Exhibit 2.1
Agreement and Plan of Merger,
dated as of July 31, 1998
among SFS and Cohoes,
including exhibits thereto
AGREEMENT AND PLAN OF MERGER
between
COHOES SAVINGS BANK
and
SFS BANCORP, INC.
dated as of July 31, 1998
AGREEMENT AND PLAN OF MERGER
TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS.............................................................................................1
ARTICLE II THE MERGER.............................................................................................7
2.1 The Merger...................................................................................7
2.2 Effective Time; Closing......................................................................8
2.3 Treatment of Capital Stock...................................................................8
2.4 Shareholder Rights; Stock Transfers..........................................................9
2.5 Fractional Shares............................................................................9
2.6 Options.....................................................................................10
2.7 Exchange Procedures.........................................................................11
2.8 Additional Actions..........................................................................13
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SFS................................................................13
3.1 Capital Structure...........................................................................13
3.2 Organization, Standing and Authority of SFS.................................................13
3.3 Ownership of SFS Subsidiaries...............................................................14
3.4 Organization, Standing and Authority of SFS Subsidiaries....................................14
3.5 Authorized and Effective Agreement..........................................................14
3.6 Securities Documents and Regulatory Reports.................................................16
3.7 Financial Statements........................................................................16
3.8 Material Adverse Change.....................................................................17
3.9 Environmental Matters.......................................................................17
3.10 Tax Matters.................................................................................17
3.11 Legal Proceedings...........................................................................18
3.12 Compliance with Laws........................................................................18
3.13 Certain Information.........................................................................19
3.14 Employee Benefit Plans......................................................................19
3.15 Certain Contracts...........................................................................21
3.16 Brokers and Finders.........................................................................21
3.17 Insurance...................................................................................22
3.18 Properties..................................................................................22
3.19 Labor.......................................................................................22
3.20 Affiliates..................................................................................22
3.21 Allowance for Loan Losses...................................................................23
3.22 Fairness Opinion............................................................................23
3.23 Accounting for the Merger; Reorganization...................................................23
3.24 Disclosures.................................................................................23
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF COHOES..............................................................23
4.1 Capital Structure...........................................................................23
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4.2 Organization, Standing and Authority of Cohoes and the Holding Company......................24
4.3 Ownership of the Cohoes Subsidiaries........................................................24
4.4 Organization, Standing and Authority of the Cohoes Subsidiaries.............................24
4.5 Authorized and Effective Agreement..........................................................25
4.6 Regulatory Reports..........................................................................26
4.7 Financial Statements........................................................................26
4.8 Material Adverse Change.....................................................................27
4.9 Environmental Matters.......................................................................27
4.10 Tax Matters.................................................................................28
4.11 Legal Proceedings...........................................................................28
4.12 Compliance with Laws........................................................................29
4.13 Certain Information.........................................................................29
4.14 Employee Benefit Plans......................................................................30
4.15 Certain Contracts...........................................................................31
4.16 Brokers and Finders.........................................................................31
4.17 Insurance...................................................................................32
4.18 Properties..................................................................................32
4.19 Labor.......................................................................................32
4.20 Ownership of SFS Common Stock...............................................................32
4.21 Allowance for Losses on Loans...............................................................33
4.22 Accounting for the Merger; Reorganization...................................................33
4.23 No Approval of the Holding Company's Shareholders Currently Required........................33
4.24 Adoption of the Plan of Conversion..........................................................33
4.25 Disclosures.................................................................................33
ARTICLE V COVENANTS..............................................................................................34
5.1 Reasonable Best Efforts.....................................................................34
5.2 Shareholder and Member Meetings.............................................................34
5.3 Regulatory Matters..........................................................................34
5.4 Investigation and Confidentiality...........................................................36
5.5 Press Releases..............................................................................36
5.6 Business of the Parties.....................................................................37
5.7 Certain Actions.............................................................................40
5.8 Current Information.........................................................................40
5.9 Indemnification; Insurance..................................................................41
5.10 Directors and Certain Officers..............................................................42
5.11 Employees and Employee Benefit Plans........................................................42
5.12 Bank Merger.................................................................................44
5.13 Organization of the Holding Company.........................................................44
5.14 Agreements..................................................................................45
5.15 Pooling Treatment...........................................................................45
5.16 Integration of Policies.....................................................................46
5.17 Disclosure Supplements......................................................................46
5.18 Failure to Fulfill Conditions...............................................................46
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ARTICLE VI CONDITIONS PRECEDENT..................................................................................46
6.1 Conditions Precedent - Cohoes and SFS.......................................................46
6.2 Conditions Precedent - SFS..................................................................48
6.3 Conditions Precedent - Cohoes...............................................................49
ARTICLE VII TERMINATION, WAIVER AND AMENDMENT....................................................................50
7.1 Termination.................................................................................50
7.2 Effect of Termination.......................................................................51
7.3 Survival of Representations, Warranties and Covenants.......................................51
7.4 Waiver......................................................................................51
7.5 Amendment or Supplement.....................................................................52
ARTICLE VIII MISCELLANEOUS.......................................................................................52
8.1 Expenses; Termination Fees..................................................................52
8.2 Entire Agreement............................................................................54
8.3 No Assignment...............................................................................54
8.4 Notices.....................................................................................54
8.5 Alternative Structure.......................................................................55
8.6 Interpretation..............................................................................55
8.7 Counterparts................................................................................55
8.8 Governing Law...............................................................................56
Exhibit A-1 Form of SFS Shareholder Agreement
Exhibit A-2 Form of Cohoes Shareholder Agreement
Exhibit B Form of Non-Competition Agreement
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AGREEMENT AND PLAN OF MERGER
Agreement and Plan of Merger (the "Agreement"), dated as of July 31,
1998, by and between Cohoes Savings Bank ("Cohoes"), a savings bank chartered
under the laws of the State of New York, and SFS Bancorp, Inc. ("SFS"), a
Delaware corporation.
W I T N E S S E T H:
WHEREAS, the Boards of Directors of Cohoes and SFS have determined to
consummate the business combination transactions provided for herein, subject to
the terms and conditions set forth herein; and
WHEREAS, the parties desire to provide for certain undertakings,
conditions, representations, warranties and covenants in connection with the
transactions contemplated hereby.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein contained, the parties hereto do hereby agree as
follows:
ARTICLE I
DEFINITIONS
The following terms shall have the meanings ascribed to them for all
purposes of this Agreement.
"Application for Conversion" shall mean the application submitted by
Cohoes to the FDIC pursuant to the FDIA and the regulations of the FDIC
thereunder and to the Department pursuant to the NYBL and the regulations of the
Department thereunder and in connection with the Conversion, as amended and
supplemented.
"Average Closing Price" shall mean the average of the daily last sales
price of Holding Company Common Stock as reported on The Nasdaq Stock Market for
the first ten trading days on which Holding Company Common Stock is traded.
"Bank" shall mean Schenectady Federal Savings Bank, a
federally-chartered savings bank and a wholly-owned subsidiary of SFS.
"Bank 401(k)" shall mean the 401(k) Savings Plan in RSI Retirement
Trust of the Bank, as amended and as in effect as of the date hereof.
"Bank Merger" shall have the meaning set forth in Section 5.12 hereof.
"Bank Merger Agreement" shall have the meaning set forth in Section
5.12 hereof.
"Bank Officer Severance Compensation Plan" shall mean the Officer
Severance Compensation Plan of the Bank, as amended and as in effect as of the
date hereof.
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"Bank SERP" shall mean the Restated Executive Supplemental Retirement
Plan and Compensation Continuation Agreement dated March 23, 1988 between the
Bank and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, as amended and as in effect as of the date hereof.
"BIF" shall mean the Bank Insurance Fund administered by the FDIC or
any successor thereto.
"Cause" shall mean termination because of the employee's personal
dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving
personal profit, intentional failure to perform stated duties or willful
violation of any law, rule or regulation (other than traffic violations or
similar offenses).
"Certificate of Merger" shall have the meaning set forth in Section 2.2
hereof.
"Closing" shall have the meaning set forth in Section 2.2 hereof.
"Closing Date" shall have the meaning set forth in Section 2.2 hereof.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Cohoes Affiliate" shall mean any person who is deemed for purposes of
pooling of interests accounting to be an "affiliate" of Cohoes or the Holding
Company.
"Cohoes Employee Plans" shall have the meaning set forth in Section
4.14(a) hereof.
"Cohoes Financial Statements" shall mean (i) the consolidated
statements of condition (including related notes and schedules, if any) of
Cohoes as of June 30, 1997, 1996 and 1995 and the consolidated statements of
income, retained income and cash flows (including related notes and schedules,
if any) of Cohoes for each of the three years ended June 30, 1997, 1996 and
1995, and (ii) the consolidated statements of condition of Cohoes (including
related notes and schedules, if any) and the consolidated statements of income,
retained income and cash flows (including related notes and schedules, if any)
of Cohoes with respect to the periods ended subsequent to June 30, 1997.
"Commission" shall mean the Securities and Exchange Commission.
"Conversion" shall mean (i) the amendment of Cohoes' Charter to
authorize the issuance of capital stock and otherwise to conform to the
requirements of a stock savings bank chartered under the laws of the State of
New York, (ii) the issuance of Holding Company Common Stock to eligible account
holders of Cohoes and others in connection therewith, (iii) the purchase by the
Holding Company of all of the capital stock of Cohoes to be sold by Cohoes in
connection with its conversion from mutual to stock form and (iv) the
establishment of a private charitable foundation.
"CRA" shall mean the Community Reinvestment Act.
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"Department" shall mean the State of New York Banking Department.
"Depositor" shall mean any person, firm or entity qualifying as a
depositor of Cohoes in accordance with its Charter and Bylaws.
"DGCL" shall mean the General Corporation Law of the State of Delaware,
as amended.
"DOJ" shall mean the United States Department of Justice.
"Effective Time" shall mean the date and time specified pursuant to
Section 2.2 hereof as the effective time of the Merger.
"Environmental Claim" shall mean any written notice from any
Governmental Entity or third party alleging potential liability (including,
without limitation, potential liability for investigatory costs, cleanup costs,
governmental response costs, natural resources damages, property damages,
personal injuries or penalties) arising out of, based on, or resulting from the
presence, or release into the environment, of any Materials of Environmental
Concern.
"Environmental Laws" shall mean any 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 (i) 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 (ii) the use, storage,
recycling, treatment, generation, transportation, processing, handling,
labeling, production, release or disposal of Materials of Environment Concern.
The term Environmental Law includes without limitation (i) 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, 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.9601, et seq;
the Emergency Planning and Community Right to Know Act, 42 U.S.C. ss.1101, et
seq; the Safe Drinking Water Act, 42 U.S.C. ss.300f, et seq; and all comparable
state and local laws, and (ii) 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, or threatened as a result of, the
presence of or exposure to any Materials of Environmental Concern.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Exchange Agent" shall have the meaning set forth in Section 2.7
hereof.
"Exchange Ratio" shall have the meaning set forth in Section 2.3
hereof.
"FDIA" shall mean the Federal Deposit Insurance Act, as amended.
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"FDIC" shall mean the Federal Deposit Insurance Corporation or any
successor thereto.
"FHLB" shall mean the Federal Home Loan Bank of New York.
"Form S-1" shall mean the registration statement on Form S-1 (or on any
successor or other appropriate form) to be filed by the Holding Company in
connection with the issuance of shares of Holding Company Common Stock in
connection with the Merger and the Conversion, as amended and supplemented.
"GAAP" shall mean generally accepted accounting principles.
"Governmental Entity" shall mean any federal or state court,
administrative agency or commission or other governmental authority or
instrumentality.
"Holding Company" shall mean a business corporation which shall be
organized by Cohoes under the DGCL for the purposes of becoming the Holding
Company of Cohoes upon consummation of the Conversion and acquiring SFS pursuant
to the terms of this Agreement.
"Holding Company Common Stock" shall mean the common stock, par value
$.01 per share, of the Holding Company.
"Holding Company Preferred Stock" shall mean the preferred stock, par
value $.01per share, of the Holding Company.
"HOLA" shall mean the Home Owners' Loan Act, as amended.
"Initial Public Offering Price" shall mean the price per share at which
Holding Company Common Stock is ultimately sold by the Holding Company to
eligible account holders of Cohoes and others in connection with the Conversion.
"IRS" shall mean the Internal Revenue Service or any successor thereto.
"KPMG" shall mean KPMG Peat Marwick LLP.
"Material Adverse Effect" shall mean, (i) with respect to SFS, any
effect that is material and adverse to the financial condition, results of
operations or business of SFS and its Subsidiaries taken as whole, or, in the
case of Section 6.3(a) hereof, SFS and its Subsidiaries and the Holding Company
taken as a whole after giving effect to the Conversion, (ii) with respect to
Cohoes, any effect that is material and adverse to the financial condition,
results of operations or business of Cohoes and its Subsidiaries taken as a
whole, or (iii) materially impairs the ability of either SFS or the Bank, on the
one hand, or the Holding Company or Cohoes, on the other hand, to consummate the
Merger or any of the other transactions contemplated by this Agreement,
provided, however, that Material Adverse Effect shall not be deemed to include
the impact of (a) changes in laws and regulations or interpretations thereof
that are generally applicable to the banking or savings industries, (b) changes
in GAAP that are generally applicable to the banking or savings industries, (c)
expenses incurred in
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connection with the transactions contemplated hereby, including the termination
of the SFS Pension Plan, (d) actions or omissions of a party (or any of its
Subsidiaries) taken with the prior informed written consent of the other party
or parties in contemplation of the transactions contemplated hereby or (e)
changes attributable to or resulting from changes in general economic
conditions, including changes in the prevailing level of interest rates.
"Materials of Environmental Concern" shall mean pollutants,
contaminants, wastes, toxic substances, petroleum and petroleum products and any
other materials regulated under Environmental Laws.
"Merger" shall have the meaning set forth in Section 2.1(a) hereof.
"NASD" shall mean the National Association of Securities Dealers, Inc.
"NYBL" shall mean the New York Banking Law.
"OTS" shall mean the Office of Thrift Supervision of the U.S.
Department of the Treasury or any successor thereto.
"PBGC" shall mean the Pension Benefit Guaranty Corporation, or any
successor thereto.
"Plan of Conversion" shall mean the Plan of Conversion adopted by the
Board of Trustees of Cohoes on May 21, 1998.
"Pooling Letters" shall have the meaning set forth in Section 6.3(f)
hereof.
"Previously Disclosed" shall mean disclosed (i) in a disclosure
schedule dated the date hereof delivered from the disclosing party to the other
party specifically referring to the appropriate section of this Agreement and
describing in reasonable detail the matters contained therein, or (ii) a
supplement to the disclosure schedule dated after the date hereof from the
disclosing party specifically referring to this Agreement and describing in
reasonable detail the matters contained therein and delivered by the other party
pursuant to Section 5.17 hereof.
"Pricing Date" shall mean the tenth day of trading of Holding Company
Common Stock on The Nasdaq Stock Market.
"Prospectus" shall mean the prospectus to be delivered to (i)
shareholders of SFS in connection with the offering of Holding Company Common
Stock in connection with the Merger pursuant to this Agreement and (ii) eligible
account holders of Cohoes and others in connection with the offering of Holding
Company Common Stock in connection with the Conversion, as amended and
supplemented.
"Proxy Statements" shall mean the proxy statements to be delivered to
(i) shareholders of SFS in connection with the solicitation of their approval of
this Agreement and the transactions contemplated hereby and (ii) Depositors of
Cohoes in connection with the solicitation of their
5
approval of the Plan of Conversion and the transactions contemplated thereby, as
amended and supplemented.
"Replacement Stock" shall have the meaning set forth in Section 2.3(d)
hereof.
"Rights" shall mean warrants, options, rights, convertible securities
and other arrangements or commitments which obligate an entity to issue or
dispose of any of its capital stock or other ownership interests.
"SAIF" shall mean the Savings Association Insurance Fund administered
by the FDIC 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, or
required to be 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 Commission promulgated thereunder.
"SFS Affiliate" shall mean any person who is deemed, for purposes of
Rule 145 under the Securities Act or for purposes of pooling of interests
accounting, to be an "affiliate" of SFS.
"SFS Change of Control Benefit Plan" shall mean the Change of Control
Benefit Plan of SFS, as amended and as in effect as of the date hereof.
"SFS Common Stock" shall mean the common stock, par value $0.01 per
share, of SFS.
"SFS Employee Plans" shall have the meaning set forth in Section
3.14(a) hereof.
"SFS ESOP" shall mean the SFS Employee Stock Ownership Plan and Trust,
as amended and as in effect as of the date hereof.
"SFS Financial Statements" shall mean (i) the consolidated balance
sheets (including related notes and schedules, if any) of SFS as of December 31,
1997, 1996 and 1995 and the consolidated statements of income, changes in
stockholders' equity and cash flows (including related notes and schedules, if
any) of SFS for each of the three years ended December 31, 1997, 1996 and 1995
as filed by SFS in its Securities Documents, and (ii) the consolidated balance
sheets of SFS (including related notes and schedules, if any) and the
consolidated statements of income, changes in stockholders' equity and cash
flows (including related notes and schedules, if any) of SFS included in the
Securities Documents filed by SFS with respect to the periods ended subsequent
to December 31, 1997.
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"SFS Incentive Plan" shall mean the Incentive Compensation Plan for
1998 of SFS, as amended and as in effect as of the date hereof.
"SFS Options" shall mean options to purchase shares of SFS Common Stock
granted pursuant to the SFS Option Plan.
"SFS Option Plan" shall mean the Amended and Restated Stock Option and
Incentive Plan of SFS, as amended and as in effect as of the date hereof.
"SFS Pension Plan" shall mean the Retirement Income Plan of the Bank,
as amended and as of the date hereof.
"SFS Preferred Stock" shall mean the shares of preferred stock, par
value $0.01 per share, of SFS.
"SFS Restricted Stock" shall mean SFS Common Stock subject to
restrictions pursuant to the SFS Restricted Stock Plan.
"SFS Restricted Stock Plan" shall mean the Amended and Restated
Recognition and Retention Plan of SFS, as amended and as in effect as of the
date hereof.
"SFS SERP" shall mean the restated executive supplemental retirement
plan and compensation continuation agreement of SFS.
"Superintendent" shall mean the Superintendent of the Department.
"Subsidiary" and "Significant Subsidiary" shall have the meanings set
forth in Rule 1-02 of Regulation S-X of the Commission.
"Surviving Bank" shall have the meaning set forth in Section 5.12
hereof.
Other terms used herein are defined in the preamble and elsewhere in
this Agreement.
ARTICLE II
THE MERGER
2.1 The Merger
(a) Subject to the terms and conditions of this Agreement, at the
Effective Time (as defined in Section 2.2 hereof), SFS shall be merged with and
into the Holding Company (the "Merger") in accordance with the provisions of
Section 251 of the DGCL. The Holding Company shall be the surviving corporation
(hereinafter sometimes called the "Surviving Corporation") of the Merger, and
shall continue its corporate existence under the laws of the State of Delaware.
The name of the Surviving Corporation shall be as stated in the Certificate of
Incorporation of the Holding Company
7
immediately prior to the Effective Time. Upon consummation of the Merger, the
separate corporate existence of SFS shall terminate.
(b) From and after the Effective Time, the Merger shall have the
effects set forth in Section 259 of the DGCL.
(c) The Certificate of Incorporation and Bylaws of the Holding Company,
as in effect immediately prior to the Effective Time, shall be the Certificate
of Incorporation and Bylaws of the Surviving Corporation, respectively, until
altered, amended or repealed in accordance with their terms and applicable law.
(d) The authorized capital stock of the Surviving Corporation shall be
as stated in the Certificate of Incorporation of the Holding Company immediately
prior to the Effective Time.
(e) The directors and officers of the Holding Company immediately prior
to the Effective Time, together with ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, who shall be appointed
a director of the Holding Company pursuant to Section 5.10, shall be the
directors and officers of the Surviving Corporation, each to hold office in
accordance with the Certificate of Incorporation and Bylaws of the Surviving
Corporation as well as the provisions hereof.
2.2 Effective Time; Closing
The Merger shall become effective upon the occurrence of the filing of
a certificate of merger with the Secretary of State of the State of Delaware
(the "Certificate of Merger"), unless a later date and time is specified as the
effective time in such Certificate of Merger (the "Effective Time"). The
Effective Time shall be deemed to occur simultaneously with the consummation of
the Conversion. A closing (the "Closing") shall take place immediately prior to
the Effective Time at 10:00 a.m., Eastern Time, following the satisfaction or
waiver, to the extent permitted hereunder, of the conditions to the consummation
of the Merger specified in Article VI of this Agreement (other than the delivery
of certificates, opinions and other instruments and documents to be delivered at
the Closing) (the "Closing Date"), at such place and at such time as the parties
may mutually agree upon. At the Closing, there shall be delivered to Cohoes and
the Holding Company, on the one hand, and SFS, on the other hand, the opinions,
certificates and other documents required to be delivered under Article VI
hereof.
