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EXHIBIT 10.1
TAX SEPARATION AGREEMENT
between
USBANCORP, INC.,
on behalf of itself
and the members
of the USBANCORP GROUP
and
THREE RIVERS BANCORP, INC.,
on behalf of itself
and the members
of the THREE RIVERS GROUP
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TAX SEPARATION AGREEMENT
This Agreement is entered into as of the first (1st) day of April, 2000,
between USBANCORP, Inc. ("USBANCORP"), a Pennsylvania corporation, on behalf of
itself and the members of the USBANCORP Group, and Three Rivers Bancorp, Inc.
("Three Rivers"), a Pennsylvania corporation, on behalf of itself and the
members of the Three Rivers Group.
W I T N E S S E T H:
WHEREAS, pursuant to the tax laws of the United States and various state
and local jurisdictions within the United States, certain members of the Three
Rivers Group, as defined below, presently file certain tax returns separately
and certain federal income tax returns as part of a consolidated group, as
permitted by Section 1501 of the Internal Revenue Code of 1986, as amended (the
"Code"), with certain members of the USBANCORP Group, as defined below (each
such federal income tax consolidated group, a "Consolidated Group");
WHEREAS, USBANCORP and Three Rivers intend to enter into a Separation
Agreement dated as of the first (1st) day of April, 2000 (the "Separation
Agreement"), providing for the distribution by USBANCORP to its shareholders of
all of the
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common stock of Three Rivers that is held by USBANCORP (the "Distribution") and
certain other matters;
WHEREAS, USBANCORP and Three Rivers desire to set forth their agreement on
the rights and obligations of USBANCORP, Three Rivers and the members of the
USBANCORP Group and the Three Rivers Group, respectively, with respect to the
administration and allocation of certain federal, state and local (a) Taxes
incurred in Taxable periods beginning prior to the Distribution Date, (b) Taxes
resulting from transactions effected in connection with, or as part of the plan
for, the Distribution (the "Restructuring"), and (c) Taxes that may be incurred
in Taxable periods after the Distribution Date, and various other Tax matters;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth, the parties agree as follows:
1. Definitions
(a) As used in this Agreement:
"Affiliate" of any Person shall mean (i) any individual, corporation,
partnership or other entity directly or indirectly
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owning more than 50 percent (by vote or value) of, owned more than 50 percent
(by vote or value) by, or under more than 50 percent (by vote or value) common
ownership with, such Person, and (ii) any entity that is entitled to the benefit
of any Tax Asset of such Person under applicable law, any entity with any Tax
Asset to which such Person is entitled to the benefit of under applicable law,
or any entity which is entitled or required to transfer or assign income,
revenues, receipts, or gains to such Person under applicable law.
"After-Tax Amount" shall mean an additional amount necessary to reflect the
Tax consequences of the receipt or accrual of any payment, using the maximum
statutory rate (or rates, in the case of an item that affects more than one Tax)
applicable to the recipient of such payment for the relevant year, reflecting,
for example, the amount of any increased Tax liability (or reduction of a Tax
Asset), and the amount of any interest or penalty attributable to such increased
Tax liability (or reduction of a Tax Asset), as adjusted for the effect of the
deductions available for interest paid or accrued and for Taxes such as state
and local income Taxes.
"Consolidated Group" shall have the meaning ascribed to it in the first
"whereas" clause in this Agreement.
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"Distribution" shall mean the distribution by USBANCORP of all of the
common stock of Three Rivers that is held by USBANCORP to USBANCORP's
shareholders pursuant to the Separation Agreement.
"Distribution Date" shall mean the date on which the Distribution shall be
effected.
"Federal Tax" shall mean any Tax imposed under Subtitle A of the Code and
any related penalty imposed under Subtitle F of the Code.
"Final Determination" shall mean: (i) with respect to Federal Taxes, (A) a
"determination" as defined in Section 1313(a) of the Code, or (B) the date of
acceptance by or on behalf of the IRS of Form 870-AD (or any successor form
thereto), as a final resolution of Tax liability for any Taxable period, except
that a Form 870-AD (or successor form thereto) that reserves the right of the
taxpayer to file a claim for refund or the right of the IRS to assert a further
deficiency shall not constitute a Final Determination with respect to the item
or items so reserved; (ii) with respect to Taxes other than Federal Taxes, any
final determination of liability in respect of a Tax that, under applicable law,
is not subject to further appeal, review or modification through proceedings or
otherwise;
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(iii) any final disposition by reason of the expiration of the applicable
statute of limitations; or (iv) the payment of Tax by USBANCORP, Three Rivers,
or any member of the USBANCORP Group or the Three Rivers Group, whichever is
responsible for payment of such Tax under applicable law, with respect to any
item disallowed or adjusted by a Taxing Authority, provided that the provisions
of Section 8 hereof have been complied with, or, if such section is
inapplicable, that the party responsible under the terms of this Agreement for
such Tax (the responsible party) is notified by the party paying such Tax (the
paying party) that it, the paying party, has determined that no action should be
taken to recoup such disallowed item, and the responsible party either agrees
with such determination or fails to respond within 30 days to the paying party's
notice of such determination.
"IRS" shall mean the Internal Revenue Service.
"LIBOR" shall be determined on the basis of the offered rates for deposits
in U.S. Dollars for a period of 30 days which appear on the Reuters Screen LIBOR
Page as of 11:00 a.m., London time. If at least two rates appear on the Reuters
Screen LIBO Page, the rate will be the arithmetic mean of such rates.
"Person" shall have the meaning ascribed to it in Section 7701(a)(1) of the
Code.
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"Post-Distribution Period" shall mean any Taxable period (or portion
thereof) beginning after the close of business on the Distribution Date;
provided, that if a Taxable period ending after the Distribution Date contains
any days which fall prior to or on the Distribution Date, any portion of such
Taxable period after the Distribution Date shall also be included in the
Post-Distribution Period.
"Pre-Distribution Period" shall mean any Taxable period ending on or before
the close of business on the Distribution Date; provided, that if a Taxable
period ending after the Distribution Date contains any days which fall prior to
or on the Distribution Date, any portion of such Taxable period up to and
including the Distribution Date shall also be included in the Pre-Distribution
Period.
"Prime" shall mean the rate announced from time to time as "prime" in the
"Money Rates" column of the Wall Street Journal.
"Return" shall mean any Tax return, statement, report, form, election,
claim or surrender (including estimated Tax returns and reports, extension
requests and forms, and information returns and reports) required to be filed
with any Taxing Authority.
