proposal
(and including a copy thereof with all accompanying documentation, if in
writing) identifying the person making the Superior Proposal and stating
whether CNB intends to enter into a definitive agreement with respect to
the Superior Proposal. After providing such notice, CNB shall provide a
reasonable opportunity to NBT during the five-day period to make such
adjustments in the terms and conditions of this Agreement as would
enable CNB to proceed with the Merger on such adjusted terms.
11.1.9 By CNB, if its Board of Directors so determines by a
majority vote of the members of its entire Board, at any time during the
five-day period commencing on the Determination Date, such termination
to be effective on the 30th day following such Determination Date
("Effective Termination Date"), if both of the following conditions are
satisfied:
(i) the NBT Market Value on the Determination Date is less
than the product of 0.85 and the Initial NBT Market Value; and
(ii) (a) the number obtained by dividing the NBT Market Value
on the Determination Date by the Initial NBT Market Value ("NBT
Ratio") shall be less than (b) the quotient obtained by dividing
the Final Index Price by the Initial Index Price minus 0.15 (such
number, the "Index Ratio");
If CNB elects to exercise its termination right pursuant to this Section
11.1.9, it shall give prompt written notice thereof to NBT; provided, that
such notice of election to terminate may be withdrawn at any time prior to
the Effective Termination Date. During the five-day period commencing with
its receipt of such notice, NBT shall have the option to adjust the Exchange
Ratio to equal the lesser of (i) a quotient, the numerator of which is equal
to the product of the Initial NBT Market Value, the Exchange Ratio, and the
Index Ratio, and the denominator of which is equal to NBT Market Value on the
Determination Date; or (ii) a quotient, the numerator of which is equal to
the product of 0.85, the Initial NBT Market Value, and the Exchange Ratio and
the denominator of which is equal to the NBT Market Value on the
Determination Date. If NBT so elects, it shall give, within such five-day
period, written notice to CNB of such election and the Revised Exchange
Ratio, whereupon no termination shall be deemed to have occurred pursuant to
this Section 11.1.9 and this Agreement shall remain in full force and effect
in accordance with its terms (except as the Revised Exchange Ratio shall have
been so modified).
For purposes of this Section 11.1.9, the following terms shall have
the meanings indicated below:
62
"Acquisition Transaction" shall mean (i) a merger or consolidation,
or any similar transaction, involving the relevant companies, (ii) a
purchase, lease or other acquisition of all or substantially all of the
assets of the relevant companies, (iii) a purchase or other acquisition
(including by way of merger, consolidation, share exchange or otherwise) of
securities representing 10% or more of the voting power of the relevant
companies; or (iv) agree or commit to take any action referenced above.
"Determination Date" shall mean the first date on which all
Regulatory Approvals (and waivers, if applicable) necessary for consummation
of the Merger and the Bank Merger have been received.
"Final Index Price" means the sum of the Final Prices for each
company comprising the Index Group multiplied by the weighting set forth
opposite such company's name in the definition of Index Group below.
"Final Price," with respect to any company belonging to the Index
Group, means the average of the daily closing sales prices of a share of
common stock of such company (and if there is no closing sales price on any
such day, then the mean between the closing bid and the closing asked prices
on that day), as reported on the consolidated transaction reporting system
for the market or exchange on which such common stock is principally traded,
for the five consecutive trading days immediately preceding the Determination
Date.
