SCHEDULE 14-A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant []
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
Landmark Financial Corp.
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(Name of Registrant as Specified In Its Charter)
Alan Schick, Luse Lehman Gorman Pomerenk & Schick, PC
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(Name of Person(s) Filling Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[ ] No fee required
[X] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
Common Stock par value $.10 per share
.......................................................................
2) Aggregate number of securities to which transaction applies:
152,508
.......................................................................
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
$21 per share
.......................................................................
4) Proposed maximum aggregate value of transaction:
$3.3 million
.......................................................................
5) Total fee paid:
$800
.......................................................................
[ ] Fee previously paid:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
Landmark Financial Corp.
May __, 2000
Dear Fellow Stockholder:
We cordially invite you to attend a special meeting of the stockholders of
Landmark Financial Corp. The meeting will be held at the Fort Rensselaer Club, 4
Moyer Street, Canajoharie, New York 13317, on ___________, June __, 2000 at
_____ .m., local time.
At the special meeting, you will be asked to approve an Agreement and Plan
of Merger that provides for us to be merged into a subsidiary of TrustCo Bank
Corp NY ("TrustCo"). Upon completion of the merger, each outstanding share of
our common stock (other than shares as to which dissenters' rights have been
asserted and duly perfected in accordance with Delaware law) will be converted
into the right to receive a payment, in cash without interest, equal to $21.00
per share. Upon completion of the merger you will no longer have any interest in
Landmark Financial Corp. nor will you have any interest in TrustCo.
Completion of the merger is subject to certain conditions, including
receipt of regulatory approvals and the approval of the Agreement and Plan of
Merger by the affirmative vote of a majority of our outstanding shares of common
stock.
We urge you to read the attached proxy statement carefully. It describes
the Agreement and Plan of Merger in detail and includes a copy of the Agreement
and Plan of Merger as Appendix A.
Your board of directors has unanimously approved the Agreement and Plan of
Merger and recommends that you vote "FOR" the merger because the board believes
it to be in the best interests of our stockholders. Your board of directors has
received the opinion of RP Financial, LC that the consideration to be received
by Landmark Financial Corp.'s shareholders is fair from a financial point of
view.
It is very important that your shares be represented at the special
meeting. Whether or not you plan to attend, please complete, date and sign the
enclosed proxy card and return it promptly in the postage-paid envelope we have
provided. Not returning your card or not instructing your broker how to vote any
shares held for you in "street name" will have the same effect as a vote against
the merger.
On behalf of the board, I thank you for your prompt attention to this
important matter.
Sincerely,
Gordon E. Coleman
President and Chief Executive Officer
Landmark Financial Corp.
211 Erie Boulevard
Canajoharie, New York 13317
(518) 673-2012
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE__, 2000
NOTICE IS HEREBY GIVEN that a special meeting of stockholders of Landmark
Financial Corp. ("Landmark") will be held at the Fort Rensselaer Club, 4 Moyer
Street, Canajoharie, New York 13317, on June __, 2000, commencing at _____ .m.,
local time.
A proxy card and a proxy statement for the meeting are enclosed. The
meeting is for the purpose of considering and acting upon:
1. The approval of the Agreement and Plan of Merger (the "merger
agreement") dated as of February 21, 2000, between Landmark, Landmark
Acquisition Corp., a newly formed subsidiary of TrustCo, and TrustCo, pursuant
to which each outstanding share of common stock of Landmark (other than shares
as to which dissenters' rights have been asserted and duly perfected in
accordance with Delaware law) shall be converted into the right to receive a
payment, in cash of $21.00; and
2. Such other matters as may properly come before the meeting or any
adjournments or postponements thereof. We are not aware of any other business to
come before the meeting.
Our stockholders of record at the close of business on May __, 2000 are the
stockholders entitled to vote at the meeting and any adjournments or
postponements thereof.
Stockholders of Landmark who comply with the requirements of Section 262 of
the Delaware General Corporation Law will be entitled, if the merger is
consummated, to seek an appraisal of their shares of common stock.
In the event there are not sufficient votes to approve the proposal for the
adoption of the merger agreement at the time of the meeting, the meeting may be
adjourned in order to permit further solicitation by Landmark Financial Corp.
Approval of the merger agreement requires the affirmative vote of the
holders of a majority of the outstanding shares of Landmark common stock. A
failure to vote or a vote to abstain will have the same effect as a vote against
the merger agreement.
You are requested to complete, sign and date the enclosed proxy card, which
is solicited on behalf of the board of directors, and to mail it promptly in the
enclosed postage-paid envelope. The proxy card will not be used if you attend
and vote at the meeting in person. If you are a stockholder whose shares are not
registered in your name, you will need additional documentation from the holder
of record of your shares to vote in person at the meeting. The prompt return of
proxies will save us the expense of further requests for proxies.
By Order of the board of directors,
Gordon E. Coleman
President and Chief Executive Officer
Canajoharie, New York
May __, 2000
YOUR BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND
RECOMMENDS THAT YOU VOTE "FOR" ADOPTION OF THE MERGER AGREEMENT.
SUMMARY OF TERMS
This is a summary of the most material terms of the transaction between
Landmark and TrustCo.
o If the merger occurs, each stockholder of Landmark will
receive, for each share he or she owns, an amount in cash
equal to $21.00. See the discussion under the caption "Merger
Price; Treatment of Options" beginning at page 13 for more
information.
o The merger cannot occur unless Landmark's stockholders approve
the merger by at least a majority of the outstanding shares of
common stock and TrustCo obtains all regulatory approvals
necessary to complete the merger. See the discussion under the
caption "Conditions to the Merger" beginning at page ____ for
more information.
o The board of directors of Landmark has approved the merger and
has unanimously recommended that Landmark's stockholders vote
in favor of it. See the discussion under the caption "Reasons
for the Merger; Recommendation of the board of directors"
beginning at page ____ for more information.
o RP Financial, LC ("RP Financial") has issued a fairness
opinion that the amount that will be paid to Landmark's
stockholders is fair from a financial point of view. See the
discussion under the caption "Opinion of RP Financial"
beginning at page ____ for more information.
o Landmark has granted TrustCo an option to acquire up to 19.9%
of Landmark common stock if Landmark agrees to be acquired by
a party other than TrustCo. See the discussion under the
caption "Stock Option Agreement" beginning at page ____ for
more information.
o In general, Landmark has agreed that it will not seek or
encourage a competing transaction to acquire Landmark, except
in very limited situations in which an unsolicited offer is
made. See the discussion under the caption "Conduct of
Business Prior to the Closing Date" beginning at page ____ for
more information.
o The directors and executive officers of Landmark have agreed
to vote their shares of Landmark common stock in favor of the
merger. See the discussion under the caption "Voting
Agreements" beginning at page ____ for more information.
o Officers and directors of Landmark who have stock options and
restricted stock awards under Landmark's stock benefit plans
will receive payments for their awards based upon the merger
price per share. They and other employees will also receive
other benefits from the merger. See the discussion under the
caption "Interests of Certain Persons Under the Merger"
beginning at page ____ for more information.
o Stockholders who dissent from the merger have the right to
receive the appraised value of their shares if the merger is
consummated, provided that they satisfy certain requirements
of Delaware law. See the discussion under the caption "Rights
of Dissenting Stockholders" beginning at page ____ for more
information and Appendix C.
o TrustCo has agreed to enter into an employment agreement with
Landmark's President and Chief Executive Officer which will
provide for a three-year term at a salary of $125,000 plus use
of a car at the effective time of the merger.
o TrustCo shall establish an advisory board which shall be
composed of Landmark's board of directors.
TABLE OF CONTENTS
Page
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INTRODUCTION...................................................................2
THE PARTIES TO THE MERGER......................................................2
THE SPECIAL MEETING............................................................3
Place, Time and Date..................................................3
Matters to Be Considered..............................................3
Record Date; Vote Required............................................3
Beneficial Ownership of Landmark Common Stock.........................4
Proxies .............................................................4
Our Independent Auditors Will Be Available at the Meeting.............5
THE MERGER.....................................................................5
General .............................................................5
Background of the Merger..............................................5
Reasons for the Merger; Recommendation of the Board of Directors......7
Opinion of RP Financial...............................................7
Merger Price; Treatment of Options...................................11
Surrender of Certificates............................................12
Representations and Warranties.......................................12
Conditions to the Merger.............................................13
Conduct of Business Prior to the Closing Date........................14
Voting Agreements....................................................16
Other Agreements.....................................................16
Required Approvals...................................................16
Waiver and Amendment.................................................17
Termination..........................................................17
Stock Option.........................................................18
Interests of Certain Persons in the Merger...........................21
Rights of Dissenting Stockholders....................................22
Certain Federal Income Tax Consequences..............................25
Accounting Treatment of the Merger...................................26
Expenses of the Merger...............................................26
BENEFICIAL OWNERSHIP OF LANDMARK COMMON STOCK
BY CERTAIN BENEFICIAL OWNERS AND MANAGEMENT..........................27
STOCKHOLDER PROPOSALS.........................................................27
OTHER .....................................................................28
APPENDIX A - AGREEMENT AND PLAN OF MERGER
APPENDIX B - STOCK OPTION AGREEMENT
APPENDIX C - DISSENTER'S RIGHTS STATUTE
APPENDIX D - RP FINANCIAL FAIRNESS OPINION
LANDMARK FINANCIAL CORP.
PROXY STATEMENT
INTRODUCTION
This proxy statement is being furnished to the stockholders of Landmark
Financial Corp. ("Landmark") in connection with the solicitation of proxies by
our board of directors for use at the special meeting of stockholders, and any
adjournment or postponement thereof, to be held at the time and place set forth
in the accompanying notice of special meeting. It is anticipated that the
mailing of this proxy statement and the enclosed proxy card will commence on or
about May __, 2000.
At the special meeting, stockholders of Landmark will be asked to approve
and adopt an Agreement and Plan of Merger (the "merger agreement") dated as of
February 21, 2000, a copy of which is attached hereto as Appendix A.
Upon the completion of the merger of Landmark Acquisition Co., a newly
formed subsidiary of TrustCo Bank Corp NY ("TrustCo"), with and into Landmark,
each outstanding share of our common stock (other than shares as to which
dissenters' rights have been asserted and duly perfected in accordance with
Delaware law and other than treasury shares and certain shares held by TrustCo
or us) will be converted into the right to receive a payment, in cash without
interest, equal to $21.00.
For a more complete description of the merger agreement and the terms of
the merger, see "The Merger."
Our common stock trades over the counter under the symbol "LMFC.OB." On
February 18, 2000, the last full trading day prior to the public announcement of
the execution of the merger agreement, the closing sales price per share of our
common stock was $20.00. The last closing sales price per share of our common
stock as of May __, 2000, the latest practicable trading day before the printing
of this proxy statement, was $_____. See "Landmark Stock Prices and Dividend
Information."
All stockholders are urged to read this proxy statement carefully and in
its entirety.
THE PARTIES TO THE MERGER
Landmark Financial Corp.
Landmark was organized in June 1997 for the purpose of serving as the
holding company for Landmark Community Bank. Landmark has not engaged in any
material operations to date. Landmark has no significant assets other than the
outstanding capital stock of the Bank, net proceeds from its mutual-to- stock
conversion and a note evidencing its loan to the Bank's employee stock ownership
plan. Landmark's principal business is overseeing and directing the business of
the Bank and investing the net conversion proceeds retained by it.
Landmark Community Bank is a federally-chartered stock savings bank
headquartered in Canajoharie, New York. It was chartered in 1925 as a New York
savings and loan association under the name Canajoharie Building Savings and
Loan Association. In 1997, it converted to a federal mutual savings
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bank charter and changed its name to Landmark Community Bank. Its deposits are
insured up to the maximum allowable amount by the FDIC. Through its offices it
serves communities located in Montgomery County, New York.
At December 31, 1999, Landmark had consolidated assets of $26,024,323,
deposits of $21,900,034 and stockholders' equity of $1,957,729.
The executive office of Landmark is located at 211 Erie Boulevard,
Canajoharie, New York 13317- 1117. Its telephone number at that address is (518)
673-2012.
TrustCo Bank Corp NY
TrustCo is a one-bank holding company having its principal place of
business at 320 State Street, Schenectady, New York 12305. TrustCo was
incorporated under the laws of New York in 1981 to acquire all of the
outstanding stock of TrustCo Bank, National Association, formerly known as
TrustCo Bank New York, and prior to that The Schenectady Trust Company.
Following receipt of necessary regulatory approvals, TrustCo commenced business
on July 1, 1982. In 1991, TrustCo acquired, for a combination of cash and
TrustCo common stock, Home & City Savings Bank ("Home & City") located in
Albany, New York. At the time of the acquisition, Home & City operated 16
branches, and had total assets of approximately $848 million, deposits of $750
million and shareholders' equity of $93 million. Through policy and practice,
TrustCo continues to emphasize that it is an equal opportunity employer. There
were 455 full-time equivalent employees at year end 1999. TrustCo had 11,252
shareholders of record as of December 31, 1999, and the closing price of the
TrustCo common stock at that date was $13.25. At December 31, 1999, TrustCo had
consolidated assets of $2,364,022,000, deposits of $1,994,909,000 and
stockholders' equity of $166,356,000.
THE SPECIAL MEETING
Place, Time and Date
The special meeting is scheduled to be held at______ .m., local time, on
June__, 2000, at the Fort Rensselaer Club, 4 Moyer Street, Canajoharie, New
York.
Matters to Be Considered
At the special meeting, or any adjournment or postponement thereof, our
stockholders will be asked to approve a proposal to adopt the merger agreement.
Our stockholders also may consider and vote upon such other matters as are
properly brought before the special meeting. As of the date hereof, we know of
no business that will be presented for consideration at the special meeting,
other than the matters described in this proxy statement.
Record Date; Vote Required
Only our stockholders of record at the close of business on May __, 2000
(the "Record Date") are entitled to notice of and to vote at the special
meeting. As of the Record Date, there were 154,508 shares of our common stock
outstanding and entitled to vote at the special meeting.
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Each of our stockholders will be entitled to cast one vote per share held
at the special meeting. Such vote may be exercised in person or by properly
executed proxy. The presence, in person or by properly executed proxy, of the
holders of a majority of our outstanding shares of common stock entitled to vote
at the special meeting is necessary to constitute a quorum. Abstentions and
broker non-votes will be treated as shares present at the special meeting for
purposes of determining the presence of a quorum.
The affirmative vote of the holders of at least a majority of our
outstanding shares of common stock entitled to vote at the special meeting is
required for approval of the merger agreement. As a result, abstentions and
broker non-votes will have the same effect as votes against the approval of the
merger agreement.
Approval of the merger agreement by our stockholders is a condition to
completion of the merger. See "The Merger--Conditions to the Merger."
Beneficial Ownership of Landmark Common Stock
As of the Record Date, our directors and executive officers and their
affiliates beneficially-owned in the aggregate 19,786 shares (excluding stock
options) of our common stock, or 12.81% of our outstanding shares of common
stock entitled to vote at the special meeting. Our directors have each agreed to
vote their shares in favor of the merger agreement.
Proxies
Shares of our common stock represented by properly executed proxies
received prior to or at the special meeting will, unless such proxies have been
revoked, be voted at the special meeting and any adjournments or postponements
thereof in accordance with the instructions indicated in the proxies. If no
instructions are indicated on a properly executed proxy, the shares will be
voted FOR the adoption of the merger agreement.
Any proxy given pursuant to this solicitation or otherwise may be revoked
by the person giving it at any time before it is voted by delivering to Gordon
E. Coleman, President and Chief Executive Officer of Landmark, at 211 Erie
Boulevard, Canajoharie, New York 13317 or at the special meeting on or before
the taking of the vote at the special meeting, a written notice of revocation
bearing a later date than the proxy or a later dated proxy relating to the same
shares of common stock or by attending the special meeting and voting in person.
Attendance at the special meeting will not by itself constitute the revocation
of a proxy.
If any other matters are properly presented at the special meeting for
consideration, the persons named in the proxy or acting thereunder will have
discretion to vote on such matters in accordance with their best judgment. As of
the date hereof, we know of no such other matters.
We will bear the cost of solicitation of proxies. We will reimburse
brokerage firms and other custodians, nominees and fiduciaries for reasonable
expenses incurred by them in sending proxy materials to the beneficial owners of
our common stock. In addition to solicitation by mail, our directors, officers
and regular employees may solicit proxies personally or by telegraph or
telephone without additional compensation.
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In addition to solicitation by mail, our directors, officers and employees,
who will not receive additional compensation for such services, may solicit
proxies from our stockholders, personally or by telephone or other forms of
communication. Brokerage houses, nominees, fiduciaries and other custodians will
be requested to forward soliciting materials to beneficial owners and will be
reimbursed for their reasonable expenses incurred in sending proxy material to
beneficial owners. We will bear our own expenses in connection with the
solicitation of proxies for the special meeting.
You are requested to complete, date and sign the accompanying form of proxy
and to return it promptly in the enclosed postage-paid envelope.
You should not forward stock certificates with your proxy cards.
Our Independent Auditors Will Be Available at the Meeting
Our independent auditors, Harvazinski & Montanye LLP, will have one or more
representatives at the special meeting who will have an opportunity to make a
statement, if they so desire, and who will be available to respond to
appropriate questions.
THE MERGER
The information in this proxy statement concerning the terms of the merger
is qualified in its entirety by reference to the full text of the merger
agreement, which is attached as Appendix A and incorporated by reference herein.
All stockholders are urged to read the merger agreement in its entirety.
General
As soon as possible after the conditions to consummation of the merger
described below have been satisfied or waived, and unless the merger agreement
has been terminated as provided below, Landmark and Landmark Acquisition Co.
will file Articles of Merger with the State of Delaware. The merger will become
effective at the time and on the date of the filing of the Articles of Merger
with the State of Delaware, unless a later date and time is specified as the
effective time in such Articles of Merger. Pursuant to the merger agreement,
Landmark Acquisition Co. will first be merged with and into us, with us
surviving as a subsidiary of TrustCo.
Upon consummation of the merger, our stockholders will be entitled to
receive the Merger Price in consideration for each of their shares of Landmark
common stock held and thereupon shall cease to be stockholders of Landmark, and
our separate existence and corporate organization shall cease. TrustCo shall
succeed to all the rights and property of Landmark.
Background of the Merger
Landmark was organized in 1997 in connection with the conversion and stock
offering of Landmark Community Bank. At the time of the conversion, management
and the board of directors sought to use the net proceeds from the conversion to
expand the asset size of Landmark Community Bank and to diversify the products
it offered to the Canajoharie community.
In the fall of 1999, management received an unsolicited request to discuss
the possible acquisition of Landmark for approximately book value, or $12.63 per
share. Prior to that time the board of directors intended to maintain Landmark's
independence. After consideration of the indication of interest, and in light of
the fact that up until the unsolicited request, the board had not seriously
considered the sale of Landmark,
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the board of directors decided that it was in Landmark's, its shareholders' and
the community's best interests for Landmark not to further pursue discussions.
On February 4, 2000, Robert Cushing, the Chief Financial Officer of TrustCo
contacted Landmark's President and Chief Executive Officer, Gordon E. Coleman
and requested the opportunity to hold a meeting with Robert McCormick, TrustCo's
President. The parties agreed to meet on February 9, 2000. At the February 9,
2000 meeting, Messrs. McCormick and Cushing indicated their interest in having
TrustCo acquire Landmark for cash at a substantial premium over book value. Mr.
McCormick indicated that TrustCo desired to maintain Landmark Community Bank as
a separate savings association subsidiary and that all existing employees,
including management, would be expected to remain with Landmark Community Bank
as part of any acquisition. Mr. McCormick briefly outlined the business plan
they anticipated could occur with Landmark Community Bank continuing as a
separate subsidiary of TrustCo. Messrs. McCormick and Cushing discussed
TrustCo's strong financial condition and significantly bigger asset size as a
source of strength for Landmark Community Bank.
Following the meeting, Mr. Coleman contacted Landmark's Chairman of the
Board. In response to TrustCo's proposal, Landmark's board of directors held a
special meeting on February 11, 2000. At the special meeting, the board
discussed the particulars of TrustCo's proposal and TrustCo's reputation in
upstate New York, as well as the ability of TrustCo to obtain regulatory
approval of a transaction involving Landmark. Although the board of directors
expressed a desire to remain independent, they acknowledged that TrustCo had
significant resources that will permit Landmark to offer the Canajoharie
community greater banking products and services than Landmark could currently
provide or expect to provide in the near term. Consequently, at that time, the
board of directors authorized management to continue discussions with TrustCo in
order to get more details regarding TrustCo's proposal and TrustCo's intentions
with respect to continuing Landmark's operations following an acquisition. Mr.
Coleman conveyed to Mr. Cushing the board's reaction to TrustCo's proposal, and
asked that TrustCo provide Landmark with a written term sheet setting forth the
particulars of an acquisition proposal.
At this time, Mr. Coleman advised counsel of developments to-date. Mr.
Coleman was advised to hold a special board meeting to discuss TrustCo's written
proposal in detail. On February 11, 2000, the board of directors held a special
meeting. Prior to the special meeting, Landmark's President and Chairman of the
Board held discussions with the appraisal firm that assisted Landmark Community
Bank in its conversion, to inquire as to current pricing multiples for savings
institutions similar to Landmark that recently sold their business. Management
was informed that based upon current market pricing of selling savings
associations of Landmark's size and earnings capacity, Landmark would be
expected to obtain between $16.00 and $19.00 a share, or 126% to 150% of book
value in a sale. TrustCo's proposal as set forth in the term sheet was to
acquire Landmark at a price of $21.00 per share. Counsel then informed the board
of directors in general of its fiduciary duties in the merger and acquisition
context. The board of directors then proceeded to discuss the offer made by
TrustCo. Following completion of their discussions, it was determined to
continue discussions with TrustCo with a goal of entering into a definitive
agreement.
On February 17, 2000, Landmark engaged RP Financial, LC to analyze
TrustCo's proposal with a view towards preparing an opinion as to the fairness
of the transaction to Landmark's shareholders from a financial point of view.
During the week of February 14-18, the parties conducted their due diligence
investigation of each other. During this time, Landmark and TrustCo, primarily
through their respective counsel, negotiated a definitive merger agreement which
was submitted to Landmark's board of directors at a special meeting held on
February 21, 2000. At this special meeting, RP Financial, LC provided the board
of directors with a detailed analysis of TrustCo and TrustCo's offer. RP
Financial, LC discussed in detail the criteria and methodology upon which it
analyzed TrustCo's offer and concluded that the consideration provided to
Landmark's shareholders was fair from a financial point of view. Counsel then
reviewed the
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definitive merger agreement, together with exhibits, paragraph by paragraph, and
responded to questions from directors. Following the board of directors'
discussion, the board of directors voted to enter into the merger agreement.
Reasons for the Merger; Recommendation of the Board of Directors
Our board of directors believes that the terms of the merger agreement,
which are the product of arm's length negotiations between representatives of
TrustCo and Landmark, are in the best interests of Landmark and our
stockholders. In the course of reaching its determination, our board of
directors considered a number of factors, including:
(a) the Merger Price to be paid to our stockholders in relation to the
market value, book value, earnings per share and dividend rates of our common
stock;
(b) information concerning our financial condition, results of operations,
capital levels, asset quality and prospects as an independent company;
(c) industry and economic conditions;
(d) the impact of the merger on the depositors, employees, customers and
communities served by us through expanded commercial, consumer and retail
banking products and service;
(e) the opinion of our financial advisor as to the fairness of the Merger
Price from a financial point of view to the holders of our common stock;
(f) the general structure of the transaction and the compatibility of
management and business philosophy;
(g) the financial strength and asset size of TrustCo;
(h) an overall assessment of our strategic alternatives; and
(i) the likelihood of receiving the requisite regulatory approvals in a
timely manner.
In making its determination, our board of directors did not ascribe any
relative or specific weights to the factors which it considered.
Our board of directors believes that the merger is in the best interest of
Landmark and our stockholders. The board of directors unanimously recommends
that our stockholders vote for the adoption of the merger agreement.
Opinion of RP Financial
Landmark retained RP Financial, LC as its financial advisor in connection
with the transactions contemplated by the merger agreement and to evaluate the
financial terms of the merger. RP Financial, LC was selected by the board to act
as its financial advisor because of RP Financial, LC's expertise in the
valuation of businesses and their securities for a variety of purposes,
particularly its expertise in connection with mergers and acquisitions of
financial institutions, including banks. RP Financial, LC was engaged by
Landmark pursuant to terms set forth in an engagement letter dated February 17,
2000. RP Financial, LC estimates that it will receive from Landmark total
professional fees of approximately $20,000 of which
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approximately $2,500 has been paid to date, plus reimbursement of certain
out-of-pocket expenses for its services in connection with the merger.
On February 21, 2000, RP Financial, LC delivered its oral opinion to the
board that, as of such date, the per share purchase price to be paid by TrustCo
for each share of common stock pursuant to the merger agreement was fair, from a
financial point of view, to the shareholders of Landmark.
RP Financial, LC subsequently delivered its written opinion to this effect
to the board on __________, 2000. The full text of this written opinion of RP
Financial, LC dated as of __________, 2000, which sets forth assumptions made,
matters considered and limitations on the review undertaken in connection with
the opinion, is attached hereto as Appendix D and is incorporated herein by
reference. Shareholders are urged to, and should, read such opinion in its
entirety.
The opinion of RP Financial, LC is directed toward the consideration to be
received by the shareholders and does not constitute a recommendation to any
shareholder to vote in favor of approval of the merger agreement and the merger.
RP Financial, LC has consented to the inclusion and description of its written
opinion in the Proxy Statement.
In rendering this opinion, RP Financial, LC reviewed the following
material:
(1) the merger agreement, dated February 21, 2000, including exhibits;
(2) the following information for Landmark and Landmark Community Bank:
(a) audited financial statements for the fiscal years ended March 31,
1995 through 1999; and
(b) shareholder, regulatory and internal financial and other reports
through December 31, 1999--all with regard to balance sheet and
off-balance sheet composition profitability, interest rates,
volumes, maturities, market values, trends, credit risk, interest
rate risk, liquidity risk and operations;
(3) discussions with Landmark's management regarding past and current
business, operations, financial condition and future prospects;
(4) an analysis of the pro forma impact of alternative strategies as an
independent institution;
(5) competitive, economic and demographic characteristics in the local
market area;
(6) the potential impact of regulatory and legislative changes on savings
institutions;
(7) the financial terms of other recently completed and pending
acquisitions of savings institutions in New York and regionally with
similar characteristics; and
(8) TrustCo's financial condition as of December 31, 1999 regarding the
perceived ability to complete the merger from a cash and capital
perspective.
In rendering its opinion, RP Financial, LC relied, without independent
verification, on the accuracy and completeness of the information concerning
Landmark which was furnished by Landmark to RP Financial, LC for review for
purposes of its opinion, as well as publicly available information regarding
other financial institutions and economic and demographic data. Landmark did not
restrict RP Financial, LC as
8
to the material it was permitted to review. RP Financial, LC did not perform or
obtain any independent appraisals or evaluations of the assets and liabilities
and potential and/or contingent liabilities of Landmark.
RP Financial, LC expresses no opinion on matters of a legal, regulatory,
tax or accounting nature or the ability of the merger as set forth in the merger
agreement to be consummated. In rendering its opinion, RP Financial, LC assumed
that, in the course of obtaining the necessary regulatory and governmental
approvals for the proposed merger, no restriction will be imposed on TrustCo
that would have a material adverse effect on the ability of the merger to be
consummated as set forth in the merger agreement.
RP Financial, LC's opinion was based solely upon the information available
to it and the economic, market and other circumstances as they existed as of
__________, 2000; events occurring after the most recent date could materially
affect the assumptions used in preparing the opinion.
The Bank has agreed to indemnify and hold harmless, to the fullest extent
permitted by law, RP Financial, LC, any affiliates of RP Financial, LC, and the
respective directors, officers, agents and employees of RP Financial, LC or
their successors and assigns who act for or on behalf of RP Financial, LC in
connection with the services called for under the engagement letter from and
against and all losses, claims, damages and liabilities, joint or several, that
RP Financial, LC may become obligated to pay, to which RP Financial, LC may
become subject or for which RP Financial, LC may become liable, in connection
with any of the services rendered pursuant to, or matters that are the subject
or arise out of, the services rendered pursuant to the engagement letter.
Landmark will be under no obligation to indemnify or hold harmless RP Financial,
LC if a court of competent jurisdiction determines by a final non appealable
judgment that RP Financial, LC was negligent or acted in bad faith with respect
to any actions or omissions of RP Financial, LC related to a matter for which
indemnification is sought. Any time devoted by employees of RP Financial, LC to
situations for which indemnification is provided is an indemnifiable cost
payable by Landmark at the normal hourly professional rate chargeable by such
employee. Landmark is required to pay for or reimburse the reasonable expenses,
including attorney's fees, incurred by RP Financial, LC in advance of the final
disposition of any proceeding within thirty (30) days of the receipt of such
request if RP Financial, LC furnishes Landmark:
(1) a written statement of RP Financial, LC's good faith belief that it is
entitled to indemnification; and
(2) a written undertaking to repay the advance if it ultimately is
determined in a final adjudication of such proceeding that it is not
entitled to such indemnification.