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"Tax" (and the correlative meaning, "Taxes," "Taxing" and "Taxable") shall
mean (A) any tax imposed under Subtitle A of the Code, or any net income, gross
income, gross receipts, alternative or add-on minimum, sales, use, business and
occupation, value-added, trade, goods and services, ad valorem, shares, capital
stock, franchise, profits, license, business royalty, withholding, payroll,
employment, capital, excise, transfer, recording, severance, stamp, occupation,
premium, property, asset, real estate acquisition, environmental, custom duty,
or other tax, governmental fee or other like assessment or charge of any kind
whatsoever, together with any interest and any penalty, addition to tax or
additional amount imposed by a Taxing Authority; (B) any liability of a member
of the USBANCORP Group or the Three Rivers Group, as the case may be, for the
payment of any amounts of the type described in clause (A) for any Taxable
period resulting from such member being a part of a Consolidated Group pursuant
to the application of Treasury Regulation Section 1.1502-6 or any similar
provision applicable under state or local law; or (C) any liability of a member
of the USBANCORP Group or the Three Rivers Group for the payment of any amounts
described in clause (A) as a result of any express or implied obligation to
indemnify any other party.
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"Tax Asset" shall mean any net operating loss, net capital loss, investment
Tax credit, foreign Tax credit, target jobs Tax credit, low income housing
credit, research and experimentation credit, charitable deduction, or any other
loss, credit or Tax attribute, including additions to basis of property, which
could reduce any Tax, including, without limitation, deductions, credits, or
alternative minimum net operating loss carryforwards related to alternative
minimum Taxes.
"Tax Packages" shall mean one or more packages of information that are (i)
reasonably necessary for the purpose of preparing Returns of any Consolidated
Group, or of any member of the USBANCORP Group or the Three Rivers Group, with
respect to a Pre-Distribution Period, and (ii) completed in all material
respects in accordance with the standards that USBANCORP has established for its
subsidiaries with respect to the relevant Pre-Distribution Period.
"Tax Proceeding" shall mean any Tax audit, dispute or proceeding (whether
administrative or judicial).
"Taxing Authority" shall mean any governmental authority, including,
without limitation, any state, municipality, political subdivision or
governmental agency, responsible for the imposition of any Tax.
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"Three Rivers Group" shall mean Three Rivers and its Affiliates immediately
after the Distribution Date, including any predecessors thereto; provided,
however, that for purposes of determining whether an entity is a member of the
Three Rivers Group, a transfer of beneficial ownership of an entity shall be
treated as a transfer of title, regardless of whether title has actually passed.
"Three Rivers Tax Liability" shall mean, with respect to any Consolidated
Group and any Taxable period, the share of the Tax liability of such
Consolidated Group that is attributable or allocable to Three Rivers Group
members that are also members of such Consolidated Group, computed as if the
relevant members of the Three Rivers Group were not and never were part of such
Consolidated Group, but rather were a separate affiliated group of corporations
filing a similar group Return (provided, however, that transactions with any
member of the USBANCORP Group that is included in such Consolidated Group shall
not be taken into account until the first Taxable period in which such
transaction is required to be taken into account for Tax purposes under
applicable law). Such computation shall be made (A) without regard to the
income, deductions (including net operating loss and capital loss deductions)
and credits in any year of any relevant member of the USBANCORP Group, except to
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the extent that a payment was made to any such member of the USBANCORP Group
with respect thereto, (B) by taking account of any Tax Asset of the relevant
members of the Three Rivers Group, (C) with regard to net operating loss and
capital loss carryforwards and carrybacks and minimum Tax credits from earlier
years of the relevant members of the Three Rivers Group and without reduction
for any such losses, carryforwards, carrybacks or credits used by any relevant
member of the USBANCORP Group, except to the extent that such losses,
carryforwards, carrybacks or credits have been used (and a payment therefor was
made to the relevant member of the Three Rivers Group) by any relevant member of
the USBANCORP Group, (D) by applying the maximum applicable statutory Tax rate
in effect under applicable law during the relevant year, and (E) reflecting the
positions, elections and accounting methods used by the Consolidated Group in
preparing the relevant Return for the Consolidated Group.
"USBANCORP Chief Financial Officer" shall include any successor
position or title.
"USBANCORP Group" shall mean, with respect to any Taxable period, USBANCORP
and its Affiliates (including their predecessors and successors) at any time
prior to the
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Distribution other than those Affiliates comprising the Three Rivers Group.
"USBANCORP Tax Liability" shall mean, with respect to any Consolidated
Group and any Taxable period, the share of the Tax liability of such
Consolidated Group that is attributable or allocable to USBANCORP Group members
that are also members of such Consolidated Group, computed as if the relevant
members of the USBANCORP Group were not and never were part of such Consolidated
Group, but rather were a separate affiliated group of corporations filing a
similar group Return (provided, however, that transactions with any member of
the Three Rivers Group that is included in such Consolidated Group shall not be
taken into account until the first Taxable period in which such transaction is
required to be taken into account for Tax purposes under applicable law). Such
computation shall be made (A) without regard to the income, deductions
(including net operating loss and capital loss deductions) and credits in any
year of any relevant member of the Three Rivers Group, except to the extent that
a payment was made to any such member of the Three Rivers Group with respect
thereto, (B) by taking account of any Tax Asset of the relevant members of the
USBANCORP Group, (C) with regard to net operating loss and capital loss
carryforwards and carrybacks and minimum Tax credits from earlier years of the
relevant members of the USBANCORP Group and
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without reduction for any such losses, carryforwards, carrybacks or credits used
by any relevant member of the Three Rivers Group, except to the extent that such
losses, carryforwards, carrybacks or credits have been used (and a payment
therefor was made to the relevant member of the USBANCORP Group) by any relevant
member of the Three Rivers Group, (D) by applying the maximum applicable
statutory Tax rate in effect under applicable law during the relevant year, and
(E) reflecting the positions, elections and accounting methods used by the
Consolidated Group in preparing the relevant Return for the Consolidated Group.
(b) Any term used in this Agreement which is not defined in this Agreement
shall, to the extent the context requires, have the meaning assigned to it in
the Code or the applicable United States Treasury regulations thereunder (as
interpreted in administrative pronouncements and judicial decisions) or in
comparable provisions of applicable law.
2. Administrative and Compliance Matters.
(a) Sole Tax Sharing Agreement. Any and all existing Tax sharing agreements
or arrangements, written or unwritten, between any member of the USBANCORP Group
and any member of the Three Rivers Group for Tax Returns or Tax matters of a
Consolidated Group, for Tax years that end in 1998, 1999 or
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2000, shall be terminated as of the Distribution Date. As of the Distribution
Date, neither the members of the Three Rivers Group nor the members of the
USBANCORP Group shall have any further rights or liabilities thereunder, and
this Agreement shall be the sole Tax sharing agreement between the members of
the Three Rivers Group and the members of the USBANCORP Group. Notwithstanding
the foregoing, if any such termination is not binding on any Taxing Authority,
the Three Rivers Group shall hold the affected member of the USBANCORP Group
harmless against any adverse effect which would have been avoided if such
termination had been given effect by such Taxing Authority.
