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Exhibit 99.2
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
TOMPKINS FINANCIAL CORPORATION,
TMP MERGECO, INC.,
AND
SLEEPY HOLLOW BANCORP, INC.
DATED AS OF NOVEMBER 9, 2007
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TABLE OF CONTENTS
ARTICLE I PLAN OF MERGER
.................................................. 1
1.1 Definitions
..................................................... 1
1.2 The Merger
...................................................... 7
1.3 Conversion of SHB Common Stock
.................................. 8
1.4 Surrender of SHB Common Stock Certificates
...................... 9
1.5 Preferred Stock
................................................. 10
1.6 The Bank Merger
................................................. 10
1.7 Structure
....................................................... 10
ARTICLE II REPRESENTATIONS AND WARRANTIES OF SHB
.......................... 10
2.1 Capital Structure of SHB
........................................ 10
2.2 Organization, Standing and Authority of SHB
..................... 11
2.3 Ownership of SHB Subsidiaries; Capital Structure of
SHB Subsidiaries .............................................
11
2.4 Organization, Standing and Authority of Sleepy Hollow Bank
...... 11
2.5 Authorized and Effective Agreement
.............................. 12
2.6 Regulatory Filings
.............................................. 13
2.7 Financials; Books and Records; Minute Books
..................... 13
2.8 Material Adverse Change
......................................... 13
2.9 Absence of Undisclosed Liabilities
.............................. 13
2.10 Properties
...................................................... 13
2.11 Loans
........................................................... 14
2.12 Allowance for Loan Losses
....................................... 14
2.13 Tax Matters
..................................................... 14
2.14 Employee Benefit Plans
.......................................... 15
2.15 Certain Contracts
............................................... 17
2.16 Legal Proceedings
............................................... 18
2.17 Compliance With Laws
............................................ 18
2.18 Labor Matters
................................................... 18
2.19 Brokers and Finders
............................................. 19
2.20 Insurance
....................................................... 19
2.21 Environmental Liability
......................................... 19
2.22 Administration of Trust Accounts
................................ 19
2.23 Intellectual Property
........................................... 20
2.24 Anti-Takeover Provisions
........................................ 20
2.25 Insider Interests
............................................... 20
2.26 Registration Obligations
........................................ 21
2.27 Derivative Transactions
......................................... 21
2.28 Internal Financial Controls
..................................... 21
2.29 Certain Bank Regulatory Matters
................................. 21
ARTICLE III REPRESENTATIONS AND WARRANTIES OF TFC
......................... 22
3.1 Capital Structure of TFC
........................................ 22
3.2 Organization, Standing and Authority of TFC
..................... 22
3.3 Ownership of TFC Subsidiaries; Capital Structure of
TFC Subsidiaries .............................................
22
3.4 Organization, Standing and Authority of TFC Subsidiaries
........ 23
3.5 Authorized and Effective Agreement
.............................. 23
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3.6 Compliance with Laws
............................................ 24
3.7 Regulatory Filings
.............................................. 24
3.8 Financials; Books and Records; Minute Books
..................... 24
3.9 Material Adverse Change
......................................... 25
3.10 Absence of Undisclosed Liabilities
.............................. 25
3.11 Properties
...................................................... 25
3.12 Tax Matters
..................................................... 26
3.13 Labor Matters
................................................... 27
3.14 Legal Proceedings
............................................... 27
3.15 Compliance With Laws
............................................ 27
3.16 Brokers and Finders
............................................. 28
3.17 Insurance
....................................................... 28
3.18 Insider Interests
............................................... 28
3.19 Internal Financial Controls
..................................... 28
3.20 Certain Bank Regulatory Matters
................................. 29
ARTICLE IV COVENANTS OF THE PARTIES
....................................... 29
4.1 Conduct of SHB Business
......................................... 29
4.2 Ossining and Palisade Branches
.................................. 32
4.3 Access; Confidentiality
......................................... 32
4.4 Regulatory Matters and Consents
................................. 33
4.5 Taking of Necessary Action
...................................... 33
4.6 Certain Agreements
.............................................. 34
4.7 Exclusivity
..................................................... 35
4.8 Core Deposits
................................................... 36
4.9 Subsequent Events
............................................... 36
4.10 Conduct of TFC Business
......................................... 36
4.11 Board and Committee Minutes
..................................... 36
4.12 Undertakings by TFC and SHB
..................................... 37
4.13 Employees of SHB and Sleepy Hollow Bank
......................... 38
4.14 Employee Benefits
............................................... 39
4.15 ESOP and 401(K) Plan
............................................ 40
4.16 Defined Benefit Pension Plan Termination
........................ 40
4.17 SHB CEO
......................................................... 41
4.18 Supplemental Indenture
.......................................... 41
4.19 Resignation
..................................................... 41
ARTICLE V CONDITIONS
...................................................... 41
5.1 Conditions to SHB Obligations under this Agreement
.............. 41
5.2 Conditions to TFC Obligations under this Agreement
.............. 42
ARTICLE VI TERMINATION, WAIVER AND AMENDMENT
.............................. 43
6.1 Termination
..................................................... 43
6.2 Effect of Termination
........................................... 44
6.3 Termination Fee
................................................. 44
ARTICLE VII MISCELLANEOUS
................................................. 44
7.1 Expenses
........................................................ 44
7.2 Non-Survival of Representations and Warranties
.................. 45
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7.3 Amendment, Extension and Waiver
................................. 45
7.4 Entire Agreement
................................................ 45
7.5 No Assignment
................................................... 45
7.6 Notices
......................................................... 45
7.7 Captions
........................................................ 46
7.8 Counterparts
.................................................... 46
7.9 Severability
.................................................... 46
7.10 Choice of Law and Venue
......................................... 47
iii
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of November 9, 2007,
is made
by and among TOMPKINS FINANCIAL CORPORATION ("TFC"), a New York
corporation,
having its principal place of business at The Commons, P.O. Box
460, Ithaca, New
York 14851, TMP MERGECO, INC., a Delaware corporation and a
wholly-owned
subsidiary of TFC ("Merger Sub"), and SLEEPY HOLLOW BANCORP,
INC. ("SHB"), a
Delaware corporation, having its principal place of business at
49 Beekman
Avenue, Sleepy Hollow, NY 10591.
BACKGROUND
1. TFC, Merger Sub, and SHB desire for Merger Sub to merge with
and into
SHB, with SHB surviving such merger, in accordance with the
applicable laws of
the State of Delaware and in accordance with the plan of merger
set forth
herein.
2. TFC desires to merge Sleepy Hollow Bank ("Sleepy Hollow
Bank"), a New
York State-chartered bank and a wholly-owned subsidiary of SHB
into and with The
Mahopac National Bank ("Mahopac National Bank"), a national bank
and a
wholly-owned subsidiary of TFC, with Mahopac National Bank
surviving such merger
in accordance with the Bank Plan of Merger in the form attached
hereto as
Exhibit 1.
3. TFC, Merger Sub and SHB desire to provide the terms and
conditions
governing the transactions contemplated herein.
NOW, THEREFORE, in consideration of the premises and of the
mutual
covenants, agreements, representations and warranties herein
contained, the
parties hereto, intending to be legally bound, do hereby agree
as follows:
ARTICLE I
PLAN OF MERGER
1.1 Definitions. As used in this Agreement, the following
terms
shall have the indicated meanings (such meanings to be equally
applicable to
both the singular and plural forms of the terms defined):
(a) Acquisition Proposal means any proposal or offer with
respect to any of the following (other than the transactions
contemplated
hereunder) involving SHB: (i) any merger, consolidation, share
exchange,
business combination of other similar transactions; (ii) any
sale, lease,
exchange, mortgage, pledge, transfer or other disposition of
assets and/or
liabilities that constitute a substantial portion of net
revenues, net income
or assets of SHB in a
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single transaction or series of transactions; (iii) any tender
offer or
exchange offer for 25% of more of the outstanding shares of its
capital stock
or the filing of a registration statement under the Securities
Act in
connection therewith; or, (iv) any public announcement by any
Person (which
shall include any regulatory application or notice, whether in
final or draft
form) of a proposal, plan or intention to do any of the
foregoing or any
agreement to engage in any of the foregoing.
(b) Agreement means this agreement, and any amendment or
supplement hereto, which constitutes a plan of merger between
TFC, Merger
Sub, and SHB.