2.3 Treatment of Capital Stock
Subject to the provisions of this Agreement, at the Effective Time,
automatically by virtue of the Merger and without any action on the part of any
shareholder:
(a) each share of Holding Company Common Stock issued and outstanding
immediately prior to the Effective Time (consisting of shares issued or to be
issued by the Holding Company in connection with the Conversion) shall be
unchanged and shall remain issued and outstanding;
8
(b) each share of SFS Common Stock owned by SFS (including treasury
shares) or the Holding Company or any of their respective Subsidiaries (other
than shares held in a fiduciary capacity for the benefit of third parties or as
a result of debts previously contracted) shall be canceled and retired and shall
not represent capital stock of the Holding Company and shall not be exchanged
for shares of Holding Company Common Stock, or other consideration; and
(c) each share of SFS Common Stock which under the terms of Section 2.7
hereof is to be converted into the right to receive shares of Holding Company
Common Stock shall, subject to Section 2.5 hereof, be converted into and become
the right to receive a number of shares (the "Exchange Ratio") of Holding
Company Common Stock equal to the lesser of:
(i) the quotient (calculated to the nearest one-thousandth)
determined by dividing $26.50 by the Initial Public Offering Price, or
(ii) the quotient (calculated to the nearest one-thousandth)
determined by dividing $35.00 by the Average Closing Price.
(d) Each share of SFS Restricted Stock at the Effective Time shall be
converted into the right to receive shares of Holding Company Common Stock,
pursuant to the Exchange Ratio set forth in Section 2.3(c) hereof, subject to
identical restrictions as are applicable to such SFS Restricted Stock
("Replacement Stock"), and the Holding Company shall assume the SFS Restricted
Stock Plan; provided that such assumption shall only be in respect of the
Replacement Stock and the Holding Company or any Holding Company Subsidiary
shall have no obligation with respect to any awards under the SFS Restricted
Stock Plan other than the Replacement Stock and shall have no obligation to make
any additional grants or awards under the SFS Restricted Stock Plan.
2.4 Shareholder Rights; Stock Transfers
At the Effective Time, holders of SFS Common Stock shall cease to be
and shall have no rights as shareholders of SFS, other than to receive the
consideration provided under Sections 2.3 and 2.5 hereof. After the Effective
Time, there shall be no transfers on the stock transfer books of SFS or the
Surviving Corporation of shares of SFS Common Stock and if certificates
evidencing such shares are presented for transfer after the Effective Time, they
shall be canceled against delivery of certificates for whole shares of Holding
Company Common Stock (plus cash in lieu of any fractional share interest) as
herein provided.
2.5 Fractional Shares
Notwithstanding any other provision hereof, no fractional shares of
Holding Company Common Stock shall be issued to holders of SFS Common Stock. In
lieu thereof, each holder of shares of SFS Common Stock entitled to a fraction
of a share of Holding Company Common Stock shall, at the time of surrender of
the certificate or certificates representing such holder's shares, receive an
amount of cash (without interest) equal to the amount determined by multiplying
the fractional share interest to which such holder would otherwise be entitled
by the Average Closing
9
Price. No such holder shall be entitled to dividends, voting rights or any other
rights in respect of fractional shares.
2.6 Options
(a) At the Effective Time, each SFS Option which is then outstanding,
whether or not exercisable, shall cease to represent a right to acquire shares
of SFS Common Stock and shall be converted automatically into a right to
purchase shares of Holding Company Common Stock, and the Holding Company shall
assume each SFS Option, in accordance with the terms of the SFS Option Plan and
stock option or other agreement by which it is evidenced, except that (i) from
and after the Effective Time, the Holding Company and either its Board of
Directors or a committee consisting solely of two or more Non-Employee
Directors, as defined in Rule 16b-3(b)(3) under the Exchange Act, shall be
substituted for SFS and the committee of SFS's Board of Directors (including, if
applicable, the entire Board of Directors of SFS) administering the SFS Option
Plan, (ii) from and after the Pricing Date, the number of shares of Holding
Company Common Stock subject to such SFS Option shall be equal to the number of
shares of SFS Common Stock subject to such SFS Option immediately prior to the
Effective Time multiplied by the Exchange Ratio, provided that any fractional
shares of Holding Company Common Stock resulting from such multiplication shall
be rounded to the nearest share, and (iii) from and after the Pricing Date, the
per share exercise price under each such SFS Option shall be adjusted by
dividing the per share exercise price under each such SFS Option by the Exchange
Ratio, provided that such exercise price shall be rounded up to the next cent.
Notwithstanding clauses (ii) and (iii) of the preceding sentence, each SFS
Option which is an "incentive stock option" shall be adjusted as required by
Section 424 of the Code, and the regulations promulgated thereunder, so as not
to constitute a modification, extension or renewal of the option within the
meaning of Section 424(h) of the Code. The Holding Company and SFS shall take
all necessary steps to effect the foregoing provisions of this Section 2.6(a).
(b) Each holder of an SFS Option who becomes either a director or an
advisory director of the Holding Company or Cohoes shall satisfy the "Continuous
Service" requirement set forth in the SFS Option Plan for each of the holder's
SFS Options for as long as such person remains a director or advisory director
of the Holding Company or Cohoes. With respect to SFS Options which are
incentive stock options as of the date of this Agreement, such options shall be
compensatory or non-qualified stock options under the SFS Option Plan as of the
business day immediately prior to the three-month anniversary of the Effective
Time.
(c) As soon as practicable after the Pricing Date, the Holding Company
shall deliver to each participant in the SFS Option Plan an appropriate notice
setting forth such participant's rights pursuant thereto and the grants subject
to such SFS Option Plan shall continue in effect on the same terms and
conditions, including without limitation the duration thereof, subject to the
adjustments required by Section 2.6(a) hereof after giving effect to the Merger.
Within 30 days after the Effective Time, the Holding Company shall file a
registration statement on Form S-3 or Form S-8, as the case may be (or any
successor or other appropriate forms), with respect to the shares of Holding
Company Common Stock subject to such options and shall maintain the current
status of the prospectus or prospectuses contained therein for so long as such
options remain outstanding.
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2.7 Exchange Procedures
(a) The Holding Company shall designate an exchange agent, reasonably
acceptable to SFS, to act as agent (the "Exchange Agent") for purposes of
conducting the exchange procedure as described herein. No later than five
business days following the Pricing Date, the Holding Company shall cause the
Exchange Agent to mail or make available to each holder of record of a
certificate or certificates which immediately prior to the Effective Time
represented issued and outstanding shares of SFS Common Stock (i) a notice and
letter of transmittal (which shall specify that delivery shall be effected and
risk of loss and title to the certificates theretofore representing shares of
SFS Common Stock shall pass only upon proper delivery of such certificates to
the Exchange Agent) advising such holder of the effectiveness of the Merger and
the procedure for surrendering to the Exchange Agent such certificate or
certificates which immediately prior to the Effective Time represented issued
and outstanding shares of SFS Common Stock in exchange for the consideration set
forth in Section 2.3 hereof deliverable in respect thereof pursuant to this
Agreement.
(b) At the Effective Time, the Holding Company shall provide written
instructions to its transfer agent to issue up to a number of shares of Holding
Company Common Stock equal to the product of (i) the number of shares of SFS
Common Stock then issued and outstanding, and (ii) the quotient in Section
2.3(c)(i) hereof. The maximum number of shares specified in such instructions
shall be subject to reduction only in the event the quotient in Section
2.3(c)(ii) hereof is less than the quotient in Section 2.3(c)(i) hereof. At the
Effective Time, the Holding Company shall issue to the Exchange Agent the number
of shares of Holding Company Common Stock issuable in the Merger, which shall be
held by the Exchange Agent in trust for the holders of SFS Common Stock. If the
quotient in Section 2.3(c)(ii) hereof is less than the quotient in Section
2.3(c)(i) hereof, then the number of shares of Holding Company Common Stock held
by the Exchange Agent in trust for the holders of SFS Common Stock shall be
appropriately reduced, with the excess shares returned to the Holding Company.
Following the Pricing Date, the Exchange Agent shall promptly distribute Holding
Company Common Stock (and cash in lieu of fractional shares pursuant to Section
2.5 hereof) as provided herein. The Exchange Agent shall not be entitled to vote
or exercise any rights of ownership with respect to the shares of Holding
Company Common Stock held by it from time to time hereunder, except that it
shall receive and hold all dividends or other distributions paid or distributed
with respect to such shares for the account of the persons entitled thereto.
(c) Each holder of an outstanding certificate or certificates which
prior thereto represented shares of SFS Common Stock who surrenders such
certificate or certificates to the Exchange Agent will, upon acceptance thereof
by the Exchange Agent, be entitled to a certificate or certificates representing
the number of full shares of Holding Company Common Stock into which the
aggregate number of shares of SFS Common Stock previously represented by such
certificate or certificates surrendered shall have been converted pursuant to
this Agreement and any other distribution theretofore paid with respect to
Holding Company Common Stock issuable in the Merger, in each case without
interest. The Exchange Agent shall accept such certificates upon compliance with
such reasonable terms and conditions as the Exchange Agent may impose to effect
an orderly exchange thereof in accordance with normal exchange practices. Each
outstanding certificate which prior to the Effective Time represented SFS Common
Stock and which is not surrendered to the Exchange Agent in accordance with the
procedures provided for herein shall,
11
except as otherwise herein provided, until duly surrendered to the Exchange
Agent be deemed to evidence ownership of the number of shares of Holding Company
Common Stock into which the aggregate number of shares of SFS Common Stock
previously represented by such certificate shall have been converted pursuant to
the terms of this Agreement. After the Effective Time, there shall be no further
transfer on the records of SFS of certificates representing shares of SFS Common
Stock and if such certificates are presented to SFS for transfer, they shall be
cancelled against delivery of certificates for Holding Company Common Stock or
cash as hereinabove provided. No dividends which have been declared will be
remitted to any person entitled to receive shares of Holding Company Common
Stock under this Section 2.7 until such person surrenders the certificate or
certificates representing SFS Common Stock, at which time such dividends shall
be remitted to such person, without interest.
(d) The Holding Company shall not be obligated to deliver a certificate
or certificates representing shares of Holding Company Common Stock to which a
holder of SFS Common Stock would otherwise be entitled as a result of the Merger
until such holder surrenders the certificate or certificates representing the
shares of SFS Common Stock for exchange as provided in this Section 2.7, or, in
default thereof, an appropriate affidavit of loss and indemnity agreement and/or
a bond as may be required in each case by the Holding Company. If any
certificates evidencing shares of Holding Company Common Stock are to be issued
in a name other than that in which the certificate evidencing SFS Common Stock
surrendered in exchange therefor is registered, it shall be a condition of the
issuance thereof that the certificate so surrendered shall be properly endorsed
or accompanied by an executed form of assignment separate from the certificate
and otherwise in proper form for transfer and that the person requesting such
exchange pay to the Exchange Agent any transfer or other tax required by reason
of the issuance of a certificate for shares of Holding Company Common Stock in
any name other than that of the registered holder of the certificate surrendered
or otherwise establish to the satisfaction of the Exchange Agent that such tax
has been paid or is not payable.
(e) Any portion of the shares of Holding Company Common Stock delivered
to the Exchange Agent by the Holding Company pursuant to Section 2.7(b) that
remains unclaimed by the shareholders of SFS for six months after the Pricing
Date shall be delivered by the Exchange Agent to the Holding Company. Any
shareholders of SFS who have not theretofore complied with Section 2.7(c) shall
thereafter look only to the Holding Company for the consideration deliverable in
respect of each share of SFS Common Stock such shareholder holds as determined
pursuant to this Agreement without any interest thereon. If outstanding
certificates for shares of SFS Common Stock are not surrendered or the payment
for them is not claimed prior to the date on which such shares of Holding
Company Common Stock or cash would otherwise escheat to or become the property
of any governmental unit or agency, the unclaimed items shall, to the extent
permitted by abandoned property and any other applicable law, become the
property of the Holding Company (and to the extent not in its possession shall
be delivered to it), free and clear of all claims or interest of any person
previously entitled to such property. Neither the Exchange Agent nor any party
to this Agreement shall be liable to any holder of SFS Common Stock represented
by any certificate for any consideration paid to a public official pursuant to
applicable abandoned property, escheat or similar laws. The Holding Company and
the Exchange Agent shall be entitled to rely upon the stock transfer books of
SFS to establish the identity of those persons entitled to receive consideration
specified in this Agreement, which books shall be conclusive with respect
thereto. In the event of
12
a dispute with respect to ownership of stock represented by any certificate, the
Holding Company and the Exchange Agent shall be entitled to deposit any
consideration represented thereby in escrow with an independent third party and
thereafter be relieved with respect to any claims thereto.
2.8 Additional Actions
If, at any time after the Effective Time, the Surviving Corporation
shall consider that any further assignments or assurances in law or any other
acts are necessary or desirable to (i) vest, perfect or confirm, of record or
otherwise, in the Surviving Corporation its right, title or interest in, to or
under any of the rights, properties or assets of SFS acquired or to be acquired
by the Surviving Corporation as a result of, or in connection with, the Merger,
or (ii) otherwise carry out the purposes of this Agreement, SFS and its proper
officers and directors shall be deemed to have granted to the Surviving
Corporation an irrevocable power of attorney to execute and deliver all such
proper deeds, assignments and assurances in law and to do all acts necessary or
proper to vest, perfect or confirm title to and possession of such rights,
properties or assets in the Surviving Corporation and otherwise to carry out the
purposes of this Agreement; and the proper officers and directors of the
Surviving Corporation are fully authorized in the name of SFS or otherwise to
take any and all such action.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SFS
SFS represents and warrants to Cohoes as follows, except as Previously
Disclosed:
3.1 Capital Structure
The authorized capital stock of SFS consists of 2,500,000 shares of SFS
Common Stock and 500,000 shares of SFS Preferred Stock. As of the date hereof,
1,208,472 shares of SFS Common Stock are issued and outstanding, 286,528 shares
of SFS Common Stock are held in treasury, and no shares of SFS Preferred Stock
are issued and outstanding. All outstanding shares of SFS Common Stock have been
duly authorized and validly issued and are fully paid and nonassessable, and
none of the outstanding shares of SFS Common Stock has been issued in violation
of the preemptive rights of any person, firm or entity. Except for SFS Options
to acquire not more than 125,579 shares of SFS Common Stock as of the date
hereof, a schedule of which has been Previously Disclosed, there are no Rights
authorized, issued or outstanding with respect to the capital stock of SFS.
3.2 Organization, Standing and Authority of SFS
SFS is a corporation duly organized and validly existing under the laws
of the State of Delaware with full corporate power and authority to own or lease
all of its properties and assets and to carry on its business as now conducted
and is duly licensed or qualified to do business in each jurisdiction in which
its ownership or leasing of property or the conduct of its business requires
such licensing or qualification, except where the failure to be so licensed,
qualified or in good standing would not have a Material Adverse Effect on SFS.
SFS is duly registered as a savings and loan
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holding company under the HOLA and the regulations of the OTS thereunder. SFS
has heretofore delivered to Cohoes true and complete copies of the Certificate
of Incorporation and Bylaws of SFS as in effect as of the date hereof.
3.3 Ownership of SFS Subsidiaries
SFS has Previously Disclosed the name, jurisdiction of incorporation
and percentage ownership of each direct or indirect SFS Subsidiary and
identified the Bank as its only Significant Subsidiary. Except for (x) capital
stock of SFS Subsidiaries, (y) securities and other interests held in a
fiduciary capacity and beneficially owned by third parties or taken in
consideration of debts previously contracted and (z) securities and other
interests which are Previously Disclosed, SFS does not own or have the right to
acquire, directly or indirectly, any outstanding capital stock or other voting
securities or ownership interests of any corporation, bank, savings association,
partnership, joint venture or other organization, other than investment
securities representing not more than 5% of any entity. The outstanding shares
of capital stock or other ownership interests of each SFS Subsidiary have been
duly authorized and validly issued, are fully paid and nonassessable, and are
directly owned by SFS free and clear of all liens, claims, encumbrances,
charges, pledges, restrictions or rights of third parties of any kind
whatsoever. No rights are authorized, issued or outstanding with respect to the
capital stock or other ownership interests of SFS Subsidiaries and there are no
agreements, understandings or commitments relating to the right of SFS to vote
or to dispose of such capital stock or other ownership interests.
3.4 Organization, Standing and Authority of SFS Subsidiaries
Each of the SFS Subsidiaries is a corporation or partnership duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which it is organized. Each of the SFS Subsidiaries (i) has full
power and authority to own or lease all of its properties and assets and to
carry on its business as now conducted, and (ii) is duly licensed or qualified
to do business and is in good standing in each jurisdiction in which its
ownership or leasing of property or the conduct of its business requires such
qualification, except where the failure to be so licensed, qualified or in good
standing would not have a Material Adverse Effect on SFS. The deposit accounts
of the Bank are insured by the SAIF to the maximum extent permitted by the FDIA
and the Bank has paid all deposit insurance premiums and assessments required by
the FDIA and the regulations thereunder. SFS has heretofore delivered or made
available to Cohoes true and complete copies of the Charter and Bylaws of the
Bank as in effect as of the date hereof.
3.5 Authorized and Effective Agreement
(a) SFS has all requisite corporate power and authority to enter into
this Agreement and (subject to receipt of all necessary governmental approvals
and the approval of SFS's shareholders of this Agreement) to perform all of its
obligations under this Agreement. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly authorized by all necessary corporate action in respect thereof on the
part of SFS, except for the approval of this Agreement by SFS's shareholders.
This Agreement has been duly and validly executed and delivered by SFS and,
assuming due authorization, execution and delivery by
14
Cohoes, constitutes a legal, valid and binding obligation of SFS which is
enforceable against SFS in accordance with its terms, subject, as to
enforceability, to bankruptcy, insolvency and other laws of general
applicability relating to or affecting creditors' rights and to general equity
principles.
(b) Neither the execution and delivery of this Agreement, nor
consummation of the transactions contemplated hereby (including the Merger and
the Bank Merger), nor compliance by SFS with any of the provisions hereof (i)
does or will conflict with or result in a breach of any provisions of the
Certificate of Incorporation or Bylaws of SFS or the equivalent documents of any
SFS Subsidiary, subject to the deletion of Section 8A of the Bank's Federal
Stock Charter, (ii) violate, conflict with or result in a breach of any term,
condition or provision of, or constitute a default (or an event which, with
notice or lapse of time, or both, would constitute a default) under, or give
rise to any right of termination, cancellation or acceleration with respect to,
or result in the creation of any lien, charge or encumbrance upon any property
or asset of SFS or an SFS Subsidiary pursuant to, any material note, bond,
mortgage, indenture, deed of trust, license, lease, agreement or other
instrument or obligation to which SFS or an SFS Subsidiary is a party, or by
which any of their respective properties or assets may be bound or affected, or
(iii) subject to receipt of all required governmental and shareholder approvals,
violate any order, writ, injunction, decree, statute, rule or regulation
applicable to SFS or an SFS Subsidiary.
(c) To the best knowledge of SFS and the Bank, except for (i) the
filing of applications with and the approvals of the OTS and the FDIC, (ii) the
filing of applications with the Department and the approvals of the
Superintendent, (iii) the filing and effectiveness of the Form S-1 and the Proxy
Statement relating to the meeting of shareholders of SFS to be held pursuant to
Section 5.2 hereof with the Commission, (iv) the approval of this Agreement by
the requisite vote of the shareholders of SFS, (v) the filing of the Certificate
of Merger with the Secretary of State of the State of Delaware pursuant to the
DGCL in connection with the Merger, (vi) the filing of Articles of Combination
with the OTS in connection with the Bank Merger, and (vii) review of the Merger
by the DOJ under federal antitrust laws, no consents or approvals of or filings
or registrations with any Governmental Entity or with any third party are
necessary on the part of SFS or the Bank in connection with (x) the execution
and delivery by SFS of this Agreement and the consummation by SFS of the
transactions contemplated hereby and (y) the execution and delivery by the Bank
of the Bank Merger Agreement and the consummation of the transactions
contemplated thereby.
(d) As of the date hereof, neither SFS nor the Bank is aware of any
reasons relating to SFS or the Bank (including without limitation CRA
compliance) why all consents and approvals shall not be procured from all
regulatory agencies having jurisdiction over the transactions contemplated by
this Agreement and the Bank Merger Agreement as shall be necessary for (i)
consummation of the transactions contemplated by this Agreement and the Bank
Merger Agreement and (ii) the continuation by the Holding Company and Cohoes
after the Effective Time of the business of SFS and the Bank, respectively, as
such business is carried on immediately prior to the Effective Time, free of any
conditions or requirements which, in the reasonable opinion of SFS, could have a
Material Adverse Effect on the Holding Company or Cohoes or materially impair
the value of SFS and the Bank to the Holding Company and Cohoes, respectively.
15
3.6 Securities Documents and Regulatory Reports
(a) Since January 1, 1995, SFS has timely filed with the Commission and
the NASD all Securities Documents required by the Securities Laws and such
Securities Documents complied in all material respects with the Securities Laws
and did not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(b) Since January 1, 1995, each of SFS and the Bank has duly filed with
the OTS and any other applicable federal or state banking authority, as the case
may be, the reports required to be filed under applicable laws and regulations
and such reports were in all material respects complete and accurate and in
compliance with the requirements of applicable laws and regulations. In
connection with the most recent examinations of SFS and the Bank by the OTS,
neither SFS nor the Bank was required to correct or change any action, procedure
or proceeding which SFS or the Bank believes has not been corrected or changed
as required as of the date hereof and which could have a Material Adverse Effect
on SFS.