(b) Designation of Agent. Three Rivers and each member of Three Rivers
Group, and USBANCORP and each member of the USBANCORP Group, as the case may be,
in each case with respect to any Consolidated Group of which such Person is a
member, hereby irrevocably authorize USBANCORP or Three Rivers, respectively,
and consistent with past practice and applicable law, to designate a member of
the USBANCORP Group or the Three Rivers Group, as appropriate, or a successor of
such member, as its agent, coordinator, and administrator, for the purpose of
taking any and all actions (including the execution of waivers of applicable
statutes of limitation) necessary or incidental to the filing of any Return, any
amended Return, or any claim for refund (even where an item or Tax Asset giving
rise to an
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amended Return or refund claim arises in a Post-Distribution Period), credit or
offset of Tax or any other proceedings, and for the purpose of making payments
to, or collecting refunds from, any Taxing Authority, in each case relating only
to any Pre-Distribution Period. Such designated member of the USBANCORP Group or
the Three Rivers Group, as the case may be, as agent, covenants to Three Rivers
or USBANCORP, respectively, that it shall be responsible to see that all such
administrative matters relating thereto shall be handled promptly and
appropriately.
(c) Pre-Distribution Period Returns. With respect to a Consolidated Group,
the member of the USBANCORP Group or the Three Rivers Group, as applicable, that
is required by applicable law to file any Return(s) for any Pre-Distribution
Period will prepare such Return(s) with the assistance of the relevant members
of the Three Rivers Group and the USBANCORP Group, respectively. With respect to
each Consolidated Group, either a member of the USBANCORP Group or a member of
the Three Rivers Group, as consistent with past practice and applicable law,
will file the Pre-Distribution Period Returns for such Consolidated Group.
USBANCORP and the relevant members of the USBANCORP Group shall have the right
with respect to any Consolidated Group Returns to determine (x) the manner in
which such returns, documents or statements shall be prepared and filed,
including, without limitation, the manner in which any
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item of income, gain, loss, deduction or credit shall be reported, (y) whether
any extensions should be requested, and (z) the elections that will be made by
any relevant member of the USBANCORP Group or the Three Rivers Group. In
addition, with respect to all Pre-Distribution Periods, except as provided in
Section 8(b), USBANCORP and the relevant members of the USBANCORP Group shall
have the right to (i) contest, compromise or settle any adjustment or deficiency
proposed, asserted or assessed as a result of any audit of any Consolidated
Return filed by the relevant members of the USBANCORP Group or the Three Rivers
Group, (ii) file, prosecute, compromise or settle any claim for refund, (iii)
determine whether any refunds to which the relevant members of the USBANCORP
Group may be entitled shall be received by way of refund or credited against the
tax liability of the USBANCORP Group and (iv) determine whether a deposit will
be made with a Taxing Authority to stop the running of interest. With respect to
the 1999 and 2000 Tax years, Three Rivers and the members of the Three Rivers
Group shall prepare and deliver to USBANCORP within 120 days after the
Distribution Date all Tax Packages requested by any member of the USBANCORP
Group, regardless of whether the member's Taxable year ends on the Distribution
Date.
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3. Tax Sharing.
(a) General. For each Taxable period of each Consolidated Group during
which income, profits, gains, shares, capital stock, franchise, net worth,
receipts, sales, loss or credit against Tax of at least one member of each of
the Three Rivers Group and the USBANCORP Group are includible in a Return of
such Consolidated Group, the Three Rivers Group or the USBANCORP Group, as
appropriate, shall pay, as provided in this Section 3, to the USBANCORP Group or
the Three Rivers Group, respectively, an amount equal to the Three Rivers Tax
Liability or the USBANCORP Tax Liability, as appropriate, for such Taxable
period, if any.
(b) Estimated Tax and Extension Payments. Not later than five business days
after a member of the USBANCORP Group or a member of the Three Rivers Group, as
the case may be, makes an estimated Tax or extension payment with respect to a
Taxable period of a Consolidated Group, whether or not such payment is made
prior to the Distribution, the USBANCORP Group shall (i) in good faith determine
the amount of the Three Rivers Tax Liability or the USBANCORP Tax Liability, as
appropriate, pursuant to this Agreement and (ii) deliver a written statement to
Three Rivers reflecting such determination. Not later than five business days
after receipt of such statement, the Three
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Rivers Group shall pay to the USBANCORP Group or the USBANCORP Group shall pay
to the Three Rivers Group, as appropriate, the amount so determined in
accordance with Section 9 hereof.
(c) Payment of Taxes at Year-End.
(i) Not later than five business days before a member of the USBANCORP
Group or a member of the Three Rivers Group, as the case may be, is required to
file a Return (after taking extensions into account) with respect to any
Consolidated Group for which payments are to be made under this Agreement,
whether or not such Return is filed prior to the Distribution, the USBANCORP
Group shall deliver to the Three Rivers Group a written statement setting forth
the difference between (x) the Three Rivers Tax Liability and the USBANCORP Tax
Liability, respectively, for such Return, and (y) the aggregate amount of
payments with respect to the Three Rivers Tax Liability and the USBANCORP Tax
Liability, respectively, made for such year pursuant to Section 3(b). Not later
than the date such Return is required to be filed, the Three Rivers Group shall
pay to the USBANCORP Group or the USBANCORP Group shall pay to the Three Rivers
Group, as appropriate, in accordance with Section 9 hereof, an amount equal to
such difference, if any; provided, however, that to the extent such payment is
to be made to the Three Rivers Group and is attributable to a claim for refund
of
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Taxes previously paid to a Taxing Authority, the USBANCORP Group will not be
required to make such payment to the Three Rivers Group until the amount of such
refund has been determined and paid to USBANCORP by the Taxing Authority. Within
five business days of the receipt of such refund, USBANCORP shall pay to the
Three Rivers Group the amount equal to the excess, if any, of (i) the amount of
such refund, together with all interest paid thereon by the Taxing Authority,
over (ii) the amount, if any, of the increased Tax liability of USBANCORP
attributable to the receipt of such refund and any interest thereon.
(ii) With respect to each Consolidated Group Return described in
Section 3(a) above previously or hereafter filed by a Consolidated Group for the
Tax years ended in 1998, 1999 and 2000, and for which the Three Rivers Tax
Liability or the USBANCORP Tax Liability, as the case may be, has not been
satisfied in full, the Three Rivers Group shall pay to the USBANCORP Group or
the USBANCORP Group shall pay to Three Rivers Group, as appropriate, within 30
days of demand therefor, the amount of the unpaid Three Rivers Tax Liability or
the unpaid USBANCORP Tax Liability, as the case may be, in respect of such
Return as determined by the USBANCORP Chief Financial Officer.