(c) Applications means the applications for regulatory
approval which are required by the transactions contemplated
hereby.
(d) AST means the American Stock Transfer and Trust Company,
New York, New York.
(e) Bank Merger means the merger of Sleepy Hollow Bank with
and into Mahopac National Bank, with Mahopac National Bank
surviving such
merger, contemplated by Section 1.6 of this Agreement.
(f) Bank Plan of Merger has the meaning given to that term
in
Section 1.6 of this Agreement.
(g) BHC Act means the Bank Holding Company Act of 1956, as
amended.
(h) Certificate of Merger means one or more certificates of
merger to be executed by Merger Sub and SHB and to be filed in
the DDS, in
accordance with the applicable laws of the State of Delaware,
and in the
NYDS, in accordance with the applicable laws of the State of New
York.
(i) Closing Date means the date determined by TFC, in its
reasonable discretion, upon five (5) days prior written notice
to SHB, but in
no event later than the end of the calendar month which is
thirty (30) days
after the last condition precedent pursuant to this Agreement
has been
fulfilled or waived, or such other date as TFC and SHB shall
agree.
(j) Common Share Price shall mean $5,129.07 per share of
issued and outstanding SHB common stock, as the same may be
adjusted to
reflect new shares of common stock issued pursuant to Section
4.1(a)(ii)
hereof, such that the Merger Consideration (as defined in
Section 1.1(gg))
remains $30,200,000.
(k) Comptroller means the Comptroller of the Currency.
(l) DDS means the Department of State of the State of
Delaware.
(m) DGCL means the Delaware General Corporation Law, as
amended.
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(n) DIF means the Deposit Insurance Fund.
(o) Dissenting Shares means any shares of SHB Capital Stock
that are issued and outstanding as of the Effective Date and
that are held by
a stockholder who has properly exercised his or her appraisal
rights under
applicable law.
(p) Effective Date means the date and time to be specified
in
the Certificate of Merger, to be filed on the Closing Date or as
soon as
practicable thereafter with the NYDS and in the Certificate of
Merger, to be
filed on the Closing Date with the DDS, which date shall be the
Closing Date,
or such later date and time as shall be specified as the
effective date in
the Certificate of Merger pursuant to the mutual agreement of
TFC and SHB and
in accordance with the DGCL and the NYBCL.
(q) Employee Retention Amount shall have the meaning set
forth
in Section 4.13(b) hereof.
(r) Environmental Law means any federal, state, local or
foreign law, statute, ordinance, rule, regulation, code,
license, permit,
authorization, approval, consent, order, judgment, decree,
injunction or
agreement with any Regulatory Authority 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 any substance presently listed, defined,
designated or
classified as hazardous, toxic, radioactive or dangerous, or
otherwise
regulated, whether by type or by quantity, including any
material containing
any such substance as a component.
(s) ERISA means the Employee Retirement Income Security Act
of
1974, as amended.
(t) ERISA Affiliate means any trade or business, whether or
not incorporated, that together with SHB or TFC (and any of
either company's
Subsidiaries) would be deemed a "single employer" under Section
414 of the
Code.
(u) ESOP means the Sleepy Hollow Bank Employee Stock
Ownership
Plan, dated January 1, 1991, as amended May 4, 2007.
(v) Exchange Act means the Securities Exchange Act of 1934,
as
amended, and the rules and regulations promulgated from time to
time
thereunder.
(w) Exchange Agent means the designation of AST to effect
the
exchanges contemplated hereby.
(x) FDIA means the Federal Deposit Insurance Act, as
amended.
(y) FDIC means the Federal Deposit Insurance Corporation.
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(z) FRB means the Federal Reserve Board.
(aa) GAAP means generally accepted accounting principles as
in
effect at the relevant date and which are applied on a
consistent basis.
(bb) IRC or Code means the Internal Revenue Code of 1986, as
amended.
(cc) IRS means the Internal Revenue Service.
(dd) Mahopac National Bank means The Mahopac National Bank,
a
national bank, all the outstanding capital stock of which is
owned by TFC.
(ee) Material Adverse Effect means with respect to TFC or
SHB,
respectively, any effect that is material and adverse to its
assets,
financial condition or results of operations on a consolidated
basis,
provided, however, that Material Adverse Effect shall not be
deemed to
include (i) any change in the value of the respective investment
and loan
portfolios of TFC or SHB resulting from a change in interest
rates generally,
(ii) any change occurring after the date hereof in any federal
or state law,
rule or regulation or in GAAP, which change affects banking
institutions
generally, including any changes affecting the Deposit Insurance
Fund, (iii)
any business combination transaction or agreement to which TFC
is a party
that is approved by a majority of the TFC directors then in
office so long as
TFC continues as the surviving corporation, (iv) actions or
omissions of a
party (or any of its Subsidiaries) taken with the prior informed
written
consent of the other party in contemplation of the transactions
contemplated
hereby, (v) any change in general economic conditions affecting
banks or
their holding companies, (vi) changes resulting from expenses
incurred in
connection with this Agreement, (vii) any charge to earnings
associated with
SHB's Pension Plan and (viii) any information that is set forth
on a
disclosure schedule attached hereto.
(ff) Merger means the merger of the Merger Sub with and into
SHB, with SHB surviving such merger, contemplated by this
Agreement.
(gg) Merger Consideration means the aggregate sum of
$30,200,000.00, which shall be allocated among the holders of
SHB common
stock as set forth in Section 1.3(c).
(hh) Merger Sub means TMP Mergeco, Inc., a Delaware
corporation and a wholly-owned subsidiary of TFC.
(ii) National Bank Act means 12 USC Section 1, et seq.
(jj) NYBCL means the New York Business Corporation Law, as
amended.
(kk) NYDS means the Department of State of the State of New
York.
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(ll) NYSB means the Superintendent of Banking of the State
of
New York.
(mm) Old Certificate means the certificate formerly
representing SHB Capital Stock (an "Old Certificate") prior to
the Effective
Date.
(nn) Person means any individual, corporation, partnership,
joint venture, association, trust or "group" (as that term is
defined under
the Exchange Act).
(oo) Preferred Stock shall mean the Floating Rate Series A
Noncumulative Redeemable Preferred Stock of SHB.
(pp) Proxy Statement means the proxy statement, together
with
any supplements thereto, to be sent to holders of SHB Capital
Stock in
connection with the transactions contemplated by this
Agreement.
(qq) Regulatory Authority means any banking agency or
department of any federal or state government, including,
without limitation
the FRB, the FDIC, the Comptroller, the NYSB or the respective
staffs
thereof.
(rr) Rights means warrants, options, rights, convertible
securities and other arrangements or commitments which obligate
an entity to
issue or dispose of any of its capital stock, stock appreciation
rights,
performance units and other similar stock-based rights whether
they obligate
the issuer thereof to issue stock or other securities or to pay
cash.
(ss) SEC means the Securities and Exchange Commission.
(tt) Securities Act means the Securities Act of 1933, as
amended, and the rules and regulations promulgated from time to
time
thereunder.
(uu) Securities Documents means all registration statements,
schedules, statements, forms, reports, proxy materials and other
documents
required to be filed under the Securities Laws.
(vv) Securities Laws means the Securities Act and the
Exchange
Act.
(ww) Settlement Agreement shall have meaning set forth in
Section 4.6(a) hereof.
(xx) Subsidiary means any corporation, 50% or more of the
capital stock of which is owned, either directly or indirectly,
by another
entity, except any corporation the stock of which is held in the
ordinary
course of the lending activities of a bank.
(yy) SHB means Sleepy Hollow Bancorp, Inc., a Delaware
corporation.
(zz) SHB Board means the Board of Directors of SHB.
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(aaa) SHB Capital Stock means the common stock and the
Floating Rate Series A Noncumulative Redeemable Preferred Stock
of SHB
described in Section 2.1.
(bbb) SHB Employees shall have the meaning set forth in
Section 4.14 hereof.
(ccc) SHB Financials means (i) the consolidated financial
statements of SHB as of September 30, 2007 and 2006 (unaudited)
and for the
three years ended December 31, 2006 (audited), and (ii) the
unaudited interim
and any audited annual consolidated financial statements of SHB
as of each
calendar quarter and year, respectively, included in any SHB or
Sleepy Hollow
Bank Regulatory Reports filed by SHB after September 30, 2007
and through the
Closing Date.