3.7 Financial Statements
(a) SFS has previously delivered or made available to Cohoes accurate
and complete copies of SFS Financial Statements which, in the case of the
consolidated balance sheets of SFS as of December 31, 1997, 1996 and 1995 and
the consolidated statements of income, changes in stockholders' equity and cash
flows for each of the three years ended December 31, 1997, 1996 and 1995, are
accompanied by the audit reports of KPMG Peat Marwick, LLP, independent
certified public accountants with respect to SFS. The SFS Financial Statements
referred to herein, as well as the SFS Financial Statements to be delivered
pursuant to Section 5.8 hereof, fairly present or will fairly present, as the
case may be, the consolidated financial condition of SFS as of the respective
dates set forth therein, and the consolidated income, changes in stockholders'
equity and cash flows of SFS for the respective periods or as of the respective
dates set forth therein.
(b) Each of the SFS Financial Statements referred to in Section 3.7(a)
has been or will be, as the case may be, prepared in accordance with GAAP
consistently applied during the periods involved, except as stated therein. The
audits of SFS and SFS Subsidiaries have been conducted in all material respects
in accordance with generally accepted auditing standards. The books and records
of SFS and SFS Subsidiaries are being maintained in material compliance with
applicable legal and accounting requirements, and such books and records
accurately reflect in all material respects all dealings and transactions in
respect of the business, assets, liabilities and affairs of SFS and its
Subsidiaries.
(c) Except and to the extent (i) reflected, disclosed or provided for
in the consolidated balance sheets of SFS as of December 31, 1997 (including
related notes), (ii) of liabilities incurred since December 31, 1997 in the
ordinary course of business and (iii) of liabilities incurred in connection with
consummation of the transactions contemplated by this Agreement, neither SFS nor
any SFS Subsidiary has any liabilities, whether absolute, accrued, contingent or
otherwise, material to the financial condition, results of operations or
business of SFS on a consolidated basis.
16
3.8 Material Adverse Change
Since March 31, 1998, (i) SFS and its Subsidiaries have conducted their
respective businesses in the ordinary and usual course (excluding the incurrence
of expenses in connection with this Agreement and the transactions contemplated
hereby) and (ii) no event has occurred or circumstance arisen that, individually
or in the aggregate, has had or is reasonably likely to have a Material Adverse
Effect on SFS.
3.9 Environmental Matters
(a) To the best of SFS's knowledge, SFS and its Subsidiaries are in
compliance with all Environmental Laws, except for any violations of any
Environmental Law which would not, singly or in the aggregate, have a Material
Adverse Effect on SFS. Neither SFS nor an SFS Subsidiary has received any
communication alleging that SFS or an SFS Subsidiary is not in such compliance
and, to the best knowledge of SFS, there are no present circumstances that would
prevent or interfere with the continuation of such compliance.
(b) To the best of SFS's knowledge, none of the properties owned,
leased or operated by SFS or an SFS Subsidiary has been or is in violation of or
liable under any Environmental Law, except any such violations or liabilities
which would not singly or in the aggregate have a Material Adverse Effect on
SFS.
(c) To the best of SFS's knowledge, there are no past or present
actions, activities, circumstances, conditions, events or incidents that could
reasonably form the basis of any Environmental Claim or other claim or action or
governmental investigation that could result in the imposition of any liability
arising under any Environmental Law against SFS or an SFS Subsidiary or against
any person or entity whose liability for any Environmental Claim SFS or an SFS
Subsidiary has or may have retained or assumed either contractually or by
operation of law, except such which would not have a Material Adverse Effect on
SFS.
(d) Except in the ordinary course of its loan underwriting activities,
SFS has not conducted any environmental studies during the past five years with
respect to any properties owned by it or an SFS Subsidiary as of the date
hereof.
3.10 Tax Matters
(a) SFS and its Subsidiaries have timely filed all federal, state and
local (and, if applicable, foreign) income, franchise, bank, excise, real
property, personal property and other tax returns required by applicable law to
be filed by them (including, without limitation, estimated tax returns, income
tax returns, information returns and withholding and employment tax returns) and
have paid, or where payment is not required to have been made, have set up an
adequate reserve or accrual for the payment of, all taxes required to be paid in
respect of the periods covered by such returns and, as of the Effective Time,
will have paid, or where payment is not required to have been made, will have
set up an adequate reserve or accrual for the payment of, all material taxes for
any subsequent periods ending on or prior to the Effective Time. Neither SFS nor
a Subsidiary will have
17
any material liability for any such taxes in excess of the amounts so paid or
reserves or accruals so established.
(b) All federal, state and local (and, if applicable, foreign) income,
franchise, bank, excise, real property, personal property and other tax returns
filed by SFS and its Subsidiaries are complete and accurate in all material
respects. Neither SFS nor any SFS Subsidiary is delinquent in the payment of any
tax, assessment or governmental charge or has requested any extension of time
within which to file any tax returns in respect of any fiscal year or portion
thereof. The federal, state and local income tax returns of SFS and its
Subsidiaries have been audited by the applicable tax authorities for all periods
ended through December 31, 1993 (or are closed to examination due to the
expiration of the applicable statute of limitations) and no deficiencies for any
tax, assessment or governmental charge have been proposed, asserted or assessed
(tentatively or otherwise) against SFS or a Subsidiary as a result of such
audits or otherwise which have not been settled and paid. There are currently no
agreements in effect with respect to SFS or a Subsidiary to extend the period of
limitations for the assessment or collection of any tax. As of the date hereof,
no audit, examination or deficiency or refund litigation with respect to such
return is pending or, to the best of SFS's knowledge, threatened.
(c) Neither SFS nor any SFS Subsidiary (i) is a party to any agreement
providing for the allocation or sharing of taxes, (ii) is required to include in
income any adjustment pursuant to Section 481(a) of the Code by reason of a
voluntary change in accounting method initiated by SFS or a Subsidiary (nor does
SFS have any knowledge that the IRS has proposed any such adjustment or change
of accounting method) or (iii) has filed a consent pursuant to Section 341(f) of
the Code or agreed to have Section 341(f)(2) of the Code apply.
3.11 Legal Proceedings
There are no actions, suits, claims, governmental investigations or
proceedings instituted, pending or, to the best knowledge of SFS, that are
unasserted or threatened against SFS or a Subsidiary or against any asset,
interest or right of SFS or a Subsidiary, or against any officer, director or
employee of any of them that in any such case, if decided adversely, would have
a Material Adverse Effect on SFS. Neither SFS nor any SFS Subsidiary is a party
to any order, judgment or decree which has or could reasonably be expected to
have a Material Adverse Effect on SFS.
3.12 Compliance with Laws
(a) Each of SFS and SFS Subsidiaries has all permits, licenses,
certificates of authority, orders and approvals of, and has made all filings,
applications and registrations with, federal, state, local and foreign
governmental or regulatory bodies that are required in order to permit it to
carry on its business as it is presently being conducted and the absence of
which could reasonably be expected to have a Material Adverse Effect on SFS; all
such permits, licenses, certificates of authority, orders and approvals are in
full force and effect; and to the best knowledge of SFS, no suspension or
cancellation of any of the same is threatened.
18
(b) Neither SFS nor any SFS Subsidiary is in violation of its
respective Certificate of Incorporation, Charter or Bylaws, or of any applicable
federal, state or local law or ordinance or any order, rule or regulation of any
federal, state, local or other governmental agency or body (including, without
limitation, all banking (including all regulatory capital requirements),
securities, municipal securities, safety, health, environmental, zoning,
anti-discrimination, antitrust, and wage and hour laws, ordinances, orders,
rules and regulations), or in default with respect to any order, writ,
injunction or decree of any court, or in default under any order, license,
regulation or demand of any governmental agency, any of which violations or
defaults could reasonably be expected to have a Material Adverse Effect on SFS;
and neither SFS nor any SFS Subsidiary has received any notice or communication
from any federal, state or local governmental authority asserting that SFS or
any SFS Subsidiary is in violation of any of the foregoing which could
reasonably be expected to have a Material Adverse Effect on SFS or, to the best
knowledge of SFS, on Cohoes. Neither SFS nor a Subsidiary is subject to any
regulatory or supervisory cease and desist order, agreement, written directive,
memorandum of understanding or written commitment (other than those of general
applicability to savings banks or holding companies thereof issued by
governmental authorities), and neither of them has received any written
communication requesting that it enter into any of the foregoing.
3.13 Certain Information
None of the information relating to SFS and its Subsidiaries supplied
or to be supplied by them for inclusion in (i) the Form S-1, including the
Prospectus, at the time the Form S-1 and any amendment thereto becomes effective
under the Securities Act, will 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 under which they were made, not misleading, (ii) the
Application for Conversion, at the time the Application for Conversion and any
amendment thereto is approved by the FDIC under the FDIA and the regulations of
the FDIC thereunder and the Department under the NYBL and the regulations of the
Department thereunder, will 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 under which they were made, not misleading, and (iii) the
Proxy Statements, as of the date or dates such Proxy Statements are mailed to
shareholders of SFS and Depositors of Cohoes and up to and including the date or
dates of the meetings of shareholders and Depositors to which such Proxy
Statements relate, will 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 under which they were made, not misleading, provided that
information as of a later date shall be deemed to modify information as of an
earlier date.
3.14 Employee Benefit Plans
(a) SFS has Previously Disclosed all stock option, employee stock
purchase and stock bonus plans, qualified pension or profit-sharing plans, any
deferred compensation, consultant, bonus or group insurance contract or any
other incentive, health and welfare or employee benefit plan or agreement
maintained for the benefit of employees or former employees of SFS or any SFS
Subsidiary (the "SFS Employee Plans"), whether written or oral, and SFS has
previously furnished or made available to Cohoes accurate and complete copies of
the same together with, in the case of
19
qualified plans, (i) the most recent actuarial and financial reports prepared
with respect thereto, (ii) the most recent annual reports filed with any
governmental agency with respect thereto, and (iii) all rulings and
determination letters and any open requests for rulings or letters that pertain
thereto.
(b) None of SFS, any SFS Subsidiary, any SFS Employee Plan constituting
an "employee pension benefit plan" within the meaning of Section 3(2) of ERISA
("SFS Defined Benefit Plan") or, to the best of SFS's knowledge, any fiduciary
of such SFS Defined Benefit Plan, has incurred any material liability to the
PBGC or the IRS with respect to any such SFS Defined Benefit Plan. To the best
of SFS's knowledge, no reportable event under Section 4043(b) of ERISA has
occurred with respect to any SFS Defined Benefit Plan.
(c) Neither SFS nor any SFS Subsidiary participates in or has incurred
any liability under Section 4201 of ERISA for a complete or partial withdrawal
from a multi-employer plan (as such term is defined in ERISA).
(d) A favorable determination letter has been issued by the IRS with
respect to each SFS Defined Benefit Plan which is intended to qualify under
Section 401 of the Code to the effect that such SFS Defined Benefit Plan is
qualified under Section 401 of the Code, and the trust associated with such SFS
Defined Benefit Plan is tax exempt under Section 501 of the Code. No such letter
has been revoked or, to the best of SFS's knowledge, is threatened to be
revoked, and SFS does not know of any ground on which such revocation may be
based. Neither SFS nor any SFS Subsidiary has any liability under any such SFS
Defined Benefit Plan that is not reflected on the consolidated statement of
financial condition of SFS at December 31, 1997 or the notes thereto included in
SFS Financial Statements, other than liabilities incurred in the ordinary course
of business in connection therewith subsequent to the date thereof.
(e) To the best of SFS's knowledge, no prohibited transaction (which
shall mean any transaction prohibited by Section 406 of ERISA and not exempt
under Section 408 of ERISA or Section 4975 of the Code) has occurred with
respect to any SFS Employee Plan which would result in the imposition, directly
or indirectly, of a material excise tax under Section 4975 of the Code or
otherwise have a Material Adverse Effect on SFS.
(f) Full payment has been made (or proper accruals have been
established) of all contributions which are required for periods prior to the
date hereof, and full payment will be so made (or proper accruals will be so
established) of all contributions which are required for periods after the date
hereof and prior to the Effective Time, under the terms of each SFS Employee
Plan or ERISA; no accumulated funding deficiency (as defined in Section 302 of
ERISA or Section 412 of the Code), whether or not waived, exists with respect to
any SFS Defined Benefit Plan, and there is no "unfunded current liability" (as
defined in Section 412 of the Code) with respect to any SFS Defined Benefit
Plan.
(g) To the best of SFS's knowledge, SFS Employee Plans have been
operated in compliance in all material respects with the applicable provisions
of ERISA, the Code, all regulations, rulings and announcements promulgated or
issued thereunder and all other applicable governmental laws and regulations.
20
(h) There are no pending or, to the best knowledge of SFS, threatened
claims (other than routine claims for benefits) by, on behalf of or against any
of SFS Employee Plans or any trust related thereto or any fiduciary thereof.
3.15 Certain Contracts
(a) Neither SFS nor a Subsidiary is a party to, is bound or affected
by, receives, or is obligated to pay, benefits under (i) any agreement,
arrangement or commitment, including without limitation any agreement, indenture
or other instrument, relating to the borrowing of money by SFS or a Subsidiary
(other than in the case of the Bank deposits, FHLB advances, federal funds
purchased and securities sold under agreements to repurchase in the ordinary
course of business) or the guarantee by SFS or a Subsidiary of any obligation,
other than by the Bank in the ordinary course of its banking business, (ii) any
agreement, arrangement or commitment relating to the employment of a consultant
or the employment, election or retention in office of any present or former
director, officer or employee of SFS or a Subsidiary, (iii) any agreement,
arrangement or understanding pursuant to which any payment (whether of severance
pay or otherwise) became or may become due to any director, officer or employee
of SFS or a Subsidiary upon execution of this Agreement or upon or following
consummation of the transactions contemplated by this Agreement (either alone or
in connection with the occurrence of any additional acts or events); (iv) any
agreement, arrangement or understanding pursuant to which SFS or a Subsidiary is
obligated to indemnify any director, officer, employee or agent of SFS or a
Subsidiary; (v) any agreement, arrangement or understanding to which SFS or a
Subsidiary is a party or by which any of the same is bound which limits the
freedom of SFS or a Subsidiary to compete in any line of business or with any
person, (vi) any assistance agreement, supervisory agreement, memorandum of
understanding, consent order, cease and desist order or condition of any
regulatory order or decree with or by the OTS, the FDIC or any other regulatory
agency, or (vii) any agreement, arrangement or understanding which would be
required to be filed as an exhibit to SFS's Annual Report on Form 10-K under the
Exchange Act and which has not been so filed.
(b) Neither SFS nor any SFS Subsidiary is in default or in
non-compliance, which default or non-compliance could reasonably be expected to
have a Material Adverse Effect on SFS, under any contract, agreement,
commitment, arrangement, lease, insurance policy or other instrument to which it
is a party or by which its assets, business or operations may be bound or
affected, whether entered into in the ordinary course of business or otherwise
and whether written or oral, 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
or non-compliance.
3.16 Brokers and Finders
Except for ▇▇▇▇▇▇▇ ▇▇▇▇ & Company, neither SFS nor any SFS Subsidiary
nor any of their respective directors, officers or employees, has employed any
broker or finder or incurred any liability for any broker or finder fees or
commissions in connection with the transactions contemplated hereby.
21
3.17 Insurance
Each of SFS and its Subsidiaries is insured for reasonable amounts with
financially sound and reputable insurance companies against such risks as
companies engaged in a similar business would, in accordance with good business
practice, customarily be insured and has maintained all insurance required by
applicable laws and regulations.
3.18 Properties
All real and personal property owned by SFS or its Subsidiaries or
presently used by any of them in its respective business is in good condition
(ordinary wear and tear excepted) and is sufficient to carry on the business of
SFS and its Subsidiaries in the ordinary course of business consistent with
their past practices. SFS has good and marketable title free and clear of all
liens, encumbrances, charges, defaults or equities (other than equities of
redemption under applicable foreclosure laws) to all of its properties and
assets, real and personal, except (i) liens for current taxes not yet due or
payable (ii) pledges to secure deposits and other liens incurred in the ordinary
course of its banking business, (iii) such imperfections of title, easements and
encumbrances, if any, as are de minimis in character amount or extent and (iv)
as reflected on the consolidated statement of condition of SFS as of March 31,
1998 included in the SFS Financial Statements. All real and personal property
which is material to SFS's business on a consolidated basis and leased or
licensed by SFS or a Subsidiary is held pursuant to leases or licenses which are
valid and enforceable in accordance with their respective terms and such leases
will not terminate or lapse prior to the Effective Time. All improved real
property owned by SFS or its Subsidiaries is in compliance with all applicable
zoning laws.
3.19 Labor
No work stoppage involving SFS or a Subsidiary is pending or, to the
best knowledge of SFS, threatened. Neither SFS nor a Subsidiary is involved in
or, to the best knowledge of SFS, threatened with or affected by, any labor
dispute, arbitration, lawsuit or administrative proceeding involving the
employees of SFS or a Subsidiary which could have a Material Adverse Effect on
SFS. Employees of SFS and SFS Subsidiaries are not represented by any labor
union nor are any collective bargaining agreements otherwise in effect with
respect to such employees, and to the best of SFS's knowledge, there have been
no efforts to unionize or organize any employees of SFS or any of SFS
Subsidiaries during the past five years.
3.20 Affiliates
SFS has Previously Disclosed to Cohoes a schedule of each person that,
to the best of its knowledge, is deemed to be an Affiliate.
22
3.21 Allowance for Loan Losses
The allowance for loan losses reflected on SFS's consolidated
statements of financial condition included in the March 31, 1998 SFS Financial
Statements is, or will be in the case of subsequently delivered SFS Financial
Statements, as the case may be, in the opinion of SFS's management, adequate in
all material respects as of their respective dates under the requirements of
GAAP to provide for reasonably anticipated losses on outstanding loans net of
recoveries. The real estate owned reflected on the consolidated statements of
financial condition included in the March 31, 1998 SFS Financial Statements is,
or will be in the case of subsequently delivered SFS Financial Statements, as
the case may be, carried at the lower of cost or fair value, less estimated
costs to sell, as required by GAAP.
3.22 Fairness Opinion
SFS has received the opinion from ▇▇▇▇▇▇▇ ▇▇▇▇ & Company to the effect
that, as of the date hereof, the consideration to be received by shareholders of
SFS pursuant to this Agreement is fair, from a financial point of view, to such
shareholders.
3.23 Accounting for the Merger; Reorganization.
As of the date hereof, after reviewing the terms of this Agreement, the
stock repurchases by SFS, and the employee benefit plans of SFS and the Bank
with SFS's independent auditors, and assuming compliance by SFS and Cohoes with
the requirements of Section 5.15 hereof, SFS does not have any reason to believe
that the Merger will fail to qualify (i) for pooling-of-interests treatment
under GAAP, or (ii) as a reorganization under Section 368(a) of the Code.
3.24 Disclosures
None of the representations and warranties of SFS or any of the written
information or documents furnished or to be furnished by SFS to Cohoes in
connection with or pursuant to this Agreement or the consummation of the
transactions contemplated hereby, when considered as a whole, contains or will
contain any untrue statement of a material fact, or omits or will omit to state
any material fact required to be stated or necessary to make any such
information or document, in light of the circumstances, not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF COHOES
Cohoes represents and warrants to SFS as follows, except as Previously
Disclosed:
4.1 Capital Structure
As of the date hereof, Cohoes is a savings bank chartered under the
laws of the State of New York in mutual form and, as a result, has no authorized
or outstanding capital stock. Upon
23
consummation of the Conversion, Cohoes will be a duly organized New York savings
bank in stock form and will have authorized capital stock as set forth in its
Charter.
4.2 Organization, Standing and Authority of Cohoes and the Holding Company
(a) Cohoes is a savings bank duly organized, validly existing and in
good standing under the laws of the State of New York, with full corporate power
and authority to own or lease all of its properties and assets and to carry on
its business as now conducted, and Cohoes is duly licensed or qualified to do
business and is in good standing in each jurisdiction in which its ownership or
leasing of property or the conduct of its business requires such licensing or
qualification, except where the failure to be so licensed, qualified or in good
standing would not have a Material Adverse Effect on Cohoes. The deposit
accounts of Cohoes are insured by the BIF to the maximum extent permitted by the
FDIA, and Cohoes has paid all premiums and assessments required by the FDIA and
the regulations thereunder. Cohoes has heretofore delivered to SFS true and
complete copies of the Charter and Bylaws of Cohoes as in effect as of the date
hereof.
(b) At the Effective Time, the Holding Company will be duly organized,
and validly existing under the DGCL.
4.3 Ownership of the Cohoes Subsidiaries
Cohoes has Previously Disclosed the name, jurisdiction of incorporation
and percentage ownership of each direct or indirect Cohoes Subsidiary. Except
for (x) capital stock of the Cohoes Subsidiaries, (y) securities and other
interests held in a fiduciary capacity and beneficially owned by third parties
or taken in consideration of debts previously contracted and (z) securities and
other interests which are Previously Disclosed, Cohoes does not own or have the
right to acquire, directly or indirectly, any outstanding capital stock or other
voting securities or ownership interests of any corporation, bank, savings
association, partnership, joint venture or other organization, other than
investment securities representing not more than 5% of any entity. The
outstanding shares of capital stock or other ownership interests of each Cohoes
Subsidiary have been duly authorized and validly issued, are fully paid and
nonassessable, and are directly owned by Cohoes free and clear of all liens,
claims, encumbrances, charges, pledges, restrictions or rights of third parties
of any kind whatsoever.
