Stock Purchase Agreement

This Stock Purchase Agreement ("Agreement") is made as of March 1, 2005, by BRIDGE STREET FINANCIAL, INC., a Delaware Corporation ("Buyer"), ROBERT J. ROWE, an individual residing at 211 Sedgwick Drive, Syracuse, New York 13203, ("Rowe"), CHRISTINE ROMAGNOLI, an individual residing at 8498 Oneida Valley Road, Canastota, New York 13032 , ("Romagnoli") EILEEN CASSIDY, an individual residing at 102 Hafner Drive, North Syracuse, New York 13212, ("Cassidy") and MICHAEL MONICA, an individual residing at 108 Coachman's Whip, Baldwinsville, New York 13027 ("Monica"). (Rowe, Romagnoli, Cassidy and Monica are collectively referred to as "Sellers").


RECITALS


Sellers desire to sell, and Buyer desires to purchase, all of the issued and outstanding shares (the "Shares") of the capital stock of Ladd's Agency, Inc., a New York corporation (the "Company"), for the consideration and on the terms set forth in this Agreement.


The issued and outstanding shares of capital stock of the Company are held as follows:


Rowe 154 shares
Romagnoli 3 shares
Cassidy 3 shares
Monica 6 shares


AGREEMENT


The parties, intending to be legally bound, agree as follows:


1. DEFINITIONS


For purposes of this Agreement, the following terms have the meanings specified or referred to in this Section 1:


(a) "ACQUIRED COMPANIES" --the Company and its Subsidiaries, collectively.


(b) "APPLICABLE CONTRACT"--any Contract (a) under which any Acquired Company has or may acquire any rights, (b) under which any Acquired Company has or may become subject to any obligation or liability, or (c) by which any Acquired Company or any of the assets owned or used by it is or may become bound.


(c) "BEST EFFORTS"--the reasonable efforts that a prudent Person desirous of achieving a result would use in similar circumstances to ensure that such result is achieved as expeditiously as possible ; PROVIDED, HOWEVER, that an obligation to use Best Efforts under this Agreement does not require the Person subject to that obligation to take actions that would result in a materially adverse change in the benefits to such Person of this Agreement and the Contemplated Transactions.


(d) "BREACH"--a "Breach" of a representation, warranty, covenant, obligation, or other provision of this Agreement or any instrument delivered pursuant to this Agreement will be deemed to have occurred if there is or has been (a) any material inaccuracy in or breach of, or any failure to perform or comply with, such representation, warranty, covenant, obligation, or other provision, or (b) any claim (by any Person) or other occurrence or circumstance that is or was materially inconsistent with such representation, warranty, covenant, obligation, or other provision.


(e) "BUYER"--as defined in the first paragraph of this Agreement.


(f) "CLOSING"--as defined in Section 2.3.


(g) "CLOSING DATE"--the date and time as of which the Closing actually takes place.


(h) "COMPANY"--as defined in the Recitals of this Agreement.


(i) "COMPANY'S FINANCIAL STATEMENTS" - as defined in Section 3.4.


(j) "CONSENT"--any approval, consent, ratification, waiver, or other authorization (including any Governmental Authorization).


(k) "CONTEMPLATED TRANSACTIONS"--all of the transactions contemplated by this Agreement, including:


(i) the sale of the Shares by Sellers to Buyer;


(ii) the execution, delivery, and performance of
the Employment Agreements and the Sellers' Releases;


(iii) the performance by Buyer and Sellers of
their respective covenants and obligations under this Agreement; and


(iv) Buyer's acquisition and ownership of the
Shares and exercise of control over the Acquired Companies.


(l) "CONTRACT"--any agreement, contract, obligation, promise, or undertaking (whether written or oral and whether express or implied) that is legally binding.


(m) "DAMAGES"--as defined in Section 10.2.


(n) "DISCLOSURE LETTER"--the disclosure letter delivered by Sellers to Buyer concurrently with the execution and delivery of this Agreement.


(o) "EMPLOYMENT AGREEMENTS"--as defined in Section 2.4(a)(iii).


(p) "ENCUMBRANCE"--any charge, claim, community property interest, condition, equitable interest, lien, option, pledge, security interest, right of first refusal, or restriction of any kind, including any restriction on use, voting, transfer, receipt of income, or exercise of any other attribute of ownership.


(q) "ENVIRONMENT"--soil, land surface or subsurface strata, surface waters (including navigable waters, ocean waters, streams, ponds, drainage basins, and wetlands), groundwaters, drinking water supply, stream sediments, ambient air (including indoor air), plant and animal life, and any other environmental medium or natural resource.