It is a condition to the consummation of the merger, that RP Financial, has
not withdrawn its opinion prior to the Special Meeting (see "--Conditions to the
Merger").
In connection with rendering its opinion dated February 21, 2000, and
updated as of __________, 2000, RP Financial, LC performed a variety of
financial analyses that are summarized below. Although the evaluation of the
fairness, from a financial point of view, of the merger consideration was to
some extent subjective based on the experience and judgment of RP Financial, LC
and not merely the result of mathematical analyses of financial data, RP
Financial, LC relied, in part, on the financial analyses summarized below in its
determinations. The preparation of a fairness opinion is a complex process and
is not necessarily susceptible to partial analyses or summary description. RP
Financial, LC believes its analyses must be considered as a whole and that
selecting portions of such analyses and factors considered by RP Financial, LC
without considering all such analyses and factors could create an incomplete
view of the process underlying RP Financial, LC's opinion. In its analyses, RP
Financial, LC took into account its assessment of general business, market,
monetary, financial and economic conditions, industry performance
9
and other matters, many of which are beyond the control of Landmark., as well as
RP Financial, LC's experience in securities valuation, its knowledge of
financial institutions, and its experience in similar transactions. With respect
to the comparable transactions analysis described below, no public company
utilized as a comparison is identical to Landmark and such analyses necessarily
involve complex considerations and judgments concerning the differences in
financial and operating characteristics of the companies and other factors that
could affect the acquisition values of the companies concerned. The analyses
were prepared solely for purposes of RP Financial, LC providing its opinion as
to the fairness of the merger consideration and do not purport to be appraisals
or necessarily reflect the prices at which businesses or securities actually may
be sold. Any estimates contained in RP Financial, LC's analyses are not
necessarily indicative of future results or values, which may be significantly
more or less favorable than such estimates. None of the analyses performed by RP
Financial, LC was assigned a greater significance by RP Financial, LC than any
other.
Comparable Transactions Analysis. RP Financial, LC compared the merger on
the basis of acquisition pricing multiples or ratios of reported earnings, book
value, tangible book value, assets and tangible book premium to core deposits of
Landmark implied by the merger consideration to be paid to the holders of
Landmark common stock with the same ratios in two groups of pending and
completed acquisitions of publicly-traded and non-publicly traded thrifts and
thrift holding companies from 1997 to February 21, 2000; all New York thrifts
with assets less than $200 million (Small New York Thrift Group); and all
regional thrifts with assets less than $200 million (Small Regional Thrift
Group). The median acquisition pricing multiples or ratios at announcement for
these two groups are set forth below:
Acquisition of
Small New York Small Regional Landmark
Thrift Group(1) Thrift Group(1) Financial Corp.(2)
--------------- --------------- ------------------
Price/Book.............................. 156.79% 162.48% 165.39%
Price/Tangible book..................... 156.79% 162.48% 165.39%
Price/Earnings (trailing 12 months)..... 26.57x 26.20x 40.28x
Price/Assets............................ 18.27% 17.86% 12.44%
Tangible book premium/core deposits..... 10.46% 10.44% 9.58%
- -------------------------
(1) Included pending and completed acquisition transactions announced 1997 to
present.
(2) As of or for the 12 months ended December 31, 1999.
In comparison to the Small New York Thrift Group medians, Landmark was
smaller, had a lower capital level, reported lower profitability prior to the
merger announcement both in terms of return on average assets and return on
equity and maintained lower non-performing assets and a more favorable reserve
coverage ratio. In comparison to the Small Regional Thrift Group medians,
Landmark was smaller, had a lower capital level, reported lower profitability on
a return on average assets basis and a lower return on average equity and
maintained lower non-performing assets and a more favorable reserve coverage
ratio. Landmark's acquisition pricing multiples or ratios based on the merger
consideration for price/earnings, price/book, price/tangible book and tangible
book premium/core deposits are consistent with or higher than the respective
median of these two groups, based on Landmark's financial statements as of or
for the 12 months ended December 31, 1999: 40.28 times fully diluted
earnings;165.39 % of reported and tangible book value; and 9.58% tangible book
premium on core deposits.
No company or transaction used in this composite is identical to Landmark
Financial Corp. or the merger. Accordingly, an analysis of the results of the
foregoing is not mathematical; rather, it involves complex considerations and
judgments concerning differences in financial and operating characteristics of
the companies involved and other factors that could affect the public trading
values of the securities of the company or companies to which they are being
compared.
10
Discounted Cash Flow Analysis. In applying the discounted cash flow
analysis, RP Financial, LC estimated the present value of both future dividends
over a five year period and a terminal value at the end of the fifth year,
reflecting alternative strategies in comparison to a continuation of Landmark's
recent operating strategy, growth and profitability. Such strategies included:
slower growth, payment of dividends, and slower growth with use of leverage. The
price/tangible book value and price/earnings multiples utilized to determine the
terminal value range were derived from the comparable transaction analyses
discussed above. The cash flows were then discounted to their present value
based on a 15% discount rate taking into consideration the earnings
capitalization rate of publicly-traded thrifts, the treasury yield curve (i.e.,
the risk- free rate) and perceived investment risks. The merger consideration
exceeds the upper end of the range of discounted cash flows based on these
alternative scenarios.
The dollar amounts per share of the discounted cash flow analyses ranged
from $16.17 per share to $18.48 per share, as follows for each of the scenarios
analyzed:
Base case.............................. $ 18.48
Slower growth.......................... $ 17.40
Payment of dividends................... $ 16.17
Slower growth with leverage............ $ 17.73
Merger Price; Treatment of Options
Upon completion of the merger, each outstanding share of our common stock
(other than shares as to which dissenters' rights have been asserted and duly
perfected in accordance with Delaware law) shall be converted into and represent
the right to receive a payment, in cash without interest, equal to $21.00.
In addition, each holder of a Landmark option then outstanding shall
receive cash in settlement thereof from TrustCo in an amount determined by
multiplying the excess of the Merger Price over the applicable exercise price
per share of such option, multiplied by the number of shares of our common stock
subject to such Landmark option. The cash will be paid by TrustCo when the
holder of the Landmark option executes an agreement canceling the Landmark
option in exchange for the cash payment. The aggregate amount to be paid by
TrustCo in connection with the merger is expected to be approximately $3.4
million, assuming none of the outstanding Landmark options are exercised prior
to completion of the merger.
Surrender of Certificates
No later than five business days after the completion of the merger,
_____________________, acting as the exchange agent of TrustCo, will mail or
make available to all holders of record of our common stock a notice and letter
of transmittal, together with instructions for the exchange of their common
stock certificates for cash. Until so exchanged, each certificate representing
our common stock outstanding immediately prior to the completion of the merger
shall be deemed for all purposes to evidence the right to receive the Merger
Price into which each such share is to be converted. You should not send in your
certificates of Landmark common stock until you receive further instructions.
Representations and Warranties
The merger agreement contains representations and warranties of Landmark
and TrustCo that are customary in merger transactions, including, but not
limited to, representations and warranties concerning:
(1) the organization, good standing and corporate power and authority of
Landmark and TrustCo to carry on their respective businesses;
11
(2) the due authorization, execution, delivery and enforceability of the
merger agreement;
(3) due organization of subsidiaries of Landmark and TrustCo;
(4) the consents or approvals required, and the lack of conflicts or
violations under applicable certificates of incorporation, charters,
bylaws, instruments and laws, with respect to the transactions
contemplated by the merger agreement;
(5) litigation in which either TrustCo or Landmark is a party;
(6) the absence of material adverse changes;
(7) the documents filed by Landmark with the OTS and other regulatory
agencies;
(8) the conduct by Landmark's business in the ordinary course and the
absence of certain changes;
(9) the absence of regulatory enforcement matters, actions, suits, claims
or proceedings instituted, pending, or threatened against Landmark;
(10) all tax returns filed by Landmark;
(11) Landmark's benefit plans and employee relations;
(12) environmental matters;
(13) the absence of brokers, finders or financial advisors, other than RP
Financial;
(14) the financial statements of the respective parties; and,
(15) TrustCo's ability to have sufficient funds to satisfy its obligations
under the merger agreement.
We also made certain additional representations and warranties regarding
environmental matters, the adequacy of our insurance coverage, tax matters, our
employee benefit plans, certain contracts and properties, the accuracy of the
information in this proxy statement, that our data processing systems are Year
2000 compliant, compliance with laws, labor matters, material interests of our
officers, directors, employees and associates pertaining to our business, the
accuracy of disclosures to TrustCo, the absence of undisclosed liabilities, the
absence of claims for indemnification, our loan and investment portfolio, the
accuracy of our corporate records, the absence of defaults, and the allowance
for loan losses maintained by us. TrustCo has also represented that it will have
the funds necessary to pay the amounts required of it under the merger
agreement.
The representations and warranties of TrustCo and Landmark will not survive
beyond the effective time of the merger if it is consummated, and, if the merger
agreement is terminated without consummation of the merger, there will be no
liability on the part of any party except that no party shall be relieved from
any liability arising out of a willful breach of any provision in the merger
agreement, and except that no such representations or warranties shall be deemed
to be terminated so as to deprive TrustCo or Landmark (or any director, officer
or controlling person of either of them) of any defense at law or in equity that
otherwise
12
would be available against the claims of any person, including any stockholder
or former stockholder of either TrustCo or Landmark.
Conditions to the Merger
The respective obligations of the parties to consummate the merger are
subject to the satisfaction or waiver of the following conditions specified in
the merger agreement:
o the receipt of all necessary regulatory approvals;
o approval of the merger agreement by the requisite vote of our
stockholders;
o the compliance with or satisfaction of all representations,
warranties, covenants and conditions set forth in the merger
agreement;
o that none of Landmark, TrustCo, or the merger subsidiary formed
by TrustCo shall be subject to any statute, rule, regulation,
injunction or other order or decree of any governmental authority
that prohibits, restricts or makes illegal the completion of the
merger;
o that no proceeding initiated by a governmental authority seeking
an order, injunction or decree issued by any court or agency, or
other legal restraint or prohibition preventing the completion of
the merger, is pending or threatened;
o the receipt of certain certificates;
o RP Financial, LC shall not have withdrawn its opinion, to the
effect that the terms of the merger are fair to the shareholders
of Landmark from a financial point of view, prior to the Special
Meeting.
There can be no assurance that the conditions to consummation of the merger
will be satisfied or waived.
Conduct of Business Prior to the Closing Date
Under the terms of the merger agreement, we will conduct our businesses and
engage in transactions only in the ordinary course and consistent with past
practice or to the extent otherwise contemplated under the merger agreement,
except with the prior written consent of TrustCo. We also will use our
reasonable efforts to:
(1) preserve our business organization intact; and
(2) preserve for ourselves and TrustCo the goodwill of our customers
and others with whom business relationships exist and retain the
services of our employees and officers.
We also agreed, among other things, that, except as contemplated by the
merger agreement or unless TrustCo provides its consent, we will not:
(i) pay any dividend or distribution on our common stock;
13
(ii) issue any shares of our capital stock (other than pursuant to the
exercise of existing Landmark Options), repurchase our common stock or
make any change in our capitalization;
(iii)amend our certificate of incorporation or bylaws, expect as
specifically contemplated by the merger agreement, or waive any
material right or cancel any material debt;
(iv) increase the compensation of any of our directors, officers or
employees or agree to pay any bonus, severance payment or other new
benefit to such persons, except as specifically contemplated by the
merger agreement;
(v) borrow or agree to borrow funds in excess of $500,000, except as
specifically contemplated by the merger agreement;
(vi) enter or commit to make any loans, letter of credit or new advance in
excess of $100,000 or to increase any existing lending relationship in
excess of $200,000;
(vii)purchase or otherwise acquire any investment security, except in a
manner consistent with past practice;
(viii) materially change the rates paid on deposits; and
(ix) enter into any agreement not in the ordinary course of business having
a term in excess of three months or an obligation in excess of
$10,000; or expend or commit to expend more than $135,000 for legal
fees and reasonable expenses of counsel not to exceed $5,000 in
connection with the transaction contemplated by the merger agreement;
(x) except in the ordinary course of business, place on any of its assets
or properties any mortgage, pledge, lien, charge, or other encumbrance
of any kind;
(xi) except in the ordinary course of business, cancel or accelerate any
material indebtedness owing to Landmark or its subsidiaries or any
claims which Landmark or its subsidiaries may possess or waive any
material rights with respect thereto;
(xii)sell or otherwise dispose of any real property or any amount of any
tangible or intangible personal property other than in the ordinary
course of business and other than properties acquired in foreclosure
or otherwise in the ordinary collection of indebtedness to Landmark
and its subsidiaries;
(xiii) foreclose upon or others take title to or possession or control of
any real property without first obtaining a phase one environmental
report thereon which indicates that the property is free of
pollutants, contaminants or hazardous or toxic waster materials;
provided, however, that Landmark and its subsidiaries shall not be
required to obtain such a report with respect to single family,
non-agricultural residential property of one acre or less to be
foreclosed upon unless it has reason to believe that such property
might contain any such waster material or otherwise might be
contaminated;
(xiv)commit any act or fail to do any act which would cause a breach of
any agreement, contract or commitment and which would ha ve a material
adverse effect on Landmark;
(xv) purchase any real or personal property or make any other capital
expenditure;
14
(xvi)take any action which would adversely effect or delay the ability of
either TrustCo or Landmark to obtain any necessary approvals of an
regulatory agency or other governmental authority required for the
transactions contemplated by this agreement or to perform its
covenants and agreements under this agreement or the stock option; and
(xvii) Landmark and its subsidiaries shall not, without the prior written
consent of TrustCo, engage in any transaction or take any action that
would render untrue any of the representations and warranties of
Landmark.
In addition, we have agreed to promptly notify TrustCo of any matters or
events known to us and directly involving us (other than changes in conditions
affecting the banking industry generally) that, individually or in the
aggregate, would have a material adverse effect on us.
Finally, we have agreed not to solicit or encourage inquiries or proposals
from, or furnish information to or participate in any discussions or
negotiations with, third parties concerning any merger, acquisition or sale of
all or substantially all of our assets. We are required to notify TrustCo
immediately if we receive any such inquires or proposals. Notwithstanding the
foregoing, we are permitted to furnish such information or engage in discussions
or negotiations with third parties if, after having consulted with outside legal
counsel, we determine that the failure to do so may cause our board of directors
to breach its fiduciary duties under applicable law.
Voting Agreements
The directors of Landmark who own shares of our common stock, as a
condition precedent to the consummation of the merger, have executed voting
agreements in which they agree not to sell their shares prior to our
stockholders' meeting to vote on the merger and they agree to vote their shares
in favor of the merger agreement. These agreements by our directors terminate if
the merger agreement is terminated or upon consummation of the merger.
Other Agreements
We and TrustCo have agreed to certain other actions that are customary in
merger agreements. For example, we and TrustCo have agreed to use our reasonable
best efforts to consummate the merger as promptly as reasonably practical and to
cooperate with each other for that purpose (including preparing and filing all
required regulatory documents). We have agreed to provide TrustCo and its
representatives reasonable access to our properties and personnel, including all
of our books and records relating to our business, provided that all such
information is treated as our sole property and is kept confidential by TrustCo.
We have agreed to consult with one another as to press releases relating to the
merger agreement and to confer on a monthly or more frequent basis regarding our
financial condition, operations and matters relating to the completion of the
transactions contemplated by the merger agreement. If requested by TrustCo, we
have agreed to provide an environmental report on real property owned or leased
by us, provided the costs of such environmental investigations are borne by
TrustCo.
In addition, TrustCo has agreed that our full-time employees who remain
employed after consummation of the merger will be eligible for the TrustCo
benefit plans that are generally available to TrustCo full-time employees, with
credit for years of service with us for the purpose of eligibility and vesting
(but not for the purpose of accrual of benefits or allocation of employer
contributions). Finally, upon the effectiveness of the merger, our Employee
Stock Ownership Plan will be terminated, the ESOP loan will be repaid, and any
of our unallocated common stock in the ESOP will be allocated to the accounts of
all participants.
15
Required Approvals
Approval of the Board of Governors of the Federal Reserve System and the
Office of Thrift Supervision ("OTS") is required in order to consummate the
merger. Applications for these approvals have been filed and are currently
pending. There can be no assurances that the requisite regulatory approvals will
be received in a timely manner, in which event the consummation of the merger
may be delayed. In the event the merger is not consummated on or before October
31, 2000, the merger agreement may be terminated by either TrustCo or us. There
can be no assurance as to the receipt or timing of such approvals.
It is a condition to the consummation of the merger that the regulatory
approvals be obtained without any condition or requirement that, in the
aggregate, would so materially reduce the economic or business benefits of the
transactions contemplated by the merger agreement to TrustCo that had such
condition or requirement been known, TrustCo, in its reasonable judgment, would
not have entered into the merger agreement. There can be no assurance that any
such approvals will not contain terms, conditions or requirements which cause
such approvals to fail to satisfy such condition to the consummation of the
merger.
Waiver and Amendment
Prior to the completion of the merger, TrustCo and Landmark may extend the
time for performance of any obligations under the merger agreement, waive any
inaccuracies in the representations and warranties contained in the merger
agreement and waive compliance with any covenant, agreement or, to the extent
permitted by law, any condition of the merger agreement. However, after our
stockholders have adopted the merger agreement, no waiver can modify the amount
or form of consideration to be provided to our stockholders or otherwise
materially adversely affect our stockholders without the approval of the
affected stockholders to the extent required by applicable law.
The merger agreement may be amended or supplemented at any time by mutual
agreement of TrustCo and Landmark, provided that any such amendment or
supplement after our stockholders have adopted the merger agreement is subject
to the same condition in the last sentence of the preceding paragraph.
Termination
The merger agreement may be terminated:
(a) At any time on or prior to consummation of the merger by mutual written
consent of the parties;
(b) At any time on or prior to consummation of the merger by either TrustCo
or Landmark if the other of them has breached in any material respect the merger
agreement, unless the breach has been cured within 30 days after notice;
(c) By TrustCo within 15 days after a determination by an environmental
expert retained by TrustCo and reasonably acceptable to Landmark that the costs
of corrective environmental actions either required by applicable law or
recommended by an investigative report will exceed $100,000 in the aggregate;
(d) At any time, by either TrustCo or Landmark, if any application for
prior approval of a governmental authority necessary to consummate the merger is
finally denied, or by TrustCo within 30 days after receipt of a regulatory
approval that TrustCo's board of directors determines would prove unduly
burdensome to the parties;
16
(e) At any time, by either TrustCo or Landmark, if our stockholders do not
approve the merger agreement;
(f) By TrustCo if our board of directors fails to approve or recommend the
merger or the agreement, or withdraws or adversely modifies its approval and/or
recommendation of the merger or the agreement; or
(g) By either TrustCo or Landmark if the merger is not completed by October
31, 2000, provided that a party that is then in breach of the merger agreement
shall not be entitled to so terminate the merger agreement.
In the event the merger agreement is terminated, the merger agreement shall
become void and have no effect, except that
(a) certain provisions regarding confidential information and the break-up
fee and expenses (described below) will survive and remain in full force and
effect; and
(b) a breaching party shall not be relieved of liability or damages for any
willful breach of the merger agreement that gives rise to such termination,
provided that if we terminate the merger agreement solely because of a willful
breach in a material respect of the merger agreement by TrustCo, we will be
entitled to liquidated damages from TrustCo in the amount of $200,000 plus
reimbursement of our reasonable and verifiable expenses related to the merger
agreement as our exclusive remedy.
Stock Option
The following is a description of the material terms of the stock option
agreement. All stockholders of Landmark are urged to read the stock option
agreement, a copy of which we previously filed with the SEC, in its entirety for
a complete description of its terms.
As a condition to TrustCo's willingness to enter into the merger agreement,
Landmark entered into the Stock Option Agreement, dated as of February 21, 2000,
with TrustCo. Pursuant to the stock option agreement, Landmark granted TrustCo
an option to purchase up 19.9% of the number of shares of Landmark common stock
outstanding as of February 21, 2000. The exercise price of the TrustCo option is
$14.00 per share, subject to adjustment under specified circumstances.
Arrangements such as the stock option agreement are often entered into in
connection with corporate mergers and acquisitions in an effort to increase the
likelihood that the transactions will be completed in accordance with their
terms, and to compensate the recipient of the option for its efforts and
expenses, losses and opportunity costs in connection with the transactions if
they are not completed due to circumstances involving an acquisition or
potential acquisition of the option issuer by a third party. The stock option
agreement may have the effect of discouraging offers by third parties to acquire
Landmark prior to the merger even if such persons are prepared to pay more than
the consideration to be received by the Landmark stockholders pursuant to the
merger agreement.
The TrustCo option will become exercisable in whole or in part only
following the occurrence of a "Purchase Event." For purposes of the stock option
agreement, a Purchase Event occurs if:
(A) any person acquires beneficial ownership of 20% or more of the then
outstanding shares of Landmark common stock; or
17
(B) Landmark, without TrustCo's prior written consent, enters into an
agreement to engage in an "acquisition transaction" of a type
specified in the stock option agreement as described below with a
third party, or the Landmark Board recommends that its stockholders
approve or accept any acquisition transaction;
As used above, "acquisition transaction" means:
(A) a merger or consolidation or any similar transaction involving
Landmark;
(B) a purchase, lease or other acquisition of all or a substantial portion
of the assets or deposits of Landmark; or
(C) a purchase or other acquisition (including by merger, consolidation,
share exchange or otherwise) of securities representing 20% or more of
the voting power of Landmark.
The TrustCo option will terminate upon the earliest to occur of:
(A) immediately prior to the Effective Time;
(B) 12 months after the first occurrence of a Purchase Event;
(C) 18 months after the termination of the merger agreement following the
occurrence of a "Preliminary Purchase Event" as described below;
(D) termination of the merger agreement prior to the occurrence of a
Purchase Event or a Preliminary Purchase Event other than termination
following certain breaches of the merger agreement; or
(E) 18 months after termination of the merger agreement due to certain
willful breaches of the merger agreement.
As used above, "Preliminary Purchase Event" means:
(A) Landmark, without TrustCo's prior written consent, enters into an
agreement to engage in an "acquisition transaction" of a type
specified in the stock option agreement as described above with a
third party, except that the percentage referred to in clause (C) of
the definition of "acquisition transaction" set forth above is 10% or
the Landmark Board recommends that its stockholders approve or accept
any acquisition transaction;
(B) any person acquires beneficial ownership of 15% or more of the then
outstanding shares of Landmark common stock;
(C) A third party makes a bona fide proposal to Landmark or its
stockholders to engage in an acquisition transaction and such proposal
has been publicly announced or disclosed;
(D) A third party files a registration statement with the Securities and
Exchange Commission with respect to a tender offer or exchange offer
which would result in the third party acquiring beneficial ownership
of 15% or more of the then outstanding shares of Landmark common
stock;
18
(E) Landmark breaches and does not promptly cure any covenant or
obligation contained in the merger agreement after an overture is made
by a third party to engage in an acquisition transaction, and
following such breach TrustCo would be entitled to terminate the
merger agreement;
(F) Our stockholders do not approve the merger agreement, or we do not
hold our stockholders meeting, in either case after the public
announcement that any third party has (1) made, or disclosed an
intention to make, a proposal to engage in an acquisition transaction;
(2) commenced a tender offer or filed a registration statement with
the Securities and Exchange Commission with respect to an exchange
offer; or (3) filed an application or notice with the Federal Reserve
Board, or other federal or state bank regulatory authority, for
approval to engage in an acquisition transaction;
(G) Any person other than TrustCo or any subsidiary of TrustCo, other than
in connection with a transaction to which TrustCo has given its prior
written consent, files an application or notice with the Federal
Reserve Board, or other federal or state bank regulatory authority,
for approval to engage in an acquisition transaction; or
(H) Our board of directors fails to approve or recommend the merger or the
agreement, or withdraws or adversely modifies its approval and/or
recommendation of the merger or the agreement, or authorizes,
recommends or proposes an agreement to engage in an acquisition
transaction.
Upon the occurrence of a Purchase Event that occurs prior to the
termination of the TrustCo option, TrustCo will have registration rights with
respect to the shares of Landmark common stock issued under or issuable pursuant
to the TrustCo option.
The stock option agreement also provides that within 30 days after the
occurrence of a Purchase Event that occurs prior to the occurrence of an event
of termination of the option, upon request, Landmark will repurchase the TrustCo
Option and all or any part of the shares received upon the full or partial
exercise of the TrustCo Option from the holder thereof. The repurchase of the
TrustCo Option shall be made at an aggregate price equal to the amount by which
the Market/Offer Price (as defined below) exceeds the TrustCo Option price
multiplied by the number of shares then subject to the TrustCo Option. To the
extent TrustCo previously acquired shares of Landmark common stock upon the
exercise of part of the TrustCo Option, such shares shall be repurchased by
Landmark at the Market/Offer Price.
The term "Market/Offer Price" means the highest of the following:
(A) the price per share at which a tender or exchange offer has been made
for Landmark common stock in connection with the Purchase Event;
(B) the price per share of Landmark common stock that any third party is
to pay pursuant to an agreement with Landmark in connection with the
Purchase Event;
(C) the highest closing price per share of Landmark common stock; and
(D) if there is a sale of all or a substantial portion of Landmark's
assets, the sum of the price paid for the assets and the current
market value of the remaining assets (as determined by a nationally
recognized investment banking firm), divided by the number of shares
of Landmark common stock outstanding at the time of the sale.
19
According to the terms of the stock option agreement, if, prior to the
termination of the TrustCo Option, Landmark enters into an extraordinary
transaction in which Landmark is effectively not the surviving corporation, the
TrustCo Option may be converted into, or exchanged for, an option with terms
similar to those of the TrustCo Option being converted or exchanged, as the case
may be, to purchase stock of the entity that is the effective successor to
Landmark.
The stock option agreement generally provides that neither TrustCo nor
Landmark may assign any of its respective rights or obligations thereunder
without the written consent of the other party. However, if a Preliminary
Purchase Event occurs before the termination of the TrustCo option, TrustCo may,
subject to limitations, assign its rights and obligations thereunder in whole or
in part; provided, however, that until the date the Federal Reserve Board
approves an application by TrustCo under the Bank Holding Company Act of 1956,
as amended, to acquire the option shares, TrustCo may not assign its rights
under the TrustCo option except in one of the following ways:
(A) a widely dispersed public distribution;
(B) a private placement in which one party does not acquire the right to
purchase in excess of 2% of the voting shares of Landmark;
(C) an assignment to a single party (e.g., a broker or investment banker)
for the purpose of conducting a widely dispersed public distribution
on TrustCo's behalf; or
(D) any other manner approved by the Federal Reserve Board.
To the best knowledge of Landmark, no event giving rise to any rights to
exercise the TrustCo option has occurred as of the date of this Proxy Statement.
Interests of Certain Persons in the Merger
Some members of our management and board of directors may have interests in
the merger that are in addition to, or different from, the interests of
stockholders. Our Board of Directors was aware of these interests and considered
them in approving the merger agreement.
As of May __, 2000, there were outstanding an aggregate of 7,940 stock
options to purchase our common stock under our Stock Option Plan. Of these stock
options, 1,232 are currently exercisable. The remaining options for 6,708 shares
will become fully vested and exercisable as of the time our stockholders approve
the merger agreement. In addition, each holder of an option outstanding upon
completion of the merger shall receive cash in settlement thereof from TrustCo
in an amount determined by multiplying the excess of the Merger Price over the
applicable exercise price per share of the option, multiplied by the number of
shares of our common stock subject to the option. See "Beneficial Ownership of
Landmark Common Stock by Certain Beneficial Owners and Management" for the
amount of vested and unvested stock options held by our directors and executive
officers.
As of May __, 2000, an aggregate of 2,508 shares of our common stock have
been awarded to our directors and executive officers pursuant to our Recognition
and Retention Plan and 2,508 shares have not yet vested. All unvested awards
will become fully vested as of the time our stockholders approve the merger
agreement, and upon completion of the merger each holder of such vested stock
will be entitled to a cash payment equal to the Merger Price multiplied by the
number of shares of such vested stock. See "Beneficial Ownership of Landmark
Common Stock by Certain Beneficial Owners and Management" for the amount of
unvested awards held by our directors and executive officers.
20
As of May __, 2000, the ESOP held 10,336 shares of Landmark common stock
which had not yet been allocated to participants and which were pledged as
collateral for the remaining $101,333 loan to the Landmark ESOP. The ESOP will
be terminated upon completion of the merger, at which time the loan will be
repaid with the cash received by the ESOP in the merger. Based on the number of
unallocated shares and the current loan balance, the ESOP will have $115,723 of
cash after repayment of the loan, which cash will be allocated to the
participants as earnings of the plan after a favorable determination letter on
termination is received from the Internal Revenue Service.