4.4 Organization, Standing and Authority of the Cohoes Subsidiaries
Each of the Cohoes Subsidiaries is a corporation or partnership duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which it is organized. Each of the Cohoes Subsidiaries (i) has
full power and authority to own or lease all of its properties and assets and to
carry on its business as now conducted, and (ii) is duly licensed or qualified
to do business and is in good standing in each jurisdiction in which its
ownership or leasing or property or the conduct of its business requires such
qualification, except where the failure to be so licensed, qualified or in good
standing would not have a Material Adverse Effect on Cohoes.
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4.5 Authorized and Effective Agreement
(a) Cohoes has, and following its organization the Holding Company will
have, all requisite corporate power and authority to enter into this Agreement
and (subject to receipt of all necessary governmental approvals and the approval
of the Conversion by the Depositors of Cohoes) to perform all of its respective
obligations under this Agreement. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly authorized by all necessary corporate action in respect thereof on the
part of Cohoes, except for the approval of the Conversion by the Depositors of
Cohoes, and promptly following organization of the Holding Company and their
execution and delivery of an instrument of accession pursuant to Section 5.13 of
this Agreement, the execution and delivery of this Agreement by the Holding
Company and the consummation of the transactions contemplated hereby will have
been duly and validly authorized by all necessary corporate action in respect
thereof on the part of the Holding Company. This Agreement has been duly and
validly executed and delivered by Cohoes and upon its execution and delivery of
an instrument of accession pursuant to Section 5.13 of this Agreement, this
Agreement will have been duly and validly executed and delivered by the Holding
Company and, assuming due authorization, execution and delivery by SFS, this
Agreement constitutes or will constitute, as applicable, a legal, valid and
binding obligation of Cohoes, the Holding Company which is enforceable against
Cohoes, the Holding Company in accordance with its terms, subject, as to
enforceability, to bankruptcy, insolvency and other laws of general
applicability relating to or affecting creditors' rights and to general equity
principles.
(b) Neither the execution and delivery of this Agreement, nor
consummation of the transactions contemplated hereby (including the Merger and
the Bank Merger) nor compliance by Cohoes or upon its organization the Holding
Company with any of the provisions hereof (i) does or will conflict with or
result in a breach of any provisions of the Charter, Certificate of
Incorporation, Bylaws or similar organizational documents of Cohoes, any Cohoes
Subsidiary or upon its organization the Holding Company, except that Cohoes will
not be authorized to issue capital stock until consummation of the Conversion,
(ii) violate, conflict with or result in a breach of any term, condition or
provision of, or constitute a default (or an event which, with notice or lapse
of time, or both, would constitute a default) under, or give rise to any right
of termination, cancellation or acceleration with respect to, or result in the
creation of any lien, charge or encumbrance upon any property or asset of Cohoes
or upon its organization the Holding Company pursuant to, any material note,
bond, mortgage, indenture, deed of trust, license, lease, agreement or other
instrument or obligation to which Cohoes or upon its organization the Holding
Company is a party, or by which any of their respective properties or assets may
be bound or affected, or (iii) subject to receipt of all required governmental
and Member approvals, violate any order, writ, injunction, decree, statute, rule
or regulation applicable to Cohoes or upon its organization the Holding Company.
(c) To the best knowledge of Cohoes, except for (i) the filing of
applications and notices with and the approvals of the OTS, (ii) the filing of
applications with and the approvals of the FDIC, (iii) the filing of
applications with the Department and the approvals of the Superintendent, (iv)
the filing and effectiveness of the Form S-1 with the Commission, (v) compliance
with applicable state securities or "blue sky" laws and the NASD Bylaws in
connection with the issuance of Holding Company Common Stock in connection with
the Merger and the Conversion, (vi) the approval of
25
the Conversion by the requisite vote of the Depositors of Cohoes, (vii) the
filing of a Certificate of Merger with the Secretary of State of the State of
Delaware pursuant to the DGCL in connection with the Merger, (viii) review of
the Merger by the DOJ under federal antitrust laws, and (ix) the filing of
Articles of Combination with the OTS in connection with the Bank Merger, no
consents or approvals of or filings or registrations with any Governmental
Entity or with any third party are necessary on the part of Cohoes or the
Holding Company in connection with the (x) execution and delivery by Cohoes of
this Agreement, the execution and delivery by the Holding Company of an
instrument of accession to this Agreement pursuant to Section 5.13 hereof and
the consummation by Cohoes and the Holding Company of the transactions
contemplated hereby and (y) the execution and delivery by Cohoes of the Bank
Merger Agreement and the consummation by Cohoes of the transactions contemplated
thereby.
(d) As of the date hereof, Cohoes is not aware of any reasons relating
to Cohoes (including without limitation CRA compliance) why all consents and
approvals shall not be procured from all regulatory agencies having jurisdiction
over the transactions contemplated by this Agreement and the Bank Merger
Agreement as shall be necessary for (i) consummation of the transactions
contemplated by this Agreement and the Bank Merger Agreement and (ii) the
continuation by the Holding Company and Cohoes after the Effective Time of the
business of each of SFS and the Bank as such business is carried on immediately
prior to the Effective Time, free of any conditions or requirements which in the
reasonable opinion of Cohoes could have a Material Adverse Effect on the Holding
Company or Cohoes or materially impair the value of SFS and the Bank to the
Holding Company and Cohoes, respectively.
4.6 Regulatory Reports
Since January 1, 1995, Cohoes has duly filed with the FDIC and the
Department the reports required to be filed under applicable laws and
regulations and such reports were in all material respects complete and accurate
and in compliance with the requirements of applicable laws and regulations. In
connection with the most recent examinations of Cohoes by the FDIC and the
Department, Cohoes was not required to correct or change any action, procedure
or proceeding which Cohoes believes has not been corrected or changed as
required as of the date hereof and which could have a Material Adverse Effect on
Cohoes.
4.7 Financial Statements
(a) Cohoes has previously delivered or made available to SFS accurate
and complete copies of the Cohoes Financial Statements, which are accompanied by
the audit reports of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, independent certified public accountants
with respect to Cohoes. The Cohoes Financial Statements, as well as the Cohoes
Financial Statements to be delivered pursuant to Section 5.8 hereof, fairly
present or will fairly present, as the case may be, the consolidated financial
condition of Cohoes as of the respective dates set forth therein, and the
consolidated earnings, changes in retained income and cash flows of Cohoes for
the respective periods or as of the respective dates set forth therein.
26
(b) Each of the Cohoes Financial Statements and the Cohoes Financial
Statements to be delivered pursuant to Section 5.8 hereof has been or will be,
as the case may be, prepared in accordance with GAAP consistently applied during
the periods involved, except as stated therein. The audits of Cohoes have been
conducted in all material respects in accordance with generally accepted
auditing standards. The books and records of Cohoes and the Cohoes Subsidiaries
are being maintained in material compliance with applicable legal and accounting
requirements, and all such books and records accurately reflect in all material
respects all dealings and transactions in respect of the business, assets,
liabilities and affairs of Cohoes and the Cohoes Subsidiaries.
(c) Except to the extent (i) reflected, disclosed or provided for in
the consolidated statement of condition of Cohoes as of June 30, 1997 (including
related notes), (ii) of liabilities incurred since June 30, 1997 in the ordinary
course of business and (iii) of liabilities in connection with consummation of
the transaction contemplated by this Agreement, neither Cohoes nor any Cohoes
Subsidiary has any liabilities, whether absolute, accrued, contingent or
otherwise, material to the financial condition, results of operations or
business of Cohoes on a consolidated basis.
4.8 Material Adverse Change
Since March 31, 1998, (i) Cohoes and its Subsidiaries have conducted
their respective businesses in the ordinary and usual course (excluding the
incurrence of expenses in connection with the Conversion and with this Agreement
and the transactions contemplated hereby) and (ii) no event has occurred or
circumstance arisen that, individually or in the aggregate, has had or is
reasonably likely to have a Material Adverse Effect on Cohoes.
4.9 Environmental Matters
(a) To the best of Cohoes's knowledge, Cohoes and its Subsidiaries are
in compliance with all Environmental Laws, except for any violations of any
Environmental Law which would not, singly or in the aggregate, have a Material
Adverse Effect on Cohoes. Neither Cohoes nor any of its Subsidiaries have
received any communication alleging that Cohoes or any of is Subsidiaries is not
in such compliance and, to the best knowledge of Cohoes, there are no present
circumstances that would prevent or interfere with the continuation of such
compliance.
(b) To the best of Cohoes's knowledge, none of the properties owned,
leased or operated by Cohoes or any of its Subsidiaries has been or is in
violation of or liable under any Environmental Law, except any such violations
or liabilities which would not singly or in the aggregate have a Material
Adverse Effect on Cohoes.
(c) To the best of Cohoes's knowledge, there are no past or present
actions, activities, circumstances, conditions, events or incidents that could
reasonably form the basis of any Environmental Claim or other claim or action or
governmental investigation that could result in the imposition of any liability
arising under any Environmental Law against Cohoes or any of its Subsidiaries or
against any person or entity whose liability for any Environmental Claim Cohoes
has or may have retained or assumed either contractually or by operation of law,
except such which would not have a Material Adverse Effect on Cohoes.
27
(d) Except in the ordinary course of its loan underwriting activities,
Cohoes has not conducted any environmental studies during the past five years
with respect to any properties owned by it or a Cohoes Subsidiary as of the date
hereof.
4.10 Tax Matters
(a) Cohoes and its Subsidiaries have timely filed all federal, state
and local (and, if applicable, foreign) income, franchise, bank, excise, real
property, personal property and other tax returns required by applicable law to
be filed by them (including, without limitation, estimated tax returns, income
tax returns, information returns and withholding and employment tax returns) and
have paid, or where payment is not required to have been made, have set up an
adequate reserve or accrual for the payment of, all taxes required to be paid in
respect of the periods covered by such returns and, as of the Effective Time,
will have paid, or where payment is not required to have been made, will have
set up an adequate reserve or accrual for the payment of, all taxes for any
subsequent periods ending on or prior to the Effective Time. Neither Cohoes nor
any of its Subsidiaries will have any material liability for any such taxes in
excess of the amounts so paid or reserves or accruals so established.
(b) All federal, state and local (and, if applicable, foreign) income,
franchise, bank, excise, real property, personal property and other tax returns
filed by Cohoes and its Subsidiaries are complete and accurate in all material
respects. Neither Cohoes nor any of its Subsidiaries is delinquent in the
payment of any tax, assessment or governmental charge or has requested any
extension of time within which to file any tax returns in respect of any fiscal
year or portion thereof. The federal and state income tax returns of Cohoes and
its Subsidiaries have been audited by the applicable tax authorities for all
periods ended through December 31, 1990 in the case of federal income tax
returns and through December 31, 1996 in the case of state income tax returns
(or are closed to examination due to the expiration of the applicable statute of
limitations) and no deficiencies for any tax, assessment or governmental charge
have been proposed, asserted or assessed (tentatively or otherwise) against
Cohoes or any of its Subsidiaries as a result of such audits or otherwise which
have not been settled and paid. There are currently no agreements in effect with
respect to Cohoes or any of its Subsidiaries to extend the period of limitations
for the assessment or collection of any tax. As of the date hereof, no audit,
examination or deficiency or refund litigation with respect to such return is
pending or, to the best of Cohoes' knowledge, threatened.
(c) Neither Cohoes nor any of its Subsidiaries (i) is a party to any
agreement providing for the allocation or sharing of taxes, (ii) is required to
include in income any adjustment pursuant to Section 481(a) of the Code by
reason of a voluntary change in accounting method initiated by Cohoes or any of
its Subsidiaries (nor does Cohoes have any knowledge that the IRS has proposed
any such adjustment or change of accounting method) or (iii) has filed a consent
pursuant to Section 341(f) of the Code or agreed to have Section 341(f)(2) of
the Code apply.
4.11 Legal Proceedings
There are no actions, suits, claims, governmental investigations or
proceedings instituted, pending or, to the best knowledge of Cohoes, that are
unasserted or threatened against Cohoes or any
28
of its Subsidiaries or against any asset, interest or right of Cohoes or any of
its Subsidiaries, or against any officer, director, trustee or employee of them
that in any such case, if decided adversely, would have a Material Adverse
Effect on Cohoes. Cohoes is not a party to any order, judgment or decree which
has or could reasonably be expected to have a Material Adverse Effect on Cohoes.
4.12 Compliance with Laws
(a) Cohoes and each of its Subsidiaries have all permits, licenses,
certificates of authority, orders and approvals of, and has made all filings,
applications and registrations with, federal, state, local and foreign
governmental or regulatory bodies that are required in order to permit them to
carry on their business as it is presently being conducted and the absence of
which could reasonably be expected to have a Material Adverse Effect on Cohoes;
all such permits, licenses, certificates of authority, orders and approvals are
in full force and effect; and to the best knowledge of Cohoes, no suspension or
cancellation of any of the same is threatened.
(b) Neither Cohoes nor any of its Subsidiaries is in violation of its
Charter or Bylaws, or of any applicable federal, state or local law or ordinance
or any order, rule or regulation of any federal, state, local or other
governmental agency or body (including, without limitation, all banking
(including all regulatory capital requirements), securities, municipal
securities, safety, health, environmental, zoning, anti-discrimination,
antitrust, and wage and hour laws, ordinances, orders, rules and regulations),
or in default with respect to any order, writ, injunction or decree of any
court, or in default under any order, license, regulation or demand of any
governmental agency, any of which violations or defaults could reasonably be
expected to have a Material Adverse Effect on Cohoes; and neither Cohoes nor any
of its Subsidiaries has received any notice or communication from any federal,
state or local governmental authority asserting that Cohoes or any of its
Subsidiaries is in violation of any of the foregoing which could reasonably be
expected to have a Material Adverse Effect on Cohoes. Neither Cohoes nor any of
its Subsidiaries is subject to any regulatory or supervisory cease and desist
order, agreement, written directive, memorandum of understanding or written
commitment (other than those of general applicability to all savings banks,
savings associations or holding companies thereof, as applicable, issued by
governmental authorities), and neither Cohoes nor any of its Subsidiaries have
received any written communication requesting that it enter into any of the
foregoing.
4.13 Certain Information
None of the information relating to Cohoes or the Holding Company
supplied by them and to be included in (i) the Form S-1, including the
Prospectus, will, at the time the Form S-1 and any amendment thereto becomes
effective under the Securities Act, 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 under which they were made, not misleading, (ii)
the Application for Conversion, at the time the Application for Conversion and
any amendment thereto is approved by the FDIC under the FDIA and the regulations
of the FDIC thereunder and by the Department under the NYBL and the regulations
of the Department thereunder, will 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 under which they were made, not misleading, and
(iii) the Proxy Statements, as of the date or dates
29
such Proxy Statements are mailed to shareholders of SFS and Depositors of Cohoes
and up to and including the date or dates of the meetings of shareholders and
Depositors to which such Proxy Statements relate, will 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 under which they were
made, not misleading, provided that information as of a later date shall be
deemed to modify information as of an earlier date.
4.14 Employee Benefit Plans
(a) Cohoes has Previously Disclosed all qualified pension or
profit-sharing plans, any deferred compensation, consultant, bonus or group
insurance contract or any other incentive, health and welfare or employee
benefit plan or agreement maintained for the benefit of employees or former
employees of Cohoes or any of its Subsidiaries (the "Cohoes Employee Plans"),
whether written or oral.
(b) None of Cohoes, any of its Subsidiaries, any Cohoes Employee Plan
constituting an "employee pension benefit plan" within the meaning of Section
3(2) of ERISA ("Cohoes Pension Plan") or to the best of Cohoes's knowledge, any
fiduciary of a Cohoes Pension Plan has incurred any material liability to the
PBGC or the IRS with respect to any such Cohoes Pension Plan. To the best of
Cohoes's knowledge, no reportable event under Section 4043(b) of ERISA has
occurred with respect to any Cohoes Pension Plan.
(c) Neither Cohoes nor any of its Subsidiaries participate in and have
not incurred any liability under Section 4201 of ERISA for a complete or partial
withdrawal from a multi-employer plan (as such term is defined in ERISA).
(d) A favorable determination letter has been issued by the IRS with
respect to each Cohoes Pension Plan which is intended to qualify under Section
401 of the Code to the effect that the Cohoes Pension Plan is qualified under
Section 401 of the Code and the trust associated with such Cohoes Pension Plan
is tax exempt under Section 501 of the Code. No such letter has been revoked or,
to the best of Cohoes's knowledge, is threatened to be revoked and Cohoes does
not know of any ground on which such revocation may be based. Neither Cohoes nor
any of its Subsidiaries have any liability under any such Cohoes Pension Plan
that is not reflected on the statement of condition of Cohoes at June 30, 1997
or the notes thereto included in the Cohoes Financial Statements, other than
liabilities incurred in the ordinary course of business in connection therewith
subsequent to the date thereof.
(e) To the best of Cohoes's knowledge, no prohibited transaction (which
shall mean any transaction prohibited by Section 406 of ERISA and not exempt
under Section 408 of ERISA or Section 4975 of the Code) has occurred with
respect to any Cohoes Employee Plan which would result in the imposition,
directly or indirectly, of a material excise tax under Section 4975 of the Code
or otherwise have a Material Adverse Effect on Cohoes.
(f) Full payment has been made (or proper accruals have been
established) of all contributions which are required for periods prior to the
date hereof, and full payment will be so
30
made (or proper accruals will be so established) of all contributions which are
required for periods after the date hereof and prior to the Effective Time,
under the terms of each Cohoes Employee Plan or ERISA; no accumulated funding
deficiency (as defined in Section 302 of ERISA or Section 412 of the Code),
whether or not waived, exists with respect to any Cohoes Pension Plan, and there
is no "unfunded current liability" (as defined in Section 412 of the Code) with
respect to any Cohoes Pension Plan.
(g) To the best of Cohoes's knowledge, the Cohoes Employee Plans have
been operated in compliance in all material respects with the applicable
provisions of ERISA, the Code, all regulations, rulings and announcements
promulgated or issued thereunder and all other applicable governmental laws and
regulations.
(h) There are no pending or, to the best knowledge of Cohoes,
threatened claims (other than routine claims for benefits) by, on behalf of or
against any of the Cohoes Employee Plans or any trust related thereto or any
fiduciary thereof.
4.15 Certain Contracts
(a) Neither Cohoes nor any of its Subsidiaries is a party to, is bound
or affected by, receives, or is obligated to pay, benefits under (i) any
agreement, arrangement or understanding to which Cohoes or any of its
Subsidiaries is a party or by which any of the same is bound which limits the
freedom of Cohoes or any of its Subsidiaries to compete in any line of business
or with any person, (ii) any assistance agreement, supervisory agreement,
memorandum of understanding, consent order, cease and desist order or condition
of any of regulatory order or decree with or by the OTS, the FDIC, the
Department or any other regulatory agency, or (iii) any other agreement,
arrangement or understanding which would be required to be filed as an exhibit
to the Annual Report on Form 10-K under the Exchange Act (assuming Cohoes was
required to file such reports under the Exchange Act).
(b) Neither Cohoes nor any of its Subsidiaries is in default or in
non-compliance, which default or non-compliance could reasonably be expected to
have a Material Adverse Effect on Cohoes, under any contract, agreement,
commitment, arrangement, lease, insurance policy or other instrument to which it
is a party or by which its assets, business or operations may be bound or
affected, whether entered into in the ordinary course of business or otherwise
and whether written or oral, 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
or non-compliance.
4.16 Brokers and Finders
None of Cohoes, any of its Subsidiaries, the Holding Company, nor any
of their respective directors, trustees, officers or employees, has employed any
broker or finder or incurred any liability for any broker or finder fees or
commissions in connection with the transactions contemplated hereby.
31
4.17 Insurance
Cohoes and each of its Subsidiaries is insured for reasonable amounts
with financially sound and reputable insurance companies against such risks as
companies engaged in a similar business would, in accordance with good business
practice, customarily be insured and has maintained all insurance required by
applicable laws and regulations.
4.18 Properties
All real and personal property owned by Cohoes or any of its
Subsidiaries or presently used by them in their business is in good condition
(ordinary wear and tear excepted) and is sufficient to carry on their respective
business in the ordinary course of business consistent with its past practices.
Cohoes has good and marketable title free and clear of all liens, encumbrances,
charges, defaults or equities (other than equities of redemption under
applicable foreclosure laws) to all of its properties and assets, real and
personal, except (i) liens for current taxes not yet due or payable (ii) pledges
to secure deposits and other liens incurred in the ordinary course of its
banking business, (iii) such imperfections of title, easements and encumbrances,
if any, as are de minimis in character, amount or extent and (iv) as reflected
on the statement of condition of Cohoes as of March 31, 1998 included in the
Cohoes Financial Statements. All real and personal property which is material to
Cohoes's business on a consolidated basis and leased or licensed by Cohoes or
any of its Subsidiaries is held pursuant to leases or licenses which are valid
and enforceable in accordance with their respective terms and such leases will
not terminate or lapse prior to the Effective Time. All improved real property
owned by Cohoes or its Subsidiaries is in compliance with all applicable zoning
laws.