(d) Intentionally omitted.
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(e) Treatment of Adjustments.
(i) Intentionally omitted.
(ii) If any adjustment is made in, or if a Taxing Authority assesses
any deficiency with respect to, a Return of a Consolidated Group filed by a
member of the USBANCORP Group which would have increased the Three Rivers Tax
Liability under Section 3(c)(i), then within 30 days after any member of the
USBANCORP Group makes a payment to a Taxing Authority or makes a deposit with a
Taxing Authority to stop the running of interest with respect to such
adjustment, the Three Rivers Group shall pay to the USBANCORP Group the
difference between all payments actually made under Section 3(c)(i) and all
payments that would have been made under Section 3(c)(i) taking such adjustment
into account.
(iii) Intentionally omitted.
(iv) Any refunds or credits of Tax, or the portion thereof, received
by (or credited to the Tax Return of) the USBANCORP Group relating to a
Pre-Distribution Period Consolidated Return for a Tax year or period ending in
1999 or 2000, which results from an adjustment which decreases the Three Rivers
Tax Liability with respect to such Return, shall be paid
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within thirty days of the receipt of such refund, or notice of Final
Determination of such credit, by the USBANCORP Group to the Three Rivers Group,
but only to the extent of the actual decrease in the Three Rivers Tax Liability
with respect to such Return and the interest, if any, paid thereon by the Taxing
Authority.
4. Certain Representations and Covenants.
(a) (i) Three Rivers Representations. Three Rivers and each member of the
Three Rivers Group represent that as of the date hereof, and covenants that on
the Distribution Date, there is no agreement, understanding, arrangement,
negotiation, plan or intention (A) to liquidate Three Rivers or to merge or
consolidate Three Rivers, or any member of Three Rivers Group, with any other
Person subsequent to the Distribution, except as otherwise disclosed to the IRS
in connection with the USBANCORP request for a private letter ruling with
respect to the Distribution or the Restructuring, (B) to sell or otherwise
dispose of any asset, or transfer, terminate or discontinue any business, of
Three Rivers or any member of the Three Rivers Group subsequent to the
Distribution, in a manner that would result in any increased Tax liability or
reduction of any Tax Asset of the USBANCORP Group or any member thereof, (C) to
take any action inconsistent with, or fail to take any action
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required on its part by, the information and representations furnished to the
IRS in connection with the USBANCORP request for a private letter ruling with
respect to the Distribution or the Restructuring, (D) to enter into any
negotiations, agreements, understandings, plans or arrangements with respect to
transactions or events (including, without limitation, the issuance or sale of
capital stock pursuant to the exercise of options or otherwise, capital
contributions or acquisitions, but not including the Distribution or any other
transaction disclosed to the IRS in connection with the USBANCORP request for a
private letter ruling with respect to the Distribution or the Restructuring)
which, if treated as consummated before the proposed Distribution, would result
in USBANCORP not having "control" of Three Rivers within the meaning of sections
355(a)(1)(A) and 368(c) of the Code at the time of the Distribution, or if
treated as consummated on or after the Distribution Date, would result in any
increased Tax liability or reduction of any Tax Asset of the USBANCORP Group or
any member thereof, (E) to make any change in equity structure that would result
in USBANCORP not having such "control" (except for the Distribution or any other
transaction disclosed to the IRS in connection with the USBANCORP request for a
private letter ruling with respect to the Distribution or the Restructuring),
(F) to repurchase stock of Three Rivers in a manner contrary to the requirements
of Revenue Procedure 96-30 or in a manner
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contrary to the representations made in connection with the USBANCORP request
for a private letter ruling with respect to the Distribution or the
Restructuring, or (G) to take any action that contravenes any existing gain
recognition agreement or other agreement with a Taxing Authority to which any
member of Three Rivers Group or the USBANCORP Group is a party.
(ii) Three Rivers and USBANCORP Representations. Each of Three Rivers,
USBANCORP and the members of the Three Rivers Group and the USBANCORP Group,
respectively, represents that as of the date hereof, and covenants that on the
Distribution Date, neither Three Rivers or USBANCORP, nor the members of the
Three Rivers Group or the USBANCORP Group, respectively (as applicable), is
aware of any present agreement, understanding, arrangement, negotiation, plan or
intention by the current shareholders of USBANCORP to sell, exchange, transfer
by gift, or otherwise dispose of any of their stock in, or securities of,
USBANCORP or Three Rivers subsequent to the Distribution. In making this
representation, the parties hereto recognize that the shares of USBANCORP are,
and the shares of Three Rivers will be, listed on certain stock exchanges and
regular public trading in such shares can be expected.
(b) Three Rivers Covenants. Three Rivers covenants to USBANCORP that, (i)
during the two-year period following the
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Distribution Date, neither Three Rivers, nor any member of the Three Rivers
Group, will liquidate, merge or consolidate, or enter into or negotiate any
agreement, understanding, plan or arrangement to liquidate, merge or
consolidate, with any other Person, in a manner that would result in any
increased Tax liability or reduction of any Tax Asset of the USBANCORP Group or
any member thereof, (ii) during the two-year period following the Distribution
Date, Three Rivers will not sell, exchange, distribute or otherwise dispose of
its assets or those of any member of the Three Rivers Group, or transfer,
terminate or discontinue any business of any member of the Three Rivers Group,
in a manner that would result in any increased Tax liability or reduction of any
Tax Asset of the USBANCORP Group or any member thereof, (iii) following the
Distribution, Three Rivers Bank and Trust Company will, for a minimum of two
years, continue the active conduct of the historic business conducted by Three
Rivers Bank and Trust Company throughout the five year period prior to the
Distribution, (iv) during the two-year period following the Distribution Date,
Three Rivers will not, nor will it permit any member of the Three Rivers Group
to, enter into or negotiate any transaction or make any change, or enter into or
negotiate any agreement, understanding, plan or arrangement to make any change,
in equity structure (including, without limitation, the issuance or sale of
capital stock pursuant to the exercise of options or otherwise, capital
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contributions or acquisitions, but not including the Distribution) which, (A) if
treated as consummated before the proposed distribution, would result in
USBANCORP not having "control" of Three Rivers within the meaning of sections
355(a)(1)(A) and 368(c) of the Code at the time of the Distribution, or (B) if
treated as occurring or consummated during the two-year period following the
proposed Distribution would result in any increased Tax liability or reduction
of any Tax Asset of the USBANCORP Group or any member thereof, (v) Three Rivers
will not, nor will it permit any member of Three Rivers Group to, take any
action inconsistent with, or fail to take any action required on its part by,
the information and representations furnished to the IRS in connection with the
USBANCORP request for a private letter ruling with respect to the Distribution
or the Restructuring, (vi) Three Rivers will not take any action that
contravenes any existing gain recognition agreement or other agreement with a
Taxing Authority to which any member of the Three Rivers Group or the USBANCORP
Group is a party, (vii) Three Rivers will not repurchase stock of Three Rivers
in a manner contrary to the requirements of Revenue Procedure 96-30 or in a
manner contrary to the representations made in connection with the USBANCORP
request for a private letter ruling with respect to the Distribution or the
Restructuring, and (viii) on or after the Distribution Date Three Rivers will
not, nor will it permit any member of the
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Three Rivers Group to, make or change any accounting method, amend any Return or
take any Tax position on any Return, take any other action, omit to take any
action or enter into any transaction that results in any increased Tax liability
or reduction of any Tax Asset of the USBANCORP Group or any member thereof in
respect of any Pre-Distribution Period. Three Rivers agrees that USBANCORP is to
have no liability for any Tax resulting from any action referred to in the
preceding sentence and agrees to indemnify and hold harmless the USBANCORP Group
against any such Tax, all interest and penalties thereon, and all costs of
investigation and defense reasonably incurred by USBANCORP in connection with
USBANCORP's determination whether USBANCORP or any member of the USBANCORP Group
has incurred any liability for any such Tax, interest or penalty as a result of
any breach or violation of any covenant or agreement to be kept or performed by
Three Rivers and the members of the Three Rivers Group under this Section 4(b).