"Index Group" means the financial institution holding companies
listed below, the common stock of all of which shall be publicly traded and
as to which there shall not have been an Acquisition Transaction involving
such company publicly announced at any time during the period beginning on
the date of this Agreement and ending on the Determination Date. In the event
that the common stock of any such company ceases to be publicly traded or an
Acquisition Proposal for such company to be acquired, or for such company to
acquire another company in transaction with a value exceeding 25% of the
acquiror's market capitalization, is announced at any time during the period
beginning on the date of this Agreement and ending on the Determination Date,
such company will be removed from the Index Group, and the weights attributed
to the remaining companies will be adjusted proportionately for purposes of
determining the Final Index Price and the Initial Index Price. The financial
institution holding companies and the weights attributed to them are as
follows:
Company Name Index Weighting (%) Index Price
------------ ------------------- -----------
First Niagara Financial Group, Inc. 18.5 2.46
Susquehanna Bancshares, Inc. 7.4 1.74
Northwest Bancorp, Inc. (MHC) 8.0 1.63
TrustCo Bank Corp NY 11.8 1.50
First Commonwealth Financial Corporation 11.1 1.49
S&T Bancorp, Inc. 4.2 1.51
National Penn Bancshares, Inc. 5.5 1.31
Community Bank System, Inc. 4.8 1.15
Harleysville National Corporation 4.2 0.96
Sterling Financial Corporation 4.6 0.93
Partners Trust Financial Group, Inc. 7.9 0.81
U.S.B. Holding Co., Inc. 3.2 0.75
F.N.B. Corporation 8.9 1.67
---- -----
100% 17.91
63
"Initial NBT Market Value" means the closing sales price of a share
of NBT Common Stock, as reported on the Nasdaq National Market, on the five
trading days immediately preceding the public announcement of this Agreement.
"Initial Index Price" means the sum of the per share closing sales
price of the common stock of each company comprising the Index Group
multiplied by the applicable weighting, as such prices are reported on the
consolidated transaction reporting system for the market or exchange on which
such common stock is principally traded on the trading day immediately
preceding the public announcement of this Agreement.
If NBT or any company belonging to the Index Group declares or
effects a stock dividend, reclassification, recapitalization, split-up,
combination, exchange of shares or similar transaction between the date of
this Agreement and the Determination Date, the prices for the common stock of
such company shall be appropriately adjusted for the purposes of applying
this Section 11.1.9.
"NBT Market Value" shall be the average of the daily closing sales
prices of a share of NBT Common Stock as reported on the Nasdaq National
Market for the five consecutive trading days immediately preceding the
Determination Date.
11.2. Effect of Termination.
11.2.1. In the event of termination of this Agreement pursuant to
any provision of Section 11.1, this Agreement shall forthwith become
void and have no further force, except that (i) the provisions of
Sections 11.2, 12.1, 12.2, 12.3, 12.4, 12.5, 12.6, 12.9, 12.10, 12.11,
and any other Section which, by its terms, relates to post-termination
rights or obligations, shall survive such termination of this Agreement
and remain in full force and effect.
11.2.2. If this Agreement is terminated, expenses and damages of
the parties hereto shall be determined as follows:
(A) Except as provided below, whether or not the Merger is
consummated, all costs and expenses incurred in connection with
this Agreement and the transactions contemplated by this Agreement
shall be paid by the party incurring such expenses.
(B) In the event of a termination of this Agreement because of
a willful breach of any representation, warranty, covenant or
agreement contained in this Agreement, the breaching party shall
remain liable for any and all damages, costs and expenses,
including all reasonable attorneys' fees, sustained or incurred by
the non-breaching party as a result thereof or in connection
therewith or with respect to the enforcement of its rights
hereunder.
(C) If either party terminates this Agreement because of the
failure to obtain Regulatory Approvals solely because of action
taken by the Department of Justice due to
64
antitrust concerns, then NBT shall pay it own and CNB's reasonable
costs and expenses (as documented pursuant to Section 6.13).
(D) As a condition of NBT's willingness, and in order to
induce NBT to enter into this Agreement, and to reimburse NBT for
incurring the costs and expenses related to entering into this
Agreement and consummating the transactions contemplated by this
Agreement, CNB hereby agrees to pay NBT, and NBT shall be entitled
to payment of, a fee of $4,500,000 (the "Fee"), by wire transfer of
same day funds on the earlier of (x) the date of termination or (y)
within three business days after written demand for payment is made
by NBT, as applicable, following the occurrence of any of the
events set forth below:
(i) CNB terminates this Agreement pursuant to Section
11.1.8 or NBT terminates this Agreement pursuant to Section
11.1.7; or
(ii) The entering into a definitive agreement by CNB
relating to an Acquisition Proposal or the consummation of an
Acquisition Proposal involving CNB within one year after the
occurrence of any of the following: (i) the termination of
this Agreement by NBT pursuant to Section 11.1.2 or 11.1.3
because of a breach by CNB or any CNB Subsidiary; or (ii) the
termination of this Agreement by NBT or CNB pursuant to
Section 11.1.5 because of the failure of the shareholders of
CNB to approve this Agreement at the CNB Shareholders Meeting
after the occurrence of an Acquisition Proposal has been
publicly announced or otherwise made known to the shareholders
of CNB.