4.19 Labor
No work stoppage involving Cohoes or any of its Subsidiaries is pending
or, to the best knowledge of Cohoes, threatened. Neither Cohoes nor any of its
Subsidiaries is involved in or to the best knowledge of Cohoes threatened with
or affected by, any labor dispute, arbitration, lawsuit or administrative
proceeding involving its employees which could have a Material Adverse Effect on
Cohoes. Employees of Cohoes and its Subsidiaries are not represented by any
labor union nor are any collective bargaining agreements otherwise in effect
with respect to such employees, and to the best of Cohoes's knowledge, there
have been no efforts to unionize or organize any employees of Cohoes or any of
its Subsidiaries during the past five years.
4.20 Ownership of SFS Common Stock
As of the date hereof, neither Cohoes nor, to its best knowledge, any
of its affiliates or associates (as such terms are defined under the Exchange
Act), (i) beneficially own, directly or indirectly, or (ii) are parties to any
agreement, arrangement or understanding for the purpose of acquiring, holding,
voting or disposing of, in each case, shares of SFS Common Stock which in the
aggregate represent 5% or more of the outstanding shares of SFS Common Stock
(other than shares held in a fiduciary capacity and beneficially owned by third
parties or shares taken in consideration of debts previously contracted).
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4.21 Allowance for Losses on Loans
The allowance for losses on loans reflected on Cohoes's consolidated
statements of condition included in the March 31, 1998 Cohoes Financial
Statements is, or will be in the case of subsequently delivered Cohoes Financial
Statements, as the case may be, in the opinion of Cohoes management adequate in
all material respects as of their respective dates under the requirements of
GAAP to provide for reasonably anticipated losses on outstanding loans net of
recoveries. The real estate owned reflected on the consolidated statements of
condition included in the March 31, 1998 Cohoes Financial Statements is, or will
be in the case of subsequently delivered Cohoes Financial Statements, as the
case may be, carried at the lower of cost or fair value, less estimated costs to
sell, as required by GAAP.
4.22 Accounting for the Merger; Reorganization.
As of the date hereof, after reviewing the terms of this Agreement, the
stock repurchases by SFS, and the employee benefit plans of SFS, the Bank and
Cohoes with Cohoes's independent auditors, and assuming compliance by SFS and
Cohoes with the requirements of Section 5.15 hereof, Cohoes does not have any
reason to believe that the Merger will fail to qualify (i) for
pooling-of-interests treatment under GAAP, or (ii) as a reorganization under
Section 368(a) of the Code. As of the date hereof, neither Cohoes nor any Cohoes
Subsidiary owns any shares of SFS Common Stock.
4.23 No Approval of the Holding Company's Shareholders Currently Required.
Based upon current laws and regulations to be applicable to the Holding
Company upon its formation, including the rules, regulations and policies of the
NASD, as of the date of this Agreement, neither approval of this Agreement by
the shareholders of the Holding Company nor approval of the transactions
contemplated hereby by the shareholders of the Holding Company will be required
upon consummation of the Conversion.
4.24 Adoption of the Plan of Conversion
The Board of Trustees of Cohoes validly adopted the Plan of Conversion
on May 21, 1998. The Board of Directors of the Holding Company shall duly
approve the Plan of Conversion prior to the filing of the Form S-1.
4.25 Disclosures
None of the representations and warranties of Cohoes or any of the
written information or documents furnished or to be furnished by Cohoes to SFS
in connection with or pursuant to this Agreement or the consummation of the
transactions contemplated hereby, when considered as a whole, contains or will
contain any untrue statement of a material fact, or omits or will omit to state
any material fact required to be stated or necessary to make any such
information or document, in light of the circumstances, not misleading.
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ARTICLE V
COVENANTS
5.1 Reasonable Best Efforts
Subject to the terms and conditions of this Agreement, each of SFS and
Cohoes (i) shall use its reasonable best efforts in good faith to take, or cause
to be taken, all actions, and to do, or cause to be done, all things necessary
or advisable under applicable laws and regulations so as to permit and otherwise
enable consummation of the Conversion and the Merger as promptly as reasonably
practicable, it being the intention of the parties that the Merger be
consummated simultaneously with the consummation of the Conversion, and that the
Bank Merger be consummated following the Effective Time in accordance with
Section 5.12 hereof, and (ii) shall cooperate fully with each other to that end.
SFS shall use its reasonable best efforts in good faith to cause the holders of
more than 5% of the SFS Common Stock to execute and deliver representation
letters as may be requested by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ in connection with the delivery
of its opinion pursuant to Section 6.1(f) hereof. SFS shall use its reasonable
best efforts in good faith to cause the Federal Stock Charter of the Bank to be
amended to delete Section 8A thereof prior to the Effective Time.
5.2 Shareholder and Member Meetings
(a) SFS shall take all action necessary to properly call and convene a
meeting of its shareholders as soon as practicable after the date hereof to
consider and vote upon this Agreement and the transactions contemplated hereby.
The Board of Directors of SFS will recommend that the shareholders of SFS
approve this Agreement and the transactions contemplated hereby, provided that
the Board of Directors of SFS may fail to make such recommendation, or withdraw,
modify or change any such recommendation, if such Board of Directors, after
having consulted with and considered the advice of outside counsel, has
determined that the making of such recommendation, or the failure to withdraw,
modify or change such recommendation, would constitute a breach of the fiduciary
duties of such directors under applicable law.
(b) Cohoes shall take all action necessary to properly call and convene
a meeting of its Depositors as soon as practicable to consider and vote upon the
Plan of Conversion and the transactions contemplated thereby. The Board of
Trustees of Cohoes will recommend that the Depositors of Cohoes approve the Plan
of Conversion and the transactions contemplated thereby.
5.3 Regulatory Matters
(a) The parties hereto shall promptly cooperate with each other in the
preparation and filing of the Form S-1, the Prospectus and the Proxy Statements
relating to the meetings of shareholders of SFS and the Depositors of Cohoes to
be held pursuant to Section 5.2 of this Agreement (the "SFS Proxy Statement" and
the "Cohoes Proxy Statement," respectively) under the Securities Act and the
Exchange Act, as applicable. Each of the Holding Company, Cohoes and SFS shall
use its reasonable best efforts to have the Form S-1 filed with the Commission
within 60 days from the date hereof, and to have an amendment to the Form S-1
filed with the Commission within
34
15 days from receiving any comments of the Commission staff on the Form S-1 and
to have the Form S-1 declared effective under the Securities Act and the SFS
Proxy Statement approved for mailing in definitive form under the Exchange Act
as promptly as practicable after such filings and the receipt of conditional
approval of the Application for Conversion by the FDIC and the Department, and
thereafter SFS shall promptly mail to its shareholders the SFS Proxy Statement
and Prospectus and Cohoes shall promptly mail to its Depositors the Cohoes Proxy
Statement and the Prospectus. The Holding Company also shall use its reasonable
best efforts to obtain all necessary state securities law or "blue sky" permits
and approvals required to carry out the issuance of Holding Company Common Stock
in connection with the Merger and the Conversion. SFS shall furnish all
information concerning SFS and the holders of SFS Common Stock as may be
reasonably requested in connection with any of the foregoing actions.
(b) The parties hereto shall cooperate with each other and use their
reasonable best efforts to promptly prepare and file all necessary
documentation, to effect all applications, notices, petitions and filings, and
to obtain as promptly as practicable all permits, consents, approvals and
authorizations of all Governmental Entities and third parties which are
necessary or advisable to consummate the transactions contemplated by this
Agreement (including without limitation the Conversion, the Merger and the Bank
Merger). Cohoes and SFS shall have the right to review in advance, and to the
extent practicable each will consult with the other on, in each case subject to
applicable laws relating to the exchange of information, all the information
which appears in any filing made with or written materials submitted to any
third party or any Governmental Entity in connection with the transactions
contemplated by this Agreement. In exercising the foregoing right, each of the
parties hereto shall act reasonably and as promptly as practicable. The parties
hereto agree that they will consult with each other with respect to the
obtaining of all permits, consents, approvals and authorizations of all third
parties and Governmental Entities necessary or advisable to consummate the
transactions contemplated by this Agreement and each party will keep the other
apprised of the status of matters relating to completion of the transactions
contemplated herein.
(c) Cohoes and SFS shall, upon request, furnish each other with all
information concerning themselves, their respective Subsidiaries, directors and
officers, the shareholders of SFS and such other matters as may be reasonably
necessary or advisable in connection with the Form S-1 or any other statement,
filing, notice or application made by or on behalf of Cohoes, the Holding
Company, SFS or the Bank to any Governmental Entity in connection with the
Conversion, the Merger, the Bank Merger and the other transactions contemplated
hereby.
(d) Cohoes and SFS shall promptly furnish each other with copies of
written communications received by Cohoes or SFS, as the case may be, or any of
their respective Subsidiaries from, or delivered by any of the foregoing to, any
Governmental Entity in respect of the transactions contemplated hereby.
(e) Cohoes agrees to use its best efforts to consummate the
transactions contemplated by the Plan of Conversion so that the Conversion can
be consummated simultaneously with or immediately prior to the consummation of
the Merger, and to consult with SFS regarding any proposed amendments to the
Plan of Conversion.
35
5.4 Investigation and Confidentiality
(a) Each party shall permit the other party and its representatives
reasonable access to its properties and personnel, and shall disclose and make
available to such other party all books, papers and records relating to the
assets, stock ownership, properties, operations, obligations and liabilities of
it and its Subsidiaries, including, but not limited to, all books of account
(including the general ledger), tax records, minute books of meetings of boards
of directors (and any committees thereof) and shareholders, organizational
documents, bylaws, material contracts and agreements, filings with any
regulatory authority, accountants' work papers, litigation files, loan files,
plans affecting employees, and any other business activities or prospects in
which the other party may have a reasonable interest, provided that such access
shall be reasonably related to the transactions contemplated hereby and, in the
reasonable opinion of the respective parties providing such access, not unduly
interfere with normal operations. Each party and its Subsidiaries shall make
their respective directors, officers, employees and agents and authorized
representatives (including counsel and independent public accountants) available
to confer with the other party and its representatives, provided that such
access shall be reasonably related to the transactions contemplated hereby and
shall not unduly interfere with normal operations.
(b) All information furnished previously in connection with the
transactions contemplated by this Agreement or pursuant hereto shall be treated
as the sole property of the party furnishing the information until consummation
of the transactions contemplated hereby and, if such transactions shall not
occur, the party receiving the information shall either destroy or return to the
party which furnished such information all documents or other materials
containing, reflecting or referring to such information, shall use its best
efforts to keep confidential all such information, and shall not directly or
indirectly use such information for any competitive or other commercial
purposes. The obligation to keep such information confidential shall continue
for five years from the date the proposed transactions are abandoned but shall
not apply to (i) any information which (x) the party receiving the information
can establish was already in its possession prior to the disclosure thereof by
the party furnishing the information; (y) was then generally known to the
public; or (z) became known to the public through no fault of the party
receiving the information; or (ii) disclosures pursuant to a legal requirement
or in accordance with an order of a court of competent jurisdiction, provided
that the party which is the subject of any such legal requirement or order shall
use its best efforts to give the other party at least ten business days prior
notice thereof.
5.5 Press Releases
Cohoes and SFS shall agree with each other as to the form and substance
of any press release related to this Agreement or the transactions contemplated
hereby, and consult with each other as to the form and substance of other public
disclosures which may relate to the transactions contemplated by this Agreement,
provided, however, that nothing contained herein shall prohibit either party,
following notification to the other party, from making any disclosure which is
required by law or regulation.
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5.6 Business of the Parties
(a) During the period from the date of this Agreement and continuing
until the Effective Time, except as expressly contemplated or permitted by this
Agreement or with the prior written consent of Cohoes, SFS and its Subsidiaries
shall carry on their respective businesses in the ordinary course consistent
with past practice. During such period, SFS also will use all reasonable efforts
to (x) preserve its business organization and that of the Bank intact, (y) keep
available to itself and Cohoes the present services of the employees of SFS and
the Bank and (z) preserve for itself and Cohoes the goodwill of the customers of
SFS and the Bank and others with whom business relationships exist. Without
limiting the generality of the foregoing, except with the prior written consent
of Cohoes or as expressly contemplated hereby, between the date hereof and the
Effective Time, SFS shall not, and shall cause each SFS Subsidiary not to:
(i) declare, set aside, make or pay any dividend or other
distribution (whether in cash, stock or property or any combination
thereof) in respect of SFS Common Stock, except for regular quarterly
cash dividends at a rate per share of SFS Common Stock not in excess of
$.08 per share and except, in the event the Effective Time occurs more
than 45 days after the commencement of any calendar quarter but prior
to the normal dividend payment date for such calendar quarter, a pro
rata cash dividend based on SFS's normal quarterly cash dividend rate;
provided, however, that nothing contained herein shall be deemed to
affect the ability of a Subsidiary to pay dividends on its capital
stock to SFS;
(ii) issue any shares of its capital stock, other than upon
exercise of SFS Options referred to in Section 3.1 hereof or upon the
reissuance of shares pursuant to Section 5.15(b)(i) hereof, or issue,
grant, modify or authorize any Rights; purchase any shares of SFS
Common Stock; or effect any recapitalization, reclassification, stock
dividend, stock split or like change in capitalization;
(iii) amend its Certificate of Incorporation, Bylaws or
similar organizational documents, other than as contemplated by Section
5.1 hereof; impose, or suffer the imposition, on any share of stock or
other ownership interest held by SFS in a Subsidiary of any lien,
charge or encumbrance or permit any such lien, charge or encumbrance to
exist; or waive or release any material right or cancel or compromise
any material debt or claim;
(iv) increase the rate of compensation of any of its
directors, officers or employees, or pay or agree to pay any bonus or
severance to, or provide any other new employee benefit or incentive
to, any of its directors, officers or employees, except (i) as may be
required pursuant to Previously Disclosed commitments existing on the
date hereof, (ii) as may be required by law, (iii) merit increases in
accordance with past practices, normal cost-of-living increases and
normal increases related to promotions or increased job
responsibilities and (iv) that immediately prior to the Effective Time,
SFS may pay bonuses under the SFS Incentive Plan in amounts as provided
under such plan, provided that if the Effective Time is prior to
December
37
31, 1998, then the amount for 1998 shall be pro rated for the period
from January 1, 1998 to the Effective Time;
(v) enter into or, except as may be required by law and for
amendments contemplated by Sections 5.11 or 5.15 hereof, modify any
pension, retirement, stock option, stock purchase, stock appreciation
right, 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 SFS Defined
Benefit Plan or the SFS ESOP (other than as required by law or
regulation or in a manner and amount consistent with past practices);
(vi) enter into (w) any transaction, agreement, arrangement or
commitment not made in the ordinary course of business, (x) any
agreement, indenture or other instrument relating to the borrowing of
money by SFS or a Subsidiary or guarantee by SFS or any SFS Subsidiary
of any such obligation, except in the case of the Bank for deposits,
FHLB advances, federal funds purchased and securities sold under
agreements to repurchase in the ordinary course of business consistent
with past practice, (y) any agreement, arrangement or commitment
relating to the employment of an employee or consultant, or amend any
such existing agreement, arrangement or commitment, provided that SFS
and the Bank may employ an employee or consultant in the ordinary
course of business if the employment of such employee or consultant is
terminable by SFS or the Bank at will without liability, other than as
required by law; and provided that the term of the employment
agreements and change in control severance agreements existing as of
the date hereof (other than the employment agreement with ▇▇.
▇▇▇▇▇▇▇▇▇) may be extended for an additional one year as of the
anniversary date of such agreements in accordance with the provisions
thereof; or (z) any contract, agreement or understanding with a labor
union;
(vii) change its method of accounting in effect for the year
ended December 31, 1997, except as required by changes in laws or
regulations or GAAP, or change any of its methods of reporting income
and deductions for federal income tax purposes from those employed in
the preparation of its federal income tax return for such year, except
as required by changes in laws or regulations;
(viii) 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 and other than
expenditures necessary to maintain existing assets in good repair; or
enter into any new lease of real property or any new lease of personal
property providing for annual payments exceeding $10,000;
(ix) file any applications or make any contract with respect
to branching or site location or relocation;
38
(x) acquire in any manner whatsoever (other than to realize
upon collateral for a defaulted loan) control over or any equity
interest in any business or entity, except for investments in
marketable equity securities in the ordinary course of business and not
exceeding 5% of the outstanding shares of any class;
(xi) enter or agree to enter into any agreement or arrangement
granting any preferential right to purchase any of its assets or rights
or requiring the consent of any party to the transfer and assignment of
any such assets or rights;
(xii) except as necessitated in the reasonable opinion of SFS
due to changes in interest rates, and in accordance with safe and sound
banking practices, change or modify in any material respect any of its
lending or investment policies, except to the extent required by law or
an applicable regulatory authority;
(xiii) take any action that would prevent or impede the Merger
or the Conversion from qualifying as a reorganization within the
meaning of Section 368 of the Code or from being accounted for as a
pooling-of-interests under GAAP;
(xiv) except as necessitated in the reasonable opinion of SFS
due to changes in interest rates, and in accordance with safe and sound
banking practices, enter into any futures contract, option contract,
interest rate caps, interest rate floors, interest rate exchange
agreement or other agreement for purposes of hedging the exposure of
its interest-earning assets and interest-bearing liabilities to changes
in market rates of interest;
(xv) take any action that would result in any of the
representations and warranties of SFS contained in this Agreement not
to be true and correct in any material respect at the Effective Time or
that would cause any of the conditions of Sections 6.1 or 6.3 hereof
not to be satisfied; or
(xvi) agree to do any of the foregoing.
(b) During the period from the date of this Agreement and continuing
until the Effective Time, except with the prior written consent of SFS or as
expressly contemplated hereby, Cohoes and its Subsidiaries shall carry on their
respective businesses in the ordinary course consistent with past practice.
During the period between the date hereof and the Effective Time, Cohoes will
use all reasonable efforts to (x) preserve its business organization intact, and
(y) preserve for itself and SFS the goodwill of the customers of Cohoes and
others with whom business relationships exist. Without limiting the generality
of the foregoing, except with the prior written consent of SFS or as expressly
contemplated hereby, between the date hereof and the Effective Time, Cohoes
shall not, and shall cause each Cohoes Subsidiary not to:
(i) take any action that would prevent or impede the Merger or
the Conversion from qualifying as a reorganization within the meaning
of Section 368 of the Code or from being accounted for as a
pooling-of-interests under GAAP;
39
(ii) take any action that would result in any of the
representations and warranties of Cohoes contained in this Agreement
not to be true and correct in any material respect at the Effective
Time or that would cause any of the conditions of Sections 6.1 or 6.2
hereof not to be satisfied; or
(iii) agree to do any of the foregoing.
5.7 Certain Actions
SFS shall not, and shall cause each SFS Subsidiary not to, solicit or
encourage inquiries or proposals with respect to, furnish any information
relating to, or participate in any negotiations or discussions concerning, any
acquisition, purchase of all or a substantial portion of the assets of, or any
equity interest in, SFS or a Subsidiary (other than with Cohoes or an affiliate
thereof), provided, however, that the Board of Directors of SFS may furnish such
information or participate in such negotiations or discussions if such Board of
Directors, after having consulted with and considered the advice of outside
counsel, has determined that the failure to do the same may cause the members of
such Board of Directors to breach their fiduciary duties under applicable law.
SFS will promptly inform Cohoes orally and in writing of any such request for
information or of any such negotiations or discussions, as well as instruct its
and its Subsidiaries' directors, officers, representatives and agents to refrain
from taking any action prohibited by this Section 5.7.
5.8 Current Information
During the period from the date of this Agreement to the Effective
Time, each of Cohoes and SFS shall, upon the request of the other party, cause
one or more of its designated representatives to confer on a monthly or more
frequent basis with representatives of the other party regarding its financial
condition, operations and business and matters relating to the completion of the
transactions contemplated hereby. As soon as reasonably available, but in no
event more than 45 days after the end of each calendar quarter ending after the
date of this Agreement (other than the quarter ending December 31, 1998), SFS
will deliver to Cohoes its quarterly report on Form 10-Q under the Exchange Act,
and, as soon as reasonably available, but in no event more than 90 days after
December 31, 1998, SFS will deliver to Cohoes its Annual Report on Form 10-K for
1998. As soon as reasonably available, but in no event more than 90 days after
June 30, 1998, Cohoes will deliver to SFS audited statements of condition
(including related notes and schedules, if any) of Cohoes as of June 30, 1998
and 1997 and statements of income, changes in net worth and cash flows
(including related notes and schedules, if any) of Cohoes for each of the years
in the three-year period ended June 30, 1998. Cohoes also will deliver to SFS
each call report filed by Cohoes with the FDIC concurrently with the filing of
such call report. Within 25 days after the end of each month, SFS and Cohoes
will deliver to the other party an unaudited consolidated statement of condition
and an unaudited consolidated statement of income, without related notes, for
such month prepared in accordance with GAAP.