(c) Deductions and Certain Taxes Related to Options. Tax deductions
attributable to the exercise of options to purchase the stock of Three Rivers
shall be deducted by the Three Rivers Group if the holder of the option is an
employee of any member of the Three Rivers Group immediately after the
Distribution. Tax Deductions attributable to the exercise of all other options
to purchase the stock of Three Rivers or the stock of USBANCORP
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shall be deducted by the USBANCORP Group. The Tax Returns of the Three Rivers
Group and the USBANCORP Group shall reflect the entitlement of the Three Rivers
Group and the USBANCORP Group, respectively, to such deductions in accordance
with this Section 4(c). To the extent that any such Tax deduction is, or the
USBANCORP Chief Financial Officer determines that any such Tax deduction, if
asserted, would be, disallowed:
(i) If the USBANCORP Group is entitled under the provisions of this
Section 4(c) to any such Tax deduction which is, or, if asserted, would be,
disallowed, the Three Rivers Group shall pay to the USBANCORP Group an amount
equal to the Tax paid by the USBANCORP Group as a result of such disallowance,
or an amount equal to the Tax that would become payable if the USBANCORP Group
claimed the Tax deduction and such deduction was disallowed, respectively; and
(ii) If the Three Rivers Group is entitled under the provisions of this
Section 4(c) to any such Tax deduction which is, or, if asserted, would be,
disallowed, the USBANCORP Group shall pay to the Three Rivers Group an amount
equal to the Tax paid by the Three Rivers Group as a result of such
disallowance, or an amount equal to the Tax that would become payable if the
Three Rivers Group claimed the Tax deduction and such deduction was disallowed,
respectively.
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The Three Rivers Group and each member of the Three Rivers Group will
indemnify the USBANCORP Group, and the USBANCORP Group and each member of the
USBANCORP Group will indemnify the Three Rivers Group, against any Tax liability
under the Federal Insurance Contributions Act or the Federal Unemployment Tax
Act, and all interest thereon and all penalties related thereto, incurred by the
USBANCORP Group or the Three Rivers Group, respectively, in connection with the
exercise of any option with respect to which the Tax deduction is allocated to
the Three Rivers Group or the USBANCORP Group, respectively, under the
provisions of this Section 4(c), except to the extent such Tax is withheld from
a payment to the holder of the exercised option and remitted to a Taxing
Authority.
5. Indemnities.
(a) Three Rivers Indemnity. Three Rivers and each member of the Three
Rivers Group will, jointly and severally, indemnify USBANCORP and the members of
the USBANCORP Group against and hold them harmless from:
(i) any Tax liability of the Three Rivers Group, any Three Rivers
Group Tax Liability, and any Tax liability attributable to the Restructuring,
except for such Tax
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liability, if any, as may be incurred by the USBANCORP Group in connection with
the 1994 intercompany sale of the assets of Standard Mortgage Corporation of
Georgia, which shall be the liability and obligation of the USBANCORP Group;
(ii) any liability or damage resulting from a breach by Three Rivers
or any member of the Three Rivers Group of any representation or covenant made
by Three Rivers herein;
(iii) any Tax liability of USBANCORP or any shareholder of USBANCORP
resulting from the Distribution, unless such Tax liability arises solely as a
result of any action of USBANCORP or any member of the USBANCORP Group;
(iv) any Tax liability under Section 355(e) of the Code, any Tax
liability under any state or local Tax law corresponding to Section 355(e) of
the Code or resulting from a Tax liability under Section 355(e) of the Code, and
any liability, damage, cost or expense which the USBANCORP Group, or any member
of the USBANCORP Group, may suffer or incur as a result of a Final Determination
that Section 355(e)(1) of the Code applies to the Distribution or the
Restructuring, unless such Tax liability, or other liability, damage, cost or
expense, arises solely as a result of any action of USBANCORP or any member of
the USBANCORP Group; and
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(v) all liabilities, costs, expenses (including, without limitation,
reasonable expenses of investigation and attorneys' fees, court costs and all
expenses related or incidental thereto), losses, damages, interest, penalties,
assessments, settlements or judgments arising out of or incident to the
imposition, assessment or assertion of any Tax liability or damage described in
(i), (ii), (iii), or (iv), above, including those incurred in the contest in
good faith in appropriate proceedings relating to the imposition, assessment or
assertion of any such Tax, liability or damage.
(b) USBANCORP Indemnity. USBANCORP and each member of the USBANCORP Group
will, jointly and severally, indemnify Three Rivers and the members of the Three
Rivers Group that were members of a Consolidated Group that included a USBANCORP
Affiliate against and hold them harmless from:
(i) any Tax liability of the USBANCORP Group and any USBANCORP Tax
Liability, other than any such liabilities described in Section 5(a) above;
(ii) any liability or damage resulting from a breach by USBANCORP or
any member of the USBANCORP Group of any representation or covenant made by
USBANCORP herein; and
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(iii) all liabilities, costs, expenses (including, without limitation,
reasonable expenses of investigation and attorneys' fees and expenses), losses,
damages, interest, penalties, assessments, settlements or judgments arising out
of or incident to the imposition, assessment or assertion of any Tax liability
or damage described in (i) or (ii), above, including those incurred in the
contest in good faith in appropriate proceedings relating to the imposition,
assessment or assertion of any such Tax, liability or damage.