TrustCo has agreed to indemnify and hold harmless our past and present
directors and officers for all acts or omissions occurring at or prior to the
effective time of the merger to the same extent these persons have the right to
be indemnified and held harmless by us, and this right shall continue in full
force and effect for so long as it would (but for the merger) otherwise survive
and continue in full force and effect. In addition, TrustCo has also agreed that
it will maintain a policy of directors' and officers' liability insurance
coverage, or provide a policy providing comparable coverage and amounts on terms
no less favorable than Landmark's current policy, for the benefit of directors
and officers of Landmark and its subsidiaries for three years following the
consummation of the merger, provided that TrustCo is not obligated to spend any
amount in excess of 150% of Landmark's current premiums in order to provide this
insurance coverage.
TrustCo has agreed that, following the merger, Landmark Community Bank will
enter into an employment agreement with Landmark's President and Chief Executive
Officer, Gordon Coleman, to serve as President and Chief Executive Officer of
Landmark Community Bank. The employment agreement will have a term of three
years and provide for annual compensation of $125,000 per year and the use of a
car.
TrustCo has agreed that, following the merger, Landmark Community Bank will
establish an advisory board of directors, and that up to eight of Landmark's
current directors will serve on the advisory committee for three years following
the merger. The chairman of the advisory board will receive fees of $600 per
month; the vice chairman will receive fees of $300 per month; and other members
will receive fees of $200 per month.
Rights of Dissenting Stockholders
Pursuant to Section 262 of the Delaware General Corporation Law ("DGCL"),
any holder of Landmark common stock who does not wish to accept the
consideration to be paid pursuant to the merger agreement may dissent from the
merger and elect to have the fair value of his shares of common stock (exclusive
of any element of value arising from the accomplishment or expectation of the
merger) judicially determined and paid to him in cash, provided that he complies
with the provisions of Section 262.
The following is a brief summary of the statutory procedures to be followed
by a holder of Landmark common stock in order to dissent from the merger and
perfect appraisal rights under the DGCL. This summary is not intended to be
complete and is qualified in its entirety by reference to Section 262, the text
of which is attached as Annex D to this Proxy Statement.
If any holder of Landmark common stock elects to exercise his right to
dissent from the merger and demand appraisal, such stockholder must satisfy each
of the following conditions:
(i) such stockholder must deliver a written demand for appraisal of his
shares to Landmark before the taking of the vote with respect to the
merger agreement (this written demand for appraisal must be in
addition to and separate from any proxy or vote against the merger
agreement; neither voting against, abstaining from voting nor failing
to vote on the merger agreement will constitute a demand for appraisal
within the meaning of Section 262);
21
(ii) such stockholder must not vote in favor of the merger agreement (a
failure to vote will satisfy this requirement, but a vote in favor of
the merger agreement, by proxy or in person, or the return of a signed
proxy which does not specify a vote against approval and adoption of
the merger agreement will constitute a waiver of such stockholder's
right of appraisal and will nullify any previously filed written
demand for appraisal); and
(iii)such stockholder must continuously hold such shares from the date of
the making of the demand through the Effective Time.
If any stockholder fails to comply with any of these conditions and the
merger becomes effective, he will be entitled to receive the consideration
provided for in the merger agreement, but will have no appraisal rights with
respect to his shares of Landmark common stock.
All written demands for appraisal should be addressed to Gordon E. Coleman,
Secretary, Landmark Financial Corp., 211 Erie Boulevard, Canajoharie, New York
13317, before the taking of the vote concerning the merger agreement at the
special meeting, and should be executed by, or on behalf or, the holder of
record. Such demand must reasonably inform the Landmark of the identity of the
stockholder and that such stockholder is thereby demanding appraisal of his
shares.
To be effective, a demand for appraisal must be executed by or for the
stockholder of record who held such shares on the date of making such demand,
and who continuously holds such shares through the effective Time, fully and
correctly, as such stockholder's name appears on his stock certificate(s) and
cannot be made by the beneficial owner if he does not also hold the shares of
record. The beneficial holder must, in such case, have the registered owner
submit the required demand in respect of such shares.
If Landmark common stock is owned of record in a fiduciary capacity, such
as by a trustee, guardian or custodian, execution of a demand for appraisal
should be make in such capacity. If Landmark common stock is owned of record by
more than one person, as in a joint tenancy in common, such demand must be
executed by or for all joint owners. An authorized agent, including one of two
or more joint owners, may execute the demand for appraisal for a stockholder of
record; however, the agent must identify the record owner or owners and
expressly disclose the fact that, in executing the demand, he is acting as agent
for the record owner. A record owner, such as a broker, who holds Landmark
common stock as a nominee for others may exercise his right or appraisal with
respect to the shares held for one or more beneficial owners, while not
exercising such right for other beneficial owners. In such case, the written
demand should set forth the number of shares as to which the record holder
dissents. Where no number of shares is expressly mentioned, the demand will be
presumed to cover all shares of Landmark common stock in the name of such record
owner.
Within ten days after the Effective Time, TrustCo (as the surviving
corporation in the merger) must give written notice that the merger has become
effective to each stockholder who so filed a written demand for appraisal and
who did not vote in favor of the merger agreement. Within 120 days after the
Effective Time, but not thereafter, either TrustCo, or any holder of shares of
common stock who has complied with the requirements of Section 262, may file a
petition in the Delaware Court of Chancery (the "Court of Chancery") demanding a
determination of the value of the shares of Landmark common stock held by all
stockholders entitled to appraisal. TrustCo does not presently intend to file
such a petition. Inasmuch as TrustCo has no obligation to file such a petition,
the failure of a stockholder to do so with the period specified could nullify
such stockholder' previous written demand for appraisal. In any event, at any
time within 60 days after the Effective Time (or at any time thereafter with the
written consent of TrustCo), any stockholder who has demanded appraisal has the
right to withdraw the demand and to accept payment of the consideration provided
in the merger agreement.
22
Within 120 days after the Effective Time, any stockholder who has complied
with the provisions of Section 262 to that point in time will be entitled to
receive from the Surviving Corporation, upon written request, a statement
setting forth the aggregate number of shares not voted in favor of the merger
agreement ans with respect to which demands for appraisal have been received and
the aggregate number of holders of such shares. The Surviving Corporation must
mail such statement to the stockholder within 10 days of receipt of such
request.
If a petition for appraisal is duly filed by a stockholder and a copy
thereof is delivered to TrustCo, TrustCo will then be obligated within 20 days
to provide the Court of Chancery with a duly verified list containing the names
and addresses of all stockholders who have demanded an appraisal of their shares
and with whom agreement as to the value of such shares has not been reached.
After notice to such stockholders, the Court of Chancery is empowered to conduct
a hearing upon a petition to determine those stockholders who have complied with
Section 262 and who have become entitled to appraisal rights under that Section.
The Court of Chancery may required the stockholder who demanded payment for
their shares to submit their stock certificates to the Register in Chancery for
notation thereon of the pendency of the appraisal proceedings; and if any
stockholder fails to comply with such direction, the Court of Chancery may
dismiss the proceedings as to such stockholder.
After determination of the stockholders entitled to an appraisal, the Court
of Chancery will appraise the shares of common stock, determining their fair
value exclusive of any element of value arising from the accomplishment and
expectation of the merger. When the value is so determined, the Court will
direct the payment by TrustCo of such value, with interest thereon, simple or
compound, if the Court so determines, to the stockholders entitled to receive
the same, upon surrender to TrustCo by such stockholders of the certificates
representing such Landmark common stock.
In determining fair value, the Court of Chancery will take into account all
relevant factors. In Weinberger v. UOP, Inc., decided February 1, 1983, the
Delaware Supreme Court expended the factors that could be considered in
determining fair value in an appraisal proceeding, stating that "proof of value
by any techniques or methods which are generally considered acceptable in the
financial community and otherwise admissible in court" should be considered, and
that "fair price obviously requires consideration of all relevant factors
involving the value of a company." The Delaware Supreme Court stated that, in
making this determination of fair value, the Court of Chancery must consider
market value, asset value, dividends, earnings prospects, the nature of the
enterprise and any other facts which could be ascertained as of the date of the
merger that throw any light on future prospects of the merged corporation.
Section 262 provides that fair value is to be "exclusive of any element of
value arising from the accomplishment or expectation of the merger." In
Weinberger, the Delaware Supreme Court construed Section 262 to mean that
"elements of future value, including the nature of the enterprise, which are
known or susceptible of proof as of the date of the merger and not the product
of speculation, may be considered." Stockholders considering seeking to perfect
their rights of appraisal should bear in mind that the fair value of their
shares of Landmark common stock determined under Section 262 could be more than,
the same as or less than the consideration they are to receive pursuant to the
merger agreement if they do not seek appraisal of their shares of Landmark
common stock, and that an opinion of an investment banking firm as to fairness
is not an opinion as to fair value under Section 262.
Costs of the appraisal proceeding may be assessed against the parties
thereto (i.e., TrustCo and the stockholders participating in the appraisal
proceeding) by the court as the court deems equitable in the circumstances. upon
the application of any stockholder, the court may determine the amount of
interest, if any, to be paid upon the value of the stock of stockholders
entitled. thereto. Upon application of a stockholder, the court may order all or
a portion of the expenses incurred by any stockholder in connection
23
with the appraisal proceeding, including, without limitation, reasonable
attorney's fees and the fees and expenses of experts, to be charged pro rate
against the value of all shares entitled to appraisal. Any stockholder who has
demanded appraisal rights will not, after the Effective Time, be entitled to
vote the stock subject to such demand (other than dividends or distributions, if
any, payable to holders of record as of a record date prior to the Effective
Time) or to receive the payment of the consideration provided for in the merger
agreement. However, if no petition for an appraisal is field within 120 days
after the Effective Time or is such stockholder delivers to the Surviving
Corporation a written withdrawal of his demand for an appraisal and an
acceptance of the merger, wither within 60 days after the Effective Time or
thereafter with the written approval of the Surviving Corporation, then the
right of such stockholder to an appraisal will cease. Notwithstanding the
foregoing, no appraisal proceeding in the Court of Chancery will be dismissed as
to any stockholder without the approval of the court, and such approval may be
conditioned upon such terms as in the court deems just.
Failure to comply strictly with these procedures will cause the stockholder
to lose his dissenter's rights. Consequently any stockholder who desires to
exercise his dissenter's rights is urged to consult a legal advisor before
attempting to exercise such rights.
Certain Federal Income Tax Consequences
The exchange of our common stock for cash pursuant to the terms of the
merger agreement will be a taxable transaction for federal income tax purposes
under the Internal Revenue Code (the "Code"), and may also be a taxable
transaction under state, local and other tax laws. Similarly, any stockholders
of Landmark who exercise their dissenters' appraisal rights and receive cash in
exchange for their shares of Landmark common stock will realize and recognize
income for federal tax purposes and may recognize income under state, local and
other tax laws. A stockholder of Landmark will recognize gain or loss equal to
the difference between the amount of cash received by the stockholder pursuant
to the merger and the tax basis in the Landmark common stock exchanged by such
stockholder pursuant to the merger. Gain or loss must be determined separately
for each block of Landmark common stock (i.e., shares of Landmark common stock
acquired by the stockholder at the same time and price) exchanged pursuant to
the merger.
Gain or loss recognized by the stockholder exchanging his or her Landmark
common stock pursuant to the merger or pursuant to the exercise of dissenters'
rights will be capital gain or loss if such Landmark common stock is a capital
asset in the hands of the stockholder. If the Landmark common stock has been
held for more than one year, the gain or loss will be long-term. Capital gains
recognized by an exchanging individual stockholder generally will be subject to
tax at the top federal marginal rate applicable to the stockholder (up to a
maximum of 39.6% for short-term capital gains and 20% for long-term capital
gains), and capital gains recognized by an exchanging corporate stockholder
generally will be subject to federal tax at a maximum rate of 35%.
The exchange of outstanding stock options to acquire Landmark common stock
for cash pursuant to the terms of the merger agreement will also be a taxable
transaction for federal income tax purposes under the Code and may also be a
taxable transaction under state, local and other laws. Generally, each optionee
will recognize ordinary income equal to the amount of cash received by the
optionee pursuant to the merger in exchange for cancellation of his stock
options.
The federal income tax discussion set forth above is based upon current law
and is intended for general information only. Each Landmark stockholder and
optionee is urged to consult his tax advisor concerning the specific tax
consequences of the merger to such stockholder or optionee, including the
applicability and effect of state, local or other tax laws and of any proposed
changes in the Code.
24
Accounting Treatment of the Merger
The merger will be accounted for as a purchase for financial reporting
purposes. Under this method of accounting, TrustCo will record the acquisition
of Landmark at its cost at the completion of the merger, which cost would
include the cash paid in the merger and all direct acquisition costs. The
acquisition cost will be allocated to the acquired assets and liabilities of
Landmark based upon their fair values at the completion of the merger in
accordance with generally accepted accounting principles. Acquisition cost in
excess of the fair values of the net assets acquired, if any, will be recorded
as an intangible asset and amortized for financial accounting purposes. The
reported income of TrustCo will include the operations of Landmark after the
completion of the merger.
Expenses of the Merger
All out-of-pocket costs and expenses incurred in connection with the merger
(including, but not limited to, counsel fees) shall be paid by the party
incurring such costs and expenses.
25
BENEFICIAL OWNERSHIP OF LANDMARK COMMON STOCK
BY CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Stockholders of record as of the close of business on March __, 2000 will
be entitled to one vote for each share of our common stock then held. As of that
date, we had 152,508 shares of common stock issued and outstanding. The
following table sets forth information regarding share ownership of those
persons or entities known by management to beneficially own more than five
percent of our common stock, and all directors and executive officers of
Landmark as a group.
Amount of Shares
Owned and Nature Percent of Shares
Name and Address of of Beneficial of Common Stock
Beneficial Owners Ownership Outstanding
----------------- --------- -----------
Directors and Officers (1):
Frederick W. Lee 3,500 2.27%
Edward R. Jacksland 1,500 .97%
Gordon E. Coleman 4,514 2.92%
John R. Francisco 6,152 3.98%
F. Richard Ferraro 280 .18%
Federick P. LaCoppola 580 .38%
Carl J. Rockefeller 580 .38%
Leila N. Salmon 100 .07%
Patricia A. Symolon 500 .38%
Paul Hofmann 1,500 .97%
H. Stuart Larson 500 .33%
----- ------
All Directors and Executive Officers 19,786 12.81%
as a Group (11 persons) ====== =====
Landmark Community Bank 12,160 8.00%
Employee Stock Ownership Plan
211 Erie Boulevard
Canajoharie, New York 13126
Unvested RRP shares 2,508 1.62
- -----------------
(1) The mailing address of all named persons is 211 Erie Boulevard,
Canajoharie, New York.
(2) Excludes unvested shares awarded under the Recognition and Retention Plan
and Stock Option Plan, but includes 1,232 shares subject to currently
exercisable options or options exercisable at any time within 60 days from
the Record Date.
(3) The amount reported represents 2,160 shares held by the ESOP, 1,824 of the
original ______ have been allocated to accounts of participants as the
Record Date (_________, 2000). The trustee of the ESOP, may be deemed to
beneficially own the shares held by the ESOP that have not been allocated
to accounts of participants. Unallocated shares held in the ESOP's suspense
account or allocated shares for which no voting instructions are received
are voted by the trustee in the same proportion as allocated shares voted
by participants.
(4) Includes shares held directly, as well as in retirement accounts, shares
held by certain members of the named individuals' families, or held by
trusts of which the named individual is a trustee or substantial
beneficiary, with respect to which the named individuals may be deemed to
have sole voting and investment power.
STOCKHOLDER PROPOSALS
The merger is expected to be consummated prior to the next regularly
scheduled annual meeting of our stockholders, in which case the annual meeting
would not be convened. However, if the merger is not consummated prior to the
next regularly scheduled annual meeting of our stockholders, any proposal which
a stockholder wishes to have included in our proxy materials for the next annual
meeting of stockholders must have been received at our main office located at
211 Erie Boulevard, Canajoharie, New York 13317, not later than May 20, 2000.
Any such proposal shall be subject to the requirements of the proxy rules
adopted under the Securities Exchange Act of 1934. Otherwise, any stockholder
proposal to take action at such meeting must be received at our main office
located at 211 Erie Boulevard, Canajoharie, New York 13317 by May __, 2000. All
stockholder proposals must also comply with our bylaws and applicable federal
law.
26
OTHER MATTERS
Our board of directors is not aware of any business to come before the
special meeting other than those matters described above in this proxy
statement. However, if any other matter should properly come before the special
meeting, it is intended that holders of the proxies will act in accordance with
their best judgment.
27
REVOCABLE PROXY
LANDMARK FINANCIAL CORP.
SPECIAL MEETING OF STOCKHOLDERS
______, 2000
The undersigned hereby appoints the official proxy committee of the Board
of Directors with full powers of substitution to act as attorneys and proxies
for the undersigned to vote all shares of Common Stock of the Company which the
undersigned is entitled to vote at the Special Meeting of Stockholders ("Annual
Meeting") to be held at ____________________________________________ on _____,
2000, at _______.m. Eastern Time. The official proxy committee is authorized to
cast all votes to which the undersigned is entitled as follows:
1. The approval of the Agreement and Plan of Merger FOR AGAINST ABSTAIN
(the "merger agreement") dated as of February 21, --- ------- -------
2000, between Landmark, Landmark Acquisition |_| |_| |_|
Corp., a newly formed subsidiary of TrustCo, and
TrustCo, pursuant to which each outstanding share
of common stock of Landmark (other than shares as
to which dissenters' rights have been
asserted and duly perfected in accordance
with Delaware law) shall be converted into the
right to receive a payment, in cash of $21.00.
The Board of Directors recommends a vote "FOR" the listed proposal.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS
PROXY, IF SIGNED AND RETURNED, WILL BE VOTED FOR THE PROPOSITION STATED ABOVE.
IF ANY OTHER BUSINESS IS PRESENTED AT SUCH ANNUAL MEETING, THIS PROXY WILL BE
VOTED AS DIRECTED BY A MAJORITY OF THE BOARD OF DIRECTORS. AT THE PRESENT TIME,
THE BOARD OF DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT THE ANNUAL
MEETING.
- --------------------------------------------------------------------------------
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
Should the undersigned be present and elect to vote at the Special Meeting or at
any adjournment thereof and after notification to the Secretary of the Company
at the Special Meeting of the stockholder's decision to terminate this proxy,
then the power of said attorneys and proxies shall be deemed terminated and of
no further force and effect. This proxy may also be revoked by sending written
notice to the Secretary of the Company at the address set forth on the Notice of
Special Meeting of Stockholders, or by the filing of a later proxy prior to a
vote being taken on a particular proposal at the Special Meeting.
Dated: _________________________ --- Check Box if You Plan
--- to Attend Annual Meeting
- ------------------------------- -------------------------------
PRINT NAME OF STOCKHOLDER PRINT NAME OF STOCKHOLDER
- ------------------------------- -------------------------------
SIGNATURE OF STOCKHOLDER SIGNATURE OF STOCKHOLDER
Please sign exactly as your name appears on this card. When signing as attorney,
executor, administrator, trustee or guardian, please give your full title.
- --------------------------------------------------------------------------------
Please complete and date this proxy and return it promptly
in the enclosed postage-prepaid envelope.
- --------------------------------------------------------------------------------
APPENDIX A - AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER
by and among
TRUSTCO BANK CORP NY,
a New York corporation,
LANDMARK ACQUISITION CO.,
a Delaware corporation,
and
LANDMARK FINANCIAL CORP.,
a Delaware corporation
Dated as of February 21, 2000
TABLE OF CONTENTS
Page
----
1. Terms of Merger and Closing...............................................1
1.1. Merger...........................................................1
1.2. Merging Corporation..............................................1
1.3. Surviving Corporation............................................1
1.4. Effect of Merger.................................................1
1.5. Conversion of Landmark Common....................................1
1.6. Stock Options and Restricted Stock...............................2
1.7. Closing..........................................................3
1.8. Exchange Procedures; Surrender of Certificates...................3
1.9. Closing Date.....................................................3
1.10. Closing Deliveries...............................................4
1.11. Disclosure Schedule; Standard....................................5
1.12. Right to Revise Transaction......................................6
2. Representations and Warranties of Landmark................................6
2.1. Organization and Capital Stock...................................6
2.2. Authorization; No Defaults.......................................7
2.3. Subsidiaries.....................................................7
2.4. Financial Information............................................8
2.5. Absence of Changes...............................................8
2.6. Regulatory Enforcement Matters...................................8
2.7. Tax Matters......................................................9
2.8. Litigation and Related Matters...................................9
2.9. Employment Agreements...........................................10
2.10. Reports.........................................................10
2.11. Employee Matters and ERISA......................................10
2.12. Title to Properties; Insurance..................................12
2.13. Environmental Matters...........................................12
2.14. Compliance with Law.............................................13
2.15. Brokerage.......................................................13
2.16. Trust Administration............................................13
2.17. Material Contracts and Agreements...............................13
2.18. No Undisclosed Liabilities......................................13
2.19. Statements True and Correct.....................................13
2.20. State Takeover Laws.............................................14
2.21. Fair Lending; Community Reinvestment Act........................14
2.22. Loan Portfolio..................................................14
2.23. Investment Portfolio............................................14
2.24. Interest Rate Risk Management Instruments.......................14
2.25. Year 2000 Compliance............................................15
2.26. Interim Events..................................................15
3. Representations and Warranties of Trustco and AcquisitionCo..............15
3.1. Organization and Capital Stock..................................15
3.2. Authorization...................................................15
3.3. Subsidiaries....................................................15
3.4. Litigation......................................................16
3.5. Statements True and Correct.....................................16
3.6. Funds Available.................................................16
4. Agreements of Landmark...................................................16
4.1. Business in Ordinary Course.....................................16
4.2. Breaches........................................................18
4.3. Submission to Shareholders......................................18
4.4. Consents to Contracts and Leases................................19
4.5. Consummation of Agreement.......................................19
4.6. Environmental Reports...........................................19
4.7. Access to Information...........................................19
4.8. Subsidiary Bank Name Change.....................................20
4.9. Plan of Merger..................................................20
5. Agreements of Trustco and AcquisitionCo..................................20
5.1. Regulatory Approvals and Registration Statement;
Other Agreements................................................20
5.2. Breaches........................................................20
5.3. Consummation of Agreement.......................................20
5.4. Directors' and Officers' Liability Insurance
and Indemnification.............................................21
5.5. Employee Benefits...............................................21
5.6. Advisory Board Composition......................................22
5.7. Access to Information...........................................22
6. Conditions Precedent to Merger...........................................22
6.1. Conditions to TrustCo's and AcquisitionCo's Obligations.........22
6.2. Conditions to Landmark's Obligations............................23
7. Termination or Abandonment...............................................24
7.1. Mutual Agreement................................................24
7.2. Breach of Agreements............................................24
7.3. Environmental Reports...........................................24
7.4. Failure of Conditions...........................................24
7.5. Regulatory Approval Denial; Burdensome Condition................24
7.6. Shareholder Approval Denial; Withdrawal/Modification of
Board Recommendation............................................25
7.7. Regulatory Enforcement Matters..................................25
7.8. Fall-Apart Date.................................................25
8. General..................................................................25
8.1. Confidential Information........................................25
8.2. Publicity.......................................................25
8.3. Return of Documents.............................................25
8.4. Notices.........................................................26
8.5. Liabilities and Expenses........................................26
8.6. Nonsurvival of Representations, Warranties and Agreements.......27
8.7. Entire Agreement................................................27
8.8. Headings and Captions...........................................27
8.9. Waiver, Amendment or Modification...............................27
8.10. Rules of Construction...........................................27
8.11. Counterparts....................................................27
8.12. Successors and Assigns..........................................28
8.13. Severability....................................................28
8.14. Governing Law; Assignment.......................................28
8.15. Enforcement of Agreement........................................28
8.16. Legal Fees, Costs...............................................28
EXHIBIT 1.01 - Form of Landmark Option Agreement
EXHIBIT 1.10(a) - Landmark's Legal Opinion Matters
EXHIBIT 1.10(b) - TrustCo's Legal Opinion Matters
AGREEMENT AND PLAN OF MERGER
----------------------------
This AGREEMENT AND PLAN OF MERGER (this "Agreement") is made as of February
21, 2000, by and among TRUSTCO BANK CORP NY, a New York corporation ("TrustCo"),
LANDMARK ACQUISITION CO., a Delaware corporation ("AcquisitionCo") and LANDMARK
FINANCIAL CORP., a Delaware corporation ("Landmark").
RECITALS
The Boards of Directors of TrustCo, AcquisitionCo (a wholly-owned subsidiary of
TrustCo) and Landmark have approved and deem it advisable and in the best
interests of their respective shareholders to consummate the business
combination transaction provided for herein in which AcquisitionCo shall,
subject to the terms and conditions set forth herein, merge with and into
Landmark (the "Merger").
A. The Boards of Directors of TrustCo, AcquisitionCo and Landmark have each
determined that the Merger and the other transactions contemplated by this
Agreement are consistent with, and in furtherance of, their respective
business strategies and goals.
B. Concurrently with the execution and delivery of this Agreement, and as a
condition and inducement to TrustCo's willingness to enter into this
Agreement, TrustCo and Landmark have executed a Stock Option Agreement (the
"Landmark Option Agreement"), dated as of the date hereof and in the form
attached hereto as Exhibit 1.01, pursuant to which Landmark has granted
TrustCo an option exercisable upon the occurrence of certain events.
C. TrustCo, AcquisitionCo and Landmark desire to make certain representations,
warranties and agreements in connection with the Merger and also to
prescribe certain conditions to the Merger.
D. In consideration of the foregoing and the respective representations,
warranties, covenants, and agreements set forth herein and in the Landmark
Option Agreement, TrustCo, AcquisitionCo and Landmark hereby agree as
follows:
1. Terms of Merger and Closing.
1.1. Merger. Pursuant to the terms and provisions set forth herein and the
Delaware General Corporation Law (the "DGCL"), AcquisitionCo shall merge with
and into Landmark.
1.2. Merging Corporation. AcquisitionCo shall be the merging corporation in
the Merger and its corporate identity and existence, separate and apart from
Landmark, shall cease upon consummation of the Merger.
1.3. Surviving Corporation. Landmark shall be the surviving corporation in
the Merger. No changes in the Certificate of Incorporation of Landmark shall be
effected by the Merger.
1.4. Effect of Merger. The Merger shall have all of the effects provided
for herein and under the DGCL.
1.5. Conversion of Landmark Common.
1.5.1. At the Effective Time (as defined in Section 1.9 hereof), by
virtue of the Merger and without any action on the part of TrustCo,
AcquisitionCo, Landmark or their respective shareholders, each share of
common stock, par value $0.10 per share, of Landmark (the "Landmark
Common") issued
and outstanding immediately prior to the Effective Time (other than shares
of Landmark Common held in the treasury of Landmark or by any direct or
indirect subsidiary of Landmark and the shares held by holders duly
exercising dissenting rights pursuant to Section 262 of the DGCL) shall be
converted into the right to receive cash in the amount of Twenty-One
Dollars ($21.00) (the "Merger Consideration").
1.5.2. At the Effective Time, all of the shares of Landmark Common, by
virtue of the Merger and without any action on the part of the holders
thereof, shall no longer be outstanding and shall be canceled and retired
and shall cease to exist, and each holder of any certificate or
certificates which immediately prior to the Effective Time represented
outstanding shares of Landmark Common (the "Certificates") shall thereafter
cease to have any rights with respect to such shares, except the right of
such holders to receive, without interest, the Merger Consideration upon
the surrender of such Certificate or Certificates in accordance with
Section 1.8 hereof or the dissenter's rights described in Section 1.5.5
below, if applicable.
1.5.3. At the Effective Time, each share of Landmark Common, if any,
held in the treasury of Landmark or by any direct or indirect subsidiary of
Landmark (other than shares held in trust accounts for the benefit of
others or in other fiduciary, nominee or similar capacities and shares held
by Landmark or any of its subsidiaries in respect to a debt previously
contracted) immediately prior to the Effective Time shall be canceled.
1.5.4. Each share of common stock, par value $1.00 per share, of
AcquisitionCo outstanding immediately prior to the Effective Time shall be
converted into and become one share of Landmark Common.
1.5.5. If holders of Landmark Common are entitled to dissent from the
Agreement and Merger and demand payment of fair market value of their
shares under the DGCL, any issued and outstanding shares of Landmark Common
held by a dissenting holder shall not be converted as described in this
Section 1.5 but from and after the Effective Time shall represent only the
right to receive such consideration as may be determined to be due to such
dissenting holder pursuant to the DGCL; provided, however, that each share
of Landmark Common outstanding immediately prior to the Effective Time and
held by a dissenting holder who shall, after the Effective Time, withdraw
his demand for appraisal with consent of TrustCo or lose his right of
appraisal shall have only the right to receive the Merger Consideration for
such shares in accordance with Section 1.5.1 of this Agreement.