40
5.9 Indemnification; Insurance
(a) From and after the Effective Time through the sixth anniversary of
the Effective Time, the Holding Company (the "Indemnifying Party") shall provide
indemnification to any present or former director, officer or employee of SFS
and each SFS Subsidiary, in each case determined as of the Effective Time (the
"Indemnified Parties"), with respect to any costs or expenses (including
reasonable attorneys' fees), judgments, fines, losses, claims, damages or
liabilities incurred in connection with any claim, action, suit, proceeding or
investigation, whether, civil, criminal, administrative or investigative,
arising out of matters existing or occurring at or prior to the Effective Time,
if first asserted or claimed prior to the date hereof and Previously Disclosed,
if first asserted or claimed between the date hereof and the Effective Time and
disclosed pursuant to Section 5.17 hereof or if first asserted or claimed after
the Effective Time, to the fullest extent, if any, that such Indemnified Party
would have been entitled to indemnification by SFS or any SFS Subsidiary under
the Certificate of Incorporation, Charter or Bylaws of SFS or any SFS Subsidiary
as Previously Disclosed, provided, however, that all rights to indemnification
in respect of any claim asserted or made within such period shall continue until
the final disposition of such claim, and provided, further, that nothing
contained herein shall extend or be deemed a waiver of any applicable statute of
limitations in respect of any claim or claim for indemnification. Without
limiting the foregoing, all limitations of liability existing in favor of the
Indemnified Parties in the Certificate of Incorporation, Charter or Bylaws of
SFS or any SFS Subsidiary, arising out of matters existing or occurring at or
prior to the Effective Time shall survive the Merger and shall continue in full
force and effect.
(b) Any Indemnified Party wishing to claim indemnification under
Section 5.9(a), upon learning of any such claim, action, suit, proceeding or
investigation, shall promptly notify the Indemnifying Party, but the failure to
so notify shall not relieve the Indemnifying Party of any liability it may have
to such Indemnified Party if such failure does not materially prejudice the
Indemnifying Party. In the event of any such claim, action, suit, proceeding or
investigation (whether arising before or after the Effective Time), (i) the
Indemnifying Party shall have the right to assume the defense thereof and the
Indemnifying Party shall not be liable to such Indemnified Parties for any legal
expenses of other counsel or any other expenses subsequently incurred by such
Indemnified Parties in connection with the defense thereof, except that if the
Indemnifying Party elects not to assume such defense or counsel for the
Indemnified Parties advises that there are issues which raise conflicts of
interest between the Indemnifying Party and the Indemnified Parties, the
Indemnified Parties may retain counsel which is reasonably satisfactory to the
Indemnifying Party, and the Indemnifying Party shall pay, promptly as statements
therefor are received, the reasonable fees and expenses of such counsel for the
Indemnified Parties (which may not exceed one firm in any jurisdiction unless
the use of one counsel for such Indemnified Parties would present such counsel
with a conflict of interest) in accordance with the obligations set forth in
Section 5.9(a) hereof, (ii) the Indemnified Parties will cooperate in the
defense of any such matter, (iii) the Indemnifying Party shall not be liable for
any settlement effected without its prior written consent and (iv) the
Indemnifying Party shall have no obligation hereunder in the event a federal
banking agency or a court of competent jurisdiction shall ultimately determine,
and such determination shall have become final and nonappealable, that
indemnification of an Indemnified Party in the manner contemplated hereby is
prohibited by applicable law.
41
(c) The Holding Company shall maintain SFS's existing directors' and
officers' liability insurance policy (or purchase an insurance policy providing
coverage on substantially the same terms and conditions) for acts or omissions
occurring prior to the Effective Time by persons who are currently covered by
such insurance policy maintained by SFS and SFS Subsidiaries for a period of six
years following the Effective Time, provided, however, that in no event shall
the Holding Company be required to expend on an annual basis more than 125% of
the amount paid by SFS and SFS Subsidiaries on an annual basis as of the date
hereof for such insurance coverage (the "Insurance Amount") to maintain or
procure such insurance coverage, and further provided that if the Holding
Company is unable to maintain or obtain the insurance called for hereby, the
Holding Company shall use all reasonable efforts to obtain as much comparable
insurance as is available for the Insurance Amount. At the request of the
Holding Company, SFS shall use reasonable efforts to procure the insurance
coverage referred to in the preceding sentence prior to the Effective Time.
(d) In the event that the Holding Company or any of its respective
successors or assigns (i) consolidates with or merges into any other person and
shall not be the continuing or surviving corporation 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 the successors
and assigns of such entity shall assume the obligations set forth in this
Section 5.9, which obligations are expressly intended to be for the irrevocable
benefit of, and shall be enforceable by, each director and officer covered
hereby.
5.10 Directors and Certain Officers
Each of Cohoes and the Holding Company agrees to take all action
necessary to appoint or elect, effective as of the Effective Time, ▇▇. ▇▇▇▇▇▇▇▇▇
as a director of the Holding Company and the Surviving Bank. At its next annual
meeting of stockholders, the Holding Company will propose to its stockholders
that ▇▇. ▇▇▇▇▇▇▇▇▇ be elected to the Board of Directors of the Holding Company
for a three-year term. For as long as he is willing to serve, the Holding
Company will cause ▇▇. ▇▇▇▇▇▇▇▇▇ to remain a director of the Bank for at least
three years after the Effective Time. ▇▇. ▇▇▇▇▇▇▇▇▇ shall not be entitled to any
new awards under any stock option or restricted stock plan of the Holding
Company, other than pursuant to Sections 2.3(d) and 2.7 hereof. The remaining
directors of SFS as of the Effective Time and each person Previously Disclosed
on Disclosure Schedule 5.10 shall be eligible to serve on an advisory board of
the Holding Company for a three-year term (four years, with respect to the
participation of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇). Service on the advisory board will cease
immediately for any member who becomes employed or affiliated with any financial
institution competing with Cohoes at an office within Albany, Saratoga,
Rensselaer or Schenectady County, New York. The advisory board will meet four
times per year and members of the advisory board will be compensated at a rate
of $250 per meeting attended.
5.11 Employees and Employee Benefit Plans
(a) It is the intention of Cohoes that within a reasonable period of
time following the Effective Time (a) it will provide former full time employees
of SFS or the Bank who remain employed by Cohoes following the Effective Time
with employee benefit plans substantially similar in the aggregate to those
provided to similarly situated employees of Cohoes, (b) any such
42
employees will receive credit for years of service with SFS or any of its
Subsidiaries prior to the Effective Time for the purpose of eligibility and
vesting (but not for the purpose of accrual of benefits or allocation of
employer contributions) and (c) Cohoes shall cause any and all pre-existing
condition limitations (to the extent such limitations did not apply to a
pre-existing condition under any SFS Employee Plan) and eligibility waiting
periods under group health plans to be waived with respect to such participants
and their eligible dependents.
(b) To the extent that the Holding Company or a Holding Company
Subsidiary terminates the employment of any SFS or Bank employee (other than
those employees who receive payments pursuant to Section 5.11(d) hereof), other
than for Cause, within six months following the Effective Time, the Holding
Company shall, or shall cause a Holding Company Subsidiary to, provide severance
benefits in a cash amount equal to such employee's regular salary for a one-week
period (as in effect immediately prior to the Effective Time) multiplied by the
total number of whole years of such employee's employment (up to a maximum of
eight years) at SFS, the Bank and any other SFS Subsidiary and Cohoes, provided,
however that in no event shall the Holding Company or a Holding Company
Subsidiary have any obligation to provide severance benefits to any SFS or Bank
employee whose termination of employment occurs due to resignation or discharge
for Cause or who is entitled to severance benefits or the equivalent thereof
under the terms of the Bank Officer Severance Compensation Plan or an individual
contract with SFS or the Bank.
(c) The Holding Company and Cohoes agree to honor each of the
employment agreements, change in control severance agreements, SFS Change in
Control Benefit Plan, Bank Officer Severance Compensation Plan and Bank SERP
listed on Disclosure Schedule 5.11(d) hereto, provided that the Holding Company
and Cohoes shall be obligated for only such payments and benefits thereunder as
are set forth on Disclosure Schedule 5.11(d), subject in all respects to the
assumptions and qualifications set forth on such Schedule. In each case, the
payment of benefits shall be subject to the receipt by the Holding Company from
such executive of an acknowledgment and a release described in Section 5.11(e)
below relating to his agreements and benefits. The Holding Company and Cohoes
agree that the Merger shall constitute a "Change in Control" and that the
Effective Time shall be the "Date of Termination" as such terms are defined in
the employment agreements and change in control severance agreements. In
addition, the parties agree to cooperate in amending the SFS SERP prior to the
Effective Time in order to establish a rabbi trust, with it being understood
that such trust shall not result in any increase in the amount of benefits
payable under the SFS SERP.
(d) In the sole discretion of the Holding Company or a Holding Company
Subsidiary, as applicable, payments made by it in full and complete satisfaction
of obligations of SFS or the Bank under any SFS Employee Plan or under any
agreement referred to in Disclosure Schedule 5.11(d) hereto shall be subject to
the recipient's delivery to the Holding Company or a Holding Company Subsidiary,
as applicable, of (i) a written acknowledgment signed by such recipient that the
payment or payments and benefits to be made to him or her is in full and
complete satisfaction of all liabilities and obligations thereunder of SFS, the
Bank, the Holding Company or any Holding Company Subsidiary, and each of their
respective affiliates, directors, officers, employees and agents, and (ii) a
release by such recipient of all such parties from further liability in
connection with the particular SFS Employee Plan or agreement, as applicable.
43
(e) Neither the Holding Company nor any Holding Company Subsidiary
shall become a party to the SFS ESOP within the meaning of Section 13.2 of the
SFS ESOP. The current administrator of the SFS ESOP, or another administrator
selected by SFS, shall continue to administer the SFS ESOP subsequent to the
Effective Time, and the current Trustee of the SFS ESOP, or such other
trustee(s) selected by SFS or the administrators, shall continue to be the
Trustee subsequent to the Effective Time. The Trustee shall make payments to the
persons entitled thereto in accordance with the terms of the SFS ESOP. The
Holding Company and Cohoes agree not to amend the SFS ESOP subsequent to the
Effective Time in any manner that would (i) alter or delay the automatic
termination provisions of the SFS ESOP, (ii) change the payment provisions
triggered by an automatic termination of the SFS ESOP, or (iii) change or expand
the class of persons entitled to receive benefits under the SFS ESOP.
(f) The Bank 401(k) shall be terminated at or prior to the Effective
Time in accordance with applicable law and in a manner that will not result in
the imposition of any liability or responsibility upon the Holding Company or
any of its Subsidiaries and will not impede the Merger from qualifying for
"pooling of interests" accounting treatment or the delivery of the Pooling
Letters.
(g) The SFS Defined Benefit Plan shall be amended to provide for a lump
sum payment option and shall be terminated at or prior to the Effective Time in
accordance with applicable law and in a manner that will not result in the
imposition of any liability or responsibility upon the Holding Company or any of
its Subsidiaries and will not impede the Merger from qualifying for "pooling of
interests" accounting treatment or the delivery of the Pooling Letters.
5.12 Bank Merger
Cohoes, the Holding Company and SFS shall take, and SFS shall cause the
Bank to take, all necessary and appropriate actions, including causing the Bank
and Cohoes to enter into a merger agreement (the "Bank Merger Agreement"), to
cause the Bank to merge with and into Cohoes (the "Bank Merger") immediately
after the Effective Time, or at such other time thereafter as may be determined
by the Holding Company and Cohoes in their sole discretion, in accordance with
the requirements of all applicable laws of the United States and the State of
New York and regulations of the OTS and the Department thereunder. Cohoes shall
be the surviving corporation in the Bank Merger (the "Surviving Bank"), and
shall continue its corporate existence under the laws of the State of New York
as a wholly-owned subsidiary of the Holding Company. The name of the Surviving
Bank shall be determined by the Board of Directors of Cohoes. The directors and
executive officers of the Surviving Bank upon consummation of the Bank Merger
shall be the directors and executive officers of Cohoes immediately prior to the
consummation of the Bank Merger, except as provided in Section 5.10 of this
Agreement. Upon consummation of the Bank Merger, the separate corporate
existence of the Bank shall cease.
5.13 Organization of the Holding Company
Prior to the filing of the Form S-1, Cohoes shall cause the Holding
Company to be organized under the DGCL. Following the organization of the
Holding Company and prior to the filing of the Form S-1, the Board of Directors
of the Holding Company shall approve this Agreement and the
44
transactions contemplated hereby, and Cohoes shall cause the Holding Company to
execute and deliver an appropriate instrument of accession to this Agreement,
whereupon the Holding Company shall become a party to, and be bound by, this
Agreement.
5.14 Agreements
(a) SFS shall use its reasonable best efforts to cause each person who
is an SFS Affiliate to execute and deliver to the Holding Company within 60 days
of the date hereof a Shareholder Agreement in the form of Exhibit A-1 hereto.
(b) Cohoes shall use its reasonable best efforts to cause each person
who is an Cohoes Affiliate to execute and deliver to SFS within 60 days of the
date hereof a Shareholder Agreement in the form of Exhibit A-2 hereof.
(c) As a condition to Cohoes and the Holding Company entering into this
Agreement, ▇▇. ▇▇▇▇▇▇▇▇▇ shall have executed and delivered to Cohoes as of the
date hereof a Non-Competition Agreement in the form of Exhibit B hereto.
5.15 Pooling Treatment
(a) None of Cohoes, Holding Company, SFS or Bank will knowingly take
any action that would prevent or impede the Merger from qualifying for "pooling
of interests" accounting treatment or the delivery of the Pooling Letters.
(b) To enable the Holding Company Merger to qualify for "pooling of
interests" accounting treatment and the delivery of the Pooling Letters, SFS and
the Bank will use their best efforts to take such action (including entering
into such amendments to agreements under the SFS Option Plan and SFS Restricted
Stock Plan) as is necessary to
(i) after the stockholder and Depositor approvals contemplated
by Section 5.2 hereof and the regulatory approvals contemplated by Sections
6.1(b) and (d) hereof have been obtained (or such earlier time as SFS shall
agree) and prior to the Effective Time, SFS shall offer and sell for fair value
to individuals or entities unaffiliated with SFS and Cohoes such number of
shares of treasury stock held by SFS as shall be sufficient in the opinion of
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and KPMG to permit them to issue the Pooling Letters (the "SFS
Stock Issuance"). SFS and Cohoes shall cooperate with each other in connection
with the SFS Stock Issuance (including, without limitation, consulting with each
other regarding the retention of an underwriter and the fees to be paid to such
underwriter) and shall enter into such placement or underwriting agreements as
may be necessary or advisable in connection therewith;
(ii) as promptly as practicable after the date hereof, waive
features of SFS Options that allow such options to be converted into cash; and
(iii) as promptly as practicable after the date hereof,
provide evidence that no vesting of the SFS Options or SFS Restricted Stock
would be accelerated due to the Merger.
45
(c) Each of SFS and the Bank shall deliver to KPMG such certificates or
representations as KPMG may reasonably request to enable it to deliver the KPMG
Pooling Letter.
(d) Each of Cohoes and the Holding Company shall deliver to ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ such certificates or representations as ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ may reasonably
request to enable it to deliver the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Pooling Letter.
5.16 Integration of Policies
During the period from the date of this Agreement to the Effective
Time, SFS and the Bank shall, and shall cause their directors, officers and
employees to, and shall make all reasonable efforts to cause their respective
data processing service providers to, cooperate and assist Cohoes in connection
with an electronic and systematic conversion of all applicable data regarding
SFS to Cohoes's system of electronic data processing. In furtherance of the
foregoing, SFS shall make reasonable arrangements during normal business hours
to permit representatives of Cohoes to train SFS and Bank employees in Cohoes'
system of electronic data processing.
5.17 Disclosure Supplements
From time to time prior to the Effective Time, each party shall
promptly supplement or amend any materials Previously Disclosed and delivered to
the other party pursuant hereto 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 materials Previously Disclosed to
the other party or which is necessary to correct any information in such
materials which has been rendered materially inaccurate thereby; no such
supplement or amendment to such materials shall be deemed to have modified the
representations, warranties and covenants of the parties for the purpose of
determining whether the conditions set forth in Article VI hereof have been
satisfied.
5.18 Failure to Fulfill Conditions
In the event that either of the parties hereto determines that a
condition to its respective obligations to consummate the transactions
contemplated may not be fulfilled on or prior to the termination of this
Agreement, it will promptly notify the other party. Each party will promptly
inform the other party of any facts applicable to it that would be likely to
prevent or materially delay approval of the Merger, the Conversion or any of the
other transactions contemplated hereby by any Governmental Entity or third party
or which would otherwise prevent or materially delay consummation of such
transactions.
ARTICLE VI
CONDITIONS PRECEDENT
6.1 Conditions Precedent - Cohoes and SFS
The respective obligations of Cohoes and SFS to effect the Merger shall
be subject to satisfaction of the following conditions at or prior to the
Effective Time.
46
(a) All corporate action necessary to authorize the execution and
delivery of this Agreement and consummation of the Merger and the other
transactions contemplated hereby shall have been duly and validly taken by
Cohoes, the Holding Company, and SFS, including without limitation adoption of
this Agreement by the requisite vote of the shareholders of SFS.
(b) All approvals and consents from any Governmental Entity the
approval or consent of which is required for the consummation of the Merger and
the other transactions contemplated hereby shall have been received and all
statutory waiting periods in respect thereof shall have expired; and Cohoes, the
Holding Company, SFS and the Bank shall have procured all other approvals,
consents and waivers of each person (other than the Governmental Entities
referred to above) whose approval, consent or waiver is necessary to the
consummation of the Merger and the other transactions contemplated hereby and
the failure of which to obtain would have the effects set forth in the following
proviso clause; provided, however, that no approval or consent referred to in
this Section 6.1(b) shall be deemed to have been received if it shall include
any condition or requirement that, individually or in the aggregate, would so
materially reduce the economic or business benefits of the transactions
contemplated by this Agreement to Cohoes that had such condition or requirement
been known, Cohoes, in its reasonable judgment, would not have entered into this
Agreement.
(c) None of Cohoes, the Holding Company, SFS or the Bank shall be
subject to any statute, rule, regulation, injunction or other order or decree
which shall have been enacted, entered, promulgated or enforced by any
governmental or judicial authority which prohibits, restricts or makes illegal
consummation of the Merger or the other transactions contemplated hereby.
(d) The Form S-1 shall have become effective under the Securities Act,
and Cohoes shall have received all state securities laws or "blue sky" permits
and other authorizations or there shall be exemptions from registration
requirements necessary to issue the Holding Company Common Stock in connection
with the Merger, and neither the Form S-1 nor any such permit, authorization or
exemption shall be subject to a stop order or threatened stop order by the
Commission or any state securities authority.
(e) The shares of Holding Company Common Stock to be issued in
connection with the Merger and the Conversion shall have been approved for
listing on The Nasdaq Stock Market's National Market.
(f) Cohoes and SFS shall have received the written opinion of ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ to the effect that (i) for federal income tax purposes the Merger will
constitute a reorganization within the meaning of Section 368(a) of the Code;
(ii) no gain or loss will be recognized by the shareholders of SFS who receive
Holding Company Common Stock in exchange for their SFS Common Stock in the
Merger; (iii) the tax basis of a shareholder in the Holding Company Common Stock
received in the Merger in exchange for his or her SFS Common Stock will be the
same as the tax basis of SFS Common Stock surrendered in exchange therefor; and
(iv) the holding period of the shares of Holding Company Common Stock received
in the Merger will include the holding period of the shares of SFS Common Stock
surrendered therefor, provided that such SFS Common Stock was held as a capital
asset by such shareholder. Each such opinion shall be based on such written
47
representations from Cohoes, SFS and others as such independent public
accountants shall reasonably request as to factual matters.
(g) The Conversion shall have been consummated in accordance with the
Plan of Conversion and applicable laws and regulations.
(h) The Federal Stock Charter of the Bank shall have been amended to
delete Section 8A thereof.
6.2 Conditions Precedent - SFS
The obligations of SFS to effect the Merger shall be subject to
satisfaction of the following conditions at or prior to the Effective Time
unless waived by SFS pursuant to Section 7.4 hereof.
(a) The representations and warranties of Cohoes set forth in Article
IV hereof shall be true and correct in all material respects as of the date of
this Agreement and as of the Closing Date as though made on and as of the
Closing Date, or on the date when made in the case of a representation and
warranty which specifically relates to an earlier date. Notwithstanding the
preceding sentence, except for the representations and warranties contained in
Section 4.13, any inaccuracies in the representations and warranties of Cohoes
shall not prevent the satisfaction of the condition contained in this Section
6.2(a) unless the cumulative effect of all such inaccuracies, taken in the
aggregate, represent a Material Adverse Effect on Cohoes. In applying the
preceding sentence, the determination of whether a representation and warranty
of Cohoes is inaccurate shall be made without regard to any language in Article
IV which would otherwise qualify such representation and warranty individually
by reference to materiality or a Material Adverse Effect.
(b) Cohoes shall have performed in all material respects all
obligations and complied with all covenants required to be performed and
complied with by it pursuant to this Agreement on or prior to the Effective
Time.
(c) Cohoes shall have delivered to SFS a certificate, dated the date of
the Closing and signed by its President and Chief Executive Officer and by its
Chief Financial Officer, to the effect that the conditions set forth in Sections
6.2(a) and 6.2(b) have been satisfied.
(d) No proceeding initiated by any Governmental Entity seeking an
order, injunction or decree issued by any court or agency of competent
jurisdiction or other legal restraint or prohibition preventing the consummation
of the Merger or the other transactions contemplated hereby shall be pending.
(e) Cohoes shall have furnished SFS with such certificates of its
respective officers or others and such other documents to evidence fulfillment
of the conditions set forth in Sections 6.1 and 6.2 as such conditions relate to
Cohoes as SFS may reasonably request.