(E) If payment of the Fee pursuant to Section 11.2.2(D) is
timely made, then NBT will not have any other rights or claims
against CNB or its Subsidiaries, or their respective officers and
directors, under this Agreement, it being agreed that the
acceptance of the Fee under Section 11.2.2(D) will constitute the
sole and exclusive remedy of NBT against CNB and its Subsidiaries
and their respective officers and directors.
11.3. Amendment, Extension and Waiver.
Subject to applicable law, at any time prior to the Effective Time
(whether before or after approval thereof by the shareholders of CNB), the
parties hereto by action of their respective Boards of Directors, may (a)
amend this Agreement, (b) extend the time for the performance of any of the
obligations or other acts of any other party hereto, (c) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto, or (d) waive compliance with any of the
agreements or conditions contained herein; provided, however, that after any
approval of this Agreement and the transactions contemplated hereby by the
shareholders of CNB, there may not be, without further approval of such
shareholders, any amendment of this Agreement which reduces the amount or
value, or changes the form of, the Merger Consideration to be delivered to
CNB's shareholders pursuant to this Agreement. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties hereto. Any agreement on the part of a party hereto to any extension
or waiver shall be valid only if set forth in an instrument in writing signed
on behalf of such party, but such waiver or failure to insist on strict
compliance with such obligation, covenant, agreement or condition shall not
operate as a waiver of, or estoppel with respect to, any subsequent or other
65
failure. Any termination of this Agreement pursuant to this Article XI may
only be effected upon a vote of a majority of the entire Board of Directors
of the terminating party.
ARTICLE XII
MISCELLANEOUS
12.1. Confidentiality.
Except as specifically set forth herein, NBT and CNB mutually agree
to be bound by the terms of the confidentiality agreement dated May 6, 2005
(the "Confidentiality Agreement") previously executed by the parties hereto,
which Confidentiality Agreement is hereby incorporated herein by reference,
and all information furnished by either party to the other party or its
representatives pursuant hereto (including pursuant to Sections 6.2 and 6.3)
shall be subject to, and the parties shall hold such information in
confidence in accordance with, the provisions of the Confidentiality
Agreement. The parties hereto agree that such Confidentiality Agreement shall
continue in accordance with its terms, notwithstanding the termination of
this Agreement.
12.2. Public Announcements.
CNB and NBT shall cooperate with each other in the development and
distribution of all news releases and other public disclosures with respect
to this Agreement, and except as may be otherwise required by law, neither
CNB nor NBT shall issue any news release, or other public announcement or
communication with respect to this Agreement unless such news release or
other public announcement or communication has been mutually agreed upon by
the parties hereto.
12.3. Survival.
All representations, warranties and covenants in this Agreement or
in any instrument delivered pursuant hereto shall expire and be terminated
and extinguished at the Effective Time, except for those covenants and
agreements contained herein which by their terms apply in whole or in part
after the Effective Time.
12.4. Notices.
All notices or other communications hereunder shall be in writing
and shall be deemed given if delivered by receipted hand delivery or mailed
by prepaid registered or certified mail (return receipt requested) or by
recognized overnight courier addressed as follows:
If to CNB, to: Xxxxxxx X. Xxxxx
Chairman, President and CEO
CNB Bancorp, Inc.
00-00 Xxxxx Xxxx Xxxxxx
XX Xxx 000
Xxxxxxxxxxxx, Xxx Xxxx 00000-0000
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With required copies to: Xxxxxx X. Xxxxxx, Esq.
Xxxxx X. Xxxxxxx, Esq.
Xxxxxxxx, Loop & Xxxxxxxx, LLP
0000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxx 00000-0000
If to NBT, to: Xxxxx X. Xxxxxxxx
Chairman and Chief Executive Officer
00 Xxxxx Xxxxx Xxxxxx
X.X. Xxx 000
Xxxxxxx, Xxx Xxxx 00000
With required copies to: Xxxxxx X. Xxxxx, Esq.
Xxxxx & Xxxxxxx L.L.P.
000 00xx Xxxxxx, X.X.