1.6. Stock Options and Restricted Stock.
1.6.1. At the Effective Time, each option to purchase shares of
Landmark Common (each, a "Landmark Stock Option") issued and outstanding
pursuant to the Landmark Financial Corp. 1998 Stock Option Plan (the "Stock
Option Plan"), whether or not such Landmark Stock Option is vested at the
Effective Time, shall, by reason of the Merger, cease to be outstanding and
shall be converted into the right to receive in cash an amount equal to (i)
the difference (if a positive number) between (A) the Merger Consideration
and (B) the exercise price of each such Landmark Stock Option multiplied by
(ii) the number of shares of Landmark Common subject to the Landmark Stock
Option.
1.6.2. At the Effective Time, each share of Landmark Common granted
under the Landmark 1998 Recognition and Retention Plan, whether or not
vested or subject to other restrictions at the Effective Time, shall cease
to be outstanding, shall cease to exist and shall be converted into the
right to receive the Merger Consideration.
1.7. Closing. The closing of the Merger (the "Closing") shall take place at
a location mutually agreeable to the parties at 10:00 a.m., Eastern Time, on the
Closing Date described in Section 1.9 hereof.
1.8. Exchange Procedures; Surrender of Certificates.
1.8.1. Trustco Bank, National Association shall act as Exchange Agent
in the Merger (the "Exchange Agent").
1.8.2. As soon as reasonably practicable after the Effective Time, but
in no event later than five (5) business days after the Closing Date, the
Exchange Agent shall mail to each record holder of any Certificate or
Certificates whose shares were converted into the right to receive the
Merger Consideration, a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only upon proper delivery of the Certificates to the Exchange
Agent and shall be in such form and have such other provisions as TrustCo
may reasonably specify) (each such letter, the "Merger Letter of
Transmittal") and instructions for use in effecting the surrender of the
Certificates in exchange for the Merger Consideration. Upon surrender to
the Exchange Agent of a Certificate, together with a Merger Letter of
Transmittal duly executed and any other required documents, the holder of
such Certificate shall be entitled to receive in exchange therefor solely
the Merger Consideration. No interest on the Merger Consideration issuable
upon the surrender of the Certificates shall be paid or accrued for the
benefit of holders of Certificates. If the Merger Consideration is to be
issued to a person other than a person in whose name a surrendered
Certificate is registered, it shall be a condition of issuance that the
surrendered Certificate shall be properly endorsed or otherwise in proper
form for transfer and that the person requesting such issuance shall pay to
the Exchange Agent any required transfer taxes or other taxes or establish
to the satisfaction of the Exchange Agent that such tax has been paid or is
not applicable. At the Effective Time, TrustCo shall deposit the Merger
Consideration into a specially segregated account for the benefit of the
holders of Landmark Common.
1.8.3. In the event that any Certificate shall have been lost, stolen
or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and, if required
by TrustCo in its sole discretion, the posting by such person of a bond in
such amount as TrustCo may determine is reasonably necessary as indemnity
against any claim that may be made against it with respect to such
Certificate, the Exchange Agent shall issue in exchange for such lost,
stolen or destroyed Certificate the Merger Consideration deliverable in
respect thereof pursuant hereto.
1.8.4. At or after the Effective Time there shall be no transfers on
the stock transfer books of Landmark of any shares of Landmark Common. If,
after the Effective Time, Certificates are presented for transfer, they
shall be cancelled and exchanged for the Merger Consideration as provided
in, and subject to the provisions of, this Section 1.8.
1.9. Closing Date. At TrustCo's election, the Closing shall take place no
later than the fifteenth day after the receipt of all regulatory approvals and
the expiration of any applicable waiting periods or on such other date as
Landmark and TrustCo may agree (the "Closing Date"). The Merger shall be
effective upon the filing of a Certificate of Merger with the Secretary of State
of Delaware (the "Effective Time"), which the parties shall use their best
efforts to cause to occur on the Closing Date.
1.10. Closing Deliveries.
1.10.1. At the Closing, Landmark shall deliver to TrustCo and
AcquisitionCo:
1.10.1.1. a certified copy of the Certificate of Incorporation
and Bylaws (or their equivalent) of Landmark, the Subsidiary Bank (as
defined in Section 2.3 hereof) and any direct or indirect subsidiary
of Landmark or the Subsidiary Bank; and
1.10.1.2. a Certificate signed by an appropriate officer of
Landmark stating that, to the best knowledge and belief of such
officer, (A) each of the representations and warranties contained in
Article Two hereof (subject to the standard in Section 1.11 hereof) is
true and correct at the time of the Closing with the same force and
effect as if such representations and warranties had been made at
Closing, and (B) all of the conditions set forth in Section 6.1.2
hereof have been satisfied or waived as provided therein; and
1.10.1.3. a certified copy of the resolutions of Landmark's Board
of Directors and shareholders as required for valid approval of the
execution of this Agreement and the consummation of the Merger and the
other transactions provided for by this Agreement; and
1.10.1.4. Certificate of the Secretary of the State of Delaware,
dated a recent date, stating that Landmark is in good standing; and
1.10.1.5. Certificates of Merger prepared by TrustCo and executed
by Landmark, reflecting the terms and provisions hereof and in proper
form for filing with the Secretary of State of the State of Delaware,
in order to cause the Merger to become effective pursuant to the DGCL;
and
1.10.1.6. a legal opinion from counsel for Landmark, in form
reasonably acceptable to TrustCo's counsel, opining with respect to
the matters listed on Exhibit 1.10(a) hereto; and
1.10.1.7. the resignation of any directors of Landmark, the
Subsidiary Bank and any of their respective subsidiaries requested by
TrustCo in a notice given to Landmark no less than 5 days prior to the
Closing Date, which such resignations shall be effective as of the
Effective Time.
1.10.2. At the Closing, TrustCo shall deliver to Landmark:
1.10.2.1. a Certificate signed by an appropriate officer of
TrustCo and AcquisitionCo stating that, to the best knowledge and
belief of such officer, (A) each of the representations and warranties
contained in Article Three hereof (subject to the standard in Section
1.11 hereof) is true and correct at the time of the Closing with the
same force and effect as if such representations and warranties had
been made at Closing, and (B) all of the conditions set forth in
Section 6.2.2 and Section 6.2.4 hereof (but excluding the approval of
Landmark's shareholders) have been satisfied or waived as provided
therein; and
1.10.2.2. a certified copy of the resolutions of TrustCo's Board
of Directors and of AcquisitionCo's Board of Directors and
shareholder, as required for valid
approval of the execution of this Agreement and the consummation of
the transactions provided for by this Agreement; and
1.10.2.3. a legal opinion from counsel for TrustCo and
AcquisitionCo, in form reasonably acceptable to Landmark's counsel,
opining with respect to the matters listed on Exhibit 1.10(b) hereto;
and
1.10.2.4. a certified copy of the Amended and Restated
Certificate of Incorporation and Bylaws of TrustCo and the Certificate
of Incorporation and Bylaws of AcquisitionCo; and
1.10.2.5. Certificate of the Secretary of State of the State of
New York, dated a recent date, stating that TrustCo is in good
standing and Certificate of the Secretary of State of the State of
Delaware, dated a recent date, stating that AcquisitionCo is in good
standing; and
1.10.2.6. Certificates of Merger executed by AcquisitionCo,
reflecting the terms and provisions hereof and in proper form for
filing with the Secretary of State of the State of Delaware in order
to cause the Merger to become effective pursuant to the DGCL.
1.11. Disclosure Schedule; Standard.
1.11.1. Landmark has delivered to TrustCo and AcquisitionCo a
confidential schedule (the "Disclosure Schedule"), executed by Landmark
concurrently with the delivery and execution hereof, setting forth, among
other things, items the disclosure of which shall be necessary or
appropriate either in response to an express disclosure requirement
contained in a provision hereof or as an exception to one or more
representations or warranties contained in Article Two hereof; provided,
that (a) no such item shall be required to be set forth in the Disclosure
Schedule as an exception to a representation or warranty if its absence
would not be reasonably likely to result in the related representation or
warranty being deemed untrue or incorrect under the standard established by
Section 1.11.2 hereof, and (b) the mere inclusion of an item in the
Disclosure Schedule as an exception to a representation or warranty shall
not be deemed an admission by Landmark that such item represents a material
exception or fact, event or circumstance or that such item is reasonably
likely to result in a Material Adverse Effect (as defined in Section 1.11.2
hereof.)
1.11.2. No representation or warranty of Landmark contained in Article
Two hereof nor of TrustCo and AcquisitionCo contained in Article Three
hereof shall be deemed untrue or incorrect, and Landmark, TrustCo and
AcquisitionCo, as the case may be, shall not be deemed to have breached a
representation or warranty, as a consequence of the existence of any fact,
event or circumstance unless such fact, events or circumstance,
individually or taken together with all other facts, event or circumstances
inconsistent with any representation or warranty contained in Article Two
hereof, in the case of Landmark, or Article Three hereof, in the case of
TrustCo and AcquisitionCo, has had or is reasonably likely to have a
Material Adverse Effect on the party making such representation or
warranty. As used herein, the term "Material Adverse Effect" means, with
respect to Landmark or TrustCo and AcquisitionCo, any effect that (i) is,
or is reasonably expected to be, material and adverse to the financial
condition, results of operations or business of Landmark and its
subsidiaries taken as a whole, or TrustCo and its subsidiaries taken as a
whole, respectively, or (ii) would materially impair the ability of either
Landmark or TrustCo and AcquisitionCo to perform its obligations under this
Agreement or otherwise materially threaten or materially impede the
consummation of the Merger and 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 banking and similar laws of general
applicability or interpretations thereof by courts or governmental
authorities, (b) changes in generally accepted accounting principles or
regulatory accounting requirements applicable to banks and their holding
companies generally, (c) any modifications or changes to valuation or
reserve policies and practices in connection with or in anticipation of the
Merger or restructuring charges taken in connection with the Merger, in
each case in accordance with generally accepted accounting principles, and
(d) reasonable costs associated with completing the transactions
contemplated by this Agreement.
1.11.3. Landmark shall be permitted to update and supplement the
Disclosure Schedule so as to disclose exceptions to one or more
representations or warranties contained in Article Two hereof which shall
have arisen between the date hereof and the Closing Date; provided,
however, that, anything herein to the contrary notwithstanding, the
exceptions and other information set forth on any such updated or
supplemented Disclosure Schedule shall not be taken into consideration in
determining, for purposes of this Agreement, whether the condition set
forth in Section 6.1 hereof shall have been satisfied.
1.12. Right to Revise Transaction. TrustCo may, at any time, change the
method of effecting the Merger (including, without limitation, the provisions of
this Article One), if and to the extent TrustCo deems such change to be
desirable, including, without limitation, to provide for the direct merger of
Landmark and TrustCo; provided, however, that no such change shall (A) alter or
change the amount or kind of the Merger Consideration to be received by the
shareholders of Landmark in the Merger, or (B) materially impede or delay
receipt of any approvals referred to in Section 6.1.4 hereof or the consummation
of the transactions contemplated by this Agreement.
2. Representations and Warranties of Landmark.
Subject to Section 1.11 hereof and except as disclosed in a Section of the
Disclosure Schedule corresponding to the relevant Section in this Article Two,
Landmark hereby makes the following representations and warranties:
2.1. Organization and Capital Stock.
2.1.1. Landmark is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware and has the
corporate power to own all of its property and assets, to incur all of its
liabilities and to carry on its business as now being conducted. Landmark
is a unitary savings and loan holding company registered with the Office of
Thrift Supervision (the "O.T.S.") under the Home Owners' Loan Act of 1934,
as amended (the "H.O.L.A."). True, complete and correct copies of the
Certificate of Incorporation and Bylaws of Landmark as in effect on the
date of this Agreement are included as exhibits to the Disclosure Schedule.
2.1.2. The authorized capital stock of Landmark consists only of
400,000 shares of Landmark Common, of which, as of the date hereof, 154,508
shares are issued and outstanding and 100,000 shares of Landmark preferred
stock, of which, as of the date hereof, no shares are issued and
outstanding. All of the issued and outstanding shares of Landmark Common
are duly and validly issued and outstanding and are fully paid and
non-assessable and free of preemptive rights. None of the outstanding
shares of Landmark Common has been issued in violation of any preemptive
rights of the current or past shareholders of Landmark. As of the date
hereof, Landmark had outstanding stock options representing the right to
acquire not more than 8,460 shares of Landmark Common pursuant to the Stock
Option Plan.
2.1.3. Except as set forth in Section 2.1.2 above, Section 2.1.3 of
the Disclosure Schedule and the Landmark Option Agreement, (i) there are no
shares of capital stock or other equity
securities of Landmark outstanding and no outstanding options, warrants,
rights to subscribe for, calls, or commitments of any character whatsoever
relating to, or securities or rights convertible into or exchangeable for,
shares of Landmark Common or other capital stock of Landmark or contracts,
commitments, understandings or arrangements by which Landmark is or may be
obligated to issue additional shares of its capital stock or options,
warrants or rights to purchase or acquire any additional shares of its
capital stock, and (ii) there are no outstanding stock appreciation,
phantom stock or similar rights.
2.1.4. The minute books of Landmark accurately reflect all corporate
actions held or taken by its shareholders and Board of Directors (including
committees of the Board of Directors) since June 1, 1997 and since January
1, 1995 with respect to the Subsidiary Bank. True, complete and correct
copies of the minute books have been made available to TrustCo by Landmark.
2.2. Authorization; No Defaults. Landmark's Board of Directors has, by all
appropriate action, approved this Agreement, the Landmark Option Agreement and
the Merger and authorized the execution hereof and thereof on its behalf by its
duly authorized officers and the performance by Landmark of its obligations
hereunder. Landmark's Board of Directors has directed that the agreement of
merger (within the meaning of the DGCL) contained in this Agreement and the
transactions provided for by this Agreement, including the Merger, be submitted
to the shareholders of Landmark for approval at the Landmark Shareholders'
Meeting (as defined in Section 4.3 hereof), and, except for the adoption and
approval of this Agreement by the affirmative vote of the holders of a majority
of the outstanding shares of Landmark Common, no other corporate proceedings on
the part of Landmark are necessary to approve this Agreement, the Landmark
Option Agreement and to consummate the transactions contemplated by this
Agreement, including the Merger, and by the Landmark Option Agreement. Nothing
in the Certificate of Incorporation or Bylaws of Landmark, as amended, or any
other agreement, instrument, decree, proceeding, law or regulation (except as
specifically referred to in or contemplated by this Agreement) by or to which it
or any of its subsidiaries are bound or subject would prohibit or inhibit
Landmark from consummating this Agreement and the Merger on the terms and
conditions herein contained. This Agreement and the Landmark Option Agreement
have been duly and validly executed and delivered by Landmark and constitute a
legal, valid and binding obligation of Landmark, enforceable against Landmark in
accordance with their respective terms. Landmark and its subsidiaries are
neither in default under nor in violation of any provision of their Articles or
Certificate of Incorporation or Association, as the case may be, Bylaws, or any
promissory note, indenture or any evidence of indebtedness or security therefor,
lease, contract, insurance policy, purchase or other commitment or any other
agreement or arrangement (however evidenced), whether written or oral, and there
has not occurred any event that, with the lapse of time or giving of notice or
both, would constitute such a default or violation.
2.3. Subsidiaries. Landmark's banking subsidiary; Landmark Community Bank
(the "Subsidiary Bank"), and its other direct or indirect subsidiaries
(collectively, the "subsidiaries") the name and jurisdiction of incorporation
and principal business or purpose of which is disclosed in Section 2.3 of the
Disclosure Schedule, are duly organized, validly existing and in good standing
under the laws of the jurisdiction of their respective incorporation and has the
corporate power to own their respective properties and assets, to incur their
respective liabilities and to carry on their respective business as now being
conducted. The Subsidiary Bank is an insured institution (within the meaning of
the Federal Deposit Insurance Act) and its deposits are insured by the Federal
Deposit Insurance Corporation (the "F.D.I.C.") in accordance with the Federal
Deposit Insurance Act, as amended, up to applicable limits. The number of issued
and outstanding shares of capital stock of each subsidiary is disclosed in
Section 2.3 of the Disclosure Schedule, all of which shares are owned by
Landmark or Landmark's subsidiaries, as the case may be, free and clear of all
liens, encumbrances, rights of first refusal, options or other restrictions of
any nature whatsoever. There are no options, warrants or rights outstanding to
acquire any
capital stock of any of Landmark's subsidiaries and no person or entity has any
other right to purchase or acquire any unissued shares of stock of any of
Landmark's subsidiaries, nor does any such subsidiary have any obligation of any
nature with respect to its unissued shares of stock. Neither Landmark nor any of
its subsidiaries is a party to any partnership or joint venture or owns an
equity interest in any other business or enterprise. True, complete and current
copies of the Articles or Certificates of Incorporation or Association and
Bylaws of each direct and indirect subsidiary of Landmark as in effect on the
date of this Agreement and included as exhibits to the Disclosure Schedule.
2.4. Financial Information. The (i) audited consolidated balance sheets of
Landmark and its subsidiaries as of March 31, 1998 and 1999, and related
consolidated income statements and statements of changes in shareholders' equity
and of cash flows for the three (3) years ended March 31, 1998, together with
the notes thereto, included in Landmark's Annual Report on Form 10-KSB for the
fiscal year ended March 31, 1999, as currently on file with the S.E.C., and the
unaudited consolidated balance sheets of Landmark and its subsidiaries as of
December 31, 1999, and the related unaudited consolidated income statements and
statements of changes in shareholders equity and cashflows for the nine months
then ended together with in Landmark's Quarterly Reports on Form 10-QSB for the
quarters June 30, 1999, September 30, 1999 and December 31, 1999 as currently on
file with the Securities and Exchange Commission ("S.E.C."), and (ii) the
year-end and quarterly Thrift Financial Reports of Landmark Community Bank (the
"Subsidiary Bank") for 1998 and for the quarters ended March 31, 1999, June 30,
1999, September 30, 1999, and December 31, 1999, as currently on file with the
F.D.I.C. (together, the "Landmark Financial Statements"), have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis (except as may be disclosed therein and except for regulatory reporting
differences required by the Subsidiary Bank's reports) and fairly present in all
material respects the financial position and the results of operations and
changes in shareholders' equity of Landmark and its subsidiaries as of the dates
and for the periods indicated (subject, in the case of interim financial
statements, to normal recurring year-end adjustments, none of which shall be
material). The books and records of Landmark and its subsidiaries have been, and
are being, maintained in accordance with generally accepted accounting
principles and any other applicable legal and accounting requirements and
reflect only actual transactions.
2.5. Absence of Changes. Since March 31, 1999, there has not been any
change in the financial condition, the results of operations or the business of
Landmark and its subsidiaries taken as a whole which would have a Material
Adverse Effect on Landmark, except as disclosed by Landmark since March 31, 1999
in its periodic reports filed with the S.E.C. under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"). Since the date of its most recent
regulatory examination report, there has been no change in the financial
condition, the results of operations or the business of the Subsidiary Bank
which would have a Material Adverse Effect on the Subsidiary Bank, except as
disclosed by Subsidiary Bank since the date of such most recent regulatory
examination report in its Thrift Financial Quarterly Reports filed with the
F.D.I.C. and the O.T.S.
2.6. Regulatory Enforcement Matters. Neither Landmark, the Subsidiary Bank
nor any other subsidiary is subject or is party to, or has received any notice
or advice that it may become subject or party to, any investigation with respect
to, any cease-and-desist order, agreement, consent agreement, memorandum of
understanding or other regulatory enforcement action, proceeding or order with
or by, or is a party to any commitment letter or similar undertaking to, or is
subject to any directive by, or has been a recipient of any supervisory letter
from, or has adopted any board resolutions at the request of, any Regulatory
Agency (as defined below in this Section 2.6) that currently restricts the
conduct of its business or that affect its capital adequacy, its credit
policies, its management or its business (each, a "Regulatory Agreement"), nor
has Landmark, the Subsidiary Bank or any other subsidiary been advised by any
Regulatory Agency that it is considering issuing or requesting any such
Regulatory Agreement. There is no unresolved violation, criticism or exception
by any Regulatory Agency with respect to any
report or statement relating to any examinations of Landmark, the Subsidiary
Bank or any other subsidiaries. As used herein, the term "Regulatory Agency"
means any federal or state agency charged with the supervision or regulation of
thrifts, banks or holding companies thereof, or engaged in the insurance of bank
deposits, or any court, administrative agency or commission or other
governmental agency, authority or instrumentality having supervisory or
regulatory authority with respect to Landmark or any of its subsidiaries.
2.7. Tax Matters.
2.7.1. Each of Landmark and its subsidiaries has filed with the
appropriate governmental agencies all foreign, federal, state and local Tax
(as defined below in this Section 2.7) returns, declarations, estimates,
information returns, statements and reports (collectively, "Tax Returns")
required to be filed by it. Neither Landmark nor its subsidiaries are (a)
delinquent in the payment of any Taxes shown on such Tax Returns or on any
assessments received by it for such Taxes, (b) subject to any agreement
extending the period for assessment or collection of any Tax, or (c) a
party to any action or proceeding with, nor has any claim been asserted or
threatened against any of them by, any governmental authority for
assessment or collection of Taxes or for the refund of Taxes previously
paid. The income Tax Returns of Landmark and its subsidiaries have not been
audited by the Internal Revenue Service (the "I.R.S.") and comparable state
agencies at any time during the past 15 years. To our best knowledge, the
reserve for Taxes in the financial statements of Landmark for the fiscal
year ended March 31, 1999 and the quarter ended December 31, 1999, is
adequate to cover all of the liabilities for Taxes of Landmark and its
subsidiaries that may become payable in future years with respect to any
transactions consummated prior to December 31, 1999. As used herein, the
term "Taxes" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental, customs duties,
capital stock, franchise, profits, withholding, social security (or
similar), unemployment, disability, real property, personal property,
sales, use, transfer, registration, value added, alternative or add-on
minimum, estimated or other tax of any kind whatsoever, including any
interest, penalty or addition thereto, whether disputed or undisputed.
2.7.2. Any amount that could be received (whether in cash or property
or the vesting of property) as a result of any of the transactions
contemplated by this Agreement by any employee, officer or director of
Landmark or any of its affiliates who is a "Disqualified Individual" (as
such term is defined in proposed Treasury Regulation Section 1.280G-1)
under any employment, severance or termination agreement, other
compensation arrangement or Landmark Employee Plan (as defined in Section
2.11.3 hereof) currently in effect would not be characterized as an "excess
parachute payment" (as such term is defined in Section 280G(b)(1) of the
Code).
2.7.3. Landmark has not been subject to any disallowance of a
deduction under Section 162(m) of the Code nor does Landmark reasonably
believe that such a disallowance is reasonably likely to be applicable for
any tax year of Landmark ended on or before the Closing Date.
2.8. Litigation and Related Matters. Section 2.8 of the Disclosure Schedule
describes all litigation, claims or other proceedings or investigations of any
nature pending or, to the knowledge of Landmark, threatened, against Landmark or
any of its subsidiaries, or of which the property of Landmark or any of its
subsidiaries is or would be subject. There is no injunction, order, judgment,
decree or regulatory restriction imposed upon Landmark, or any of its
subsidiaries or the assets of Landmark or any of its subsidiaries. Since January
1, 1995, Landmark, the Subsidiary Bank and/or its subsidiaries (as applicable)
have continuously maintained fidelity bonds insuring them against acts of
dishonesty in such amounts as are customary, usual and prudent for organizations
of their size and business. There are no facts which would form the basis of a
claim or claims under such bonds. Neither Landmark nor any of its subsidiaries
has reason to believe that its respective fidelity coverage would not be renewed
by the carrier
on substantially the same terms as the existing coverage, except for possible
premium increases unrelated to Landmark's and its subsidiaries' past claim
experience.
2.9. Employment Agreements. Section 2.9 of the Disclosure Schedule lists
each agreement, arrangement, commitment or contract (whether written or oral)
for the employment, election, retention or engagement, or with respect to the
severance, of any present or former officer, employee, agent, consultant or
other person or entity to which Landmark or any of its subsidiaries is a party
or bound by and which, by its terms, is not terminable by Landmark or such
subsidiary on thirty (30) days written notice or less without the payment of any
amount by reason of such termination. Copies of each written (and summaries of
each oral) agreement, arrangement, commitment or contract listed in Section 2.9
of the Disclosure Schedule have been previously made available to TrustCo by
Landmark.
2.10. Reports. Other than as is set forth in Section 2.10 of the Disclosure
Schedule, since January 1, 1995, Landmark, the Subsidiary Bank and/or each of
their subsidiaries has filed all reports and statements, together with any
amendments required to be made with respect thereto, if any, that it was
required to file with (i) the O.T.S., (ii) the F.D.I.C., (iii) the S.E.C., (iv)
any state securities authorities, and (v) any other Regulatory Agency with
jurisdiction over Landmark or any of its subsidiaries, and have paid all fees
and assessments due and payable in connection therewith. As of their respective
dates, each of such reports and documents, as amended, including any financial
statements, exhibits and schedules thereto, complied with the relevant statutes,
rules and regulations enforced or promulgated by the regulatory authority with
which they were filed, 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.
2.11. Employee Matters and ERISA.
2.11.1. Neither Landmark nor any of its subsidiaries has entered into
any collective bargaining agreement with any labor organization with
respect to any group of employees of Landmark or any of its subsidiaries
and, to the knowledge of Landmark, there is no present effort nor existing
proposal to attempt to unionize any group of employees of Landmark or any
of its subsidiaries.
2.11.2. (i) Landmark and its subsidiaries are and have been in
compliance with all applicable laws respecting employment and employment
practices, terms and conditions of employment and wages and hours,
including, without limitation, any such laws respecting employment
discrimination and occupational safety and health requirements, and neither
Landmark nor any of its subsidiaries is engaged in any unfair labor
practice, (ii) there is no unfair labor practice complaint against Landmark
or any subsidiary pending or, to the knowledge of Landmark, threatened
before the National Labor Relations Board, (iii) there is no labor dispute,
strike, slowdown or stoppage actually pending or, to the knowledge of
Landmark, threatened against or directly affecting Landmark or any
subsidiary, and (iv) neither Landmark nor any subsidiary has experienced
any work stoppage or other labor difficulty during the past five (5) years.
2.11.3. Section 2.11.3 of the Disclosure Schedule describes each
employee benefit plan, as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and each
nonqualified employee benefit plan, deferred compensation, bonus, stock and
incentive plan, and each other employee benefit and fringe benefit program
for the benefit of former or current employees of Landmark or any
subsidiary (the "Landmark Employee Plans") which Landmark and its
subsidiaries maintain, contribute to or participate in or have any
liability under. No present or former employee of Landmark or any
subsidiary has been charged with breaching, or, to the knowledge of
Landmark, has breached, a fiduciary duty under any of the Landmark Employee
Plans. Neither Landmark nor any of its subsidiaries participates in, nor
has it in the past five (5) years participated in, nor
has it any present or future obligation or liability under, any
multiemployer plan (as defined at Section 3(37) of ERISA). Section 2.11.3
of the Disclosure Schedule describes all plans that provide health, major
medical, disability or life insurance benefits to former employees of
Landmark or any subsidiary that Landmark and any subsidiary maintain,
contribute to, or participate in.
2.11.4. Neither Landmark nor any of its subsidiaries maintain, nor
have any of them maintained for the past ten years, any Landmark Employee
Plans subject to Title IV of ERISA or Section 412 of the Code. No
reportable event (as defined in Section 4043 of ERISA) has occurred with
respect to any Landmark Employee Plans as to which a notice would be
required to be filed with the Pension Benefit Guaranty Corporation. No
claim is pending, and Landmark has not received notice of any threatened or
imminent claim with respect to any Landmark Employee Plan (other than a
routine claim for benefits for which plan administrative review procedures
have not been exhausted) for which Landmark or any of its subsidiaries
would be liable after December 31, 1999, except as reflected on the
Landmark Financial Statements. All liabilities of the Landmark Employee
Plans have been funded on the basis of consistent methods in accordance
with sound actuarial assumptions and practices, and no Landmark Employee
Plan, at the end of any plan year, or at December 31, 1999, had or has had
an accumulated funding deficiency. No actuarial assumptions have been
changed since the last written report of actuaries on such Landmark
Employee Plans. All insurance premiums (including premiums to the Pension
Benefit Guaranty Corporation) have been paid in full, subject only to
normal retrospective adjustments in the ordinary course. Landmark and its
subsidiaries have no contingent or actual liabilities under Title IV of
ERISA. No accumulated funding deficiency (within the meaning of Section 302
of ERISA or Section 412 of the Code) has been incurred with respect to any
of the Landmark Employee Plans, whether or not waived. No reportable event
(as defined in Section 4043 of ERISA) has occurred with respect to any of
the Landmark Employee Plans as to which a notice would be required to be
filed with the Pension Benefit Guaranty Corporation. After December 31,
1999, Landmark and its subsidiaries do not have any liabilities for excise
taxes under Sections 4971, 4975, 4976, 4977, 4979 or 4980B of the Code or
for a fine under Section 502 of ERISA with respect to any Landmark Employee
Plan. All Landmark Employee Plans have been operated, administered and
maintained in accordance with the terms thereof and in compliance with the
requirements of all applicable laws, including, without limitation, ERISA
and the Code.