(ddd) SHB Plan means each bonus, deferred compensation,
incentive compensation, stock purchase, stock option, severance
pay, medical,
life or other insurance, profit-sharing, or pension plan,
program, agreement
or arrangement, and each other employee benefit plan, program,
agreement or
arrangement, sponsored, maintained or contributed to or required
to be
contributed to by SHB or by any trade or business, whether or
not
incorporated, that together with SHB or any of the SHB
Subsidiaries would be
deemed a "single employer" under Section 414 of the Code for the
benefit of
any employee or director or former employee or former director
of SHB or any
ERISA Affiliate of SHB.
(eee) SHB Regulatory Reports means the Call Reports,
consolidated reports of condition and income, and accompanying
schedules,
filed by Sleepy Hollow Bank and any other prior SHB banking
subsidiaries with
any Regulatory Authority for each calendar quarter, beginning
with the
quarter ended December 31, 2006, through the Closing Date, as
amended from
time to time.
(fff) SHB Subsidiaries means any corporation, 50% or more of
the capital stock of which is owned, either directly or
indirectly, by SHB,
except any corporation the stock of which is held in the
ordinary course of
the lending activities of Sleepy Hollow Bank.
(ggg) Sleepy Hollow Bank means Sleepy Hollow Bank, a New
York
State chartered bank, all the outstanding common stock of which
is owned by
SHB.
(hhh) Superior Proposal means any unsolicited bona fide
written proposal made by a third party to acquire, directly or
indirectly,
including pursuant to a tender offer, exchange offer, merger,
consolidation,
business combination, recapitalization, liquidation, dissolution
or similar
transaction, for consideration consisting of cash and/or
securities, more
than 50% of the combined voting power of the shares of SHB
common stock then
outstanding or all or substantially all of the assets of SHB and
otherwise
(i) on terms which the SHB Board determines in good faith, after
consultation
with its financial advisor, to be more favorable from a
financial point of
view to SHB's shareholders than the transaction contemplated by
this
Agreement, and (ii) that constitutes a transaction that, in the
SHB
6
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Board's good faith judgment, is reasonably likely to be
consummated on the
terms set forth, taking into account all legal, financial,
regulatory and
other aspects of such proposal.
(iii) Surviving Corporation means, following the Effective
Date, the entity resulting from the merger of Merger Sub with
and into SHB.
(jjj) TFC means Tompkins Financial Corporation, a New York
corporation.
(kkk) TFC Annual Report means in the TFC Annual Report on
Form
10-K for the year ended December 31, 2006
(lll) TFC Common Stock has the meaning given to that term in
Section 3.1 of this Agreement.
(mmm) TFC Financials means (i) the consolidated financial
statements of TFC as of September 30, 2007 and 2006 (unaudited)
and for the
three years ended December 31, 2006 (audited), and (ii) the
unaudited interim
and any audited annual consolidated financial statements of TFC
as of each
calendar quarter and year, respectively, included in any
Securities Documents
filed by TFC or in any TFC Regulatory Reports filed by TFC after
September
30, 2007 and through the Closing Date.
(nnn) TFC Plan means each bonus, deferred compensation,
incentive compensation, stock purchase, stock option, severance
pay, medical,
life or other insurance, profit-sharing, or pension plan,
program, agreement
or arrangement, and each other employee benefit plan, program,
agreement or
arrangement, sponsored, maintained or contributed to or required
to be
contributed to by TFC or by any trade or business, whether or
not
incorporated, that together with TFC or any of the TFC
Subsidiaries would be
deemed a "single employer" under Section 414 of the Code for the
benefit of
any employee or director or former employee or former director
of TFC or any
ERISA Affiliate of TFC.
(ooo) TFC Subsidiaries means any corporation, 50% or more of
the capital stock of which is owned, either directly or
indirectly, by TFC,
except any corporation the stock of which is held in the
ordinary course of
the lending activities of a bank.
1.2 The Merger.
(a) On the Closing Date, the Closing will take place at 9:00
A.M., at the offices of TFC, unless another time and place are
agreed to by
the parties hereto, provided in any case that all conditions to
Closing set
forth in ARTICLE V have been satisfied or waived at or prior to
Closing. At
the Closing, SHB and TFC shall cause a Certificate of Merger to
be duly
executed and to be filed in the DDS and the NYDS as soon as
practicable after
the Closing.
(b) Subject to the terms and conditions of this Agreement,
on
the Effective Date, the Merger Sub will be merged with and into
SHB in
accordance with the
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terms and conditions of this Agreement and of the DGCL.
Following the
Effective Date, the separate corporate existence of Merger Sub
will cease and
SHB will continue as the surviving corporation, and will succeed
to and
assume all the rights and obligations of Merger Sub in
accordance with the
DGCL.
(c) The certificate of incorporation of the SHB, as in
effect
immediately prior to the Effective Date, shall be the
certificate of
incorporation of the Surviving Corporation until thereafter
changed or
amended as provided therein or by applicable law. The by-laws of
the SHB, as
in effect immediately prior to the Effective Date, shall be the
by-laws of
the Surviving Corporation until thereafter changed or amended as
provided
therein or by applicable law.
(d) The directors of Merger Sub immediately prior to the
Effective Date will be the directors of the Surviving
Corporation, until the
earlier of their resignation or removal or until their
respective successors
have been duly elected. The officers of Merger Sub immediately
prior to the
Effective Date will be the officers of the Surviving
Corporation, until the
earlier of their resignation or removal.
(e) On the effective date of the Bank Merger, the Board of
Directors of Mahopac National Bank as the surviving corporation
in the Bank
Merger shall consist of those persons holding such office
immediately prior
to the effective date. Each such director shall hold office
until his or her
successor is elected and qualified or otherwise in accordance
with the
articles of association and by-laws of Mahopac National Bank. On
the
effective date of the Bank Merger, the officers of Mahopac
National Bank duly
elected and holding office immediately prior to such effective
date shall be
the officers of Mahopac National Bank, as the surviving
corporation in the
Bank Merger, except for such other officers of Sleepy Hollow
Bank as shall be
designated as officers of Mahopac National Bank at TFC's
election.
1.3 Conversion of SHB Common Stock. At the Effective Date, by
virtue
of the Merger and without any action on the part of the holder
of any shares of
the capital stock of Merger Sub or the Company:
(a) Each share of capital stock of Merger Sub that is
outstanding immediately before the Effective Date shall be
converted into and
become one fully-paid and nonassessable share of SHB common
stock.
(b) Each share of SHB common stock held by SHB as treasury
stock immediately prior to the Effective Date shall be
cancelled, and no
payment shall be made in respect thereof.
(c) Subject to Section 1.3(e) hereof, each share of issued
and
outstanding SHB common stock shall be cancelled and, at the
Effective Date,
shall be converted into the right to receive the Common Share
Price, payable
to the holder thereof in cash, without any interest thereon,
upon surrender
of the certificate representing such issued and outstanding
share.
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(d) Following the Effective Date, all shares of SHB common
stock shall no longer be outstanding and automatically shall be
cancelled and
retired and shall cease to exist, and each holder of a
certificate
representing any such share shall cease to have any rights with
respect
thereto, except the right to receive, for each share of SHB
common stock held
as of the Effective Date, the Common Share Price; provided that
this shall
not affect the rights of holders of SHB common stock who have
perfected their
right to dissent from the Merger under applicable law.
(e) Notwithstanding any other provision contained in this
Agreement, no Dissenting Shares shall be cancelled pursuant to
this Section
1.3 unless and until the holder shall have failed to perfect, or
shall have
effectively withdrawn or lost, his or her right to dissent from
the Merger
under applicable law and to receive such consideration as may be
determined
to be due with respect to such Dissenting Shares pursuant to and
subject to
the requirements of applicable law. If any holder of Dissenting
Shares shall
have so failed to perfect or shall have effectively withdrawn or
lost such
holder's right to dissent from the Merger, each of such holder's
shares of
SHB common stock shall thereupon be deemed to have been
cancelled and to have
become, as of the Effective Date, the right to receive the
Common Share
Price, as applicable.
1.4 Surrender of SHB Common Stock Certificates.
(a) Upon closing, TFC will deliver to the Exchange Agent the
full amount of cash to be paid to holders of SHB common stock
for payment in
accordance with Section 1.3(c) of this Agreement.