(f) SFS shall have received a letter from KPMG, SFS's independent
certified public accountants, dated as of the Effective Time, to the effect
that, based on its review of this Agreement
48
and the facts and circumstances then known to it, the Merger shall be accounted
for as a pooling-of-interests under GAAP (the "KPMG Pooling Letter").
6.3 Conditions Precedent - Cohoes
The obligations of Cohoes to effect the Merger shall be subject to
satisfaction of the following conditions at or prior to the Effective Time
unless waived by Cohoes pursuant to Section 7.4 hereof.
(a) The representations and warranties of SFS set forth in Article III
hereof shall be true and correct in all material respects as of the date of this
Agreement and as of the Closing Date as though made on and as of the Closing
Date, or on the date when made in the case of a representation and warranty
which specifically relates to an earlier date. Notwithstanding the preceding
sentence, except for the representations and warranties contained in the second
and fourth sentences of Section 3.1 and in Section 3.13, any inaccuracies in the
representations and warranties of SFS shall not prevent the satisfaction of the
condition contained in this Section 6.3(a) unless the cumulative effect of all
such inaccuracies, taken in the aggregate, represent a Material Adverse Effect
on SFS. In applying the preceding sentence, the determination of whether a
representation and warranty of SFS is inaccurate shall be made without regard to
any language in Article III which would otherwise qualify such representation
and warranty individually by reference to materiality or a Material Adverse
Effect.
(b) SFS shall have performed in all material respects all obligations
and covenants required to be performed by it pursuant to this Agreement on or
prior to the Effective Time.
(c) SFS shall have delivered to Cohoes a certificate, dated the date of
the Closing and signed by its President and Chief Executive Officer and by its
Chief Financial Officer, to the effect that the conditions set forth in Sections
6.3(a) and 6.3(b) have been satisfied.
(d) No proceeding initiated by any Governmental Entity seeking an
order, injunction or decree issued by any court or agency of competent
jurisdiction or other legal restraint or prohibition preventing the consummation
of the Merger or the other transactions contemplated hereby shall be pending.
(e) SFS shall have furnished Cohoes with such certificates of its
officers or others and such other documents to evidence fulfillment of the
conditions set forth in Sections 6.1 and 6.3 as such conditions relate to SFS as
Cohoes may reasonably request.
(f) The Holding Company shall have received a letter from ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, the Holding Company's independent certified public accountants, dated
as of the Effective Time, to the effect that, based on its review of this
Agreement and the facts and circumstances then known to it, the Merger shall be
accounted for as a pooling-of-interests under GAAP (the "▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Pooling
Letter," together with the KPMG Pooling Letter, the "Pooling Letters").
49
(g) Elias, Matz, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, L.L.P. shall have delivered to
▇▇▇▇▇▇▇ ▇▇▇▇ & Company, in its capacity as underwriter of Holding Company Common
Stock, an opinion with respect to such matters as ▇▇▇▇▇▇▇ ▇▇▇▇ & Company shall
reasonably require, subject to customary caveats, qualifications and
limitations.
ARTICLE VII
TERMINATION, WAIVER AND AMENDMENT
7.1 Termination
This Agreement may be terminated:
(a) at any time on or prior to the Effective Time, by the mutual
consent in writing of the parties hereto;
(b) at any time on or prior to the Effective Time, by Cohoes in writing
if SFS has, or by SFS in writing if Cohoes has, in any material respect,
breached any material covenant or undertaking contained herein or any
representation or warranty contained herein, in any case if such breach would
have a Material Adverse Effect on the party and has not been cured by the
earlier of 30 days after the date on which written notice of such breach is
given to the party committing such breach or the Effective Time;
(c) at any time, by either Cohoes or SFS in writing, (i) if any
application for prior approval of a Governmental Entity which is necessary to
consummate the Merger, the Conversion or the other transactions contemplated
hereby is denied or withdrawn at the request or recommendation of the
Governmental Entity which must grant such approval, unless within the 25- day
period following such denial or withdrawal a petition for rehearing or an
amended application has been filed with the applicable Governmental Entity,
provided, however, that no party shall have the right to terminate this
Agreement pursuant to this Section 7(c)(i) if such denial or request or
recommendation for withdrawal shall be due to the failure of the party seeking
to terminate this Agreement to perform or observe the covenants and agreements
of such party set forth herein, or (ii) if any Governmental Entity of competent
jurisdiction shall have issued a final nonappealable order enjoining or
otherwise prohibiting the consummation of the Merger, the Conversion or the
other transactions contemplated by this Agreement;
(d) at any time, by either Cohoes or SFS in writing, if (i) the
shareholders of SFS do not approve this Agreement after a vote taken thereon at
a meeting duly called for such purpose (or at any adjournment thereof) or (ii)
the Depositors of Cohoes do not approve the Plan of Conversion after a vote
taken thereon at a meeting duly called for such purpose (or at any adjournment
thereof), unless in either case the failure of such occurrence shall be due to
the failure of the party seeking to terminate to perform or observe in any
material respect its agreements set forth herein to be performed or observed by
such party at or before the Effective Time;
(e) by either Cohoes or SFS in writing if the Effective Time has not
occurred by the close of business on March 31, 1999 (provided that this right to
terminate shall not be available to Cohoes
50
until April 15, 1999 if as of March 31, 1999 all of the conditions precedent set
forth in Article VI have been satisfied or waived other than the condition
precedent set forth in Section 6.1(b) that all statutory waiting periods shall
have expired), provided that this right to terminate shall not be available to
any party whose failure to perform an obligation in breach of such party's
obligations under this Agreement has been the cause of, or resulted in, the
failure of the Merger to be consummated by such date; and
(f) by Cohoes in the event of a Purchase Event (as defined in Section
8.1 hereof).
For purposes of this Section 7.1, termination by Cohoes also shall be
deemed to be termination on behalf of the Holding Company.
7.2 Effect of Termination
In the event that this Agreement is terminated pursuant to Section 7.1
hereof, this Agreement shall become void and have no effect, except that (i) the
provisions relating to confidentiality set forth in Section 5.4(b) and expenses
and the termination fees set forth in Section 8.1, and this Section 7.2, shall
survive any such termination and (ii) a termination pursuant to Section 7.1(b),
(c), (d) or (e) shall not relieve the breaching party from liability for willful
breach of any covenant, undertaking, representation or warranty giving rise to
such termination.
7.3 Survival of Representations, Warranties and Covenants
All representations, warranties and covenants in this Agreement or in
any instrument delivered pursuant hereto or thereto shall expire on, and be
terminated and extinguished at, the Effective Time other than covenants that by
their terms are to be performed after the Effective Time (including without
limitation the covenants set forth in Sections 5.9, 5.10, 5.11 and 5.12 hereof),
provided that no such representations, warranties or covenants shall be deemed
to be terminated or extinguished so as to deprive the Holding Company, Cohoes or
SFS (or any director, officer or controlling person of either thereof) of any
defense at law or in equity which otherwise would be available against the
claims of any person, including, without limitation, any shareholder or former
shareholder of either Holding Company, Cohoes or SFS.
7.4 Waiver
Each party hereto by written instrument signed by an executive officer
of such party, may at any time (whether before or after approval of this
Agreement by the shareholders of SFS) extend the time for the performance of any
of the obligations or other acts of the other party hereto and may waive (i) any
inaccuracies of the other party in the representations or warranties contained
in this Agreement or any document delivered pursuant hereto, (ii) compliance
with any of the covenants, undertakings or agreements of the other party, (iii)
to the extent permitted by law, satisfaction of any of the conditions precedent
to its obligations contained herein or (iv) the performance by the other party
of any of its obligations set forth herein, provided that any such waiver
granted, or any amendment or supplement pursuant to Section 7.5 hereof executed
after shareholders of SFS have approved this Agreement shall not modify either
the amount or form of the consideration to be
51
provided hereby to the holders of SFS Common Stock upon consummation of the
Merger or otherwise materially adversely affect such shareholders without the
approval of the shareholders who would be so affected.
7.5 Amendment or Supplement
This Agreement may be amended or supplemented at any time by mutual
agreement of the parties hereto, subject to the proviso to Section 7.4 hereof.
Any such amendment or supplement must be in writing and authorized by or under
the direction of their respective Board of Directors and Board of Trustees.
ARTICLE VIII
MISCELLANEOUS
8.1 Expenses; Termination Fees
(a) Subject to Section 8.1(b), each party hereto shall bear and pay all
costs and expenses incurred by it in connection with the transactions
contemplated by this Agreement, including fees and expenses of its own financial
consultants, investment bankers, accountants and counsel, provided that
notwithstanding anything to the contrary contained in this Agreement, neither
Cohoes nor SFS shall be released from any liabilities or damages arising out of
its willful breach of any provision of this Agreement.
(b) Except as provided below, if this Agreement is terminated for any
reason, Cohoes shall pay to SFS within five days after such termination in
immediately available funds, the sum of $2,000,000 as an agreed-upon break up
fee; provided, however, that such break up fee shall not be payable by Cohoes to
SFS if any of the following shall occur: (i) this Agreement is properly
terminated by Cohoes pursuant to Section 7.1(b) or (f); (ii) this Agreement is
properly terminated by Cohoes or SFS pursuant to Section 7.1(c), (d)(ii) or (e);
(iii) SFS refuses to convene its shareholders' meeting to vote on this Agreement
or such shareholders' meeting is held and SFS shareholders do not approve this
Agreement by the required vote; (iv) this Agreement is terminated because the
closing condition set forth in Section 6.3(c) or (d) cannot be satisfied; or (v)
SFS exercises a right of termination prior to March 31, 1999. If this Agreement
is properly terminated by Cohoes or SFS pursuant to Section 7.1(d)(ii) or (e),
Cohoes shall pay to SFS within five days after such termination in immediately
available funds, the reasonable and verifiable expenses incurred by SFS in
connection with this Agreement. If either (i) this Agreement is properly
terminated by Cohoes or SFS pursuant to Section 7.1(c), or (ii) all of the
conditions precedent set forth in Article VI have been satisfied or waived other
than the conditions precedent set forth in Sections 6.2(f) and 6.3(f), and this
Agreement is properly terminated as a result of the failure of the conditions
precedent set forth in Sections 6.2(f) and 6.3(f) to be satisfied or waived
because of an action or omission by the Holding Company, Cohoes or a Cohoes
Affiliate, Cohoes shall pay to SFS within five days after such termination in
immediately available funds, the sum of $1,000,000 as an agreed-upon break-up
fee.
52
(c) SFS shall pay Cohoes, and Cohoes shall be entitled to payment of, a
fee (the "Fee") upon the occurrence of a Purchase Event (as defined herein) so
long as the Purchase Event occurs prior to a Fee Termination Event (as defined
herein). Such payment shall be made to Cohoes in immediately available funds
within five business days after the occurrence of a Purchase Event. The Fee
shall be equal to $2,000,000. A Fee Termination Event shall be the first to
occur of the following: (i) the Effective Time, (ii) termination of this
Agreement in accordance with the terms hereof prior to the occurrence of a
Purchase Event (other than a termination of this Agreement by Cohoes pursuant to
Section 7.1(b) hereof as a result of a willful breach of any representation,
warranty, covenant or agreement of SFS or the Bank or pursuant to Section 7.1(f)
as a result of a Purchase Event) or (iii) 12 months following a termination of
this Agreement by Cohoes pursuant to Section 7.1(b) hereof unless a Purchase
Event shall have occurred prior thereto.
(d) The term "Purchase Event" shall mean any of the following events or
transactions occurring after the date hereof:
(i) SFS or the Bank, without having received Cohoes prior
written consent, shall have entered into an agreement to engage in an
Acquisition Transaction (as defined below) with any person (the term
"person" for purposes of this Agreement having the meaning assigned
thereto in Sections 3(a)(9) and 13(d)(3) of the Exchange Act and the
rules and regulations thereunder) other than Cohoes or any affiliate of
Cohoes (the term "affiliate" for purposes of this Agreement having the
meaning assigned thereto in Rule 405 under the Securities Act) or the
Board of Directors of SFS shall have recommended that the shareholders
of SFS approve or accept any Acquisition Transaction with any person
other than Cohoes or any affiliate of Cohoes. For purposes of this
Agreement, "Acquisition Transaction" shall mean (x) a merger or
consolidation, or any similar transaction, involving SFS or the Bank,
(y) a purchase, lease or other acquisition of all or substantially all
of the assets of SFS or the Bank, or (z) a purchase or other
acquisition (including by way of merger, consolidation, share exchange
or otherwise) of securities representing 25% or more of the voting
power of SFS or the Bank; provided that the term "Acquisition
Transaction" does not include any internal merger or consolidation
involving only SFS and/or any Subsidiary including the Bank; or
(ii) After a bona fide proposal is made by any person other
than Cohoes or any affiliate of Cohoes to SFS or its shareholders to
engage in an Acquisition Transaction, (A) SFS or the Bank shall have
breached any covenant or obligation contained in this Agreement and
such breach would entitle Cohoes to terminate this Agreement or (B) the
holders of SFS Common Stock shall not have approved this Agreement at
the meeting of such shareholders held for the purpose of voting on this
Agreement or (C) the meeting of the holders of SFS Common Stock to
approve this Agreement shall not have been held or shall have been
canceled prior to termination of this Agreement or (D) the Board of
Directors of SFS shall have withdrawn or modified in a manner adverse
to Cohoes the recommendation of the Board of Directors of SFS to the
holders of SFS Common Stock with respect to this Agreement.
53
If more than one of the transactions giving rise to a Purchase Event
under this Section is undertaken or effected, then all such transactions shall
give rise to only one Purchase Event.
(e) SFS shall give written notice to Cohoes within 24 hours of the
occurrence of a Purchase Event known to SFS; however, the giving of such notice
by SFS shall not be a condition to the right of Cohoes to obtain the Fee.
8.2 Entire Agreement
This Agreement contains the entire agreement among the parties with
respect to the transactions contemplated hereby and supersedes all prior
arrangements or understandings with respect thereto, written or oral, other than
documents referred to herein and therein. The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the parties hereto
and thereto and their respective successors. Nothing in this Agreement,
expressed or implied, is intended to confer upon any party, other than the
parties hereto, and their respective successors, any rights, remedies,
obligations or liabilities other than as set forth in Sections 5.9, 5.10 and
5.11 hereof.
8.3 No Assignment
None of the parties hereto may assign any of its rights or obligations
under this Agreement to any other person.
8.4 Notices
All notices or other communications which are required or permitted
hereunder shall be in writing and sufficient if delivered personally, telecopied
(with confirmation) or sent by overnight mail service or by registered or
certified mail (return receipt requested), postage prepaid, addressed as
follows:
If to Cohoes:
Cohoes Savings Bank
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
President and Chief Executive Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a required copy to:
Silver, ▇▇▇▇▇▇▇▇ & Taff, L.L.P.
▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, P.C.
▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, P.C.
54
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to SFS:
SFS Bancorp, Inc.
▇▇▇-▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
President
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a required copy to:
Elias, Matz, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
8.5 Alternative Structure
Notwithstanding any provision of this Agreement to the contrary, Cohoes
may, with the written consent of SFS, which shall not be unreasonably withheld,
elect, subject to the filing of all necessary applications and the receipt of
all required regulatory approvals, to modify the structure of the acquisition of
SFS set forth herein, provided that (i) the federal income tax consequences of
any transactions created by such modification shall not be other than those set
forth in Section 6.1(f) hereof, (ii) consideration to be paid to the holders of
SFS Common Stock is not thereby changed in kind or reduced in amount as a result
of such modification and (iii) such modification will not materially delay or
jeopardize receipt of any required regulatory approvals or any other condition
to the obligations of Cohoes set forth in Sections 6.1 and 6.3 hereof.
8.6 Interpretation
The captions contained in this Agreement are for reference purposes
only and are not part of this Agreement.
8.7 Counterparts
This Agreement may be executed in any number of counterparts, and each
such counterpart shall be deemed to be an original instrument, but all such
counterparts together shall constitute but one agreement.
55
8.8 Governing Law
This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware applicable to agreements made and entirely to
be performed within such jurisdiction.
56
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in counterparts by their duly authorized officers and their corporate
seal to be hereunto affixed and attested by their officers thereunto duly
authorized, all as of the day and year first above written.
SFS BANCORP, INC.
Attest:
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------- -----------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Secretary President
COHOES SAVINGS BANK
Attest:
/s/ ▇▇▇▇▇▇▇ ▇▇▇ By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------- ------------------
▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Secretary President
57
Disclosure Schedule 5.11(d)
The payments and benefits to be provided to the officers of SFS set
forth below are based upon various assumptions, including the following: (1)
that the Effective Time is after December 17, 1998 but on or before December 31,
1998; and (2) that the monthly discount rate published by the IRS does not
change between now and the Effective Time, although the parties acknowledge that
it changes monthly.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
(i) A lump sum payment pursuant to the first paragraph of
Section 7(g) of the Employment Agreement between SFS and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
dated December 17, 1997 (the "▇▇▇▇▇▇▇▇▇ Agreement") due to events of involuntary
termination (as defined therein), in the amount of $534,159.
(ii) Monthly payments to ▇▇▇▇▇▇▇▇▇ over the remaining term of
the ▇▇▇▇▇▇▇▇▇ Agreement pursuant to Section 7(d) of the ▇▇▇▇▇▇▇▇▇ Agreement,
which payments are currently estimated to aggregate $626,262, before being
discounted for present value purposes.
(iii) A lump sum payment pursuant to the second paragraph of
Section 7(g) of the ▇▇▇▇▇▇▇▇▇ Agreement for a Gross Up Payment (as defined
therein), which is currently estimated to equal $795,241 based on the above
assumptions, provided that the parties acknowledge that the actual amount of the
Gross Up Payment may vary from the estimated amount herein based upon factors
arising after the date hereof.
(iv) At the cost of the Holding Company or a Holding Company
Subsidiary, for ▇▇▇▇▇▇▇▇▇ and his spouse, for their respective lifetimes,
continued group life insurance, hospitalization, medical, dental, prescription
drug, and other health benefits coverage, at least equivalent to the coverage
provided to them by SFS or the Bank on December 17, 1997 (and any acquiror of
the Holding Company shall be required to honor such entitlement).
(v) The benefits due ▇▇▇▇▇▇▇▇▇ under the Bank SERP.
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
(i) The payments set forth in Section 7(d) of the Employment
Agreement between ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and the Bank dated December 13, 1995 (the
"Ammian Agreement") due to an event of Involuntary Termination in connection
with a change in control (as defined therein), in the amount of $177,918.
(ii) At the cost of the Holding Company or a Holding Company
Subsidiary, such continued group life insurance and health benefits as are
provided in the Ammian Agreement (and any acquiror of the Holding Company shall
be required to honor such entitlement).
(iii) Any benefits applicable to Ammian under the SFS Change
of Control Benefit Plan.
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
(i) The payments set forth in Section 7(d) of the Employment
Agreement between ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ and the Bank dated December 17, 1997 (the
"▇▇▇▇▇▇▇▇▇▇ Agreement") due to an event of Involuntary Termination in connection
with a change in control (as defined therein), in the amount of $163,934.
(ii) At the cost of the Holding Company or a Holding Company
Subsidiary, such continued group life insurance and health benefits as are
provided in the ▇▇▇▇▇▇▇▇▇▇ Agreement (and any acquiror of the Holding Company
shall be required to honor such entitlement).
(iii) Any benefits applicable to ▇▇▇▇▇▇▇▇▇▇ under the SFS
Change of Control Benefit Plan.
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
(i) The payments set forth in Section 3(a) of the Change of
Control Severance Agreement between ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ and the Bank dated
December 13, 1995 (the "Krywinski Agreement") due to a change of control
followed by the involuntary termination of employment, other than for cause (as
defined therein), in the amount of $55,282.
(ii) At the cost of the Holding Company or a Holding Company
Subsidiary, such continued group life insurance and health benefits as are
provided in the Krywinski Agreement (and any acquiror of the Holding Company
shall be required to honor such entitlement).
(iii) Any benefits applicable to Krywinski under the SFS
Change of Control Benefit Plan.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
(i) The payments set forth in Section 3(a) of the Change in
Control Severance Agreement between ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and the Bank dated December
13, 1995 (the "Pezzula Agreement) due to a change in control followed by the
involuntary termination of employment, other than for cause (as defined
therein), in the amount of $51,509.
(ii) At the cost of the Holding Company or a Holding Company
Subsidiary, such continued group life insurance and health benefits as are
provided in the Pezzula Agreement (and any acquiror of the Holding Company shall
be required to honor such entitlement).
(iii) Any benefits applicable to Pezzula under the SFS Change
of Control Benefit Plan.
EXHIBIT A-1
_______________ __, 1998
Cohoes Savings Bank
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Cohoes Savings Bank ("Cohoes") and SFS Bancorp, Inc. ("SFS") have
entered into an agreement dated July 31, 1998 ("Agreement"), pursuant to which,
subject to the terms and conditions set forth therein, (a) SFS will merge with
and into a newly-organized holding company of Cohoes (the "Holding Company"),
with the Holding Company surviving the merger, and (b) stockholders of SFS will
receive common stock of the Holding Company in exchange for common stock of SFS
outstanding on the closing date (the foregoing, collectively, referred to herein
as the "Merger").
The Agreement requires that SFS use its reasonable best efforts to
cause the undersigned to execute and deliver to Cohoes this Letter Agreement.