2.11.5. Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated by this Agreement (either
alone or upon the occurrence of any additional acts or events) would,
except as set forth in Section 2.11.5 of the Disclosure Schedule, (i)
result in any payment (including, without limitation, severance,
unemployment compensation, golden parachute or otherwise) becoming due to
any director, officer or employee of Landmark or any of its affiliates from
Landmark or any of its affiliates under any Landmark Employee Plan or
otherwise, (ii) increase any benefits otherwise payable under any Landmark
Employee Plan, or (iii) result in any acceleration of the time of payment
or vesting of any such benefits.
2.11.6. Copies of each Landmark Employee Plan described in Section
2.11.3 of the Disclosure Schedule, and all amendments or supplements
thereto, have been previously made available to TrustCo by Landmark.
Section 2.11.6 of the Disclosure Schedule lists, for each Landmark Employee
Plan, all of the following with respect thereto: (i) summary plan
descriptions, (ii) lists of all current participants and all participants
with benefit entitlements, (iii) contracts relating to plan documents, (iv)
actuarial valuations for any defined benefit plan, (v) valuations for any
plan as of the most recent date, (vi) determination letters from the
I.R.S., (vii) the most recent annual report filed with the I.R.S., (viii)
registration statements and prospectuses, and (ix) trust agreements. Copies
of each of the documents described in the preceding sentence have been
previously made available to TrustCo by Landmark.
2.12. Title to Properties; Insurance. (i) Landmark and its subsidiaries
have marketable title, insurable at standard rates, free and clear of all liens,
charges and encumbrances (except Taxes which are a lien but not yet payable and
liens, charges or encumbrances reflected in the Landmark Financial Statements
and easements, rights-of-way, and other restrictions and imperfections not
material in nature, and further excepting in the case of Other Real Estate Owned
(as such real estate is internally classified on the books of Landmark or its
subsidiaries) rights of redemption under applicable law) to all of their owned
real properties, (ii) all leasehold interests for real property and personal
property used by Landmark and its subsidiaries in their businesses are held
pursuant to lease agreements which are valid and enforceable in accordance with
their terms, (iii) all such properties comply with all applicable private
agreements, zoning requirements and other governmental laws and regulations
relating thereto and there are no condemnation proceedings pending or, to the
knowledge of Landmark, threatened with respect to such properties, (iv) Landmark
and its subsidiaries have valid title or other ownership rights under licenses
to all intangible personal or intellectual property necessary to conduct the
business and operations of Landmark and its subsidiaries as presently conducted,
free and clear of any claim, defense or right of any other person or entity,
subject only to rights of the licensors pursuant to applicable license
agreements, which rights do not adversely interfere with the use of such
property, (v) all insurable properties owned or held by Landmark and its
subsidiaries are adequately insured by financially sound and reputable insurers
in such amounts and against fire and other risks insured against by extended
coverage and public liability insurance, as is customary with bank holding
companies of similar size, and there are presently no claims pending under such
policies of insurance and no notices have been given by Landmark or any of its
subsidiaries under such policies, and (vi) all tangible properties used in the
businesses of Landmark and its subsidiaries are in good condition, reasonable
wear and tear excepted, and are useable in the ordinary course of business
consistent with past practices. Section 2.12 of the Disclosure Schedule sets
forth, for each policy of insurance maintained by Landmark and its subsidiaries,
the amount and type of insurance, the name of the insurer and the amount of the
annual premium.
2.13. Environmental Matters.
2.13.1. As used herein, the term "Environmental Laws" shall mean all
local, state and federal environmental, health and safety laws and
regulations and common law standards in all jurisdictions in which Landmark
and its subsidiaries have done business or owned, leased or operated
property, including, without limitation, the Federal Resource Conservation
and Recovery Act, the Federal Comprehensive Environmental Response,
Compensation and Liability Act, the Federal Clean Water Act, the Federal
Clean Air Act, and the Federal Occupational Safety and Health Act.
2.13.2. To their best knowledge, neither the conduct nor operation of
Landmark or its subsidiaries nor any condition of any property presently or
previously owned, leased or operated by any of them violates or violated
or, to the knowledge of Landmark, may violate, Environmental Laws in a
manner or to any extent exposing Landmark or its subsidiaries to liability
or potential liability and no condition has existed or event has occurred
with respect to any of them or any such property that, with notice or the
passage of time, or both, would constitute or, to the knowledge of
Landmark, may constitute, a violation of Environmental Laws in a manner or
to any extent that would obligate (or potentially obligate) Landmark or its
subsidiaries to remedy, stabilize, neutralize or otherwise alter the
environmental condition of any such property. Neither Landmark nor any of
its subsidiaries has received any notice from any person or entity that
Landmark or its subsidiaries or the operation or condition of any property
ever owned, leased or operated by any of them are or were in violation of
any Environmental Laws in a manner or to any extent exposing Landmark or
its subsidiaries to liability or potential liability or that any of them
are responsible (or potentially responsible) for the cleanup or other
remediation of any pollutants, contaminants, or hazardous or toxic wastes,
substances or materials at, on or beneath any such property and, to the
knowledge of Landmark, Landmark and its subsidiaries and the operation and
condition of any property ever owned, leased or operated by any of them are
not and were not in violation of any
Environmental Laws in a manner or to any extent exposing Landmark or its
subsidiaries to liability or potential liability and none of them are
responsible (or potentially responsible) for the cleanup or other
remediation of any pollutants, contaminants, or hazardous or toxic wastes,
substances or materials at, on or beneath any such property. Section 2.13.2
of the Disclosure Schedule lists each property presently owned, leased or
operated by Landmark or any of its subsidiaries which, to the knowledge of
Landmark, contains any pollutants, contaminants, or hazardous or toxic
wastes, substances or materials at, on or beneath any such property or
which otherwise violates or may violate any Environmental Laws.
2.14. Compliance with Law. Landmark and its subsidiaries have all licenses,
franchises, permits and other governmental authorizations that are legally
required to enable them to conduct their respective businesses and are in
compliance with all applicable laws and regulations.
2.15. Brokerage. There are no existing claims or agreements for brokerage
commissions, finders' fees, or similar compensation in connection with the
transactions contemplated by this Agreement payable by Landmark or its
subsidiaries, other than agreements with R.P. Financial, L.C., which copies of
such agreements are attached as exhibits to the Disclosure Schedule.
2.16. Trust Administration. During the applicable statute of limitations
period, (i) the Subsidiary Bank has properly administered all Individual
Retirement Accounts for which it acts as a trustee or custodian, in accordance
with the terms of the governing documents and applicable law, and (ii) neither
the Subsidiary Bank nor any director, officer or employee of the Subsidiary Bank
has committed any breach of trust with respect to any such account.
2.17. Material Contracts and Agreements. Neither Landmark nor any of its
subsidiaries is a party to, or is bound by, any material contract (as defined in
Item 601(b)(10) of Regulation S-K of the S.E.C.) (other than loans or loan
commitments and funding transactions in the ordinary course of business of
Landmark's subsidiaries) that has not been filed or incorporated by reference in
periodic reports filed by Landmark with the S.E.C. under the Exchange Act and
listed in Section 2.17 of the Disclosure Schedule. Section 2.17 of the
Disclosure Schedule also lists (i) each agreement restricting the nature or
geographic scope of any line of business or activity of Landmark or its
subsidiaries, (ii) each agreement, indenture or other instrument relating to the
borrowing of money by Landmark or any of its subsidiaries or the guarantee by
Landmark or any of its subsidiaries of any such obligation, other than
instruments relating to transactions entered into in the ordinary course of
business, and (iii) each agreement, indenture or other instrument which has been
filed or incorporated by reference in the periodic reports referred to above.
Copies of each of the contracts and agreements listed in Section 2.17 of the
Disclosure Schedule have been previously furnished to TrustCo by Landmark.
2.18. No Undisclosed Liabilities. Landmark and its subsidiaries do not have
any liability, whether known or unknown, whether asserted or unasserted, whether
absolute or contingent, whether accrued or unaccrued, whether liquidated or
unliquidated, and whether due or to become due, including any liability for
Taxes (and there is no past or present fact, situation, circumstance, condition
or other basis for any present or future action, suit or proceeding, hearing,
charge, complaint, claim or demand against Landmark or its subsidiaries giving
rise to any such liability), except (i) for liabilities set forth in the
Landmark Financial Statements, and (ii) normal fluctuation in the amount of the
liabilities referred to in clause (i) above occurring in the ordinary course of
business of Landmark and its subsidiaries since the date of the December 31
balance sheet included in the Landmark Financial Statements.
2.19. Statements True and Correct. None of the information supplied or to
be supplied by Landmark or its subsidiaries for inclusion in (i) the Proxy
Statement (as defined in Section 4.3 hereof), and (ii) any other documents to be
filed with the S.E.C., Nasdaq or any other Regulatory Agency in connection with
the transactions contemplated by this Agreement shall, at the respective times
such
documents are filed, and, with respect to the Proxy Statement, when first
mailed to the shareholders of Landmark and at the time of its Shareholders'
Meeting, contain any untrue statement of a material fact, or omit to state any
material fact necessary in order to make the statements made therein, in light
of the circumstances under which they are made, not misleading. All documents
that Landmark shall be responsible for filing with the S.E.C., Nasdaq or any
other Regulatory Agency in connection with the transactions contemplated by this
Agreement shall comply as to form in all material respects with the provisions
of applicable law and the applicable rules and regulations thereunder.
2.20. State Takeover Laws. The transactions contemplated by this Agreement
are not subject to any applicable state takeover law.
2.21. Fair Lending; Community Reinvestment Act. With the exception of
routine investigation of consumer complaints, neither Landmark nor any of its
subsidiaries has been advised by any Regulatory Agency that it is or may be in
violation of the Equal Credit Opportunity Act or the Fair Housing Act or any
similar federal or state statute. Each of Landmark's depository institution
subsidiaries received a Community Reinvestment Act ("CRA") rating of
"Outstanding" or "Satisfactory" in its most recent CRA examination.
2.22. Loan Portfolio. (i) All loans and discounts shown on the Landmark
Financial Statements or which were entered into after the date of the most
recent balance sheet included in the Landmark Financial Statements were and
shall be made for good, valuable and adequate consideration in the ordinary
course of the business of Landmark and its subsidiaries, in accordance with
sound banking practices, and are not subject to any known defenses, set-offs or
counter-claims, including without limitation any such as are afforded by usury
or truth in lending laws, except as may be provided by bankruptcy, and solvency
or similar laws or by general principles of equity, (ii) the notes or other
evidence of indebtedness evidencing such loans in all forms of pledges,
mortgages and other collateral documents and security agreement are and shall be
in force, valid, true and genuine and what they purport to be, and (iii)
Landmark and its subsidiaries have complied with and shall prior to the
effective date comply with, all laws and regulations relating to such loans.
2.23. Investment Portfolio. All investment securities held by Landmark or
its subsidiaries, as reflected in the consolidated balance sheets of Landmark
included in the Landmark financial statements, are carried in accordance with
generally accepted accounting principles, specifically, including but not
limited to, FAS 115.
2.24. Interest Rate Risk Management Instruments. Section 2.24 of the
Disclosure Schedule describes all interest rate swaps, caps, floors, option
agreements or other interest rate risk management arrangements or agreements,
whether entered into for the account of Landmark or its subsidiaries or for the
account of a customer of Landmark or one of its subsidiaries. All such
arrangements and agreements disclosed in Section 2.24 of the Disclosure Schedule
were entered into in the ordinary course of business and in accordance with
prudent banking practice and applicable rules, regulations and policies and with
counter parties believed to be financially responsible at the time and are
legal, valid and binding obligations of Landmark or one of its subsidiaries in
force in accordance with their terms (subject to the provisions of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or similar laws
affecting the enforceability of creditors rights generally and equitable
principles relating to the granting of specific performance and other equitable
remedies as a matter of judicial discretion), and are in full force and effect.
Landmark and each of its subsidiaries have duly performed all of their
obligations thereunder to the extent that such obligations to perform have
accrued; and, to Landmark's knowledge, there are no breaches, violations or
defaults or allegations or assertions of such by any party thereunder.
2.25. Year 2000 Compliance. Landmark and the Subsidiary Bank are Year 2000
Compliant. The term "Year 2000 Compliant" as used herein, means that computer
applications, imbedded microchips and other systems are able to perform Date
Sensitive Functions prior to and after December 31, 1999. The term "Date
Sensitive Functions" as used herein, includes all functions of computer
applications, imbedded microchips, and other systems which involve the
generation of random numbers based on dates, the implementation of another
function as a consequence of a date, or the processing or generation of any
other information in which dates are significant.
2.26. Interim Events. Since September 30, 1999, neither Landmark nor its
subsidiaries have paid or declared any dividend or made any other distribution
to shareholders or taken any action which if taken after the date hereof would
have required the prior written consent of TrustCo pursuant to Section 4.1.2
hereof.
3. Representations and Warranties of Trustco and AcquisitionCo.
Subject to Section 1.11 hereof, TrustCo and AcquisitionCo hereby make the
following representations and warranties:
3.1. Organization and Capital Stock. TrustCo is a corporation duly
organized, validly existing and in good standing under the laws of the State of
New York and has the corporate power to own all of its property and assets, to
incur all of its liabilities and to carry on its business as now being
conducted. TrustCo is a bank holding company registered with the Federal Reserve
Board under the B.H.C.A. AcquisitionCo is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
the corporate power to own all of its property and assets, to incur all of its
liabilities and to carry on its business as now being conducted.
3.2. Authorization. The Board of Directors of TrustCo and the Board of
Directors and shareholder of AcquisitionCo have, by all appropriate action,
approved this Agreement and the Merger and authorized the execution hereof on
its behalf by its duly authorized officers and the performance by TrustCo and
AcquisitionCo of their respective obligations hereunder. Nothing in the Amended
and Restated Certificate of Incorporation or Bylaws of TrustCo, the Certificate
of Incorporation or Bylaws of AcquisitionCo or any other agreement, instrument,
decree, proceeding, law or regulation (except as specifically referred to in or
contemplated by this Agreement) by or to which TrustCo or any of its
subsidiaries are bound or subject would prohibit or inhibit TrustCo or
AcquisitionCo from entering into and consummating this Agreement and the Merger
on the terms and conditions herein contained. This Agreement has been duly and
validly executed and delivered by TrustCo and AcquisitionCo and constitutes a
legal, valid and binding obligation of TrustCo and AcquisitionCo, enforceable
against TrustCo and AcquisitionCo in accordance with its terms and, no other
corporate acts or proceedings are required to be taken by TrustCo or
AcquisitionCo to authorize the execution, delivery and performance of this
Agreement. Except for the requisite approval of the Federal Reserve Board, no
notice to, filing with, authorization by, or consent or approval of, any federal
or state bank regulatory authority is necessary for the execution and delivery
of this Agreement or consummation of the Merger by TrustCo and AcquisitionCo.
3.3. Subsidiaries. Each of TrustCo's significant subsidiaries (as such term
is defined in Rule 1-02 of Regulation S-X promulgated by the S.E.C.) is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has the corporate power to own its
respective properties and assets, to incur its respective liabilities and to
carry on its respective business as now being conducted.
3.4. Litigation. There is no litigation, claim or other proceeding pending
or, to the knowledge of TrustCo, threatened, against TrustCo or any of its
subsidiaries, or of which the property of TrustCo or any of its subsidiaries is
or would be subject, and there is no injunction, order, judgment, decree or
regulatory restriction imposed upon TrustCo, or any of its subsidiaries or the
assets of TrustCo or any of its subsidiaries, which would have a Material
Adverse Effect on TrustCo.
3.5. Statements True and Correct. None of the information supplied or to be
supplied by TrustCo for inclusion in (i) the Proxy Statement, and (ii) any other
documents to be filed with the S.E.C., Nasdaq, or any other Regulatory Agency in
connection with the transactions contemplated by this Agreement shall, at the
respective times such documents are filed, and, with respect to the Proxy
Statement, when first mailed to the shareholders of Landmark at the time of the
Landmark Shareholders' Meeting, contain any untrue statement of a material fact,
or omit to state any material fact necessary in order to make the statements
made therein, in light of the circumstances under which they are made, not
misleading. All documents that TrustCo shall be responsible for filing with the
S.E.C., Nasdaq or any other Regulatory Agency in connection with the
transactions contemplated by this Agreement shall comply as to form in all
material respects with the provisions of applicable law and the applicable rules
and regulations thereunder.
3.6. Funds Available. TrustCo has, and at the Effective Time shall have,
sufficient funds to pay the Merger Consideration and satisfy its other
obligations under the Agreement.
4. Agreements of Landmark.
4.1. Business in Ordinary Course.
4.1.1. Landmark shall not declare or pay any dividend or make any
other distribution to shareholders, whether in cash, stock or other
property, after the date hereof, except with the prior written consent of
TrustCo.4.1.2. Landmark shall, and shall cause each of its subsidiaries to,
(1) continue to carry on after the date hereof its respective business and
the discharge or incurrence of obligations and liabilities, only in the
usual, regular and ordinary course of business, as heretofore conducted,
(2) use reasonable best efforts to maintain and preserve intact its
respective business organization, employees and advantageous business
relationships and retain the services of its officers and key employees,
and (3) by way of amplification and not limitation, Landmark and each of
its subsidiaries shall not, without the prior written consent of TrustCo
(which shall not be unreasonably withheld):
4.1.2.1. issue any Landmark Common, preferred stock or other
capital stock or any options, warrants, or other rights to subscribe
for or purchase Landmark Common or any other capital stock or any
securities convertible into or exchangeable for any capital stock of
Landmark or any of its subsidiaries (except for (i) the issuance of
Landmark Common pursuant to the valid exercise of Landmark Stock
Options which are outstanding on the date hereof, and (ii) the
issuance of Landmark Common pursuant to the Landmark Option
Agreement); or
4.1.2.2. directly or indirectly redeem, purchase or otherwise
acquire any Landmark Common or any other capital stock of Landmark or
effect a reclassification, recapitalization, split-up, exchange of
shares, readjustment or other similar change in or to any capital
stock or otherwise reorganize or recapitalize Landmark; or
4.1.2.3. directly or indirectly redeem, purchase or otherwise
acquire any capital stock of subsidiaries of Landmark or effect a
reclassification, recapitalization, split-up, exchange of shares,
readjustment or other similar change in or to any capital stock or
otherwise reorganize or
recapitalize any subsidiary of Landmark (other than any of the
foregoing all of the parties to which shall consist exclusively of
Landmark and the wholly-owned subsidiaries of Landmark); or
4.1.2.4. change its Certificate or Articles of Incorporation or
Association, as the case may be, or Bylaws; or
4.1.2.5. grant any increase, other than ordinary and normal
increases consistent with past practices, in the compensation payable
or to become payable to officers or salaried employees, grant any
stock options or, except as required by law or as required by existing
contractual obligations which shall have been described in Section
2.11 of the Disclosure Schedule, adopt or make any material change in
any bonus, insurance, pension, or other Landmark Employee Plan,
agreement, payment or arrangement made to, for or with any of such
officers or employees; or
4.1.2.6. borrow or agree to borrow any amount of funds in excess
of $500,000, or directly or indirectly guarantee or agree to guarantee
any obligations of others, except letters of credit issued in the
ordinary course of business pursuant to Section 4.1.2.7 and the
renewal or refinancing of any existing advances from or other
indebtedness owed to the Federal Home Loan Bank of New York; or
4.1.2.7. make or commit to make any new loan or letter of credit
or any new or additional discretionary advance under any existing line
of credit in principal amounts in excess of $100,000 or that would
increase the aggregate credit outstanding to any one borrower (or
group of affiliated borrowers) to more than $250,000, other than as
set forth in Section 4.1.2.7 of the Disclosure Schedule (excluding for
this purpose any accrued interest or overdrafts), without the prior
written consent of TrustCo, acting through its Senior Vice President
and Chief Financial Officer or such other designee as TrustCo may give
notice of to Landmark; or
4.1.2.8. purchase or otherwise acquire any investment security
for its own account, except in a manner and pursuant to policies
consistent with past practice; or
4.1.2.9. materially increase or decrease the rate of interest
paid on time deposits, or on certificates of deposit, except in a
manner and pursuant to policies consistent with past practices; or
4.1.2.10. enter into any agreement, contract or commitment of a
material nature out of the ordinary course of business having a term
in excess of three (3) months or obligation in excess of $10,000; or
expend or commit to expend more than $135,000 for legal fees and
reasonable expenses of counsel not to exceed $5,000 in connection with
the transaction contemplated herein; or
4.1.2.11. except in the ordinary course of business, place on any
of its assets or properties any mortgage, pledge, lien, charge, or
other encumbrance of any kind; or
4.1.2.12. except in the ordinary course of business, cancel or
accelerate any material indebtedness owing to Landmark or its
subsidiaries or any claims which Landmark or its subsidiaries may
possess or waive any material rights with respect thereto; or
4.1.2.13. sell or otherwise dispose of any real property or any
amount of any tangible or intangible personal property other than in
the ordinary course of business and other than properties acquired in
foreclosure or otherwise in the ordinary collection of indebtedness to
Landmark and its subsidiaries; or
4.1.2.14. foreclose upon or otherwise take title to or possession
or control of any real property without first obtaining a phase one
environmental report thereon which indicates that
the property is free of pollutants, contaminants or hazardous or toxic
waste materials; provided, however, that Landmark and its subsidiaries
shall not be required to obtain such a report with respect to single
family, non-agricultural residential property of one acre or less to
be foreclosed upon unless it has reason to believe that such property
might contain any such waste materials or otherwise might be
contaminated; or
4.1.2.15. commit any act or fail to do any act which would cause
a breach of any agreement, contract or commitment and which would have
a Material Adverse Effect on Landmark; or
4.1.2.16. purchase any real or personal property or make any
other capital expenditure; or
4.1.2.17. take any action which would adversely effect or delay
the ability of either TrustCo or Landmark to obtain any necessary
approvals of any Regulatory Agency or other governmental authority
required for the transactions contemplated by this Agreement or to
perform its covenants and agreements under this Agreement or the
Landmark Option Agreement.
4.1.3. Landmark and its subsidiaries shall not, without the prior
written consent of TrustCo, engage in any transaction or take any action
that would render untrue (under the standard of Section 1.11 hereof) any of
the representations and warranties of Landmark contained in Article Two
hereof, if such representations and warranties were given as of the date of
such transaction or action.
4.1.4. Landmark shall promptly notify TrustCo in writing of the
occurrence of any matter or event known to and directly involving Landmark,
other than any changes in conditions that affect the banking industry
generally, that would have, either individually or in the aggregate, a
Material Adverse Effect on Landmark.
4.1.5. Landmark and its subsidiaries shall not, and shall not
authorize or permit any of their respective officers, directors, employees
or agents to, on or before the earlier of the Closing Date or the date of
termination of this Agreement, directly or indirectly solicit, initiate or
encourage or (subject to the fiduciary duties of its directors as advised
by counsel) hold discussions or negotiations with or provide any
information to any person in connection with any proposal from any person
for the acquisition of all or any substantial portion of the business,
assets, shares of Landmark Common or other securities of Landmark or its
subsidiaries. Landmark shall promptly (which for this purpose shall mean
within twenty-four (24) hours) advise TrustCo of its receipt of any such
proposal or inquiry concerning any such proposal, the substance of such
proposal or inquiry, and the identity of such person.
4.2. Breaches. Landmark shall, in the event it has knowledge of the
occurrence, or impending or threatened occurrence, of any event or condition
which would cause or constitute a breach (or would have caused or constituted a
breach had such event occurred or been known prior to the date hereof) of any of
its representations or agreements contained or referred to herein, give prompt
written notice thereof to TrustCo and use its best efforts to prevent or
promptly remedy the same.
4.3. Submission to Shareholders. Landmark shall cause to be duly called and
held, on a date selected by Landmark in consultation with TrustCo, a special
meeting of its shareholders (the "Landmark Shareholders' Meeting") for
submission of this Agreement and the Merger for approval of such Landmark
shareholders as required by the DGCL. In connection with the Landmark
Shareholders' Meeting, (i) Landmark shall prepare and file a Proxy Statement
(the "Proxy Statement") with the S.E.C. and Landmark shall mail it to its
shareholders, (ii) TrustCo shall furnish Landmark all information concerning
itself that Landmark may reasonably request in connection with such Proxy
Statement, and
(iii) the Board of Directors of Landmark (subject to compliance with its
fiduciary duties as advised by counsel) shall recommend to its shareholders the
approval of this Agreement and the Merger contemplated by this Agreement and use
its best efforts to obtain such shareholder approval. Landmark shall deliver
drafts of the Proxy Statement to TrustCo for its review and comment.
4.4. Consents to Contracts and Leases. Landmark shall use its best efforts
to obtain all necessary consents with respect to all interests of Landmark and
its subsidiaries in any material leases, licenses, contracts, instruments and
rights which require the consent of another person for their transfer or
assumption pursuant to the Merger, if any.
4.5. Consummation of Agreement. Landmark shall use its best efforts to
perform and fulfill all conditions and obligations on its part to be performed
or fulfilled under this Agreement and to effect the Merger and the other
transactions contemplated hereby in accordance with the terms and provisions
hereof and to effect the transition and integration of the business and
operations of Landmark and its subsidiaries with the business and operations of
TrustCo and its subsidiaries. Landmark shall furnish to TrustCo in a timely
manner all information, data and documents in the possession of Landmark
requested by TrustCo as may be required to obtain any necessary regulatory or
other approvals of the Merger and shall otherwise cooperate fully with TrustCo
to carry out the purpose and intent of this Agreement.
4.6. Environmental Reports. Landmark shall provide to TrustCo, as soon as
reasonably practical, but not later than forty-five (45) days after the date
hereof, a report of a phase one environmental investigation on the real property
identified on Section 2.13.2 of the Disclosure Schedule, if any, and within ten
(10) days after the acquisition or lease of any real property acquired or leased
by Landmark or its subsidiaries after the date hereof (but excluding space in
office or retail and similar establishments leased by Landmark or its
subsidiaries for automatic teller machines or bank branch facilities or other
office uses where the leased space comprises less than 20% of the total space
leased to all tenants of such property), except as otherwise provided in Section
4.1.2.14 hereof. If required by the phase one investigation in TrustCo's
reasonable opinion, Landmark shall provide to TrustCo, within sixty (60) days of
the receipt by Landmark of the request of TrustCo therefor, a report of a phase
two investigation on properties requiring such additional study. TrustCo shall
have fifteen (15) business days from the receipt of any such phase two
investigation report to notify Landmark of any dissatisfaction with the contents
of such report. Should the cost of taking all remedial or other corrective
actions and measures (i) required by applicable law or reasonably likely to be
required by applicable law, or (ii) recommended or suggested by such report or
reports or prudent in light of serious life, health or safety concerns, in the
aggregate, exceed the sum of $100,000 as reasonably estimated by an
environmental expert retained for such purpose by TrustCo and reasonably
acceptable to Landmark, or if the cost of such actions and measures cannot be so
reasonably estimated by such expert to be such amount or less with any
reasonable degree of certainty, then TrustCo shall have the right pursuant to
Section 7.3 hereof, for a period of fifteen (15) business days following receipt
of such estimate or indication that the cost of such actions and measures can
not be so reasonably estimated, to terminate this Agreement, which shall be
TrustCo's sole remedy in such event.
4.7. Access to Information. Landmark shall permit TrustCo reasonable access
in a manner which shall avoid undue disruption or interference with Landmark's
normal operations to its properties and shall disclose and make available to
TrustCo all books, documents, papers, records and computer systems documentation
and files relating to its assets, stock ownership, properties, operations,
obligations and liabilities, including, but not limited to, all books of account
(including the general ledger), tax records, minute books of directors' and
shareholders' meetings, organizational documents, material contracts and
agreements, loan files, filings with any regulatory authority, accountants'
workpapers (if available and subject to the respective independent accountants'
consent), litigation files (but only to the extent that such review would not
result in a material waiver of the attorney-client or attorney work
product privileges under the rules of evidence), Employee Benefit Plans, and any
other business activities or prospects in which TrustCo may have a reasonable
and legitimate interest in furtherance of the transactions contemplated by this
Agreement. TrustCo shall hold any such information which is nonpublic in
confidence in accordance with the provisions of Section 8.1 hereof.
4.8. Subsidiary Bank Name Change. Upon the request of TrustCo, Landmark
shall cause the Subsidiary Bank to execute such amendments to its charter to
change its name to Trustco Savings Bank (or such substantially similar name as
Trustco may determine) subject to the conditions of this Agreement with Trustco
Bank, N.A. and take all other actions and cooperate with TrustCo and
AcquisitionCo in causing such name change to be effective no earlier than the
Effective Time.