(b) If any payment is to be issued to a SHB stockholder with
a
name other than that in which the certificate formerly
representing SHB
common stock and surrendered for cancellation was issued, the
Old Certificate
so surrendered shall be properly endorsed and otherwise in
proper form for
transfer.
(c) In the event that any Old Certificates have not been
surrendered for cancellation in accordance with this Agreement
on or before
the second anniversary of the Effective Date, TFC may at any
time thereafter,
with or without notice to the holders of record of such Old
Certificates,
direct the Exchange Agent to release back to TFC the Common
Share Price for
each unsurrendered share. From and after any such release of
funds back to
TFC, the sole right of the holders of the unsurrendered Old
Certificates
shall be the right to collect the net Common Share Price from
TFC for their
respective accounts in connection with such unsurrendered
certificates, and
such holders shall not be entitled to receive any interest on
funds held by
TFC representing payment for the unsurrendered shares.
(d) If any Old Certificates are not surrendered prior to the
date on which such certificates would otherwise escheat to or
become the
property of any governmental unit or agency, the unclaimed
Common Share
Prices represented by such certificates shall, to the extent
permitted by
abandoned property and any other applicable law, become the
property of TFC,
free and clear of all claims or interest of any person
previously entitled to
such claims. Notwithstanding the foregoing, neither TFC nor its
agents or any
9
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other person shall be liable to any former holder of SHB common
stock for any
property delivered to a public official pursuant to applicable
abandoned
property, escheat or similar laws.
(e) Within three days after the Effective Date, the Exchange
Agent shall mail to each holder of one or more certificates
formerly
representing SHB common stock a notice specifying the Effective
Date and
notifying such holder to surrender his, her or its certificate
or
certificates to the Exchange Agent for exchange. Such notice
shall be mailed
to holders by regular mail at their addresses on the records of
SHB.
1.5 Preferred Stock. The Preferred Stock will remain issued
and
outstanding through and after the Effective Date. Holders of
Preferred Stock
will be provided with appropriate notice of their right to
appraisal in
accordance with the DGCL.
1.6 The Bank Merger. TFC and SHB shall use their best efforts
to
cause Sleepy Hollow Bank to merge with and into Mahopac National
Bank, with
Mahopac National Bank surviving such merger, concurrently with
or as soon as
practicable after the Effective Date. Concurrently with, or as
soon as practical
after, the execution and delivery of this Agreement, TFC shall
cause Mahopac
National Bank, and SHB shall cause Sleepy Hollow Bank, to
execute and deliver
the Bank Plan of Merger, in substantially the form attached
hereto as Exhibit 1,
and any subsequent amendments thereof as shall be deemed
necessary or advisable
by TFC to comply with all applicable regulatory
requirements.
1.7 Structure. Notwithstanding any provision of this Agreement
to
the contrary, TFC may elect, subject to the filing of all
necessary applications
and the receipt of all required regulatory approvals, to modify
the structure of
the transactions contemplated hereby, and the parties shall
enter into such
alternative transactions, so long as (i) there are no adverse
federal or state
income tax consequences to any of the stockholders, directors or
officers of SHB
as a result of such modification, (ii) the Common Share Price is
not thereby
changed or reduced in amount because of such modification, (iii)
such
modification will not be likely to materially delay or
jeopardize receipt of any
required regulatory approvals, (iv) it does not result in any
representation or
warranty of any party set forth in this Agreement becoming
incorrect in any
material respect, and (v) it does not diminish the benefits of
any officer,
director or employee of SHB pursuant to this Agreement or any
separate agreement
contemplated hereby.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SHB
SHB hereby represents and warrants to TFC as follows:
2.1 Capital Structure of SHB. The authorized common stock of
SHB
consists of 20,000 shares of common stock, par value $100 per
share, of which,
as of the date hereof, 5,888 shares are issued and outstanding
and 242 shares
are held in treasury. The authorized preferred stock of SHB
consists of 10,000
shares of series preferred stock, par value $1.00 per share, of
which 5,000
shares have been designated Floating Rate Series A Noncumulative
Redeemable
Preferred Stock and all of which shares, as of the date hereof,
are issued and
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outstanding. No other shares of SHB preferred stock have been
designated. As of
the date hereof, no shares of SHB Capital Stock are reserved for
issuance, and
no other shares of preferred stock have been designated or
issued. All
outstanding shares of SHB Capital Stock have been duly
authorized and validly
issued and are fully paid and nonassessable. Other than the
ESOP, SHB does not
have and is not bound by any Rights which are authorized, issued
or outstanding
with respect to the SHB Capital Stock. None of the shares of SHB
Capital Stock
has been issued in violation of the preemptive rights of any
person.
2.2 Organization, Standing and Authority of SHB. SHB is a
duly
organized corporation, validly existing and in good standing
under the laws of
Delaware with full corporate power and authority to carry on its
business as now
conducted and is duly licensed or qualified to do business in
the states of the
United States and foreign jurisdictions where its ownership or
leasing of
property or the conduct of its business requires such
qualification, except
where the failure to be so licensed or qualified would not have
a Material
Adverse Effect on SHB. SHB is registered as a bank holding
company under the BHC
Act.
2.3 Ownership of SHB Subsidiaries; Capital Structure of SHB
Subsidiaries. Except as set forth on Schedule 2.3 hereto, SHB
does not own,
directly or indirectly, 5% or more of the outstanding capital
stock or other
voting securities of any corporation, bank or other
organization; and, with
respect to Sleepy Hollow Bank, SHB owns 83 shares of common
stock of Sleepy
Hollow Bank, constituting 100% of all of the outstanding capital
stock of Sleepy
Hollow Bank. The outstanding shares of capital stock or other
equity interests
of Sleepy Hollow Bank have been duly authorized and validly
issued and are fully
paid and (except as provided by applicable law) nonassessable
and all such
shares or equity interests are directly or indirectly owned by
SHB free and
clear of all liens, claims and encumbrances. Sleepy Hollow Bank
is not bound by
any Rights which are authorized, issued or outstanding with
respect to the
capital stock or other equity interests of Sleepy Hollow Bank
and there are no
agreements, understandings or commitments relating to the right
of SHB to vote
or to dispose of said shares. None of the shares of capital
stock or other
equity interests of Sleepy Hollow Bank has been issued in
violation of the
preemptive rights of any person.
2.4 Organization, Standing and Authority of Sleepy Hollow
Bank.
Sleepy Hollow Bank (i) is a commercial bank organized, validly
existing and in
good standing under the laws of the State of New York, (ii) has
full power and
authority to carry on its business as now conducted, and (iii)
is duly licensed
or qualified to do business in the states of the United States
and foreign
jurisdictions where its ownership or leasing of property or the
conduct of its
business requires such licensing or qualification, except where
failure to be so
licensed or qualified would not have a Material Adverse Effect
on SHB. Sleepy
Hollow Bank has all federal, state, local and foreign
governmental
authorizations necessary for it to own or lease its properties
and assets and to
carry on its business as it is now being conducted, except where
the failure to
be so authorized would not have a Material Adverse Effect on
SHB. Sleepy Hollow
Bank is a member in good standing of the Federal Home Loan Bank
of New York and
it owns the requisite amount of shares therein. Eligible
deposits issued by
Sleepy Hollow Bank are insured by the FDIC through the Deposit
Insurance Fund to
the full extent permitted under applicable law.
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2.5 Authorized and Effective Agreement.
(a) SHB has all requisite corporate power and authority to
enter into and 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
SHB, except that
the affirmative vote of the holders of greater than 50% of the
outstanding
shares of SHB common stock entitled to vote thereon is required
to adopt this
Agreement pursuant to the DGCL and SHB's certificate of
incorporation, as
amended, and SHB's by-laws, each as in effect on the date of
this Agreement,
and the vote of the holders of SHB Floating Rate Series A
Noncumulative
Redeemable Preferred Stock entitled to vote thereon is not
required to adopt
this Agreement pursuant to the Certificate of Designation of
such shares, the
DGCL and SHB's certificate of incorporation, as amended, and
SHB's by-laws,
each as in effect on the date of this Agreement. The Board of
Directors of
SHB has directed that this Agreement be submitted to SHB's
stockholders for
approval at a special meeting to be held as soon as
practicable.