If a member of the USBANCORP Group ceases to be an Affiliate of USBANCORP as a
result of a sale of its stock to a third party (whether or not treated as a sale
or exchange of stock for Tax purposes), such member of the USBANCORP Group shall
be released from its obligations under this Agreement upon such sale and neither
USBANCORP nor any member of the USBANCORP Group shall have any obligation to
indemnify Three Rivers or any member of the Three Rivers Group under Section
5(b)(ii) or the portion of Section 5(b)(iii) that relates to Section 5(b)(ii),
above, for any liability or damage attributable to actions taken by such
Affiliate after such sale.
(c) Discharge of Indemnity. Three Rivers, USBANCORP and the members of the
Three Rivers Group and the USBANCORP Group,
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respectively, shall discharge their obligations under Sections 5(a) and 5(b)
hereof, respectively, by paying the relevant amount within 30 days of demand
therefor. The USBANCORP Group shall be entitled to make such a demand at any
time after a member of the USBANCORP Group makes a payment or deposit in respect
of a Tax for which any member of the Three Rivers Group has an obligation under
Section 5(a); or, in the case of a Tax liability or Tax item under Sections
5(a)(iii) or 5(a)(iv), notwithstanding the other provisions of this Section
5(c), at any time after the amount is claimed or asserted by the IRS or any
other Taxing Authority. The Three Rivers Group shall be entitled to make such a
demand at any time after a Final Determination of an obligation of any member of
the USBANCORP Group under Section 5(b). Any such demand shall include a
statement showing the amount due under Section 5(a) or 5(b), as the case may be.
Certain calculation mechanics relating to certain items described in Section
5(a)(i) and 5(b)(i) are set forth in Section 3(c). Notwithstanding the
foregoing, except in the case of a Tax liability or a claim for indemnity under
Sections 5(a)(iii) or 5(a)(iv), if either Three Rivers, USBANCORP or any member
of the Three Rivers Group or the USBANCORP Group disputes in good faith the fact
or the amount of its obligation under Section 5(a) or Section 5(b), then no
payment of the amount in dispute shall be required until any such good faith
dispute is resolved in accordance with Section
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16 hereof; provided, however, that any amount not paid within 30 days of demand
therefor shall bear interest as provided in Section 9.
(d) Tax Benefits. If an indemnification obligation of any member of the
USBANCORP Group or any member of the Three Rivers Group, as the case may be,
under this Section 5 with respect to a Consolidated Group arises in respect of
an adjustment that makes allowable to a member of Three Rivers Group or a member
of the USBANCORP Group, respectively, any deduction, amortization, exclusion
from income or other allowance (a "Tax Benefit") which would not, but for such
adjustment, be allowable, then any payment by any member of the USBANCORP Group
or any member of the Three Rivers Group, respectively, pursuant to this Section
5 shall be an amount equal to (x) the amount otherwise due but for this
subsection (d), minus (y) the present value of the product of the Tax Benefit
multiplied (i) by the maximum applicable federal, state or local, as the case
may be, corporate tax rate in effect at the time such Tax Benefit becomes
allowable to a member of the Three Rivers Group or a member of the USBANCORP
Group (as the case may be) or (ii) in the case of a credit, by 100 percent. The
present value of such product shall be determined by discounting such product
from the time the Tax Benefit becomes allowable at a rate equal to Prime.
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(e) For purposes of this Section 5, in the case of Taxes that are imposed
on a periodic basis and are payable for a Tax period that includes (but does not
end on) the Distribution Date, the portion of such Tax related to the portion of
such Tax period ending on the Distribution Date shall (x) in the case of any
Taxes other than Taxes based upon or related to income, sales, gross receipts,
wages, capital expenditures or expenses, be deemed to be the amount of such Tax
for the entire Tax period multiplied by a fraction the numerator of which is the
number of days in the Tax period ending on the Distribution Date and the
denominator of which is the number of days in the entire Tax period, and (y) in
the case of any Tax based upon or related to income, sales, gross receipts,
wages, capital expenditures or expenses, be deemed equal to the amount which
would be payable if the relevant Tax period ended on the Distribution Date.
6. Guarantees. USBANCORP or Three Rivers, as the case may be, shall guarantee
the obligations of each member of the USBANCORP Group or the Three Rivers Group,
respectively, under this Agreement.
7. Communication and Cooperation.
(a) Consult and Cooperate. Three Rivers and USBANCORP shall consult and
cooperate (and shall cause each member of the
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Three Rivers Group or the USBANCORP Group, respectively, to cooperate) fully at
such time and to the extent reasonably requested by the other party in
connection with all matters subject to this Agreement. Such cooperation shall
include, without limitation:
(i) the retention and provision on reasonable request of any and all
information, including all books, records, documentation or other information,
pertaining to Tax matters relating to the USBANCORP Group and the Three Rivers
Group, any necessary explanations of information and access to personnel, until
one year after the expiration of the applicable statute of limitation (giving
effect to any extension, waiver, or mitigation thereof);
(ii) the execution of any document that may be necessary or helpful in
connection with any required Return or in connection with any audit, proceeding,
suit or action; and
(iii) the use of the parties' best efforts to obtain any documentation
from a governmental authority or a third party that may be necessary or helpful
in connection with the foregoing.
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(b) Provide Information. USBANCORP and Three Rivers shall keep each other
fully informed with respect to any material development relating to the matters
subject to this Agreement.
(c) Tax Attribute Matters. USBANCORP and Three Rivers shall promptly advise
each other with respect to any proposed Tax adjustments, which are the subject
of an audit or investigation, or are the subject of any proceeding or
litigation, and which may affect any Tax liability or any Tax attribute of
USBANCORP, Three Rivers, the USBANCORP Group, the Three Rivers Group or any
member of the Three Rivers Group or the USBANCORP Group (including, but not
limited to, basis in an asset or the amount of earnings and profits).
8. Audits and Contest.
(a) Notwithstanding anything in this Agreement to the contrary, USBANCORP
shall have full control over all matters relating to any Return or any Tax
Proceeding relating to any Tax matters of at least one member of the USBANCORP
Group. Except as provided in Section 8(b), USBANCORP shall have absolute
discretion with respect to any decisions to be made, or the nature of any action
to be taken, with respect to any matter described in the preceding sentence.
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(b) No settlement of any Tax Proceeding relating to any matter which would
cause a payment obligation under Sections 5(a) or 5(b) shall be accepted or
entered into by or on behalf of the party entitled to receive a payment under
either Section 5(a) or 5(b), whichever is applicable, unless the party
ultimately responsible for such payment under either Section 5(a) or 5(b),
whichever is applicable (the "Indemnitor"), consents thereto in writing (which
consent shall not be unreasonably withheld or delayed); provided, however, that,
notwithstanding anything to the contrary in this Agreement, USBANCORP may settle
any Tax Proceeding if it determines, in its sole judgment, that Three Rivers is
not cooperating in such Tax Proceeding. If the Indemnitor does not respond to
the indemnified party's request for consent within 30 days, the Indemnitor will
be deemed to have consented to the settlement unless the Indemnitor shall have
given a timely Dispute Resolution Notice under Section 16 hereof.