4.9. Plan of Merger. At the request of TrustCo, Landmark shall enter into a
separate Certificate of Merger reflecting the terms hereof for purposes of any
filing requirement of the DGCL.
5. Agreements of Trustco and AcquisitionCo.
5.1. Regulatory Approvals and Registration Statement; Other Agreements.
5.1.1. TrustCo and AcquisitionCo shall file all regulatory
applications required in order to consummate the Merger, including but not
limited to the necessary applications for the prior approval of the Federal
Reserve Board and any other federal and state regulatory authorities as
applicable. TrustCo shall keep Landmark reasonably informed as to the
status of such applications and make available to Landmark from time to
time copies of such applications and any supplementally filed materials.
5.1.2. Neither TrustCo nor AcquisitionCo shall (i) between the date
hereof and the Effective Time, commit any act or fail to do any act which
would cause a breach of any agreement, contract or commitment and which
would have a Material Adverse Effect on TrustCo, (ii) without the prior
written consent of Landmark, engage in any transaction or take any action
that would render untrue (under the standard of Section 1.11 hereof) any of
the representations and warranties of TrustCo and AcquisitionCo contained
in Article Three hereof (except for any such representations and warranties
made only as of a specified date), if such representations and warranties
were given as of the date of such transaction or action. TrustCo and
AcquisitionCo shall promptly notify Landmark in writing of the occurrence
of any matter or event known to and directly involving TrustCo or
AcquisitionCo, which would not include any changes in conditions that
affect the banking industry generally, that would have, either individually
or in the aggregate, a Material Adverse Effect on TrustCo.
5.2. Breaches. TrustCo and AcquisitionCo shall, in the event either has
knowledge of the occurrence, or impending or threatened occurrence, of any event
or condition which would cause or constitute a breach (or would have caused or
constituted a breach had such event occurred or been known prior to the date
hereof) of any of their respective representations or agreements contained or
referred to herein, give prompt written notice thereof to Landmark and use its
best efforts to prevent or promptly remedy the same.
5.3. Consummation of Agreement. TrustCo and AcquisitionCo shall use their
respective best efforts to perform and fulfill all conditions and obligations on
their respective parts to be performed or fulfilled under this Agreement and to
effect the Merger in accordance with the terms and conditions of this Agreement.
5.4. Directors' and Officers' Liability Insurance and Indemnification.
5.4.1. For a period of three (3) years after the Effective Time,
TrustCo shall cause to be maintained in effect the current policies of
directors' and officers' liability insurance maintained by Landmark
(provided that TrustCo may substitute therefor policies of comparable
coverage with respect to claims arising from facts or events which occurred
before the Effective Time); provided, however, that in no event shall
TrustCo be obligated to expend, in order to maintain or provide insurance
coverage pursuant to this Section 5.4.1, any amount per annum in excess of
150% of the amount of the annual premiums paid as of the date hereof by
Landmark for such insurance (the "Maximum Amount"). If the amount of the
annual premiums necessary to maintain or procure such insurance coverage
exceeds the Maximum Amount, TrustCo shall use all reasonable efforts to
maintain the most advantageous policies of directors' and officers'
insurance obtainable for an annual premium equal to the Maximum Amount.
Notwithstanding the foregoing, prior to the Effective Time, TrustCo may
request Landmark to, and Landmark shall, purchase insurance coverage, on
such terms and conditions as shall be acceptable to TrustCo, extending for
a period of three (3) years Landmark's directors' and officers' liability
insurance coverage in effect as of the date hereof (covering past or future
claims with respect to periods before the Effective Time) and such coverage
shall satisfy TrustCo's obligations under this Section 5.4.1.
5.4.2. For the applicable statute of limitations period, TrustCo shall
indemnify, defend and hold harmless the present and former officers,
directors, employees and agents of Landmark and its subsidiaries (each, an
"Indemnified Party") against all losses, expenses, claims, damages or
liabilities arising out of actions (not including, however, such
intentional or willful acts of an Indemnified Party) or omissions occurring
on or prior to the Effective Time (including, without limitation, the
transactions contemplated by this Agreement and the Landmark Option
Agreement) to the full extent then permitted under the DGCL and by
Landmark's Certificates of Incorporation as in effect on the date hereof
(and, with respect to predecessors of Landmark, the applicable laws,
articles of incorporation and bylaws pertaining thereto), including
provisions relating to advances of expenses incurred in the defense of any
action or suit.
5.5. Employee Benefits.
5.5.1. TrustCo shall, with respect to each employee of Landmark or its
subsidiaries at the Effective Time who shall continue in employment with
TrustCo or its subsidiaries (each a "Continued Employee"), provide the
benefits described in this Section 5.5. Each Continued Employee shall be
entitled, as a new employee of a subsidiary of TrustCo, to participate in
such employee benefit plans, as defined in Section 3(3) of ERISA, or any
non-qualified employee benefit plans or deferred compensation, stock
option, bonus or incentive plans, or other employee benefit or fringe
benefit programs that may be in effect generally for employees of all of
TrustCo's subsidiaries (the "TrustCo Employee Plans"), if such Continued
Employee shall otherwise be eligible or, if required, selected for
participation therein under the terms thereof and otherwise shall not be
participating in a similar plan maintained by Landmark after the Effective
Time. Landmark employees shall be eligible to participate in TrustCo
Employee Plans on the same basis as similarly situated employees of other
TrustCo subsidiaries. All such participation shall be subject to such terms
of such TrustCo Employee Plans as may be in effect from time to time. This
Section 5.5 is not intended to give Continued Employees any rights or
privileges superior to those of other employees of TrustCo's subsidiaries
(except as provided in the following sentence with respect to credit for
past service). TrustCo may terminate or modify all Landmark Employee Plans
except insofar as benefits thereunder shall have vested at the Effective
Time and cannot be modified and TrustCo's obligation under this Section 5.5
shall not be deemed or construed so as to provide duplication of similar
benefits but, subject to that qualification, TrustCo shall, for purposes of
vesting and any age or period of service requirements for commencement of
participation with respect to any TrustCo Employee Plans in which Continued
Employees may participate (but not for benefit accruals under any defined
benefit plan),
credit each Continued Employee with his or her term of service with
Landmark and its subsidiaries and its and their predecessors.
5.5.2. Notwithstanding anything to the contrary, TrustCo shall
acknowledge and assume, upon consummation of the Merger, the obligations of
Landmark under its severance agreements, supplemental retirement plans and
arrangements, deferred compensation plans and arrangements, and related
trusts including, without limitation, all of the same maintained or
provided by any subsidiary of Landmark, as such obligations are described
in Section 2.11.3 of the Disclosure Schedule.
5.5.3. Trustco shall cause the Subsidiary Bank to enter into an
employment agreement with Gordon E. Coleman to serve in the capacity of
President and Chief Executive Officer of the Subsidiary Bank. The
employment agreement will have a term of 3 years and provide for annual
compensation of $125,000 per year and the use of a car.
5.6. Advisory Board Composition. Immediately following the Effective Time,
TrustCo shall cause the Subsidiary Bank to establish an advisory board of
directors and shall offer not more than eight (8) of the directors of Landmark
as of the Effective Time the opportunity to serve as advisory directors of the
Subsidiary Bank for the three (3) year period following the Effective Time. The
Chairman of the advisory board shall receive fees of $600/month of service; the
vice chairman shall receive fees of $300/month of service; other members of the
advisory board shall receive fees of $200/month of service.
5.7. Access to Information. TrustCo shall permit Landmark reasonable access
in a manner which shall avoid undue disruption or interference with TrustCo's
normal operations to its properties and shall disclose and make available to
Landmark all books, documents, papers and records relating to its assets, stock
ownership, properties, operations, obligations and liabilities, including, but
not limited to, all books of account (including the general ledger), tax
records, minute books of directors' and shareholders' meetings, organizational
documents, material contracts and agreements, loan files, filings with any
regulatory authority, accountants' workpapers (if available and subject to the
respective independent accountants' consent), litigation files (but only to the
extent that such review would not result in a material waiver of the
attorney-client or attorney work product privileges under the rules of
evidence), plans affecting employees, and any other business activities or
prospects in which Landmark may have a reasonable and legitimate interest in
furtherance of the transactions contemplated by this Agreement. Landmark shall
hold any such information which is nonpublic in confidence in accordance with
the provisions of Section 8.1 hereof.
6. Conditions Precedent to Merger.
6.1. Conditions to TrustCo's and AcquisitionCo's Obligations. The
obligations of TrustCo and AcquisitionCo to effect the Merger shall be subject
to the satisfaction (or waiver by TrustCo and AcquisitionCo) prior to or on the
Closing Date of the following conditions:
6.1.1. The representations and warranties made by Landmark in this
Agreement shall be true and correct (subject to the standard in Section
1.11 hereof) on and as of the Closing Date with the same effect as though
such representations and warranties had been made or given on and as of the
Closing Date (except for any such representations and warranties made only
as of a specified date which shall be true and correct (subject to the
standard in Section 1.11 hereof) as of such date); and
6.1.2. Landmark shall have performed and complied in all material
respects with all of its obligations and agreements required to be
performed on or prior to the Closing Date under this Agreement; and
6.1.3. No temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent jurisdiction or
other legal restraint or prohibition (an "Injunction") preventing the
consummation of the Merger shall be in effect, nor shall any proceeding by
any Regulatory Agency or other person seeking any of the foregoing be
pending. There shall not be any action taken, or any statute, rule,
regulation or order enacted, entered, enforced or deemed applicable to the
Merger which makes the consummation of the Merger illegal; and
6.1.4. All necessary regulatory approvals, consents, authorizations
and other approvals, including the requisite approval of this Agreement and
the Merger by the shareholders of Landmark, required by law for
consummation of the Merger shall have been obtained and all waiting periods
required by law shall have expired, and no regulatory approval shall have
imposed any condition, requirement or restriction which the Board of
Directors of TrustCo and AcquisitionCo reasonably determine in good faith
would so materially adversely impact the economic or business benefits of
the transactions contemplated by this Agreement to TrustCo and its
shareholders as to render inadvisable the consummation of the Merger (any
such condition, requirement or restriction, a "Burdensome Condition"); and
6.1.5. TrustCo and AcquisitionCo shall have received all documents
required to be received from Landmark on or prior to the Closing Date, all
in form and substance reasonably satisfactory to TrustCo and AcquisitionCo;
and
6.1.6. Landmark's Board of Directors shall have passed a resolution
(i) to terminate Landmark's employee stock ownership plan (the "Landmark
ESOP") as of the close of business on the date immediately preceding the
Closing Date (the "Termination Date"), (ii) to amend the Landmark ESOP to
provide that no additional contributions will be made and no additional
employees will become participants after the Termination Date, and (iii) to
apply for a determination letter from the Internal Revenue Service with
respect to the termination of the Landmark ESOP.
6.2. Conditions to Landmark's Obligations. The obligations of Landmark to
effect the Merger shall be subject to the satisfaction (or waiver by Landmark)
prior to or on the Closing Date of the following conditions:
6.2.1. The representations and warranties made by TrustCo and
AcquisitionCo in this Agreement shall be true and correct (subject to the
standard in Section 1.11 hereof) on and as of the Closing Date with the
same effect as though such representations and warranties had been made or
given on and as of the Closing Date (except for any such representations
and warranties made only as of a specified date which shall be true and
correct (subject to the standard in Section 1.11 hereof) as of such date);
and
6.2.2. TrustCo and AcquisitionCo shall have performed and complied in
all material respects with all of their respective obligations and
agreements hereunder required to be performed on or prior to the Closing
Date under this Agreement; and
6.2.3. No Injunction preventing the consummation of the Merger shall
be in effect, nor shall any proceeding by any Regulatory Agency or any
other person seeking any of the foregoing be pending. There shall not be
any action taken, or any statute, rule, regulation or order enacted,
entered, enforced or deemed applicable to the Merger which makes the
consummation of the Merger illegal; and
6.2.4. All necessary regulatory approvals, consents, authorizations
and other approvals, including the requisite approval of this Agreement and
the Merger by the shareholders of
Landmark and AcquisitionCo, required by law for consummation of the Merger
shall have been obtained and all waiting periods required by law shall have
expired; and
6.2.5. Landmark shall have received all documents required to be
received from TrustCo and AcquisitionCo on or prior to the Closing Date,
all in form and substance reasonably satisfactory to Landmark; and
6.2.6. Landmark's financial advisors shall not have withdrawn its
opinion, to the effect that the terms of the Merger are fair to the
shareholders of Landmark from a financial point of view, on or before the
date of the Shareholder's Meeting.
7. Termination or Abandonment.
7.1. Mutual Agreement. This Agreement may be terminated by the mutual
written agreement of TrustCo, AcquisitionCo and Landmark at any time prior to
the Closing Date, regardless of whether approval of this Agreement and the
Merger by the shareholders of Landmark and AcquisitionCo shall have been
previously obtained.
7.2. Breach of Agreements. In the event that there is a breach in any of
the representations and warranties (subject to the standard in Section 1.11
hereof) or a material breach of any of the agreements of TrustCo, AcquisitionCo
or Landmark, which breach is not cured within thirty (30) days after written
notice to cure such breach is given to the breaching party by the non-breaching
party, then the non-breaching party, regardless of whether Landmark shareholder
approval of this Agreement and the Merger shall have been previously obtained,
may terminate and cancel this Agreement by providing written notice of such
action to the other party hereto.
7.3. Environmental Reports. TrustCo may terminate this Agreement to the
extent provided by Section 4.6 hereof and this Section 7.3 by giving timely
written notice thereof to Landmark.
7.4. Failure of Conditions. In the event any of the conditions to the
obligations of either party are not satisfied or waived on or prior to the
Closing Date, and if any applicable cure period provided in Section 7.2 hereof
has lapsed, then such party may, regardless of whether approval of this
Agreement and the Merger by the shareholders of Landmark and AcquisitionCo has
been previously obtained, terminate and cancel this Agreement by delivery of
written notice of such action to the other party on such date.
7.5. Regulatory Approval Denial; Burdensome Condition. If any regulatory
application filed pursuant to Section 5.1.1 hereof should be finally denied or
disapproved by the respective regulatory authority, then this Agreement
thereupon shall be deemed terminated and canceled; provided, however, that a
request for additional information or undertaking by TrustCo, as a condition for
approval, shall not be deemed to be a denial or disapproval so long as TrustCo
diligently provides the requested information or undertaking. In the event that
an application is denied pending an appeal, petition for review, or similar such
act on the part of TrustCo (hereinafter referred to as the "appeal") then the
application shall be deemed denied unless TrustCo prepares and timely files such
appeal and continues the appellate process for purposes of obtaining the
necessary approval. TrustCo may terminate this Agreement if its Board of
Directors shall have reasonably determined in good faith that any of the
requisite regulatory approvals imposes a Burdensome Condition, and TrustCo shall
deliver written notice of such determination to Landmark not later than thirty
(30) days after receipt by TrustCo of notice of the imposition of such
Burdensome Condition from the applicable Regulatory Agency (unless an appeal of
such determination is being pursued by TrustCo, in which event the foregoing
notice shall be given within
thirty (30) days of the termination of any such appeal by TrustCo or the denial
of such appeal by the appropriate Regulatory Agency).
7.6. Shareholder Approval Denial; Withdrawal/Modification of Board
Recommendation. If this Agreement and the relevant transactions contemplated by
this Agreement, including the Merger, are not approved by the requisite vote of
the shareholders of Landmark at the Landmark Shareholders' Meeting, then either
party may terminate this Agreement. TrustCo may terminate this Agreement if
Landmark's Board of Directors shall have failed to approve or recommend this
Agreement or the Merger, or shall have withdrawn or modified in any manner
adverse to TrustCo its approval or recommendation of this Agreement or the
Merger, or shall have resolved or publicly announced an intention to do either
of the foregoing.
7.7. Regulatory Enforcement Matters. In the event that Landmark or any of
its subsidiaries shall, after the date hereof, become a party or be subject to
any new or amended written agreement, memorandum of understanding, cease and
desist order, imposition of civil money penalties or other regulatory
enforcement action or proceeding with a Regulatory Agency, which would have a
Material Adverse Effect on Landmark, then TrustCo may terminate this Agreement.
7.8. Fall-Apart Date. If the Closing Date does not occur on or prior to
October 31, 2000, then this Agreement may be terminated by either party by
giving written notice thereof to the other, unless the failure of the Closing to
occur by such date 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 in this Agreement.
8. General.
8.1. Confidential Information. The parties acknowledge the confidential and
proprietary nature of the "Information" (as described below in this Section 8.1)
which has heretofore been exchanged and which shall be received from each other
hereunder and agree to hold and keep the same confidential. Such Information
shall include any and all financial, technical, commercial, marketing, customer
or other information concerning the business, operations and affairs of a party
that may be provided to the other, irrespective of the form of the
communications, by such party's employees or agents. Such Information shall not
include information which is or becomes generally available to the public other
than as a result of a disclosure by a party or its representatives in violation
of this Agreement. The parties agree that the Information shall be used solely
for the purposes contemplated by this Agreement and that such Information shall
not be disclosed to any person other than employees and agents of a party who
are directly involved in evaluating the transaction. The Information shall not
be used in any way detrimental to a party, including use directly or indirectly
in the conduct of the other party's business or any business or enterprise in
which such party may have an interest, now or in the future, and whether or not
now in competition with such other party.
8.2. Publicity. TrustCo and Landmark shall cooperate with each other in the
development and distribution of all news releases and other public disclosures
concerning this Agreement and the Merger and shall not issue any news release or
make any other public disclosure without the prior consent of the other party,
unless it reasonably believes such is required by law upon the advice of counsel
or is in response to published newspaper or other mass media reports regarding
the transactions contemplated by this Agreement, in which such latter event the
parties shall give reasonable notice, and to the extent practicable, consult
with each other regarding such responsive public disclosure.
8.3. Return of Documents. Upon termination of this Agreement without the
Merger becoming effective, each party (i) shall deliver to the other originals
and all copies of all Information
made available to such party, (ii) shall not retain any copies, extracts or
other reproductions in whole or in part of such Information, and (iii) shall
destroy all memoranda, notes and other writings prepared by any party based on
the Information.
8.4. Notices. Any notice or other communication shall be in writing and
shall be deemed to have been given or made on the date of delivery, in the case
of hand delivery, or three (3) business days after deposit in the United States
Registered Mail, postage prepaid, or upon receipt if transmitted by facsimile
telecopy or any other means, addressed (in any case) as follows:
8.4.1. if to TrustCo and AcquisitionCo:
TrustCo Bank Corp NY
320 State Street
Schenectady, New York 12305
Attention: Robert A. McCormick, President
and Chief Executive Officer
Facsimile: 518/381-3668
with a copy to:
Lewis, Rice & Fingersh, L.C.
500 N. Broadway, Ste. 2000
St. Louis, Missouri 63102
Attention: John K. Pruellage, Esq.
Facsimile: 314/444-7788
and
(a) if to Landmark:
Landmark Financial Corp.
211 Erie Blvd.
Canajoharie, New York 13317
Attention: Gordon E. Coleman, President
and Chief Executive Officer
Facsimile: 518/673-2081
with a copy to:
Luse, Lehman, Gorman, Pomerenk & Schick, P.C.
5335 Wisconsin Avenue, N.W.; Suite 400
Washington, D.C. 20015
Attention: Alan Schick, Esq.
Facsimile: 202/362-2902
or to such other address as any party may from time to time designate by notice
to the others.
8.5. Liabilities and Expenses. Except as provided in the Landmark Option
Agreement, in the event that this Agreement is terminated pursuant to the
provisions of Article Seven hereof, no party hereto shall have any liability to
any other party for costs, expenses, damages or otherwise; provided, however,
that, notwithstanding the foregoing, in the event that this Agreement is
terminated pursuant to Article Seven hereof on account of a willful breach of
any of the representations and warranties set forth herein or any willful breach
of any of the agreements set forth herein, then the non-breaching party shall
be entitled to recover appropriate damages from the breaching party, including,
without limitation, reimbursement to the non-breaching party of its costs, fees
and expenses (including attorneys', accountants' and advisors' fees and
expenses) incident to the negotiation, preparation, execution and performance of
this Agreement and related documentation; provided, however, that nothing in
this proviso shall be deemed to constitute liquidated damages for the willful
breach by a party of the terms of this Agreement or otherwise limit the rights
of the non-breaching party.
8.6. Nonsurvival of Representations, Warranties and Agreements. Except for,
and as provided in, this Section 8.6 and the Landmark Option Agreement, no
representation, warranty or agreement contained herein shall survive the
Effective Time or the earlier termination of this Agreement; provided, however,
that no such representation, warranty or covenant shall be deemed to be
terminated or extinguished so as to deprive TrustCo or Landmark (or any
director, officer or controlling person thereof) of any defense in law or equity
which otherwise would be available against the claims of any person, including,
without limitation, any shareholder or former shareholder of either TrustCo or
Landmark, the aforesaid representations, warranties and covenants being material
inducements to the consummation by TrustCo and Landmark of the transactions
contemplated herein. The agreements set forth in Section 5.4, Section 5.5, and
Section 5.6 hereof shall survive the Effective Time and the agreements set forth
in Section 8.1, Section 8.2, Section 8.3, Section 8.5 and Section 8.16 hereof
and this Section 8.6 shall survive the Effective Time or the earlier termination
of this Agreement.
8.7. Entire Agreement. This Agreement and the Landmark Option Agreement
constitute the entire agreement between the parties and supersede and cancel any
and all prior discussions, negotiations, undertakings, agreements in principle
or other agreements between the parties relating to the subject matter hereof.
8.8. Headings and Captions. The captions of Articles and Sections hereof
are for convenience only and shall not control or affect the meaning or
construction of any of the provisions of this Agreement.
8.9. Waiver, Amendment or Modification. The conditions of this Agreement
which may be waived may only be waived by notice to the other party waiving such
condition. The failure of any party at any time or times to require performance
of any provision hereof shall in no manner affect the right at a later time to
enforce the same. This Agreement may be amended or modified by the parties
hereto, at any time before or after shareholder approval of this Agreement;
provided, however, that after any such approval no such amendment or
modification shall alter the amount or change the form of the Merger
Consideration contemplated by this Agreement to be received by shareholders of
Landmark. This Agreement not be amended or modified except by a written document
duly executed by the parties hereto.
8.10. Rules of Construction. Unless the context otherwise requires: (i) a
term has the meaning assigned to it, (ii) an accounting term not otherwise
defined has the meaning assigned to it in accordance with generally accepted
accounting principles, (iii) "or" is not exclusive, (iv) words in the singular
may include the plural and in the plural include the singular, and (v)
"knowledge" of a party means the actual or constructive knowledge of any
director or executive officer of such party or any of its subsidiaries.
8.11. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which shall
be deemed one and the same instrument. For purposes of executing this Agreement,
a document (or signature page thereto) signed and transmitted by facsimile
machine or telecopier is to be treated as an original document. The signature of
any party thereon, for purposes hereof, is to be considered as an original
signature, and the document transmitted is to be considered to have the same
binding effect as an original signature on an original document. At the
request of any party, any facsimile or telecopy document shall be re-executed in
original form by the parties who executed the facsimile or telecopy document. No
party may raise the use of a facsimile machine or telecopier or the fact that
any signature was transmitted through the use of a facsimile or telecopier
machine as a defense to the enforcement of this Agreement or any amendment or
other document executed in compliance with this Section 8.11.
8.12. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns. There shall be no third party beneficiaries hereof.
8.13. Severability. In the event that any provisions of this Agreement or
any portion thereof shall be finally determined to be unlawful or unenforceable,
such provision or portion thereof shall be deemed to be severed from this
Agreement, and every other provision, and any portion of a provision, that is
not invalidated by such determination, shall remain in full force and effect. To
the extent that a provision is deemed unenforceable by virtue of its scope but
may be made enforceable by limitation thereof, such provision shall be
enforceable to the fullest extent permitted under the laws and public policies
of the State whose laws are deemed to govern enforceability. It is declared to
be the intention of the parties that they would have executed the remaining
provisions without including any that may be declared unenforceable.
8.14. Governing Law; Assignment. This Agreement shall be governed by the
laws of the State of New York, except to the extent that the DGCL must govern
the Merger procedures, and applicable federal laws and regulations. This
Agreement may not be assigned by either of the parties hereto.
8.15. Enforcement of Agreement. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties hereto shall be entitled to
an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the United
States or any state having jurisdiction and such right shall be in addition to
any other remedy to which they shall be entitled at law or in equity.
8.16. Legal Fees, Costs. Except as otherwise provided herein, all legal and
other costs and expenses incurred by Landmark in connection with this Agreement
and the transactions contemplated hereby are to be paid by Landmark, and all
legal and other costs and expenses incurred by TrustCo in connection with this
Agreement and the transactions contemplated hereby are to be paid by TrustCo.
Notwithstanding the foregoing, however, TrustCo shall reimburse Landmark for the
reasonable fees and expenses of its financial advisor in connection with the
fairness opinion to be obtained from such advisor up to a maximum amount of
$20,000.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first above written.
LANDMARK FINANCIAL CORP.
By
--------------------------------------
Gordon E. Coleman
President and Chief Executive Officer
TRUSTCO BANK CORP NY
By
--------------------------------------
Robert A. McCormick
President and Chief Executive Officer
LANDMARK ACQUISITION CO.
By
--------------------------------------
Robert A. McCormick
President
APPENDIX B - STOCK OPTION AGREEMENT
EXHIBIT 1.01
STOCK OPTION AGREEMENT
This STOCK OPTION AGREEMENT (this "Agreement"), is made as of the 21st day
of February, 2000, between TRUSTCO BANK CORP NY, a New York corporation
("Grantee"), and LANDMARK FINANCIAL CORP., a Delaware corporation ("Issuer").
RECITALS
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A. Grantee, Landmark Acquisition Co. and Issuer are entering into an
Agreement and Plan of Merger, dated as of the date hereof (the "Plan"), which is
being executed by the parties hereto simultaneously with the execution of this
Agreement.
B. As a condition and inducement to Grantee's entering into the Plan and in
consideration therefor, Issuer has agreed to grant Grantee the Option (as
defined below).
C. In consideration of the foregoing and the mutual covenants and
agreements set forth herein and in the Plan, the parties hereto agree as
follows:
Section 1 . Grant of Option.
(a) Issuer hereby grants to Grantee an unconditional, irrevocable option
(the "Option") to purchase, subject to the terms hereof, up to 19.9% fully paid
and nonassessable shares of Common Stock, par value $0.10 per share (the "Common
Stock"), of Issuer at a price per share equal to $14 per share (the "Initial
Price"); provided, however, that in the event Issuer issues or agrees to issue
(other than pursuant to options and warrants to issue Common Stock or shares of
convertible stock convertible into shares of Common Stock in effect or
outstanding as of the date hereof) any shares of Common Stock at a price less
than the Initial Price (as adjusted pursuant to Section 5(b) hereof), such price
shall be equal to such lesser price (such price, as adjusted as hereinafter
provided, the "Option Price"). The number of shares of Common Stock that may be
received upon the exercise of the Option and the Option Price are subject to
adjustment as herein set forth.
(b) In the event that any additional shares of Common Stock are issued or
otherwise become outstanding after the date of this Agreement (other than
pursuant to this Agreement and the Plan and other than pursuant to an event
described in Section 5(a) hereof), the number of shares of Common Stock subject
to the Option shall be increased so that, after such issuance, such number
together with any shares of Common Stock previously issued pursuant hereto,
represents the same proportion of the number of shares of Common Stock then
issued and outstanding as such proportion before the event referred to above
(without giving effect to any shares subject or issued pursuant to the Option).
Nothing contained in this Section 1(b) or elsewhere in this Agreement shall be
deemed to authorize Issuer to issue shares in breach of any provision of the
Plan.
Section 2 . Exercise of Option.
(a) Timing of Exercise, Termination. Grantee may exercise the Option, in
whole or part, at any time and from time to time following the occurrence of a
Purchase Event (as defined below); provided that the Option shall terminate and
be of no further force and effect upon the earliest to occur of (i) the time
immediately prior to the Effective Time, (ii) 12 months after the first
occurrence of a Purchase Event, (iii) 18 months after the termination of the
Plan following the occurrence of a Preliminary Purchase Event (as defined
below), (iv) termination of the Plan in accordance with the terms thereof prior
to the occurrence of a Purchase Event or a Preliminary Purchase Event (other
than a termination of the Plan by Grantee pursuant to Section 7.2 thereof due to
a willful breach by Issuer of any representation, warranty or agreement
contained therein or by Grantee and Issuer pursuant to Section 7.1 thereof if
Grantee shall at that time have been entitled to terminate the Plan pursuant to
Section 7.2 thereof due to a willful breach by Issuer of any representation,
warranty or agreement contained therein) or (v) 18 months after the termination
of the Plan by Grantee pursuant to Section 7.2 thereof due to a willful breach
by Issuer of any representation, warranty or agreement contained therein or by
Grantee and Issuer pursuant to Section 7.1 thereof if Grantee shall at that time
have been entitled to terminate the Plan pursuant to Section 7.2 thereof due to
a willful breach by Issuer of any representation, warranty or agreement
contained therein. The events described in clauses (i) - (v) in the preceding
sentence are hereinafter collectively referred to as an "Exercise Termination
Event."