(b) Assuming the accuracy of the representation contained in
Section 3.5(b) hereof, this Agreement constitutes legal, valid
and binding
obligations of SHB, enforceable against it in accordance with
their
respective 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.
(c) Neither the execution and delivery of this Agreement,
nor
consummation of the transactions contemplated hereby, nor
compliance by SHB
with any of the provisions hereof or thereof shall (i) conflict
with or
result in a breach of any provision of the articles or
certificate of
incorporation or association, charter or bylaws of SHB or Sleepy
Hollow Bank,
(ii) assuming the consents and approvals contemplated by Section
4.4 hereof
are duly obtained, constitute or result in a breach of any term,
condition or
provision of, or 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 SHB
or Sleepy Hollow Bank pursuant to, any note, bond, mortgage,
indenture,
license, agreement or other instrument or obligation, or (iii)
assuming the
consents and approvals contemplated by Section 4.4 hereof and
the consents
and approvals are duly obtained, violate any order, writ,
injunction, decree,
statute, rule or regulation applicable to SHB or Sleepy Hollow
Bank.
(d) Other than as contemplated by Section 4.4 hereof and as
set forth on Schedule 2.5(d), no consent, approval or
authorization of, or
declaration, notice, filing or registration with, any
governmental or
regulatory authority, or any other person, is required to be
made or obtained
by SHB or Sleepy Hollow Bank on or prior to the Closing Date in
connection
with the execution, delivery and performance of this Agreement
and the Bank
Plan of Merger or the consummation of the transactions
contemplated hereby or
thereby. Neither SHB nor Sleepy Hollow Bank is aware of any
reason why the
conditions set forth in Section
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5.2 of this Agreement will not be satisfied without undue delay
and without
the imposition of any condition or requirement of the type
referred to in the
provisions thereof.
2.6 Regulatory Filings. SHB and Sleepy Hollow Bank have filed
all
reports required by statute or regulation to be filed with any
Regulatory
Agency, and such reports were prepared in accordance with the
applicable
statutes, regulations and instructions in existence as of the
date of filing of
such reports in all material respects, and none of the reports
contain any
untrue statement of a material fact.
2.7 Financials; Books and Records; Minute Books. SHB has
previously
delivered to TFC the SHB Regulatory Reports and the SHB
Financials, all of which
fairly present in all material respects, the consolidated
financial position of
SHB and Sleepy Hollow Bank as of the dates indicated and the
consolidated
results of operations, changes in stockholders' equity and, in
the case of the
audited financial statements, cash flows of SHB and Sleepy
Hollow Bank for the
periods then ended and each such financial statement has been or
will be, as the
case may be, prepared in conformity with GAAP or regulatory
accounting
principles, as applicable. The SHB Financials, included with the
SHB Regulatory
Reports after the date of this Agreement will fairly present in
all material
respects, the consolidated financial position of SHB and Sleepy
Hollow Bank as
of the dates indicated and the consolidated results of
operations, changes in
stockholders' equity and, in the case of the audited financial
statements, cash
flows of SHB and Sleepy Hollow Bank for the periods then ended
and each such
financial statement has been or will be, as the case may be,
prepared in
conformity with GAAP or regulatory accounting principles, as
applicable, applied
on a consistent basis. The books and records of SHB and Sleepy
Hollow Bank
fairly reflect in all material respects the transactions to
which it is a party
or by which its properties are subject or bound. Such books and
records have
been properly kept and maintained and are in compliance with all
applicable
legal and accounting requirements in all material respects. The
minute books of
SHB and Sleepy Hollow Bank contain records which are accurate in
all material
respects of all corporate actions of each of their respective
stockholders and
board of directors (including committees of their respective
board of directors)
set forth therein.
2.8 Material Adverse Change. Since June 30, 2007 to the date
hereof,
SHB has not, on a consolidated basis, suffered any change in its
financial
condition, results of operations or business which individually
or in the
aggregate with any other such changes would constitute a
Material Adverse Effect
with respect to SHB.
2.9 Absence of Undisclosed Liabilities. Neither SHB nor
Sleepy
Hollow Bank has any liability (contingent or otherwise),
excluding contractually
assumed contingencies of the nature required to be disclosed in
a balance sheet
prepared in accordance with GAAP, except (i) as disclosed in the
SHB Regulatory
Reports, SHB Financial Statements or as provided to TFC in
connection with its
due diligence inquiry, (ii) for liabilities incurred in the
ordinary course of
business subsequent to the date hereof, (iii) for liabilities
incurred in
connection with this Agreement and the transactions contemplated
hereby, or (iv)
as set forth on Schedule 2.9.
2.10 Properties. Except as set forth on Schedule 2.10, SHB
and
Sleepy Hollow Bank have good and marketable title free and clear
of all liens,
encumbrances, charges, defaults
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or equitable interests to all of the properties and assets, real
and personal,
which, individually or in the aggregate, are material to the
business of SHB and
Sleepy Hollow Bank taken as a whole, and which are reflected on
the SHB
Financials, except (i) liens for taxes not yet due and payable,
(ii) pledges to
secure deposits and other liens incurred in the ordinary course
of banking
business, (iii) such imperfections of title, easements and
encumbrances, if any,
as are not material in character, amount or extent, (iv)
dispositions and
encumbrances for adequate consideration in the ordinary course
of business and
(v) except as set forth in the SHB Regulatory Reports or SHB
Financials. All
leases pursuant to which SHB or Sleepy Hollow Bank, as lessee,
leases real and
personal property which, individually or in the aggregate, are
material to the
business of SHB and Sleepy Hollow Bank taken as a whole are
valid and
enforceable in accordance with their respective terms except
where the failure
of such lease or leases to be valid and enforceable would not,
individually or
in the aggregate, have a Material Adverse Effect on SHB.
2.11 Loans. Each loan reflected as an asset in the SHB
Financials as
of September 30, 2007 (i) is evidenced by notes, agreements or
other evidences
of indebtedness which are true, genuine and what they purport to
be, (ii) to the
extent secured, has been secured by valid liens and security
interests which
have been perfected, and (iii) is the legal, valid and binding
obligation of the
obligor named therein, enforceable in accordance with its terms,
subject to
bankruptcy, insolvency, fraudulent conveyance and other laws of
general
applicability relating to or affecting creditors' rights and to
general equity
principles, in each case other than loans as to which the
failure to satisfy the
foregoing standards would not have a Material Adverse Effect on
SHB.
2.12 Allowance for Loan Losses. The allowance for loan
losses
reflected on the SHB Financials, as of September 30, 2007 is (a)
to the best of
SHB's knowledge, adequate in all material respects to provide
for possible or
specific losses, net of recoveries relating to loans previously
charged off and
on loans outstanding, and (b) to the best of SHB's knowledge, in
all material
respects consistent with the requirements of GAAP to provide for
the reasonably
anticipated losses with respect to SHB's loan portfolio based
upon information
reasonably available at the time.
2.13 Tax Matters.
(a) SHB and Sleepy Hollow Bank have timely filed federal
income tax returns for the five years ended through December 31,
2006 and
have timely filed, or caused to be filed, all other federal,
state, local and
foreign tax returns (including, without limitation, estimated
tax returns,
returns required under Sections 1441-1446 and 6031-6060 of the
Code and the
regulations thereunder and any comparable state, foreign and
local laws, any
other information returns, withholding tax returns, FICA and
FUTA returns and
back up withholding returns required under Section 3406 of the
Code and any
comparable state, foreign and local laws) required to be filed
with respect
to SHB or Sleepy Hollow Bank. All taxes due in respect of the
periods covered
by such tax returns have been paid or adequate reserves have
been established
for the payment of such taxes and such reserves are reflected on
the SHB
Financials, and as of the Closing Date, all taxes due in respect
of any
subsequent
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periods (or portions thereof) ending on or prior to the Closing
Date will
have been paid or adequate reserves will have been established
for the
payment thereof. Except as set forth on Schedule 2.13(b), no
material (i)
audit examination, (ii) deficiency, or (iii) refund litigation
with respect
to such returns or periods has been proposed, asserted or
assessed or is
pending. To the best of their knowledge, neither SHB nor Sleepy
Hollow Bank
will have any liability for any such taxes in excess of the
amounts so paid
or reserves or accruals so established.