Xxxxxxxxxx, XX 00000
or such other address as shall be furnished in writing by any party, and any
such notice or communication shall be deemed to have been given: (a) as of
the date delivered by hand; (b) three (3) business days after being delivered
to the U.S. mail, postage prepaid; or (c) one (1) business day after being
delivered to the overnight courier.
12.5. Parties in Interest.
This Agreement shall be binding upon and shall inure to the benefit
of the parties hereto and their respective successors and assigns; provided,
however, that neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any party hereto without the prior
written consent of the other party, and that nothing in this Agreement is
intended to confer upon any other person any rights or remedies under or by
reason of this Agreement.
12.6. Complete Agreement.
This Agreement, including the Exhibits and Disclosure Schedules
hereto and the documents and other writings referred to herein or therein or
delivered pursuant hereto, and the Confidentiality Agreements referred to in
Section 12.1, contains the entire agreement and understanding of the parties
with respect to its subject matter. There are no restrictions, agreements,
promises, warranties, covenants or undertakings between the parties other
than those expressly set forth herein or therein. This Agreement supersedes
all prior agreements and understandings (other than the Confidentiality
Agreement referred to in Section 12.1) between the parties, both written and
oral, with respect to its subject matter.
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12.7. Counterparts.
This Agreement may be executed in one or more counterparts all of
which shall be considered one and the same agreement and each of which shall
be deemed an original. A facsimile copy of a signature page shall be deemed
to be an original signature page.
12.8. Severability.
In the event that any one or more provisions of this Agreement shall
for any reason be held invalid, illegal or unenforceable in any respect, by
any court of competent jurisdiction, such invalidity, illegality or
unenforceability shall not affect any other provisions of this Agreement and
the parties shall use their reasonable efforts to substitute a valid, legal
and enforceable provision which, insofar as practical, implements the
purposes and intents of this Agreement.
12.9. Governing Law.
This Agreement shall be governed by the laws of New York, without
giving effect to its principles of conflicts of laws.
12.10. Interpretation.
When a reference is made in this Agreement to Sections or Exhibits,
such reference shall be to a Section of or Exhibit to this Agreement unless
otherwise indicated. The recitals hereto constitute an integral part of this
Agreement. References to Sections include subsections, which are part of the
related Section (e.g., a section numbered "Section 5.5.1" would be part of
"Section 5.5" and references to "Section 5.5" would also refer to material
contained in the subsection described as "Section 5.5.1"). The table of
contents, index and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation
of this Agreement. Whenever the words "include", "includes" or "including"
are used in this Agreement, they shall be deemed to be followed by the words
"without limitation". The phrases "the date of this Agreement", "the date
hereof" and terms of similar import, unless the context otherwise requires,
shall be deemed to refer to the date set forth in the Recitals to this
Agreement. The parties have participated jointly in the negotiation and
drafting of this Agreement. In the event an ambiguity or question of intent
or interpretation arises, this Agreement shall be construed as if drafted
jointly by the parties and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of the authorship of any of the
provisions of this Agreement.
12.11. Specific Performance.
The parties hereto agree that irreparable damage would occur in the
event that the provisions contained in this Agreement were not performed in
accordance with its specific terms or was otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions thereof in any court of the United States or any
state having jurisdiction, this being in addition to any other remedy to
which they are entitled at law or in equity.
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12.12. Waiver of Trial by Jury.
The parties hereto hereby knowingly, voluntarily and intentionally
waive the right any may have to a trial by jury in respect to any litigation
based hereon, or rising out of, under, or in connection with this agreement
and any agreement contemplated to be executed in connection herewith, or any
course of conduct, course of dealing, statements (whether verbal or written)
or actions of either party in connection with such agreements.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, NBT and CNB have caused this Agreement to be
executed under seal by their duly authorized officers as of the date first
set forth above.
NBT Bancorp Inc.
Dated: June 13, 2005 By: /s/ Xxxxxx X. Xxxxxxxx
_______________________________
Name: Xxxxxx X. Xxxxxxxx
Title: President
CNB Bancorp, Inc.
Dated: June 13, 2005 By: /s/ Xxxxxxx X. Xxxxx
_______________________________
Name: Xxxxxxx X. Xxxxx
Title: Chairman, President and
Chief Executive Officer
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