In consideration of the foregoing, each of the undersigned hereby
irrevocably:
(a) Agrees to be present (in person or by proxy) at all meetings of
stockholders of SFS called to vote for adoption of the Agreement and the Merger
so that all shares of common stock of SFS then owned by the undersigned will be
counted for the purpose of determining the presence of a quorum at such meetings
and to vote or cause to be voted all such shares in favor of approval and
adoption of the Agreement and the transactions contemplated thereby (including
any amendments or modifications of the terms thereof approved by the Board of
Directors of SFS);
(b) Agrees not to vote or execute any written consent to rescind or
amend in any manner any prior vote or written consent, as a stockholder of SFS,
to approve or adopt the Agreement;
(c) Agrees to use reasonable best efforts to cause the Merger to be
consummated;
(d) Agrees not to offer, sell, transfer or otherwise dispose of any
shares of SFS common stock during the period beginning on the date hereof and
ending 30 days prior to consummation of the Merger, without first giving Cohoes
at least three business days notice of the proposed transfer (the "Notice
Period"). If Cohoes is advised in writing by its independent auditors that the
proposed transfer may interfere with the pooling of interests treatment of the
Merger, Cohoes shall provide the
Cohoes Savings Bank
________________, 1998
Page 2
undersigned with a copy of such writing prior to the end of the Notice Period,
in which case the proposed transfer shall not be made.
(e) Agrees not to offer, sell, transfer or otherwise dispose of any
shares of common stock of the Holding Company received in the Merger, except (i)
at such time as a registration statement under the Securities Act of 1933, as
amended ("Securities Act") covering sales of such Holding Company common stock
is effective and a prospectus is made available under the Securities Act, (ii)
within the limits, and in accordance with the applicable provisions of, Rule
145(d) under the Securities Act, or (iii) in a transaction which, in the opinion
of counsel satisfactory to Cohoes or as described in a "no-action" or
interpretive letter from the staff of the Securities and Exchange Commission
("SEC"), is not required to be registered under the Securities Act; and
acknowledges and agrees that the Holding Company is under no obligation to
register the sale, transfer or other disposition of Holding Company common stock
by the undersigned or on behalf of the undersigned, or to take any other action
necessary to make an exemption from registration available;
(f) Notwithstanding the foregoing, agrees not to sell, or in any other
way reduce the risk of the undersigned relative to, any shares of common stock
of SFS or of common stock of the Holding Company, during the period commencing
30 days prior to the effective date of the Merger and ending on the date on
which financial results covering at least 30 days of post-Merger combined
operations of the Holding Company and SFS have been published within the meaning
of Section 201.01 of the SEC's Codification of Financial Reporting Policies,
provided, however, that excluded from the foregoing undertaking shall be such
sales, pledges, transfers or other dispositions of shares of SFS common stock or
shares of Holding Company common stock which, in Cohoes's sole judgment, are
individually and in the aggregate de minimis within the meaning of Topic 2-E of
the Staff Accounting Bulletin Series of the SEC;
(g) Agrees that neither SFS nor Cohoes shall be bound by any attempted
sale of any shares of SFS common stock or Holding Company common stock,
respectively, and SFS's and the Holding Company's transfer agents shall be given
appropriate stop transfer orders and shall not be required to register any such
attempted sale, unless the sale has been effected in compliance with the terms
of this Letter Agreement; and further agrees that the certificate representing
shares of Holding Company common stock to be owned by the undersigned may be
endorsed with a restrictive legend consistent with the terms of this Letter
Agreement;
(h) Acknowledges and agrees that the provisions of subparagraphs (d),
(e), (f) and (g) hereof also apply to shares of SFS common stock or Holding
Company common stock owned or to be owned by (i) the undersigned's spouse, (ii)
any of the undersigned's relatives or relatives of the undersigned's spouse
occupying the undersigned's home, (iii) any trust or estate in which the
undersigned, the undersigned's spouse, or any such relative owns at least a 10%
beneficial interest or of which any of them serves as trustee, executor or in
any similar capacity, and (iv) any corporation or other organization in which
the undersigned, any affiliate of the undersigned, the
Cohoes Savings Bank
________________, 1998
Page 3
undersigned's spouse, or any such relative owns at least 10% of any class of
equity securities or of the equity interest;
(i) Represents that the undersigned has no plan or intention to sell,
exchange, or otherwise dispose of any shares of common stock of the Holding
Company prior to expiration of the time period referred to in subparagraph (f)
hereof; and
(j) Represents that the undersigned has the capacity to enter into this
Letter Agreement and that it is a valid and binding obligation enforceable
against the undersigned in accordance with its terms, subject to bankruptcy,
insolvency and other laws affecting creditors' rights and general equitable
principles.
------------------------------
It is understood and agreed that the provisions of subparagraphs (a),
(b) and (c) of this Letter Agreement relate solely to the capacity of the
undersigned as a shareholder or other beneficial owner of shares of SFS common
stock and is not in any way intended to affect the exercise by the undersigned
of the undersigned's responsibilities as a director or officer of SFS. It is
further understood and agreed that such subparagraphs of this Letter Agreement
are not in any way intended to affect the exercise by the undersigned of any
fiduciary responsibility which the undersigned may have in respect of any shares
of SFS common stock held by the undersigned as of the date hereof.
------------------------------
This Letter Agreement may be executed in two or more counterparts, each
of which shall be deemed to constitute an original, but all of which together
shall constitute one and the same Letter Agreement.
------------------------------
This Letter Agreement shall terminate concurrently with any termination
of the Agreement in accordance with its terms.
------------------------------
Cohoes Savings Bank
________________, 1998
Page 4
The undersigned intend to be legally bound hereby.
Sincerely,
------------------------------
------------------------------
------------------------------
------------------------------
------------------------------
------------------------------
------------------------------
------------------------------
------------------------------
EXHIBIT A-2
_______________ __, 1998
SFS Bancorp, Inc.
▇▇▇-▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Cohoes Savings Bank ("Cohoes") and SFS Bancorp, Inc.("SFS") have
entered into an agreement dated July 31, 1998 ("Agreement"), pursuant to which,
subject to the terms and conditions set forth therein, (a) SFS will merge with
and into a newly-organized holding company of Cohoes (the "Holding Company"),
with the Holding Company surviving the merger, and (b) stockholders of SFS will
receive common stock of the Holding Company in exchange for common stock of SFS
outstanding on the closing date (the foregoing, collectively, referred to herein
as the "Merger").
The Agreement requires that Cohoes use its reasonable best efforts to
cause the undersigned to execute and deliver to SFS this Letter Agreement.
In consideration of the foregoing, each of the undersigned hereby
irrevocably:
(a) Agrees to be present (in person or by proxy) at all meetings of
depositors of Cohoes called to vote for adoption of the Plan of Conversion with
Cohoes so that all votes which the undersigned is entitled to cast will be
counted for the purpose of determining the presence of a quorum at such meetings
and to vote or cause to be voted all of the undersigned's votes in favor of
approval and adoption of the Plan of Conversion and the transactions
contemplated thereby (including any amendments or modifications of the terms
thereof approved by the Board of Trustees of Cohoes);
(b) Agrees not to vote or execute any written consent to rescind or
amend in any manner any prior vote or written consent, as a depositor of Cohoes,
to approve or adopt the Plan of Conversion;
(c) Agrees to use reasonable best efforts to cause the Merger to be
consummated;
(d) Agrees not to offer, sell, transfer or otherwise dispose of any
shares of SFS common stock during the period beginning on the date hereof and
ending 30 days prior to consummation of
SFS Bancorp, Inc.
________________, 1998
Page 2
the Merger, without first giving Cohoes at least three business days notice of
the proposed transfer (the "Notice Period"). If Cohoes is advised in writing by
its independent auditors that the proposed transfer may interfere with the
pooling of interests treatment of the Merger, Cohoes shall provide the
undersigned with a copy of such writing prior to the end of the Notice Period,
in which case the proposed transfer shall not be made.
(e) Notwithstanding the foregoing, agrees not to sell, or in any other
way reduce the risk of the undersigned relative to, any shares of common stock
of SFS or of common stock of the Holding Company, during the period commencing
30 days prior to the effective date of the Merger and ending on the date on
which financial results covering at least 30 days of post-Merger combined
operations of the Holding Company and SFS have been published within the meaning
of Section 201.01 of the Codification of Financial Reporting Policies of the
Securities and Exchange Commission, provided, however, that excluded from the
foregoing undertaking shall be such sales, pledges, transfers or other
dispositions of shares of SFS common stock or shares of Holding Company common
stock which, in Cohoes's sole judgment, are individually and in the aggregate de
minimis within the meaning of Topic 2-E of the Staff Accounting Bulletin Series
of the SEC;
(f) Agrees that neither SFS nor Cohoes shall be bound by any attempted
sale of any shares of SFS common stock or Holding Company common stock,
respectively, and SFS's and the Holding Company's transfer agents shall be given
appropriate stop transfer orders and shall not be required to register any such
attempted sale, unless the sale has been effected in compliance with the terms
of this Letter Agreement; and further agrees that the certificate representing
shares of Holding Company common stock to be owned by the undersigned may be
endorsed with a restrictive legend consistent with the terms of this Letter
Agreement;
(g) Acknowledges and agrees that the provisions of subparagraphs (d),
(e) and (f) hereof also apply to shares of SFS common stock or Holding Company
common stock owned or to be owned by (i) the undersigned's spouse, (ii) any of
the undersigned's relatives or relatives of the undersigned's spouse occupying
the undersigned's home, (iii) any trust or estate in which the undersigned, the
undersigned's spouse, or any such relative owns at least a 10% beneficial
interest or of which any of them serves as trustee, executor or in any similar
capacity, and (iv) any corporation or other organization in which the
undersigned, any affiliate of the undersigned, the undersigned's spouse, or any
such relative owns at least 10% of any class of equity securities or of the
equity interest;
(h) Represents that the undersigned has no plan or intention to sell,
exchange, or otherwise dispose of any shares of common stock of the Holding
Company prior to expiration of the time period referred to in subparagraph (e)
hereof; and
(i) Represents that the undersigned has the capacity to enter into this
Letter Agreement and that it is a valid and binding obligation enforceable
against the undersigned in accordance with
\SFS Bancorp, Inc.
________________, 1998
Page 3
its terms, subject to bankruptcy, insolvency and other laws affecting creditors'
rights and general equitable principles.
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It is understood and agreed that the provisions of subparagraphs (a),
(b) and (c) of this Letter Agreement relate solely to the capacity of the
undersigned as a depositor and is not in any way intended to affect the exercise
by the undersigned of the undersigned's responsibilities as a trustee or officer
of Cohoes.
------------------------------
This Letter Agreement may be executed in two or more counterparts, each
of which shall be deemed to constitute an original, but all of which together
shall constitute one and the same Letter Agreement.
------------------------------
This Letter Agreement shall terminate concurrently with any termination
of the Agreement in accordance with its terms.
------------------------------
The undersigned intend to be legally bound hereby.
Sincerely,
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EXHIBIT B
NON-COMPETITION AGREEMENT
This NON-COMPETITION AGREEMENT (the "Agreement") made and entered into
this 31st day of July, 1998, by and among ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇▇▇") and
Cohoes Savings Bank, a savings bank chartered under the laws of the State of New
York ("Cohoes ").
WITNESSETH THAT:
WHEREAS, the Agreement and Plan of Merger (the "Plan") dated as of July
31, 1998 between Cohoes and SFS Bancorp, Inc, a Delaware corporation ("SFS")
provides that SFS will be merged into a holding company (the "Holding Company")
to be created by Cohoes and that Schenectady Federal Savings Bank (the "Bank")
will be merged into Cohoes (the "Merger");
WHEREAS, ▇▇▇▇▇▇▇▇▇ is Chairman of the Board, President and Chief
Executive Officer of each of SFS and the Bank;
WHEREAS, the personal involvement of ▇▇▇▇▇▇▇▇▇ with SFS and the Bank
has added value to SFS and the Bank;
WHEREAS, this Agreement is an essential component of the Plan necessary
to achieve the objectives of the transactions described in the Plan, and Section
5.14 of the Plan contemplates that ▇▇▇▇▇▇▇▇▇ will enter into this Agreement as a
condition to the Holding Company and Cohoes entering into the Plan;
NOW, THEREFORE, in consideration of the promises and mutual covenants
and agreements hereinafter set forth, the parties agree as follows:
1. Consideration. The Holding Company shall pay to ▇▇▇▇▇▇▇▇▇ the amount
of $175,000 upon the consummation of the Merger.
2. Non-Competition.
(a) ▇▇▇▇▇▇▇▇▇ hereby agrees that from the Effective Time (as defined in
the Plan) until December 31, 2001, ▇▇▇▇▇▇▇▇▇ will not (i) engage in the banking
business other than on behalf of the Holding Company or Cohoes or their
affiliates within the Market Area (as hereinafter defined), (ii) directly or
indirectly own, manage, operate, control, be employed by, or provide management
or consulting service in any capacity to any firm, corporation, or other entity
(other than the Holding Company or Cohoes or their affiliates) engaged in the
banking business in the Market Area, or (iii) directly or indirectly solicit or
otherwise intentionally cause any employee, officer, or member of the respective
Board of Directors of the Holding Company or Cohoes or any of their affiliates
to
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engage in any action prohibited under (i) or (ii) of this section 2(a); provided
that the ownership by ▇▇▇▇▇▇▇▇▇ as an investor of not more than five percent of
the outstanding shares of stock of any corporation whose stock is listed for
trading on any securities exchange or is quoted on the automated quotation
system of the National Association of Securities Dealers, Inc., or the shares of
any investment company as defined in section 3 of the Investment Company Act of
1940, as amended, shall not in itself constitute a violation of ▇▇▇▇▇▇▇▇▇'▇
obligations under this section 2(a).
(b) ▇▇▇▇▇▇▇▇▇ acknowledges and agrees that irreparable injury will
result to Cohoes in the event of a breach of any of the provisions of this
section 2 (the "Designated Provisions") and that Cohoes will have no adequate
remedy at law with respect thereto. Accordingly, in the event of a material
breach of any Designated Provision, and in addition to any other legal or
equitable remedy Cohoes may have, Cohoes shall be entitled to the entry of a
preliminary and permanent injunction in Albany County, New York, Schenectady
County, New York, or elsewhere in the Market Area, to restrain the violation or
breach thereof by ▇▇▇▇▇▇▇▇▇ or any affiliates, agents, or any other persons
acting for or with ▇▇▇▇▇▇▇▇▇ in any capacity whatsoever, and ▇▇▇▇▇▇▇▇▇ submits
to the jurisdiction of such court in any such action.
(c) It is the desire and intent of the parties that the provisions of
this section 2 shall be enforced to the fullest extent permissible under the
laws and public policies applied in each jurisdiction in which enforcement is
sought. Accordingly, if any particular provision of this section 2 shall be
adjudicated to be invalid or unenforceable, such provision shall be deemed
amended to delete therefrom the portion thus adjudicated to be invalid or
unenforceable, such deletion to apply only with respect to the operation of such
provision in the particular jurisdiction in which such adjudication is made. In
addition, should any court determine that the provisions of this section 2 shall
be unenforceable with respect to scope, duration, or geographic area, such court
shall be empowered to substitute, to the extent enforceable, provisions similar
hereto or other provisions so as to provide to Cohoes , to the fullest extent
permitted by applicable law, the benefits intended by this section 2.
(d) As used herein, "Market Area" shall mean Albany, Saratoga,
Rensselaer and Schenectady Counties, New York.
3. Effectiveness. This Agreement shall be effective as of the Effective
Time (as defined in the Plan).
4. Notices. All notices, consents, waivers, or other communications
which are required or permitted hereunder shall be in writing and deemed to have
been duly given if delivered personally or by messenger, transmitted by telex or
telegram, by express courier, or sent registered or certified mail, return
receipt requested, postage prepaid. All communications shall be addressed to the
appropriate address of each party as follows:
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If to the Holding Company or Cohoes :
Cohoes Savings Bank
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
President and Chief Executive Officer
If to ▇▇▇▇▇▇▇▇▇:
▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
All such notices shall be deemed to have been given on the date delivered,
transmitted, or mailed in the manner provided above.
5. Assignment. Neither party may assign this Agreement or any rights or
obligations hereunder without the consent of the other party.
6. Governing Law. This Agreement shall be governed by, construed, and
enforced in accordance with the laws of the State of New York, without giving
effect to the principles of conflict of law thereof. The parties hereby
designate Cohoes County, New York, to be proper jurisdiction and venue for any
suit or action arising out of this Agreement. Each of the parties consents to
personal jurisdiction in such venue for such a proceeding and agrees that he or
it may be served with process in any action with respect to this Agreement or
the transactions contemplated thereby by certified or registered mail, return
receipt requested, or to its registered agent for service of process in the
state of New York. Each of the parties irrevocably and unconditionally waives
and agrees, to the fullest extent permitted by law, not to plead any objection
that it may now or hereafter have to the laying of venue or the convenience of
the forum of any action or claim with respect to the Agreement or the
transactions contemplated thereby brought in the courts aforesaid.
7. Entire Agreement. This Agreement constitutes the entire
understanding between Cohoes and ▇▇▇▇▇▇▇▇▇ relating to the subject matter
hereof. Any previous agreements or understandings between the parties hereto or
between ▇▇▇▇▇▇▇▇▇ and the Bank or any of its affiliates relating to the subject
matter hereof are superseded by this Agreement. Neither this Agreement nor any
provisions hereof can be modified, changed, discharged, or terminated except by
an instrument in writing signed by the party against whom any waiver, change,
discharge, or termination is sought.
-3-
8. Severability. If any provision or provisions of this Agreement shall
be held to be invalid, illegal, or unenforceable for any reason whatsoever:
(a) the validity, legality, and enforceability of the remaining
provisions of this Agreement (including, without limitation, each portion of any
section of this Agreement containing any such provision held to be invalid,
illegal, or unenforceable) shall not in any way be affected or impaired thereby;
and
(b) to the fullest extent possible, the provisions of this Agreement
(including, without limitation, each portion of any section of this Agreement
containing any such provisions held to be invalid, illegal, or unenforceable)
shall be construed so as to give effect to the intent manifested by the
provision held invalid, illegal, or unenforceable.
9. Arbitration. Subject to the right of each party to seek specific
performance (which right shall not be subject to arbitration), if a dispute
arises out of or is related to this Agreement, or the breach thereof, such
dispute shall be referred to arbitration in accordance with the Commercial
Arbitration Rules of the American Arbitration Association ("AAA"). A dispute
subject to the provisions of this section will exist if either party notifies
the other party in writing that a dispute subject to arbitration exists and
states, with reasonable specificity, the issue subject to arbitration (the
"Arbitration Notice"). The parties agree that, after the issuance of the
Arbitration Notice, the parties will try in good faith to resolve the dispute by
mediation in accordance with the Commercial Rules of Arbitration of AAA between
the date of the issuance of the Arbitration Notice and the date of the dispute
is set for arbitration. If the dispute is not settled by the date set for
arbitration, then any controversy or claim arising out of this Agreement or the
breach hereof shall be resolved by binding arbitration and judgment upon any
award rendered by arbitrator(s) may be entered in a court having jurisdiction.
Any person serving as a mediator or arbitrator much have at least ten years'
experience in resolving commercial disputes through arbitration. In the event
any claim or dispute involves an amount in excess of $100,000, either party may
request that the matter be heard by a panel of three arbitrators; otherwise all
matters subject to arbitration shall be heard and resolved by a single
arbitrator. The arbitrator shall have the same power to compel the attendance of
witnesses and to order the production of documents or other materials and to
enforce discovery as could be exercised by a United States District Court judge
sitting in any District Court in New York. In the event of any arbitration, each
party shall have a reasonable right to conduct discovery to the same extent
permitted by the Federal Rules of Civil Procedure, provided that such discovery
shall be concluded within ninety days after the date the matter is set for
arbitration. Any provision in this Agreement to the contrary notwithstanding,
this section shall be governed by the Federal Arbitration Act and the parties
have entered into this Agreement pursuant to such Act.
10. Costs of Litigation. In the event litigation is commenced to
enforce any of the provisions hereof, or to obtain declaratory relief in
connection with any of the provisions hereof, Cohoes shall reimburse ▇▇▇▇▇▇▇▇▇
in an amount not to exceed $40,000 for his third party costs and expenses,
including reasonable attorney's fees, in connection with the prosecution or
defense of such litigation. Such reimbursements shall be paid by Cohoes within
ten days of receipt by Cohoes
-4-
from ▇▇▇▇▇▇▇▇▇ of evidence of such costs and expenses. In the event that a court
of competent jurisdiction does not render a final judgement in favor of
▇▇▇▇▇▇▇▇▇, all reimbursements for costs and expenses paid to ▇▇▇▇▇▇▇▇▇ by Cohoes
hereunder shall be repaid by ▇▇▇▇▇▇▇▇▇ within ten days.
11. Affiliation. A company will be deemed to be "affiliated" with the
Holding Company, Cohoes , or the Bank according to the definition of "Affiliate"
set forth in Rule 12b-2 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as amended.
12. Headings. The section and subsection headings herein have been
inserted for convenience of reference only and shall in no way modify or
restrict any of the terms or provisions hereof.
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IN WITNESS WHEREOF, the parties hereto executed or caused this
Agreement to be executed as of the day and year first above written.
COHOES SAVINGS BANK
Attest: /s/ ▇▇▇▇▇ ▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Attest: /s/ ▇▇▇▇▇ ▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