(b) Except as set forth on Schedule 2.13(b), all federal,
state and local (and, if applicable, foreign) tax returns filed
by SHB and
each SHB Subsidiary since December 31, 2001 are complete and
accurate in all
material respects. Neither SHB nor Sleepy Hollow Bank is
delinquent in the
payment of any material tax, assessment or governmental charge,
and none of
them has requested any extension of time within which to file
any tax returns
in respect of any fiscal year or portion thereof which have not
since been
filed. No material deficiencies for any tax, assessment or
governmental
charge have been proposed, asserted or assessed (tentatively or
otherwise)
against SHB or Sleepy Hollow Bank which have not been settled
and paid. There
are currently no agreements in effect with respect to SHB or
Sleepy Hollow
Bank to extend the period of limitations for the assessment or
collection of
any tax.
(c) Neither the transactions contemplated hereby nor the
termination of the employment of any employees of SHB or Sleepy
Hollow Bank
prior to or following consummation of the transactions
contemplated hereby
could result in SHB or Sleepy Hollow Bank making or being
required to make
any "excess parachute payment" as that term is defined in
Section 280G of the
Code.
(d) Except as set forth on Schedule 2.13(d), neither SHB nor
Sleepy Hollow Bank is a party to any agreement providing for the
allocation
or sharing of, or indemnification for, taxes.
(e) Neither SHB nor Sleepy Hollow Bank is required to
include
in income any adjustment in any taxable period ending after the
date hereof
pursuant to Section 481(a) of the Code.
(f) Except as set forth on Schedule 2.13(f), neither SHB nor
Sleepy Hollow Bank has entered into any agreement with any
taxing authority
that will bind TFC or an affiliate thereof after the Closing
Date.
(g) For purposes of this Section 2.13, references to SHB and
Sleepy Hollow Bank shall include predecessors thereof.
2.14 Employee Benefit Plans
(a) Schedule 2.14(a) hereto sets forth a true and complete
list of (a) each employment agreement or change in control
agreement (whether
written or oral) SHB or Sleepy Hollow Bank has entered into with
any
employee, director or officer of SHB or Sleepy Hollow Bank and
(b) each SHB
Plan.
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(b) Except as set forth on Schedule 2.14(b), with respect to
each of the SHB Plans, SHB has made available to TFC true and
complete copies
of each of the following documents: (a) the SHB Plan and related
documents
(including all amendments thereto); (b) the most recent annual
reports,
Financials, and actuarial reports, if any; (c) the most recent
summary plan
description, together with each summary of material
modifications, required
under ERISA with respect to such SHB Plan; and (d) the most
recent
determination letter received from the IRS with respect to each
SHB Plan that
is intended to be qualified under the Code.
(c) No liability under Title IV of ERISA has been incurred
by
SHB or any ERISA Affiliate of SHB since the effective date of
ERISA that has
not been satisfied in full, and no condition exists that
presents a material
risk to SHB or any ERISA Affiliate of SHB of incurring a
liability under such
Title, other than liability for premium payments to the Pension
Benefit
Guaranty Corporation, which premiums have been or will be paid
when due.
(d) Neither SHB nor any ERISA Affiliate of SHB, nor any of
the
SHB Plans, nor any trust created thereunder, nor any trustee or
administrator
thereof has engaged in a prohibited transaction (within the
meaning of
Section 406 of ERISA and Section 4975 of the Code) in connection
with which
SHB or any ERISA Affiliate of SHB could, either directly or
indirectly, incur
a material liability or cost.
(e) Full payment has been made, or will be made in
accordance
with Section 404(a)(6) of the Code, of all amounts that SHB or
any ERISA
Affiliate of SHB is required to pay under Section 412 of the
Code or under
the terms of the SHB Plans.
(f) Except as set forth on Schedule 2.14(f), there has been
no
Material Adverse Effect in the funded status of any SHB Plan
that is subject
to Title IV of ERISA since the inception of such SHB Plan. No
reportable
event under Section 4043 of ERISA has occurred or will occur
with respect to
any SHB Plan on or before the Closing Date other than any
reportable event
occurring by reason of the transactions contemplated by this
Agreement or a
reportable event for which the requirement of notice to the PBGC
has been
waived.
(g) None of the SHB Plans is a "multiemployer pension plan,"
as such term is defined in Section 3(37) of ERISA, a "multiple
employer
welfare arrangement," as such term is defined in Section 3(40)
of ERISA, or a
single employer plan that has two or more contributing sponsors,
at least two
of whom are not under common control, within the meaning of
Section 4063(a)
of ERISA.
(h) Except as set forth on Schedule 2.14(h), a favorable
determination letter has been issued by the Internal Revenue
Service with
respect to the each of the SHB Plans that is intended to be
"qualified"
within the meaning of Section 401(a) of the Code to the effect
that such plan
is so qualified and each such SHB Plan satisfies the
requirements of Section
401(a) of the Code in all material respects. Each of the SHB
Plans that is
intended to satisfy the requirements of Section 125 or 501(c)(9)
of the Code
satisfies such requirements in all material respects. To the
best of our
knowledge, each of the SHB Plans has been operated
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<PAGE>
and administered in all material respects in accordance with its
terms and
applicable laws, including but not limited to ERISA and the
Code.
(i) There are no actions, suits or claims pending, or, to
the
knowledge of SHB, threatened (other than routine claims for
benefits) against
any SHB Plan, the assets of any SHB Plan or against SHB or any
ERISA
Affiliate of SHB with respect to any SHB Plan. There is no
judgment, decree,
injunction, rule or order of any court, governmental body,
commission, agency
or arbitrator outstanding against or in favor of any SHB Plan or
any
fiduciary thereof (other than rules of general applicability).
To the
knowledge of SHB, there are no pending or threatened audits,
examinations or
investigations by any governmental body, commission or agency
involving any
SHB Plan.
(j) Except as contemplated by this Agreement and as set
forth
on Schedule 2.14(j), the consummation of the transactions
contemplated by
this Agreement will not (i) entitle any current or former
employee or
director of SHB or any ERISA Affiliate of SHB to severance pay,
unemployment
compensation or any similar payment, (ii) accelerate the time of
payment or
vesting, or increase the amount, of any compensation due to any
such current
or former employee or director, (iii) renew or extend the term
of any
agreement regarding compensation for any such current or former
employee or
director, or (iv) result in a "change in control" or the
occurrence of any
other event specified in the agreements which would entitle any
party to such
agreements to any payment thereunder.
(k) Each SHB Plan which is subject to the health care
continuation requirements of Part 6 of Subtitle B of Title I of
ERISA or
Section 4980B of the Code ("COBRA") has been administered in
material
compliance with such requirements.
2.15 Certain Contracts.
(a) Except as disclosed on Schedule 2.15, neither SHB nor
Sleepy Hollow Bank is a party to, or is bound by, (i) any
material contract
as defined in Item 601(b)(10) of Regulation S-K of the SEC or
any other
material contract or similar arrangement whether or not made in
the ordinary
course of business (other than loans or loan commitments and
funding
transactions in the ordinary course of business of Sleepy Hollow
Bank) or any
agreement restricting the nature or geographic scope of its
business
activities in any material respect, (ii) any agreement,
indenture or other
instrument relating to the borrowing of money by SHB or Sleepy
Hollow Bank or
the guarantee by SHB or Sleepy Hollow Bank of any such
obligation, other than
instruments relating to transactions entered into in the
customary course,
(iii) any agreement, arrangement or commitment relating to the
employment of
a consultant who was formerly a director or executive officer or
the
employment, election, retention in office or severance of any
present or
former director or officer, or (iv) any contract, agreement or
understanding
with a labor union.
(b) Neither SHB nor Sleepy Hollow Bank is in default under
any
material agreement, commitment, arrangement, lease, insurance
policy or other
instrument 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 giving of notice or
17
<PAGE>
both, would constitute such a default, except for such defaults
which would
not, individually or in the aggregate, have a Material Adverse
Effect on SHB.