(b) Preliminary Purchase Event. The term "Preliminary Purchase Event" shall
mean any of the following events or transactions occurring after the date
hereof:
(i) Issuer or any of its subsidiaries (each, an "Issuer Subsidiary"),
without having received Grantee's 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
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the
rules and regulations thereunder) other than Grantee or any of its
subsidiaries (each a "Grantee Subsidiary") or the Board of Directors of
Issuer shall have recommended that the shareholders of Issuer approve or
accept any Acquisition Transaction with any Person other than Grantee or
any Grantee Subsidiary. For purposes of this Agreement, "Acquisition
Transaction" shall mean (x) a merger or consolidation, or any similar
transaction, involving Issuer or any Issuer Subsidiary that is a
significant subsidiary as defined in Rule 1-02 of Regulation S-X by the
Securities and Exchange Commission (and the term "significant subsidiary"
shall include, wherever used in this Agreement, any bank or other financial
institution subsidiary of Issuer), (y) a purchase, lease or other
acquisition of all or substantially all of the assets of or assumption of
all or substantially all the deposits of Issuer or any Issuer Subsidiary
that is a significant subsidiary, or (z) a purchase or other acquisition
(including by way of merger, consolidation, share exchange or otherwise) of
securities representing 10% or more of the voting power of Issuer or any
Issuer Subsidiary that is a significant subsidiary, provided that the term
"Acquisition Transaction" does not include any internal merger or
consolidation, transfer or lease of assets or voting securities involving
only Issuer and/or Issuer Subsidiaries;
(ii) Any Person (other than Grantee or any Grantee Subsidiary, or any
Issuer Subsidiary acting in a fiduciary capacity in the ordinary course of
business) shall have acquired Beneficial Ownership (the term "Beneficial
Ownership" for purposes of this Agreement having the meaning assigned
thereto in Section 13(d) of the Exchange Act and the rules and regulation
thereunder) or the right to acquire Beneficial Ownership, of shares of
Common Stock such that, upon the consummation of such acquisition, such
Person would have Beneficial Ownership, in the aggregate, of 15% or more of
the then outstanding shares of Common Stock;
(iii) Any Person other than Grantee or any Grantee Subsidiary shall
have made a bona fide proposal to Issuer or its shareholders, by public
announcement or written communication that is or becomes the subject of
public disclosure, to engage in an Acquisition Transaction (including,
without limitation, any situation in which any Person other than Grantee or
any Grantee Subsidiary shall have commenced (as such term is defined in
Rule 14d-2 under the Exchange Act) or shall have filed a registration
statement under the Securities Act of 1933, as amended (the "Securities
Act"), with respect to, a tender offer or exchange offer to purchase any
shares of
Common Stock such that, upon consummation of such offer, such Person would
own or control 15% or more of the then outstanding shares of Common Stock
(such an offer being referred to herein as a "Tender Offer" or an "Exchange
Offer", respectively));
(iv) After a proposal is made by a third party to Issuer or its
shareholders to engage in an Acquisition Transaction, or such third party
states its intention to make such a proposal if the Plan terminates and/or
the Option expires, Issuer shall have willfully breached any covenant or
obligation contained in the Plan and such willful breach would entitle
Grantee to terminate the Plan (without regard to the cure period provided
for therein unless such cure is promptly effected without jeopardizing
consummation of the Merger pursuant to the terms of the Plan);
(v) The holders of Common Stock shall not have approved the Plan by
the requisite vote at the meeting of such stockholders held for the purpose
of voting on the Plan, or such meeting shall not have been held or shall
have been canceled prior to termination of the Plan, in each case after it
shall have been publicly announced that any Person (other than Grantee or
any Grantee Subsidiary) shall have (A) made, or disclosed an intention to
make, a proposal to engage in an Acquisition Transaction, (B) commenced a
Tender Offer or filed a registration statement under the Securities Act
with respect to an Exchange Offer, or (C) filed an application (or given a
notice) with, whether in draft or final form, the Board of Governors of the
Federal Reserve System (the "Federal Reserve Board") or any other
governmental authority or regulatory or administrative agency or commission
(each, a "Governmental Authority"), for approval to engage in an
Acquisition Transaction;
(vi) Any Person (other than Grantee or any Grantee Subsidiary), other
than in connection with a transaction to which Grantee has given its prior
written consent, shall have filed an application or notice with the Federal
Reserve Board or other Governmental Authority for approval to engage in an
Acquisition Transaction; or
(vii) Issuer's Board of Directors shall have withdrawn or modified (or
publicly announced its intention to withdraw or modify) in any manner
adverse in any respect to Grantee its recommendation that the stockholders
of Issuer approve the transactions contemplated by the Plan, or Issuer or
any significant Issuer Subsidiary shall have authorized, recommended,
proposed (or publicly announced its intention to authorize, recommend or
propose) an agreement to engage in an Acquisition Transaction between the
Issuer or any significant Issuer Subsidiary with any person other than
Grantee or a Grantee Subsidiary.
(c) Purchase Event. The term "Purchase Event" shall mean either of the
following events or transactions occurring after the date hereof:
(i) The acquisition by any Person (other than Grantee or any Grantee
Subsidiary or any Issuer Subsidiary acting in a fiduciary capacity in the
ordinary course of business (provided that the foregoing exception shall
not apply to any Person for whom or which such Issuer Subsidiary is acting
in such fiduciary capacity)) of Beneficial Ownership of shares of Common
Stock, such that, upon the consummation of such acquisition, such Person
would have Beneficial Ownership, in the aggregate, of 20% or more of the
then outstanding shares of Common Stock; or
(ii) The occurrence of a Preliminary Purchase Event described in
Section 2(b)(i) hereof except that the percentage referred to in clause (z)
shall be 20%.
(d) Notice by Issuer. Issuer shall notify Grantee promptly in writing of
the occurrence of any Preliminary Purchase Event or Purchase Event; provided,
however, that the giving of such notice by Issuer shall not be a condition to
the right of Grantee to exercise the Option.
(e) Notice of Exercise. In the event that Grantee is entitled to and wishes
to exercise the Option, it shall send to Issuer a written notice (the "Option
Notice" and the date of which being hereinafter referred to as the "Notice
Date") specifying (i) the total number of shares of Common Stock it will
purchase pursuant to such exercise, (ii) the aggregate purchase price as
provided herein, and (iii) a period of time (that shall not be less than three
business days nor more than thirty business days) running from the Notice Date
(the "Closing Date") and a place at which the closing of such purchase shall
take place; provided, that, if prior notification to or approval of the Federal
Reserve Board or any other Governmental Authority is required in connection with
such purchase (each, a "Notification" or an "Approval," as the case may be), (a)
Grantee shall promptly file, or cause to be filed, the required notice or
application for approval ("Notice/Application"), (b) Grantee shall expeditiously
process, or cause to be expeditiously processed, the Notice/Application, and (c)
for the purpose of determining the Closing Date pursuant to clause (iii) of this
sentence, the period of time that otherwise would run from the Notice Date shall
instead run from the later of (x) in connection with any Notification, the date
on which any required notification periods have expired or been terminated, and
(y) in connection with any Approval, the date on which such approval has been
obtained and any requisite waiting period or periods shall have expired. For
purposes of Section 2(a) hereof, any exercise of the Option shall be deemed to
occur on the Notice Date relating thereto. On or prior to the Closing Date,
Grantee shall have the right to revoke its exercise of the Option in the event
that the transaction constituting a Purchase Event that gives rise to such right
to exercise shall not have been consummated.
(f) Payments. At the closing referred to in Section 2(e) hereof, Grantee
shall pay to Issuer the aggregate Option Price for the shares of Common Stock
specified in the Option Notice in immediately available funds by wire transfer
to a bank account designated by Issuer; provided, however, that failure or
refusal of Issuer to designate such a bank account shall not preclude Grantee
from exercising the Option.
(g) Delivery of Common Stock. At such closing, subject to any requisite
Notification and/or Approval having been made or given and being in full force
and effect, and only following payment as set forth in Section 2(e) hereof,
Issuer shall deliver to Grantee a certificate or certificates representing the
number of shares of Common Stock specified in the Option Notice and, if the
Option should be exercised in part only, a new Option evidencing the rights of
Grantee thereof to purchase the balance of the shares of Common Stock
purchasable hereunder.
(h) Common Stock Certificates. Certificates for Common Stock delivered at a
closing hereunder shall be endorsed with a restrictive legend substantially as
follows:
The transfer of the shares represented by this certificate is subject
to resale restrictions arising under the Securities Act of 1933, as
amended, and to certain provisions of an agreement between TrustCo Bank
Corp NY and Landmark Financial Corp. ("Issuer") dated as of the ____
day of February, 2000. A copy of such agreement is on file at the
principal office of Issuer and will be provided to the holder hereof
without charge upon receipt by Issuer of a written request therefor.
It is understood and agreed that: (i) the reference to the resale restrictions
of the Securities Act in the above legend shall be removed by delivery of
substitute certificate(s) without such reference if Grantee shall have delivered
to Issuer a copy of a letter from the staff of the Securities and Exchange
Commission, or an opinion of counsel, in form and substance reasonably
satisfactory to Issuer, to the effect that such legend is not required for
purposes of the Securities Act; (ii) the reference to the provisions of this
Agreement in the above legend shall be removed by delivery of substitute
certificate(s) without such reference if the shares have been sold or
transferred in compliance with the provisions of this Agreement and under
circumstances that do not require the retention of such reference; and (iii) the
legend shall be removed in its entirety if the conditions in the preceding
clauses (i) and (ii) are both satisfied. In addition, such certificates shall
bear any other legend as may be required by law.
(i) Holder of Record. Upon the giving by Grantee to Issuer of an Option
Notice and the tender of the applicable purchase price in immediately available
funds on the Closing Date, subject to any requisite Notification and/or Approval
having been made or given and being in full force and effect, Grantee shall be
deemed to be the holder of record of the number of shares of Common Stock
specified in the Option Notice, notwithstanding that the stock transfer books of
Issuer shall then be closed or that certificates representing such shares of
Common Stock shall not then actually be delivered to Grantee. Issuer shall pay
all expenses and any and all United States federal, state and local taxes and
other charges that may be payable in connection with the preparation, issue and
delivery of stock certificates under this Section 2 in the name of Grantee.
Section 3 . Issuer's Covenants.
(a) Available Shares. Issuer agrees that it shall at all times until the
termination of this Agreement have reserved for issuance upon the exercise of
the Option that number of authorized and reserved shares of Common Stock equal
to the maximum number of shares of Common Stock at any time and from time to
time issuable hereunder, all of which shares shall, upon issuance pursuant
hereto, be duly authorized, validly issued, fully paid, nonassessable, and
delivered free and clear of all claims, liens, encumbrances and security
interests and not subject to any preemptive rights.
(b) Compliance. Issuer agrees that it shall not, by amendment of its
articles of incorporation or through reorganization, consolidation, merger,
dissolution or sale of assets, or by any other voluntary act, avoid or seek to
avoid the observance or performance of any of the covenants, stipulations or
conditions to be observed or performed hereunder by Issuer.
(c) Certain Actions, Applications and Arrangements. Issuer shall promptly
take all action as may from time to time be required (including (i) complying
with all premerger notification, reporting and waiting period requirements
specified in 15 U.S.C. ss. 18a and regulations promulgated thereunder, and (ii)
in the event, under the Bank Holding Company Act of 1956, as amended (the
"B.H.C. Act"), or the Change in Bank Control Act of 1978, as amended, or any
state banking law, prior approval of or notice to the Federal Reserve Board or
to any other Governmental Authority is necessary before the Option may be
exercised, cooperating with Grantee in preparing such applications or notices
and providing such information to each such Governmental Authority as it may
require) in order to permit Grantee to exercise the Option and Issuer duly and
effectively to issue shares of Common Stock pursuant hereto, and to protect the
rights of Grantee against dilution.
Section 4 . Exchange of Option. This Agreement and the Option granted
hereby are exchangeable, without expense, at the option of Grantee, upon
presentation and surrender of this Agreement at the principal office of Issuer,
for other agreements providing for Options of different denominations entitling
the holder thereof to purchase, on the same terms and subject to the same
conditions as are set forth herein, in the aggregate the same number of shares
of Common Stock purchasable hereunder. The terms "Agreement" and "Option" as
used in this Section 4 include any agreements and related options for which this
Agreement and the Option granted hereby may be exchanged. Upon receipt by Issuer
of evidence reasonably satisfactory to it of the loss, theft, destruction or
mutilation of this Agreement, and (in the case of loss, theft or destruction) of
reasonably satisfactory indemnification, and upon surrender and cancellation of
this Agreement, if mutilated, Issuer shall execute
and deliver a new Agreement of like tenor and date. Any such new Agreement
executed and delivered shall constitute an additional contractual obligation on
the part of Issuer, whether or not the Agreement so lost, stolen, destroyed or
mutilated shall at any time be enforceable by anyone.
Section 5 . Adjustments. The number of shares of Common Stock purchasable
upon the exercise of the Option shall be subject to adjustment from time to time
as follows:
(a) In the event of any change in the Common Stock by reason of stock
dividends, split-ups, mergers, recapitalizations, combinations, subdivisions,
conversions, exchanges of shares or the like, the type and number of shares of
Common Stock purchasable upon exercise hereof shall be appropriately adjusted
and proper provision shall be made so that, in the event that any additional
shares of Common Stock are to be issued or otherwise to become outstanding as a
result of any such change (other than pursuant to an exercise of the Option),
the number of shares of Common Stock that remain subject to the Option shall be
increased so that, after such issuance and together with shares of Common Stock
previously issued pursuant to the exercise of the Option (as adjusted on account
of any of the foregoing changes in the Common Stock), it represents the same
proportion of the number of shares of Common Stock then issued and outstanding
as such proportion before the applicable event described in this Section 5(a).
(b) Whenever the number of shares of Common Stock purchasable upon exercise
hereof is adjusted as provided in this Section 5, the Option Price shall be
adjusted by multiplying the Option Price by a fraction, the numerator of which
shall be equal to the number of shares of Common Stock purchasable prior to the
adjustment and the denominator of which shall be equal to the number of shares
of Common Stock purchasable after the adjustment.
Section 6 . Registration Rights.
(a) Upon the occurrence of a Purchase Event that occurs prior to an
Exercise Termination Event, Issuer shall, at the request of Grantee (whether on
its own behalf or on behalf of any subsequent holder of the Option (or part
thereof) or any holder of the shares of Common Stock issued pursuant hereto),
promptly prepare, file and keep current a registration statement under the
Securities Act covering any shares issued and issuable pursuant to the Option
and shall use its best efforts to cause such registration statement to become
effective and remain current in order to permit the sale or other disposition of
any shares of Common Stock issued upon total or partial exercise of the Option
(the "Option Shares") in accordance with any plan of disposition requested by
Grantee. Issuer shall use its best efforts to cause such registration statement
first to become effective and then to remain effective for such period not in
excess of 180 days from the day such registration statement first becomes
effective. Grantee shall have the right to demand two such registrations at
Issuer's expense. The foregoing notwithstanding, if, at the time of any request
by Grantee for registration of Option Shares as provided above, Issuer is in the
process of registration with respect to an underwritten public offering of
shares of Common Stock, and if in the good faith judgment of the managing
underwriter or managing underwriters, or, if none, the sole underwriter or
underwriters, of such offering, the offering or inclusion of the Option Shares
would interfere materially with the successful marketing of the shares of Common
Stock offered by Issuer, the number of Option Shares otherwise to be covered in
the registration statement contemplated hereby may be reduced; provided,
however, that after any such required reduction, the number of Option Shares to
be included in such offering for the account of Grantee shall constitute at
least 25% of the total number of shares of Common Stock held by Grantee and
Issuer covered in such registration statement; provided further, however, that
if such reduction occurs, then Issuer shall file a registration statement for
the balance as promptly as practicable thereafter as to which no reduction shall
thereafter occur. In addition, if Issuer proposes to register its Common Stock
or any other securities on a form that would permit the registration of the
Option Shares for public sale under the Securities Act (whether proposed to
be offered for sale by Issuer or any other Person) it shall give prompt written
notice to Grantee of its intention to do so, specifying the relevant terms of
such proposal, including the proposed maximum offering price thereof. Upon the
written notice of Grantee (whether on its own behalf or on behalf of any
subsequent holder of the Option (or part thereof) or any holder of the shares of
Common Stock issued pursuant hereto) delivered to Issuer within 20 business days
after the giving of any such notice, which request shall specify the number of
Option Shares desired to be disposed by Grantee, Issuer shall use its best
efforts to effect, in connection with its proposed registration, the
registration under the Securities Act of the Option Shares set forth in such
request. Grantee shall provide all information reasonably requested by Issuer
for inclusion in any registration statement to be filed hereunder. In connection
with any such registration, Issuer and Grantee shall provide each other with
representations, warranties, indemnities and other agreements customarily given
in connection with such registrations. If requested by Grantee in connection
with such registration, Issuer and Grantee shall become a party to any
underwriting agreement relating to the sale of such shares, but only to the
extent of obligating themselves in respect of representations, warranties,
indemnities and other agreements customarily included in such underwriting
agreements.
(b) In the event that Grantee requests Issuer to file a registration
statement following the failure to obtain any approval required to exercise the
Option as described in Section 9 hereof, the closing of the sale or other
disposition of the Common Stock or other securities pursuant to such
registration statement shall occur substantially simultaneously with the
exercise of the Option.
(c) Except where applicable state law prohibits such payments, Issuer shall
pay all expenses (including without limitation registration fees, qualification
fees, blue sky fees and expenses (including the fees and expenses of counsel),
legal expenses, including the reasonable fees and expenses of one counsel to the
holders whose Option Shares are being registered, printing expenses and the
costs of special audits or "cold comfort" letters, expenses of underwriters,
excluding discounts and commissions but including liability insurance if Issuer
so desires or the underwriters so require, and the reasonable fees and expenses
of any necessary special experts) in connection with each registration pursuant
to this Section 6 (including the related offerings and sales by holders of
Option Shares) and all other qualifications, notification or exemptions pursuant
to this Section 6.
(d) In connection with any registration under this Section 6, Issuer hereby
indemnifies Grantee, and each officer, director and controlling person of
Grantee, and each underwriter thereof, including each person, if any, who
controls such holder or underwriter within the meaning of Section 15 of the
Securities Act, against all expenses, losses, claims, damages and liabilities
caused by any untrue, or alleged untrue, statement contained in any registration
statement or prospectus or notification or offering circular (including any
amendments or supplements thereto) or any preliminary prospectus, or caused by
any omission, or alleged omission, to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
except insofar as such expenses, losses, claims, damages or liabilities of such
indemnified party are caused by any untrue statement or alleged untrue statement
that was included by Issuer in any such registration statement or prospectus or
notification or offering circular (including any amendments or supplements
thereto) in reliance upon and in conformity with, information furnished in
writing to Issuer by such indemnified party expressly for use therein, and
Issuer and each officer, director and controlling person of Issuer shall be
indemnified by such Grantee, or by such underwriter, as the case may be, for all
such expenses, losses, claims, damages and liabilities caused by any untrue, or
alleged untrue, statement, that was included by Issuer in any such registration
statement or prospectus or notification or offering circular (including any
amendments or supplements thereto) in reliance upon, and in conformity with,
information furnished in writing to Issuer by such holder or such underwriter,
as the case may be, expressly for such use.
Promptly upon receipt by a party indemnified under this Section 6(d) of
notice of the commencement of any action against such indemnified party in
respect of which indemnity or reimbursement may be sought against any
indemnifying party under this Section 6(d), such indemnified party shall notify
the indemnifying party in writing of the commencement of such action, but the
failure so to notify the indemnifying party shall not relieve it of any
liability which it may otherwise have to any indemnified party under this
Section 6(d). In case notice of commencement of any such action shall be given
to the indemnifying party as above provided, the indemnifying party shall be
entitled to participate in and, to the extent it may wish, jointly with any
other indemnifying party similarly notified, to assume the defense of such
action at its own expense, with counsel chosen by it and reasonably satisfactory
to such indemnified party. The indemnified party shall have the right to employ
separate counsel in any such action and participate in the defense thereof, but
the fees and expenses of such counsel (other than reasonable costs of
investigation) shall be paid by the indemnified party unless (i) the
indemnifying party either agrees to pay the same, (ii) the indemnifying party
fails to assume the defense of such action with counsel reasonably satisfactory
to the indemnified party, or (iii) the indemnified party has been advised by
counsel that one or more legal defenses may be available to the indemnifying
party that may be contrary to the interests of the indemnified party. No
indemnifying party shall be liable for the fees and expenses of more than one
separate counsel for all indemnified parties or for any settlement entered into
without its consent, which consent may not be unreasonably withheld.
If the indemnification provided for in this Section 6(d) is unavailable to
a party otherwise entitled to be indemnified in respect of any expenses, losses,
claims, damages or liabilities referred to herein, then the indemnifying party,
in lieu of indemnifying such party otherwise entitled to be indemnified, shall
contribute to the amount paid or payable by such party to be indemnified as a
result of such expenses, losses, claims, damages or liabilities in such
proportion as is appropriate to reflect the relative fault of Issuer, Grantee
and the underwriters in connection with the statements or omissions which
resulted in such expenses, losses, claims, damages or liabilities, as well as
any other relevant equitable considerations. The amount paid or payable by a
party as a result of the expenses, losses, claims, damages and liabilities
referred to above shall be deemed to include any legal or other fees or expenses
reasonably incurred by such party in connection with investigating or defending
any action or claim; provided, however, that in no case shall Grantee be
responsible, in the aggregate, for any amount in excess of the net offering
proceeds attributable to its Option Shares included in the offering. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. Any obligation by any Grantee
to indemnify shall be several and not joint with other holders of Option Shares.
Section 7 . Option Repurchase.
(a) Upon the occurrence of a Purchase Event that occurs prior to an
Exercise Termination Event, (i) at the request (the date of such request being
the "Request Date") of Grantee, delivered within 30 days of the Purchase Event
(or such later period as may be provided pursuant to Section 9 hereof), Issuer
shall repurchase the Option from Grantee at a price (the "Option Repurchase
Price") equal to the amount by which (A) the market/offer price (as defined
below) exceeds (B) the Option Price, multiplied by the number of shares for
which the Option may then be exercised, and (ii) at the request (the date of
such request being the "Request Date") of the owner of Option Shares from time
to time (the "Owner"), delivered within 30 days of a Purchase Event (or such
later period as may be provided pursuant to Section 9 hereof), Issuer shall
repurchase such number of the Option Shares from the Owner as the Owner shall
designate at a price (the "Option Share Repurchase Price") equal to the
market/offer price multiplied by the number of Option Shares so designated. The
term "market/offer price" shall mean the highest of (i) the price per share of
Common Stock at which a tender offer or exchange offer therefor has been made
after the date hereof and on or prior to the Request Date, (ii) the price per
share of Common Stock paid or to be paid by any third party pursuant to an
agreement with Issuer (whether by way of a merger,
consolidation or otherwise), (iii) the highest closing price for shares of
Common Stock within the 90-day period ending on the Request Date as reported on
The Nasdaq Stock Market's National Market (as reported in The Wall Street
Journal or, if not reported therein, in another mutually agreed upon
authoritative source), or (iv) in the event of a sale of all or substantially
all of Issuer's assets, the sum of the price paid in such sale for such assets
and the current market value of the remaining assets of Issuer as determined by
a nationally-recognized independent investment banking firm mutually selected by
Grantee or the Owner, as the case may be, on the one hand, and Issuer, on the
other hand, divided by the number of shares of Common Stock of Issuer
outstanding at the time of such sale. In determining the market/offer price, the
value of consideration other than cash shall be determined by a
nationally-recognized independent investment banking firm mutually selected by
Grantee or Owner, as the case may be, on the one hand, and Issuer, on the other
hand, whose determination shall be conclusive and binding on all parties.
(b) Grantee or the Owner, as the case may be, may exercise its right to
require Issuer to repurchase the Option and/or any Option Shares pursuant to
this Section 7 by surrendering for such purpose to Issuer, at its principal
office, a copy of this Agreement or certificates for Option Shares, as
applicable, accompanied by a written notice or notices stating that Grantee or
the Owner, as the case may be, elects to require Issuer to repurchase the Option
and/or the Option Shares in accordance with the provisions of this Section 7. As
immediately as practicable, and in any event within five business days after the
surrender of the Option and/or certificates representing Option Shares and the
receipt of such notice or notices relating thereto, Issuer shall deliver or
cause to be delivered to Grantee the Option Repurchase Price or to the Owner the
Option Share Repurchase Price or the portion thereof that Issuer is not then
prohibited from so delivering under applicable law and regulation or as a
consequence of administrative policy.
(c) Issuer hereby undertakes to use its best efforts to obtain all required
regulatory and legal approvals and to file any required notices as promptly as
practicable in order to accomplish any repurchase contemplated by this Section
7. Nonetheless, to the extent that Issuer is prohibited under applicable law or
regulation, or as a consequence of administrative policy, from repurchasing the
Option and/or the Option Shares in full, Issuer shall immediately so notify
Grantee and/or the Owner and thereafter deliver or cause to be delivered, from
time to time, to Grantee and/or the Owner, as appropriate, the portion of the
Option Repurchase Price and the Option Share Repurchase Price, respectively,
that it is no longer prohibited from delivering, within five business days after
the date on which Issuer is no longer so prohibited; provided, however, that if
Issuer at any time after delivery of a notice of repurchase pursuant to Section
7(b) is prohibited under applicable law or regulation, or as a consequence of
administrative policy, from delivering to Grantee and/or the Owner, as
appropriate, the Option Repurchase Price and the Option Share Repurchase Price,
respectively, in full Grantee or Owner may revoke its notice of repurchase of
the Option or the Option Shares either in whole or in part whereupon, in the
case of a revocation in part, Issuer shall promptly (i) deliver to Grantee
and/or the Owner, as appropriate, that portion of the Option Purchase Price or
the Option Share Repurchase Price that Issuer is not prohibited from delivering
after taking into account any such revocation, and (ii) deliver, as appropriate,
either (A) to Grantee, a new Agreement evidencing the right of Grantee to
purchase that number of shares of Common Stock equal to the number of shares of
Common Stock purchasable immediately prior to the delivery of the notice of
repurchase less the number of shares of Common Stock covered by the portion of
the Option repurchased, or (B) to the Owner, a certificate for the number of
Option Shares covered by the revocation.
(d) Issuer shall not enter into any agreement with any party (other than
Grantee or a Grantee Subsidiary) for an Acquisition Transaction unless the other
party thereto assumes all the obligations of Issuer pursuant to this Section 7
in the event that a Grantee or Owner elects, in its sole discretion, to require
such other party to perform such obligations.
Section 8 . Substitute Option.
(a) Grant of Substitute Option. In the event that prior to an Exercise
Termination Event, Issuer shall enter into an agreement (i) to consolidate or
merge with any Person, other than Grantee or a Grantee Subsidiary, and shall not
be the continuing or surviving corporation of such consolidation or merger, (ii)
to permit any Person, other than Grantee or a Grantee Subsidiary, to merge into
Issuer and Issuer shall be the continuing or surviving corporation, but, in
connection with such merger, the then outstanding shares of Common Stock shall
be changed into or exchanged for stock or other securities of any other Person
or cash or any other property or the then outstanding shares of Common Stock
shall after such merger represent less than 50% of the outstanding shares and
share equivalents of the merged company, or (iii) to sell or otherwise transfer
all or substantially all of its or any significant Issuer Subsidiary's assets to
any Person, other than Grantee or a Grantee Subsidiary, then, and in each such
case, the agreement governing such transaction shall make proper provision so
that the Option shall, upon the consummation of such transaction and upon the
terms and conditions set forth herein, be converted into, or exchanged for, an
option (the "Substitute Option"), at the election of Grantee, of either (x) the
Acquiring Corporation (as defined below), or (y) any Person that controls the
Acquiring Corporation (the Acquiring Corporation and any such controlling Person
being hereinafter referred to as the "Substitute Option Issuer").
(b) Exercise of Substitute Option. The Substitute Option shall be
exercisable for such number of shares of the Substitute Common Stock (as is
hereinafter defined) as is equal to the market/offer price (as defined in
Section 7 hereof), multiplied by the number of shares of the Common Stock for
which the Option was theretofore exercisable, divided by the Average Price (as
is hereinafter defined). The exercise price of the Substitute Option per share
of the Substitute Common Stock (the "Substitute Purchase Price") shall then be
equal to the product of the Option Price multiplied by a fraction in which the
numerator is the number of shares of Common Stock for which the Option was
theretofore exercisable and the denominator is the number of shares for which
the Substitute Option is exercisable.