(c) The indemnified party agrees to give notice to the Indemnitor of the
assertion of any claim, or the commencement of any suit, action or proceeding in
respect of which indemnity may be sought hereunder within 30 days of such
assertion or commencement, or such earlier time that would allow the Indemnitor
to timely respond to such claim, suit action or proceeding.
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(d) Intentionally omitted.
9. Payments. All payments to be made hereunder shall be made in immediately
available funds. Except as otherwise provided, all payments required to be made
pursuant to this Agreement will be due 30 days after the receipt of notice of
such payment or, where no notice is required, 30 days after the fixing of
liability or the resolution of a dispute. Payments shall be deemed made when
received. Any payment that is not made by the USBANCORP Group when due shall
bear interest at LIBOR plus 25 basis points, as quoted from time to time, for
each day until paid. Any payment that is not made by the Three Rivers Group when
due shall bear interest at LIBOR plus 25 basis points, as quoted from time to
time, for each day until paid. If, pursuant to a Final Determination, any amount
paid by USBANCORP or the members of the USBANCORP Group or Three Rivers or the
members of the Three Rivers Group, as the case may be, pursuant to this
Agreement results in any increased Tax liability or reduction of any Tax Asset
of Three Rivers or any member of the Three Rivers Group or USBANCORP or any
member of the USBANCORP Group, respectively, then USBANCORP or Three Rivers, as
appropriate, shall indemnify the other party and hold it harmless from any
interest or penalty attributable to such increased Tax liability or the
reduction of such Tax Asset and shall pay to the other
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party, in addition to amounts otherwise owed, the After-Tax Amount. With respect
to any payment required to be made under this Agreement, the USBANCORP Chief
Financial Officer has the right to designate, by written notice to Three Rivers,
which member of the Three Rivers Group or the USBANCORP Group, as the case may
be, will make or receive such payment and in which currency such payment will be
made.
10. Notices. Any notice, demand, claim, or other communication under this
Agreement shall be in writing and shall be deemed to have been given upon the
delivery or mailing thereof, as the case may be, if delivered personally or sent
by certified mail, return receipt requested, postage prepaid, to the parties at
the following addresses (or at such other address as a party may specify by
notice to the other):
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If to USBANCORP or the USBANCORP Group, to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Senior Vice President and Chief Financial Officer
USBANCORP, Inc.
Main and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
If to Three Rivers or Three Rivers Group, to:
▇▇▇▇▇▇▇ ▇▇▇▇▇
Chief Financial Officer
Three Rivers Bancorp, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
11. Costs and Expenses.
(a) Except as expressly set forth in this Agreement, each party shall bear
its own costs and expenses incurred pursuant to this Agreement. For purposes of
this Agreement, costs and expenses shall include, but not be limited to,
reasonable attorney fees, accountant fees and other related professional fees
and disbursements. Notwithstanding anything to the contrary in this Agreement,
the Three Rivers Group will be responsible
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for its allocable portion, as determined by the USBANCORP Chief Financial
Officer, of (i) all costs and expenses attributable to filing any Return that
reflects the income, assets or operations of the Three Rivers Group and any
Return required to be filed in connection with the Distribution or the
Restructuring, and (ii) all costs and expenses incurred by USBANCORP in
complying with the provisions of Section 7 of this Agreement.
(b) With respect to all Tax Proceedings, including pending litigation with
any Taxing Authority, costs shall be allocated in good faith by the USBANCORP
Chief Financial Officer. Each party hereto shall be liable for its allocable
portion of such costs as provided in Section 5.
(c) The IRS provided USBANCORP with certain rulings in connection with the
Restructuring and the Distribution by letter dated February 4, 2000 (the "PLR").
USBANCORP reserves the right and privilege at any time to apply to the IRS for a
supplemental ruling or rulings to the PLR (a "Supplemental Ruling") if USBANCORP
determines, in its sole discretion, that a Supplemental Ruling is necessary or
advisable in connection with the Restructuring or the Distribution or any
circumstances that exist from time to time after the Distribution Date.
USBANCORP agrees to apply for a Supplemental Ruling at the request of Three
Rivers if USBANCORP determines in good faith that a
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Supplemental Ruling is necessary or desirable in connection with the
Restructuring or the Distribution or any circumstances that exist from time to
time after the Distribution Date. All expenses reasonably incurred by members of
the USBANCORP Group and members of the Three Rivers Group in connection with any
USBANCORP application for a Supplemental Ruling, including, without limitation,
all fees, costs and expenses of or relating to accountants, lawyers, investment
bankers and other experts and advisors, engaged or retained by any member of the
USBANCORP Group or any member of the Three Rivers Group (hereinafter,
collectively, "PLR Costs"), shall be allocated as follows:
(i) All such PLR Costs shall be paid by the USBANCORP Group as they
are incurred by USBANCORP or any member of the USBANCORP Group, or by Three
Rivers or any member of the Three Rivers Group, if USBANCORP and the members of
the USBANCORP Group would incur sole liability as the "Indemnitor" (as defined
in Section 8(b) hereof) under Section 5 of this Agreement in favor of Three
Rivers or any member of the Three Rivers Group, if the IRS were to decline
(whether or not the IRS actually declines) to issue or provide the Supplemental
Ruling; and
(ii) All such PLR Costs shall be paid by the Three Rivers Group as
they are incurred by USBANCORP or any member of the USBANCORP Group, or by Three
Rivers or any member of the
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Three Rivers Group, in all cases where such PLR Costs are not allocated to the
USBANCORP Group under Section 11(c)(i) above.
12. Effectiveness; Termination and Survival. This Agreement shall become
effective upon the consummation of the Distribution. All rights and obligations
arising hereunder with respect to a Pre-Distribution Tax Period shall survive
until they are fully effectuated or performed and, provided, further, that
notwithstanding anything in this Agreement to the contrary, this Agreement shall
remain in effect and its provisions shall survive for one year after the full
period of all applicable statutes of limitation (giving effect to any extension,
waiver or mitigation thereof) and, with respect to any claim hereunder initiated
prior to the end of such period, until such claim has been satisfied or
otherwise resolved.
13. Section Headings. The headings contained in this Agreement are inserted for
convenience only and shall not constitute a part hereof or in any way affect the
meaning or interpretation of this Agreement.
14. Entire Agreement; Amendments and Waivers.
(a) Entire Agreement. This Agreement contains the entire understanding of
the parties hereto with respect to the subject
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matter contained herein. No alteration, amendment, modification, or waiver of
any of the terms of this Agreement shall be valid unless made by an instrument
signed by an authorized officer of each of USBANCORP and Three Rivers, or in the
case of a waiver, by the party against whom the waiver is to be effective.