2.16 Legal Proceedings. Except as set forth on Schedule 2.16,
there
are no actions, suits or proceedings instituted, pending or, to
the knowledge of
SHB or Sleepy Hollow Bank, threatened (or unasserted but
considered probable of
assertion and which if asserted would have at least a reasonable
probability of
an unfavorable outcome) against SHB or Sleepy Hollow Bank or
against any asset,
interest or right of SHB or Sleepy Hollow Bank as to which there
is a reasonable
probability of an unfavorable outcome and which, if such an
unfavorable outcome
was rendered, would, individually or in the aggregate, have a
Material Adverse
Effect on SHB. To the knowledge of SHB or Sleepy Hollow Bank,
there are no
actual or threatened actions, suits or proceedings which present
a claim to
restrain or prohibit the transactions contemplated herein or to
impose any
material liability in connection therewith as to which there is
a reasonable
probability of an unfavorable outcome and which, if such an
unfavorable outcome
was rendered, would, individually or in the aggregate, have a
Material Adverse
Effect on SHB. There are no actions, suits or proceedings
instituted, pending
or, to the knowledge of SHB or Sleepy Hollow Bank, threatened
(or unasserted but
considered probable of assertion and which if asserted would be
reasonably
expected to have an unfavorable outcome) against any present or
former director
or officer of SHB or Sleepy Hollow Bank, that might give rise to
a claim for
indemnification and that (i) has a reasonable probability of an
unfavorable
outcome and (ii) in the event of an unfavorable outcome, would,
individually or
in the aggregate, have a Material Adverse Effect on SHB.
2.17 Compliance With Laws. Except as set forth on Schedule 2.17,
SHB
and each SHB Subsidiary is in compliance in all material
respects with all
statutes and regulations applicable to the conduct of its
business, and neither
SHB nor Sleepy Hollow Bank has received notification from any
agency or
department of federal, state or local government (i) asserting a
material
violation of any such statute or regulation, (ii) threatening to
revoke any
license, franchise, permit or government authorization or (iii)
restricting or
in any way limiting its operations, except for such
noncompliance, violations,
revocations and restrictions which would not, individually or in
the aggregate,
have a Material Adverse Effect on SHB. Neither SHB nor Sleepy
Hollow Bank is
subject to any regulatory or supervisory cease and desist order,
agreement,
directive, memorandum of understanding or commitment which could
be reasonably
anticipated to have a Material Adverse Effect on SHB, and none
of them has
received any communication requesting that they enter into any
of the foregoing.
2.18 Labor Matters. With respect to their employees, neither SHB
nor
Sleepy Hollow Bank is a party to any labor agreement with any
labor
organization, group or association and has not engaged in any
unfair labor
practice. SHB and the SHB Subsidiaries have not experienced any
attempt by
organized labor or its representatives to make SHB or Sleepy
Hollow Bank conform
to demands of organized labor relating to their employees or to
enter into a
binding agreement with organized labor that would cover the
employees of SHB or
Sleepy Hollow Bank. There is no unfair labor practice charge or
other complaint
by any employee or former employee of SHB or Sleepy Hollow Bank
against any of
them pending before any governmental agency arising out of SHB's
or such SHB
Subsidiary's activities, which charge or
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complaint (i) has a reasonable probability of an unfavorable
outcome and (ii) in
the event of an unfavorable outcome would, individually or in
the aggregate,
have a Material Adverse Effect on SHB; there is no labor strike
or labor
disturbance pending or threatened against any of them; and
neither SHB nor
Sleepy Hollow Bank has experienced a work stoppage or other
labor difficulty.
2.19 Brokers and Finders. Neither SHB nor Sleepy Hollow Bank,
nor
any of their respective officers, directors or employees, has
employed any
broker, finder or financial advisor or incurred any liability
for any fees or
commissions in connection with the transactions contemplated
herein or the Bank
Plan of Merger, except for SHB's retention of Sandler O'Neill +
Partners, L.P.
to perform certain financial advisory services. Prior to the
execution and
delivery of this Agreement, Sandler O'Neill + Partners, L.P. has
delivered to
the Board of Directors of SHB an opinion that the Common Share
Price is fair
from a financial point of view to the stockholders of SHB.
2.20 Insurance. SHB and the SHB Subsidiaries each currently
maintains insurance in amounts considered by SHB and Sleepy
Hollow Bank, as
applicable, to be reasonably necessary for their operations.
Since December 31,
2006, Neither SHB nor Sleepy Hollow Bank has received any notice
of a material
premium increase or cancellation with respect to any of its
insurance policies
or bonds, and within the last three years, neither SHB nor
Sleepy Hollow Bank
has been refused any insurance coverage sought or applied for,
and, except as
set forth on Schedule 2.20, SHB has no reason to believe that
existing insurance
coverage cannot be renewed as and when the same shall expire,
upon terms and
conditions as favorable as those presently in effect, other than
possible
increases in premiums or unavailability in coverage that have
not resulted from
any extraordinary loss experience of SHB or Sleepy Hollow Bank.
Schedule 2.20
hereto sets forth all currently outstanding claims against SHB
or Sleepy Hollow
Bank under any insurance policy. The deposits of Sleepy Hollow
Bank are insured
by the FDIC in accordance with the FDIA, and Sleepy Hollow Bank
has paid all
assessments and filed all reports required by the FDIA.
2.21 Environmental Liability. Neither SHB nor Sleepy Hollow Bank
has
received any written notice of any legal, administrative,
arbitral or other
proceeding, claim or action and, to the knowledge of SHB and the
Sleepy Hollow
Bank, there is no governmental investigation of any nature
ongoing, in each case
that could reasonably be expected to result in the imposition,
on SHB or Sleepy
Hollow Bank of any liability arising under any local, state or
federal
environmental statute, regulation or ordinance including,
without limitation,
the Comprehensive Environmental Response, Compensation and
Liability Act of
1980, as amended, which liability would have a Material Adverse
Effect on SHB;
to the best knowledge of SHB, there are no facts or
circumstances which could
reasonably be expected to form the basis for any such
proceeding, claim, action
or governmental investigation that would impose any such
liability; and neither
SHB nor Sleepy Hollow Bank is subject to any agreement, order,
judgment, decree
or memorandum by or with any court, governmental authority,
regulatory agency or
third party imposing any such liability.
2.22 Administration of Trust Accounts. Sleepy Hollow Bank
has
properly administered all common trust funds and collective
investment funds and
all accounts for which
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it acts as a fiduciary or agent, including but not limited to
accounts for which
it serves as a trustee, agent, custodian, personal
representative, guardian,
conservator or investment advisor, in accordance with the terms
of the governing
documents and applicable state and federal law and regulation
and common law,
except where the failure to do so would not, individually or in
the aggregate,
have a Material Adverse Effect on SHB. Neither SHB, Sleepy
Hollow Bank, nor any
director, officer or employee of SHB or Sleepy Hollow Bank
acting on behalf of
SHB or Sleepy Hollow Bank, has committed any breach of trust
with respect to any
such common trust fund or collective investment fund or
fiduciary or agency
account, and the accountings for each such common trust fund or
collective
investment fund or fiduciary or agency account are true and
correct in all
material respects and accurately reflect the assets of such
common trust fund or
collective investment fund or fiduciary or agency account,
except for such
breaches and failures to be true, correct and accurate which
would not,
individually or in the aggregate, have a Material Adverse Effect
on SHB.
2.23 Intellectual Property. Except as set forth on Schedule
2.23
hereto, SHB or Sleepy Hollow Bank own the entire right, title
and interest in
and to, or has valid licenses or otherwise has the required
legal rights with
respect to, all of the Intellectual Property necessary in all
material respects
to conduct the business and operations of SHB and Sleepy Hollow
Bank as
presently conducted. None of such Intellectual Property is
subject to any
outstanding order, decree, judgment, stipulation, settlement,
lien, charge,
encumbrance or attachment. Upon consummation of the transactions
contemplated by
this Agreement, TFC and the TFC Subsidiaries will be entitled to
continue to use
all such Intellectual Property, without the payment of any fees,
licenses or
other payments (other than ongoing payments required under
license agreements
for software used by SHB or Sleepy Hollow Bank in previously
disclosed amounts
consistent with past practice).
2.24 Anti-Takeover Provisions. No "Business Combination,"
"Moratorium," "Control Share" or other state anti-takeover
statute or
regulation, (i) applies to the Merger or the Agreement, (ii)
prohibits or
restricts the ability of SHB or Sleepy Hollow Bank to perform
their respective
obligations under this Agreement, or their respective ability to
consummate the
transactions contemplated hereby, (iii) would have the effect of
invalidating or
voiding this Agreement or the Merger, hereof or thereof, or (iv)
would subject
TFC or any TFC Subsidiary to any material impediment or
condition in connection
with the exercise of any of its rights under this Agreement or
the Merger.