(c) Terms of Substitute Option. The Substitute Option shall otherwise have
the same terms as the Option, provided, however, that if the terms of the
Substitute Option cannot, for legal reasons, be the same as the Option, such
terms shall be as similar as possible and in no event less advantageous to
Grantee.
(d) Substitute Option Definitions. The following terms have the meanings
indicated:
(i) "Acquiring Corporation" shall mean (i) the continuing or surviving
corporation of a consolidation or merger with Issuer (if other than
Issuer), (ii) Issuer in a merger in which Issuer is the continuing or
surviving Person, and (iii) the transferee of all or any substantial part
of Issuer's assets (or the assets of any significant Issuer Subsidiary);
(ii) "Substitute Common Stock" shall mean the common stock issued by
the Substitute Option Issuer upon exercise of the Substitute Option; and
(iii) "Average Price" shall mean the average closing price of a share
of the Substitute Common Stock for the one year immediately preceding the
consolidation, merger or sale in question, but in no event higher than the
closing price of the shares of the Substitute Common Stock on the day
preceding such consolidation, merger or sale; provided, however, that if
such closing price is not ascertainable due to an absence of a public
market for the Substitute Common Stock, "Average Price" shall mean the
higher of (i) the price per share of Substitute Common Stock paid or to be
paid by any third party pursuant to an agreement with the issuer of the
Substitute Common Stock and (ii) the book value per share, calculated in
accordance with
generally accepted accounting principles, of the Substitute Common Stock
immediately prior to exercise of the Substitute Option; provided, further,
that if Issuer is the issuer of the Substitute Option, the Average Price
shall be computed with respect to a share of common stock issued by Issuer,
the Person merging into Issuer or by any company which controls or is
controlled by such merging Person, as Grantee may elect.
(e) Cap on Substitute Option. In no event, pursuant to any of the foregoing
paragraphs, shall the Substitute Option be exercisable for more than that
proportion of the outstanding Substitute Common Stock equal to the proportion of
the outstanding Common Stock of Issuer which Grantee had the right to acquire
immediately prior to the issuance of the Substitute Option. In the event that
the Substitute Option would be exercisable for more than the proportion of the
outstanding Substitute Common Stock referred to in the immediately preceding
paragraph but for this clause (e), the Substitute Option Issuer shall make a
cash payment to Grantee equal to the excess of (i) the value of the Substitute
Option without giving effect to the limitation in this clause (e) over (ii) the
value of the Substitute Option after giving effect to the limitation in this
clause (e). This difference in value shall be determined by a nationally
recognized investment banking firm mutually selected by Grantee, on the one
hand, and Issuer, on the other hand.
Section 9 . Extension of Exercise Right. Notwithstanding Section 2, Section
6, Section 7 and Section 11 hereof, if Grantee has given the notice referred to
in one or more of such Sections, the exercise of the rights specified in any
such Section shall be extended (a) if the exercise of such rights requires
obtaining regulatory approvals (including any required waiting periods) to the
extent necessary to obtain all regulatory approvals for the exercise of such
rights, and (b) to the extent necessary to avoid liability under Section 16(b)
of the Exchange Act by reason of such exercise; provided, however, that in no
event shall any closing date occur more than 6 months after the related Notice
Date, and, if the closing date shall not have occurred within such period due to
the failure to obtain any required approval by the Federal Reserve Board or any
other Governmental Authority despite the best efforts of Issuer or the
Substitute Option Issuer, as the case may be, to obtain such approvals, the
exercise of the Option shall be deemed to have been rescinded as of the related
Notice Date. In the event (a) Grantee receives official notice that an approval
of the Federal Reserve Board or any other Governmental Authority required for
the purchase and sale of the Option Shares shall not be issued or granted, or
(b) a closing date has not occurred within 6 months after the related Notice
Date due to the failure to obtain any such required approval, Grantee shall be
entitled to exercise the Option in connection with the resale of the Option
Shares pursuant to a registration statement as provided in Section 6.
Section 10 . Issuer's Representations and Warranties. Issuer hereby
represents and warrants to Grantee as follows:
(a) Corporate Authority. Issuer has full corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by the Board of Directors of Issuer and no other corporate proceedings on the
part of Issuer are necessary to authorize this Agreement or to consummate the
transactions so contemplated. This Agreement has been duly executed and
delivered by Issuer.
(b) Availability of Shares. Issuer has taken all necessary corporate action
to authorize and reserve and to permit it to issue, and at all times from the
date hereof through the termination of this Agreement in accordance with its
terms shall have reserved for issuance upon the exercise of the Option, that
number of shares of Common Stock equal to the maximum number of shares of Common
Stock at any time and from time to time issuable hereunder, and all such shares,
upon issuance pursuant hereto,
shall be duly authorized, validly issued, fully paid, non-assessable, and shall
be delivered free and clear of all claims, liens, encumbrances and security
interests and not subject to any preemptive rights.
(c) No Violations. The execution, delivery and performance of this
Agreement does not or shall not, and the consummation by Issuer of any of the
transactions contemplated hereby shall not, constitute or result in (A) a breach
or violation of, or a default under, its articles of incorporation or by-laws,
or the comparable governing instruments of any of the Issuer Subsidiaries, or
(B) a breach or violation of, or a default under, any agreement, lease,
contract, note, mortgage, indenture, arrangement or other obligation of it or
any of the Issuer Subsidiaries (with or without the giving of notice, the lapse
of time or both) or under any law, rule, ordinance or regulation or judgment,
decree, order, award or governmental or non-governmental permit or license to
which it or any of the Issuer Subsidiaries is subject, that would, in any case
give any other person the ability to prevent or enjoin Issuer's performance
under this Agreement in any material respect.
Section 11 . Assignment. Neither of the parties hereto may assign any of
its rights or delegate any of its obligations under this Agreement or the Option
created hereunder to any other Person without the express written consent of the
other party, except that Grantee may assign this Agreement to a wholly owned
subsidiary of Grantee and Grantee may assign its rights hereunder in whole or in
part after the occurrence of a Preliminary Purchase Event; provided, however,
that until the date at which the Federal Reserve Board has approved an
application by Grantee under the B.H.C. Act to acquire the shares of Common
Stock subject to the Option, other than to a wholly owned subsidiary of Grantee,
Grantee may not assign its rights under the Option except in (i) a widely
dispersed public distribution, (ii) a private placement in which no one party
acquires the right to purchase in excess of 2% of the voting shares of Issuer,
(iii) an assignment to a single party (e.g., a broker or investment banker) for
the purpose of conducting a widely dispersed public distribution on Grantee's
behalf, or (iv) any other manner approved by the Federal Reserve Board. The term
"Grantee," as used in this Agreement, shall also be deemed to refer to Grantee's
permitted assigns. Any attempted assignment prohibited by this Section 11 is
void and without effect.
Section 12 . Filings and Consents. Each of Grantee and Issuer shall use its
reasonable efforts to make all filings with, and to obtain consents of, all
third parties and Governmental Authorities necessary to the consummation of the
transactions contemplated by this Agreement, including, without limitation,
making application if necessary, for listing of the shares of Common Stock
issuable hereunder on any exchange or quotation system and applying to the
Federal Reserve Board under the B.H.C. Act and to state banking authorities for
approval to acquire the shares issuable hereunder.
Section 13 . Remedies. The parties hereto acknowledge that damages would be
an inadequate remedy for a breach of this Agreement by either party hereto and
that the obligations of the parties shall hereto be enforceable by either party
hereto through injunctive or other equitable relief. Both parties further agree
to waive any requirement for the securing or posting of any bond in connection
with the obtaining of any such equitable relief and that this provision is
without prejudice to any other rights that the parties hereto may have for any
failure to perform this Agreement.
Section 14 . Severability. If any term, provision, covenant or restriction
contained in this Agreement is held by a court or a federal or state regulatory
agency of competent jurisdiction to be invalid, void or unenforceable, the
remainder of the terms, provisions and covenants and restrictions contained in
this Agreement shall remain in full force and effect, and shall in no way be
affected, impaired or invalidated.
Section 15 . Notices. All notices, requests, claims, demands and other
communications hereunder shall be deemed to have been duly given when delivered
in Person, by cable, telegram,
telecopy or telex, or by registered or certified mail (postage prepaid, return
receipt requested) at the respective addresses of the parties set forth in the
Plan.
Section 16 . Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement and shall be effective at the time
of execution.
Section 17 . Expenses. Except as otherwise expressly provided herein, each
of the parties hereto shall bear and pay all costs and expenses incurred by it
or on its behalf in connection with the transactions contemplated hereunder,
including fees and expenses of its own financial consultants, investment
bankers, accountants and counsel.
Section 18 . Entire Agreement. Except as otherwise expressly provided
herein or in the Plan, this Agreement contains the entire agreement between the
parties with respect to the transactions contemplated hereunder and supersedes
all prior arrangements or understandings with respect thereof, written or oral.
The terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective successors and permitted
assigns. Nothing in this Agreement, expressed or implied, is intended to confer
upon any party, other than the parties hereto, and their respective successors
except as assigns, any rights, remedies, obligations or liabilities under or by
reason of this Agreement, except as expressly provided herein.
Section 19 . Definitions. Capitalized terms used in this Agreement and not
defined herein but defined in the Plan shall have the meanings assigned thereto
in the Plan.
Section 20 . Effect on Plan. Nothing contained in this Agreement shall be
deemed to authorize Issuer or Grantee to breach any provision of the Plan.
Section 21 . Selections. In the event that any selection or determination
is to be made by Grantee hereunder and at the time of such selection or
determination there is more than one Grantee, such selection shall be made by a
majority in interest of such Grantees.
Section 22 . Further Assurances. In the event of any exercise of the option
by Grantee, Issuer and such Grantee shall execute and deliver all other
documents and instruments and take all other action that may be reasonably
necessary in order to consummate the transactions provided for by such exercise.
Section 23 . Voting. Except to the extent Grantee exercises the Option,
Grantee shall have no rights to vote or receive dividends or have any other
rights as a shareholder with respect to shares of Common Stock covered hereby.
Section 24 . Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
IN WITNESS WHEREOF, each of the parties has caused this Stock Option
Agreement to be executed on its behalf by their officers thereunto duly
authorized, all as of the date first above written.
LANDMARK FINANCIAL CORP.
By
-------------------------------------
Gordon E. Coleman
President and Chief Executive Officer
TRUSTCO BANK CORP NY
By
--------------------------------------
Robert A. McCormick
President and Chief Executive Officer
APPENDIX C - DISSENTER'S RIGHTS STATUTE
SECTION 262 OF THE DELAWARE GENERAL CORPORATION LAW
(a) Any stockholder of a corporation of this State who holds shares of
stock on the date of the making of a demand pursuant to subsection (d) of this
section with respect to such shares, who continuously holds such shares through
the effective date of the merger or consolidation, who has otherwise complied
with subsection (d) of this section and who has neither voted in favor of the
merger or consolidation nor consented thereto in writing pursuant to Section 228
of this title shall be entitled to an appraisal by the Court of Chancery of
thefair value of the stockholder's shares of stock under the circumstances
described in subsections (b) and (c) of this section. As used in this
section,the word "stockholder" means a holder of record of stock in a stock
corporation and also a member of record of a nonstock corporation; the words
"stock" and"share" mean and include what is ordinarily meant by those words and
also membership or membership interest of a member of a nonstock corporation;
and thewords "depository receipt" mean a receipt or other instrument issued by
adepository representing an interest in one or more shares, or fractions
thereof, solely of stock of a corporation, which stock is deposited with the
depository.
(b) Appraisal rights shall be available for the shares of any class
orseries of stock of a constituent corporation in a merger or consolidation to
beeffected pursuant to Section 251 (other than a merger effected pursuant
toSection 251(g) of this title), Section 252, Section 254, Section 257, Section
258, Section 263 or Section 264 of this title: (1) Provided, however, that no
appraisal rights under this section shall be available for the shares of any
class or series of stock, which stock, or depository receipts in respect
thereof, at the record date fixed to determine the stockholders entitled to
receive notice of and to vote at the meeting of stockholders to act upon the
agreement of merger or consolidation, were either (i) listed on a national
securities exchange or designated as a national market system security on an
interdealer quotation system by the National Association of Securities Dealers,
Inc. or (ii) held of record by more than 2,000 holders; and further provided
that no appraisal rights shall be available for any shares of stock of the
constituent corporation surviving a merger if the merger did not require for its
approval the vote of the stockholders of the surviving corporation as provided
in subsection (f) of Section 251 of this title; (2) Notwithstanding paragraph
(1) of this subsection, appraisal rights under this section shall be available
for the shares of any class or series of stock of a constituent corporation if
the holders thereof are required by the terms of an agreement of merger or
consolidation pursuant to Sections 251, 252, 254, 257, 258, 263 and 264 of this
title to accept for such stock anything except: (a) Shares of stock of the
corporation surviving or resulting from such merger or consolidation, or
depository receipts in respect thereof; (b) Shares of stock of any other
corporation, or depository receipts in respect thereof, which shares of stock
(or depository receipts in respect thereof) or depository receipts at the
effective date of the merger or consolidation will be either listed on a
national securities exchange or designated as a national market system security
on an interdealer quotation system by the National Association of Securities
Dealers, Inc. or held of record by more than 2,000 holders; (c) Cash in lieu of
fractional shares or fractional depository receipts described in the foregoing
subparagraphs (a) and (b) of this paragraph; or (d) Any combination of the
shares of stock, depository receipts and cash in lieu of fractional shares or
fractional depository receipts described in the foregoing subparagraphs (a), (b)
and (c) of this paragraph; (3) In the event all of the stock of a subsidiary
Delaware corporation party to a merger
effected under Section 253 of this title is not owned by the parent corporation
immediately prior to the merger, appraisal rights shall be available for the
shares of the subsidiary Delaware corporation.
(c) Any corporation may provide in its certificate of incorporation
thatappraisal rights under this section shall be available for the shares of
anyclass or series of its stock as a result of an amendment to its certificate
ofincorporation, any merger or consolidation in which the corporation is
aconstituent corporation or the sale of all or substantially all of the assets
ofthe corporation. If the certificate of incorporation contains such a
provision,the procedures of this section, including those set forth in
subsections (d) and(e) of this section, shall apply as nearly as is practicable.
(d) Appraisal rights shall be perfected as follows: (1) If a proposed
merger or consolidation for which appraisal rights are provided under this
section is to be submitted for approval at a meeting of stockholders, the
corporation, not less than 20 days prior to the meeting, shall notify each of
its stockholders who was such on the record date for such meeting with respect
to shares for which appraisal rights are available pursuant to subsections (b)
or (c) hereof that appraisal rights are available for any or all of the shares
of the constituent corporations, and shall include in such notice a copy of this
section. Each stockholder electing to demand the appraisal of such stockholder's
shares shall deliver to the corporation, before the taking of the vote on the
merger or consolidation, a written demand for appraisal of such stockholder's
shares. Such demand will be sufficient if it reasonably informs the corporation
of the identity of the stockholder and that the stockholder intends thereby to
demand the appraisal of such stockholder's shares. A proxy or vote against the
merger or consolidation shall not constitute such a demand. A stockholder
electing to take such action must do so by a separate written demand as herein
provided. Within 10 days after the effective date of such merger or
consolidation, the surviving or resulting corporation shall notify each
stockholder of each constituent corporation who has complied with this
subsection and has not voted in favor of or consented to the merger or
consolidation of the date that the merger or consolidation has become effective;
or (2) If the merger or consolidation was approved pursuant to Section 228 or
Section 253 of this title, each constituent corporation, either before the
effective date of the merger or consolidation or within ten days thereafter,
shall notify each of the holders of any class or series of stock of such
constituent corporation who are entitled to appraisal rights of the approval of
the merger or consolidation and that appraisal rights are available for any or
all shares of such class or series of stock of such constituent corporation, and
shall include in such notice a copy of this section; provided that, if the
notice is given on or after the effective date of the merger or consolidation,
such notice shall be given by the surviving or resulting corporation to all such
holders of any class or series of stock of a constituent corporation that are
entitled to appraisal rights. Such notice may, and, if given on or after the
effective date of the merger or consolidation, shall, also notify such
stockholders of the effective date of the merger or consolidation. Any
stockholder entitled to appraisal rights may, within 20 days after the date of
mailing of such notice, demand in writing from the surviving or resulting
corporation the appraisal of such holder's shares. Such demand will be
sufficient if it reasonably informs the corporation of the identity of the
stockholder and that the stockholder intends thereby to demand the appraisal of
such holder's shares. If such notice did not notify stockholders of the
effective date of the merger or consolidation, either (i) each such constituent
corporation shall send a second notice before the effective date of the merger
or consolidation notifying each of the holders of any class or series of stock
of such constituent corporation that are entitled to appraisal rights of the
effective date of the merger or consolidation
or (ii) the surviving or resulting corporation shall send such a second notice
to all such holders on or within 10 days after such effective date; provided,
however, that if such second notice is sent more than 20 days following the
sending of the first notice, such second notice need only be sent to each
stockholder who is entitled to appraisal rights and who has demanded appraisal
of such holder's shares in accordance with this subsection. An affidavit of the
secretary or assistant secretary or of the transfer agent of the corporation
that is required to give either notice that such notice has been given shall, in
the absence of fraud, be prima facie evidence of the facts stated therein. For
purposes of determining the stockholders entitled to receive either notice, each
constituent corporation may fix, in advance, a record date that shall be not
more than 10 days prior to the date the notice is given, provided, that if the
notice is given on or after the effective date of the merger or consolidation,
the record date shall be such effective date. If no record date is fixed and the
notice is given prior to the effective date, the record date shall be the close
of business on the day next preceding the day on which the notice is given.
(e) Within 120 days after the effective date of the merger orconsolidation,
the surviving or resulting corporation or any stockholder who hascomplied with
subsections (a) and (d) hereof and who is otherwise entitled toappraisal rights,
may file a petition in the Court of Chancery demanding adetermination of the
value of the stock of all such stockholders. Notwithstanding the foregoing, at
any time within 60 days after the effectivedate of the merger or consolidation,
any stockholder shall have the right towithdraw such stockholder's demand for
appraisal and to accept the terms offeredupon the merger or consolidation.
Within 120 days after the effective date ofthe merger or consolidation, any
stockholder who has complied with the requirements of subsections (a) and (d)
hereof, upon written request, shall be entitled to receive from the corporation
surviving the merger or resulting from the consolidation a statement setting
forth the aggregate number of shares not voted in favor of the merger or
consolidation and with respect to which demands for appraisal have been received
and the aggregate number of holders of such shares. Such written statement shall
be mailed to the stockholder within 10 days after such stockholder's written
request for such a statement is received by the surviving or resulting
corporation or within 10 days after expiration of the period for delivery of
demands for appraisal under subsection (d) hereof, whichever is later.
(f) Upon the filing of any such petition by a stockholder, service of acopy
thereof shall be made upon the surviving or resulting corporation, whichshall
within 20 days after such service file in the office of the Register inChancery
in which the petition was filed a duly verified list containing thenames and
addresses of all stockholders who have demanded payment for theirshares and with
whom agreements as to the value of their shares have not beenreached by the
surviving or resulting corporation. If the petition shall befiled by the
surviving or resulting corporation, the petition shall beaccompanied by such a
duly verified list. The Register in Chancery, if soordered by the Court, shall
give notice of the time and place fixed for thehearing of such petition by
registered or certified mail to the surviving orresulting corporation and to the
stockholders shown on the list at the addressestherein stated. Such notice shall
also be given by 1 or more publications atleast 1 week before the day of the
hearing, in a newspaper of general circulation published in the City of
Wilmington, Delaware or such publication as the Court deems advisable. The forms
of the notices by mail and by publication shall be approved by the Court, and
the costs thereof shall be borne by the surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine
thestockholders who have complied with this section and who have become entitled
toappraisal rights. The Court may require the stockholders who have demanded
anappraisal for their shares and who hold stock represented by certificates
tosubmit their certificates of stock to the Register in Chancery for
notationthereon of the pendency of the appraisal proceedings; and if any
stockholderfails to comply with such direction, the Court may dismiss the
proceedings as tosuch stockholder.
(h) After determining the stockholders entitled to an appraisal, the
Courtshall appraise the shares, determining their fair value exclusive of any
elementof value arising from the accomplishment or expectation of the merger
orconsolidation, together with a fair rate of interest, if any, to be paid
uponthe amount determined to be the fair value. In determining such fair value,
theCourt shall take into account all relevant factors. In determining the fair
rateof interest, the Court may consider all relevant factors, including the rate
ofinterest which the surviving or resulting corporation would have had to pay
tomorrow money during the pendency of the proceeding. Upon application by the
surviving or resulting corporation or by any stockholder entitled to participate
in the appraisal proceeding, the Court may, in its discretion, permit discovery
or other pretrial proceedings and may proceed to trial upon the appraisal prior
to the final determination of the stockholder entitled to an appraisal. Any
stockholder whose name appears on the list filed by the surviving or resulting
corporation pursuant to subsection (f) of this section and who has submitted
such stockholder's certificates of stock to the Register in Chancery, if such is
required, may participate fully in all proceedings until it is finally
determined that such stockholder is not entitled to appraisal rights under this
section.
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to the
stockholders entitled thereto. Interest may be simple or compound, as the Court
may direct. Payment shall be so made to each such stockholder, in the case of
holders of uncertificated stock forthwith, and the case of holders of shares
represented by certificates upon the surrender to the corporation of the
certificates representing such stock. The Court's decree may be enforced as
other decrees in the Court of Chancery may be enforced, whether such surviving
or resulting corporation be a corporation of this State or of any state.
(j) The costs of the proceeding may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded his appraisal rights as provided in subsection
(d)of this section shall be entitled to vote such stock for any purpose or to
receive payment of dividends or other distributions on the stock (except
dividends or other distributions payable to stockholders of record at a date
which is prior to the effective date of the merger or consolidation); provided,
however, that if no petition for an appraisal shall be filed within the time
provided in subsection (e) of this section, or if such stockholder shall deliver
to the surviving or resulting corporation a written withdrawal of such
stockholder's demand for an appraisal and an acceptance of the merger or
consolidation, either within
60 days after the effective date of the merger or consolidation as provided in
subsection (e)of this section or thereafter with the written approval of the
corporation, then the right of such stockholder to an appraisal shall cease.
Notwithstanding the foregoing, no appraisal proceeding in the Court of Chancery
shall be dismissed as to any stockholder without the approval of the Court, and
such approval maybe conditioned upon such terms as the Court deems just.
(l) The shares of the surviving or resulting corporation to which the
shares of such objecting stockholders would have been converted had they
assented to the merger or consolidation shall have the status of authorized and
unissued shares of the surviving or resulting corporation.
APPENDIX D - RP FINANCIAL FAIRNESS OPINION
[LETTERHEAD OF RP FINANCIAL]
__________________, 2000
Board of Directors
Landmark Financial Corp.
211 Erie Boulevard
Canajoharie, New York 13317
Members of the Board:
You have requested RP Financial, LC. ("RP Financial") to provide you with
its opinion as to the fairness from a financial point of view to the
shareholders of Landmark Financial Corp., Canajoharie, New York ("Landmark"),
the savings and loan holding company of Landmark Community Bank ("Landmark
Community"), of the Agreement and Plan of Merger (the "Agreement') dated
February 21, 2000, by and among Landmark, TrustCo Bank Corp NY ("TrustCo") and
Landmark Acquisition Co. (a wholly-owned subsidiary of TrustCo), whereby at the
Effective Time TrustCo will acquire for cash all of the shares of Landmark
Common Stock ("Landmark Common") and Landmark will merge with and into TrustCo
(the "Merger"). The Agreement, inclusive of exhibits, is incorporated herein by
reference, unless otherwise defined, all capitalized terms incorporated herein
have the meanings ascribed to them in the Agreement.
Summary Description of Merger Consideration
- -------------------------------------------
At the Effective Time, each outstanding share of Landmark Common issued and
outstanding immediately prior to the Effective Time shall cease to exist and
shall be converted into the right to receive $214.00 in cash (the "Merger
Consideration'). All shares of Landmark Common which are held in the treasury of
Landmark or by any direct or indirect subsidiary of Landmark shall be cancelled.
As of this date, there were 154,208 shares of Landmark Common issued and
outstanding, there were -no treasury shares and no shares owned by TrustCo or an
affiliate.
At the Effective Time, each outstanding option to purchase shares of
Landmark Common ("Landmark Stock Option') issued and outstanding pursuant to
Landmark's 1998 Stock Option Plan, whether or not such Landmark Stock Option is
exercisable at the Effective Time, shall, by reason. of the Merger, cease to be
outstanding and shall be converted into the right to receive cash in. an a mount
equal to (i) the difference (if a positive number) between (A) the Merger
Consideration and (B) the exercise price of each such Landmark Stock Option
multiplied by (ii) the number of shares of Common subject to the Landmark Stock
Option.
At the Effective Time, each share of Landmark Common granted under the
Landmark 1998 Recognition and Retention Olan, whether or not vested or subject
to other restrictions at the Effective Time, shall cease to be outstanding,
shall cease to exist and shall be converted into the right to receive the Merger
Consideration
Prior to the Effective Time, Landmark will terminate the Landmark Employee
Stock Ownership Plan ("ESOP') and concurrently repay the ESOP loan with the
Merger Consideration received, on previously unallocated shares and distribute
the proceeds on a pro rata basis to the ESOP participants.
RP Financial Background and Experience
- --------------------------------------
RP Financial, as part of its financial institution valuation and consulting
practice, is regularly engaged in the valuation of insured financial institution
securities in connection with mergers and- acquisitions, initial and secondary
stock offerings, mutual-to-stock conversions of thrift institutions, and
business valuations for other purposes. As specialists in the securities of
insured financial institutions, RP Financial has experience. in, and knowledge
of, the markets for the securities of such institutions, including institutions
operating in the northeast U.S.
Materials Reviewed
- ------------------
In rendering this opinion, RP Financial reviewed the following material:
(I)the Agreement, dated February 21, 2000, including exhibits; (2) the following
information for Landmark -- (a) annual financial statements for the fiscal years
ended March 31, 1998 and 1999 and included in the Annual Report to the
Stockholders for each year, and (b) shareholder, regulatory, and internal
financial and other reports through December 31, 1999 since the conversion
prospectus dated August 12, 1997 -- all with regard to balance sheet and
off-balance sheet composition, profitability, interest rates, volumes,
maturities, market values, trends, credit risk, interest rate risk, liquidity
risk and operations; (3) discussions with Landmark's management regarding past
and current business, operations, financial condition, and future prospects; (4)
an analysis of the pro forma impact of alternative strategies as an independent
institution; (5) competitive, economic and demographic characteristics
nationally, regionally and in the local market area.; (6) the potential impact
- -of regulatory and legislative changes on financial institutions; (7) the fin
ancial terms of other recently completed and pending acquisitions of thrifts in
New York, regionally and nationally with similar characteristics; and (8)
TrustCo's financial condition as of December 31, 1999 regarding the perceived
ability to complete the merger from a cash and capital perspective.
In rendering its opinion, RP Financial relied, without independent
verification, on the accuracy and completeness of the information concerning
Landmark furnished by Landmark to RP Financial for review for purposes of its
opinion, as well as publicly-available information regarding other financial
institutions and economic and demographic data. Landmark did not restrict RP
Financial as to the material it was permitted to review. RP Financial did not
perform or obtain any independent appraisals or evaluations of the assets and
liabilities and potential and/or contingent liabilities of Landmark.
RP Financial expresses no opinion on matters of a legal, regulatory, tax or
accounting nature or the ability of the merger as set forth in the Agreement to
be consummated. In rendering
its opinion, RP Financial assumed that, in the course of obtaining the necessary
regulatory and governmental approvals for the proposed merger, no restriction
will be imposed on TrustCo that would have a material adverse effect on the
ability of the merger to be consummated as set forth in the Agreement.
0pinion
- -------
It is understood that this letter is directed to the Board of Directors of
Landmark in its consideration of the Agreement, and does not constitute a
recommendation to any shareholder of Landmark as to any action that such
shareholder should take in connection with the Agreement, or otherwise.
It is understood that this opinion is based on market conditions and other
circumstances existing on* the date hereof,
It is understood that this opinion may be included in its entirety in any
communication by Landmark or its Board of Directors to the stockholders of
Landmark. It is also understood that this opinion may be included in its
entirety in any regulatory filing by Landmark or TrustCo, and that RP Financial
conse nts to the summary of this opinion in the proxy materials of Landmark, and
any amendments. thereto. Except as described above, this opinion may not be
summarized, excerpted from or otherwise publicly referred to without RP
Financial's prior written consent.
Based upon and subject to the foregoing, and other such matters we consider
relevant, it is RP Financial's opinion that, as of the date hereof, the Merger
Consideration to be received by the holders of Landmark Common, as described in
the Agreement, is fair to such shareholders from a financial point of view.
Respectfully submitted.,
RP FINANCIAL, LC.