(b) Amendments and Waivers. No failure or delay by any party in exercising
any right, power or privilege hereunder shall operate as a waiver hereof nor
shall any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any right, power or privilege. This
Agreement shall not be waived, amended or otherwise modified except in writing,
duly executed by all of the parties hereto.
15. Governing Law and Interpretation. This Agreement shall be construed and
enforced in accordance with the laws of the Commonwealth of Pennsylvania without
giving effect to laws and principles relating to conflicts of law.
16. Dispute Resolution. If the parties hereto are unable to resolve any
disagreement or dispute relating to this Agreement, including, but not limited
to, whether a transaction is part of the Distribution or the Restructuring and
whether a Tax liability is a USBANCORP Tax Liability or a Three Rivers Tax
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Liability, such dispute shall be resolved in good faith, as follows:
(a) If the dispute involves an amount of Tax (exclusive of interest,
penalties and costs, if any) that is less than $250,000, such dispute shall be
resolved in good faith by the USBANCORP Chief Financial Officer; and
(b) If the dispute involves an amount of Tax (exclusive of interest,
penalties and costs, if any) that is equal to or greater than $250,000, such
dispute shall be resolved by a three member panel composed of accountants or
lawyers or any combination of accountants and lawyers (the "Panel"). For this
purpose:
(i) "Accountant" means a member of an accounting firm of recognized
national standing, including, without limitation, an accounting firm that
regularly audits the financial statements of any Person bound by this Agreement;
(ii) "Lawyer" means an individual lawyer or a member of a law firm
licensed to practice in the Commonwealth of Pennsylvania, including, without
limitation, a lawyer or law firm that regularly or from time to time represents
a Person bound by this Agreement;
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(iii) Any member of the USBANCORP Group or the Three Rivers Group
shall be entitled to demand the formation of a Panel to resolve a dispute at any
time after giving or receiving a written notice under Sections 7(a), 7(b), 8(b)
or 8(c), or in the event of a dispute concerning the allocation of PLR Costs
under Section 11(c), of this Agreement. Any such demand for the formation of a
Panel shall be made in writing and shall include a statement showing the matters
or items in dispute, the amount thereof, the calculation mechanics thereof, the
demanding party's statement of the relevant facts, issues, analysis and
conclusions, and the name and address of the Accountant or Lawyer the demanding
party (the "Petitioner") nominates to serve on the Panel (the "Dispute
Resolution Notice"). Except as set forth in Section 8(b) hereof, neither a
dispute nor a Dispute Resolution Notice shall suspend, ▇▇▇▇▇ or delay the
performance or the time set forth in this Agreement for the performance by any
party of any actions, covenants or agreements on its part to be kept or
performed hereunder.
(iv) Within ten days of receiving the Dispute Resolution Notice, the
party who receives such notice (the "Respondent") shall give written notice to
the Petitioner of the name and address of the Accountant or Lawyer nominated by
the Respondent to serve on the Panel and the Respondent's statement
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of the relevant facts, issues, analysis and conclusions (the "Respondent's
Notice"). If the Respondent fails or refuses to give the Respondent's Notice
within the time herein allowed, the Petitioner shall have the right to nominate
a second Person to the Panel (who must be an Accountant or Lawyer who, and whose
firm, if any, is independent of the Petitioner and has never been retained or
engaged by the Petitioner to perform services for the Petitioner) by written
notice of such nomination within ten days after the expiration of the period
allowed herein for the Respondent's Notice.
(v) The two Persons named by the Petitioner and the Respondent (or, by
the Petitioner if the Respondent fails or refuses to give the Respondent's
Notice within the time herein allowed) shall select by mutual agreement a third
Accountant or Lawyer to serve on the Panel and the Panel so constituted shall
resolve or decide the dispute within sixty days following the last appointment
to the Panel. The third Person so appointed must be an Accountant or Lawyer who,
and whose firm, if any, is independent of both the Petitioner and the
Respondent, and has never been retained or engaged by the Petitioner or the
Respondent to perform services for the Petitioner or the Respondent. It is the
intention and agreement of the parties that the Panel shall decide the dispute
based on the parties' statements, consultations with the parties and their
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representatives, agents and experts, if any, and upon such other sources and
resources, including experts, as the Panel may select. The Panel shall issue a
written statement that sets forth its decision on the matters in dispute and its
explanation of the basis for, or reasoning in support of, its decision,
including, where appropriate, calculations of any liabilities.
(vi) All costs of the dispute resolution process, including the
compensation of the Panel and costs incurred by the Panel, and all costs
reasonably incurred by each party, shall be divided equally between the parties,
unless the Panel, at the request of either party, allocates the liability for
payment of all or any portion of such costs entirely or disproportionately to
the Petitioner or Respondent because of the Panel's determination that either
the Petitioner or the Respondent failed to act in good faith in demanding the
formation of the Panel or at any time during the dispute resolution proceedings.
17. Counterparts. This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same Agreement.
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18. Assignments; Third Party Beneficiaries. Except as provided below, this
Agreement shall be binding upon and shall inure only to the benefit of the
parties hereto and their respective successors and assigns, by merger,
acquisition of assets or otherwise (including but not limited to any successor
of a party hereto succeeding to the Tax attributes of such party under
applicable law). This Agreement is not intended to benefit any person other than
the parties hereto and such successors and assigns, and no such other person
shall be a third party beneficiary hereof. If, during the period beginning on
the Distribution Date and ending upon the expiration of the survival period set
forth in Section 12, any corporation becomes an Affiliate of Three Rivers, such
Affiliate shall be bound by the terms of this Agreement and Three Rivers shall
provide evidence to USBANCORP of such Affiliate's agreement to be bound by the
terms of this Agreement.
19. Authorization, etc. Each of the parties hereto hereby represents and
warrants that it has the power and authority to execute, deliver and perform
this Agreement, that this Agreement has been duly authorized by all necessary
corporate action on the part of such party, that this Agreement constitutes a
legal, valid and binding obligation of each such party, and that the execution,
delivery and performance of this Agreement by such party does not contravene or
conflict with any provision or law
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or of its charter or bylaws or any agreement, instrument or order binding on
such party.
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the day and year first written above.
USBANCORP on its own behalf and on behalf of the
members of the USBANCORP Group.
By: /s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------
Title: Senior Vice President
-----------------------
THREE RIVERS on its own behalf and on behalf of the
members of the Three Rivers Group.
By: /s/▇▇▇▇▇▇▇ ▇. ▇. ▇▇▇▇▇
----------------------------
Title: Vice President and Chief
-------------------------
Financial Officer
-----------------
50