2.25 Insider Interests. All outstanding loans and other
contractual
arrangements (including deposit relationships) between SHB or
Sleepy Hollow Bank
and any officer, director or employee of SHB or Sleepy Hollow
Bank conform in
all material respects to the applicable rules and regulations
and requirements
of all applicable regulatory agencies which were in effect when
such loans and
other contractual arrangements were entered into. Except as set
forth in
Schedule 2.25, no officer, director or employee of SHB or Sleepy
Hollow Bank has
any material interest in any property, real or personal,
tangible or intangible,
used in or pertaining to the business of SHB or Sleepy Hollow
Bank.
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2.26 Registration Obligations. Neither SHB nor any SHB
Subsidiaries
are under any obligation, contingent or otherwise, which will
survive the Merger
by reason of any agreement to register any of its securities
under any of the
Securities Laws.
2.27 Derivative Transactions. Neither SHB nor any of its
Subsidiaries has entered into any futures contract, option
contract, interest
rate caps, interest rate floors, interest rate exchanges
agreement or other
derivative instruments, except in connection with the sale of
newly originated
mortgage loans and as set forth in SHB's Regulatory Reports.
2.28 Internal Financial Controls.
(a) SHB maintains for itself and its Subsidiaries a standard
system of accounting established and administered in accordance
with GAAP.
(b) Since December 31, 2006, (i) none of SHB, its
Subsidiaries, or any director or officer, or, to the knowledge
SHB, any
employee, accountant or auditor of SHB or any of its
Subsidiaries, has
received or otherwise had or obtained knowledge of any
complaint, allegation,
assertion or claim, whether written or oral, regarding the
accounting or
auditing practices and procedures of SHB or any of its
Subsidiaries or their
respective internal accounting controls and (ii) there have been
no internal
investigations regarding accounting or revenue recognition
discussed with,
reviewed by or initiated at the direction of the chief executive
officer,
chief financial officer, general counsel, the board of directors
or any
committee thereof.
(c) Since December 31, 2001, no attorney representing SHB or
any of its Subsidiaries, whether or not employed by SHB or any
subsidiary has
reported evidence of a material violation of securities laws,
breach of
fiduciary duty or similar violation by SHB or any Subsidiary or
any of their
respective officers, directors, employees or agents to the board
of directors
of SBH or any Subsidiary, to any committee thereof or to any
director or
officer of the SHB or any Subsidiary.
(d) To the knowledge of SHB, no employee of SHB or any
Subsidiary has provided or is providing information to any law
enforcement
agency regarding the commission or possible commission of any
crime or the
violation or possible violation of any applicable law. To the
knowledge of
SHB, none of SHB, the Subsidiaries, nor any officer, employee,
contractor,
subcontractor or agent of SHB or any Subsidiary has discharged,
demoted,
suspended, threatened, harassed or in any other manner
discriminated against
an employee of SHB or any Subsidiary in the terms and conditions
of
employment because of any act of such employee described in 18
U.S.C. Section
1514A(a).
2.29 Certain Bank Regulatory Matters. Except as set forth in
Schedule 2.29, SHB is not aware of, has not been advised of, and
has no reason
to believe in the existence of any facts or circumstances which
would cause it
or any of its Subsidiaries to be deemed to be (i) operating in
violation of The
Currency and Foreign Transactions Reporting Act and the
regulations promulgated
thereunder, as amended (the "Bank Secrecy Act"), the US Patriot
Act of 2001 and
the regulations promulgated thereunder, as amended (the "Patriot
Act"), the laws
and
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regulations promulgated and administered by the Office of
Foreign Asset Control
("OFAC"), any order issued with respect to anti-money laundering
by the United
States Department of Justice or the United States Department of
Treasury's
Financial Crimes Enforcement Network ("FinCEN"), any order
issued by OFAC, or
any other applicable anti-money laundering laws; or (ii) not in
satisfactory
compliance with the applicable privacy and customer information
requirements
contained in any privacy, data protection or security breach
notification laws,
including, without limitation, Title V of the Gramm Leach Bliley
Act and the
provisions of the information security program adopted pursuant
to 12 C.F.R.
Part 40. SHB is not aware of any facts or circumstances which
would cause it to
believe that any non-public customer information has been
disclosed to or
accessed by an unauthorized third person in a manner which would
cause it or any
of its Subsidiaries to undertake any remedial action. SHB or
Sleepy Hollow Bank
has adopted and implemented an anti-money laundering program
that contains
adequate and appropriate customer identification and
verification procedures
that comply with all applicable laws.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF TFC
TFC and Merger Sub hereby represent and warrant to SHB as
follows:
3.1 Capital Structure of TFC. The authorized capital stock of
TFC
consists of 15,000,000 shares of common stock, par value $0.10
per share ("TFC
Common Stock"), of which, as of September 30, 2007, 9,612,681
shares were issued
and 69,272 shares were held in treasury. As of December 31,
2006, no shares of
TFC Common Stock are reserved for issuance, except that 456,749
shares of TFC
Common Stock are reserved for future grants under the 2001
Tompkins Trustco,
Inc. Stock Option Plan and, as of the date hereof, 71,480 shares
of TFC Common
Stock have been granted but not yet exercised under the 2001
Tompkins Trustco,
Inc. Stock Option Plan. All outstanding shares of TFC capital
stock have been
duly authorized and validly issued and are fully paid and
(except as provided by
applicable law) nonassessable. None of the shares of TFC's
capital stock has
been issued in violation of the preemptive rights of any
person.
3.2 Organization, Standing and Authority of TFC. Each of TFC
and
Merger Sub is a duly organized corporation, validly existing and
in good
standing under the laws of its jurisdiction of formation, with
full corporate
power and authority to carry on its business as now conducted
and is duly
licensed or qualified to do business in the states of the United
States and
foreign jurisdictions where its ownership or leasing of property
or the conduct
of its business requires such qualification, except where the
failure to be so
licensed or qualified would not have a Material Adverse Effect
on TFC. TFC is
registered as a financial holding company under the BHC Act.
3.3 Ownership of TFC Subsidiaries; Capital Structure of TFC
Subsidiaries. TFC has no Subsidiary other than Merger Sub and
those Subsidiaries
disclosed in the TFC Annual Report other than certain
Subsidiaries not deemed
significant under the SEC's Regulation S-X. The outstanding
shares of capital
stock of the TFC Subsidiaries, including Merger Sub, have been
duly authorized
and validly issued and are fully paid and (except as
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provided in 12 U.S.C. Section 55 or Section 114 of the New York
Banking Law)
nonassessable and all such shares are directly or indirectly
owned by TFC free
and clear of all liens, claims and encumbrances. Except as
disclosed in the
Securities Documents, no TFC Subsidiary has or is bound by any
Rights which are
authorized, issued or outstanding with respect to the capital
stock of any TFC
Subsidiary and there are no agreements, understandings or
commitments relating
to the right of TFC to vote or to dispose of said shares. None
of the shares of
capital stock of any TFC Subsidiary has been issued in violation
of the
preemptive rights of any person.
3.4 Organization, Standing and Authority of TFC Subsidiaries.
Each
TFC Subsidiary is a duly organized corporation or banking
corporation, or other
legal business entity, validly existing and in good standing
under applicable
laws. Each TFC Subsidiary (i) has full power and authority to
carry on its
business as now conducted, and (ii) is duly licensed or
qualified to do business
in the states of the United States and foreign jurisdictions
where its ownership
or leasing of property or the conduct of its business requires
such licensing or
qualification and where failure to be licensed or qualified
would have a
Material Adverse Effect on TFC. Each TFC Subsidiary has all
federal, state,
local and foreign governmental authorizations necessary for it
to own or lease
its properties and assets and to carry on its business as it is
now being
conducted, except where the failure to be so authorized would
not have a
Material Adverse Effect on TFC. Mahopac National Bank is a
member in good
standing of the Federal Home Loan Bank of New York and owns the
requisite amount
of shares therein. All eligible deposits issued by Mahopac
National Bank are
insured by the FDIC through the Bank Insurance Fund to the full
extent permitted
under applicable law.
3.5 Authorized and Effective Agreement
(a) TFC and Merger Sub have all requisite corporate power
and
authority to enter into and perform all of its obligations under
this
Agreement and the Bank Plan of Merger. The execution and
delivery of this
Agreement and the Bank Plan of Merger a
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