(r) "ENVIRONMENTAL, HEALTH, AND SAFETY LIABILITIES"--any cost, damages, expense, liability, obligation, or other responsibility arising from or under Environmental Law or Occupational Safety and Health Law and consisting of or relating to:


(i) any environmental, health, or safety matters
or conditions (including on-site or off-site contamination,
occupational safety and health, and regulation of chemical substances
or products);


(ii) fines, penalties, judgments, awards,
settlements, legal or administrative proceedings, damages, losses,
claims, demands and response, investigative, remedial, or inspection
costs and expenses arising under Environmental Law or Occupational
Safety and Health Law;


(iii) financial responsibility under Environmental
Law or Occupational Safety and Health Law for cleanup costs or
corrective action, including any investigation, cleanup, removal,
containment, or other remediation or response actions ("Cleanup")
required by applicable Environmental Law or Occupational Safety and
Health Law (whether or not such Cleanup has been required or requested
by any Governmental Body or any other Person) and for any natural
resource damages; or


(iv) any other compliance, corrective,
investigative, or remedial measures required under Environmental Law or
Occupational Safety and Health Law.


The terms "removal," "remedial," and "response action," include the types of activities covered by the United States Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. ss. 9601 et seq., as amended ("CERCLA").


(s) "ENVIRONMENTAL LAW"--any Legal Requirement that requires or relates to:


(i) advising appropriate authorities, employees, and the
public of intended or actual releases of pollutants or hazardous
substances or materials, violations of discharge limits, or other
prohibitions and of the commencements of activities, such as resource
extraction or construction, that could have significant impact on the
Environment;


(ii) preventing or reducing to acceptable levels the
release of pollutants or hazardous substances or materials into the
Environment;


(iii) reducing the quantities, preventing the release, or
minimizing the hazardous characteristics of wastes that are generated;


(iv) assuring that products are designed, formulated,
packaged, and used so that they do not present unreasonable risks to
human health or the Environment when used or disposed of;


(v) protecting resources, species, or ecological amenities;


(vi) reducing to acceptable levels the risks inherent in
the transportation of hazardous substances, pollutants, oil, or other
potentially harmful substances;


(vii) cleaning up pollutants that have been released,
preventing the threat of release, or paying the costs of such clean up
or prevention; or


(viii) making responsible parties pay private parties, or
groups of them, for damages done to their health or the Environment, or
permitting self-appointed representatives of the public interest to
recover for injuries done to public assets.


(t) "ERISA"--the Employee Retirement Income Security Act of 1974 or any successor law, and regulations and rules issued pursuant to that Act or any successor law.


(u) "FACILITIES"--any real property, leaseholds, or other interests currently or formerly owned or operated by the Company or currently owned by any Acquired Company, and any buildings, plants, structures, or equipment (including motor vehicles, tank cars, and rolling stock) currently or formerly owned or operated by the Company or currently owned by any Acquired Company.


(v) "GAAP"--generally accepted United States accounting principles, applied on a basis consistent with the basis on which the Balance Sheet and the other financial statements referred to in Section 3.4(b) were prepared.


(w) "GOVERNMENTAL AUTHORIZATION"--any approval, consent, license, permit, waiver, or other authorization issued, granted, given, or otherwise made available by or under the authority of any Governmental Body or pursuant to any Legal Requirement.


(x) "GOVERNMENTAL BODY"--any:


(i) nation, state, county, city, town, village, district,
or other jurisdiction of any nature;


(ii) federal, state, local, municipal, foreign, or other
government;


(iii) governmental or quasi-governmental authority of any
nature (including any governmental agency, branch, department,
official, or entity and any court or other tribunal);


(iv) multi-national organization or body; or


(v) body exercising, or entitled to exercise, any
administrative, executive, judicial, legislative, police, regulatory,
or taxing authority or power of any nature.


(y) "HAZARDOUS ACTIVITY"--the distribution, generation, handling, importing, management, manufacturing, processing, production, refinement, Release, storage, transfer, transportation, treatment, or use (including any withdrawal or other use of groundwater) of Hazardous Materials in, on, under, about, or from the Facilities or any part thereof into the Environment, and any other act, business, operation, or thing that increases the danger, or risk of danger, or poses an unreasonable risk of harm to persons or property on or off the Facilities, or that may affect the value of the Facilities or the Acquired Companies.


(z) "HAZARDOUS MATERIALS"--any waste or other substance that is listed, defined, designated, or classified as, or otherwise determined to be, hazardous, radioactive, or toxic or a pollutant or a contaminant under or pursuant to any Environmental Law, including any admixture or solution thereof, and specifically including petroleum and all derivatives thereof or synthetic substitutes therefor and asbestos or asbestos-containing materials.


(aa) "INTELLECTUAL PROPERTY ASSETS" --as defined in Section 3.22.


(bb) "IRC"--the Internal Revenue Code of 1986 or any successor law, and regulations issued by the IRS pursuant to the Internal Revenue Code or any successor law.


(cc) "IRS"--the United States Internal Revenue Service or any successor agency, and, to the extent relevant, the United States Department of the Treasury.


(dd) "KNOWLEDGE"--an individual will be deemed to have "Knowledge" of a particular fact or other matter if such individual was actually aware of or had reasonable notice of such fact or other matter.


A Person (other than an individual) will be deemed to have "Knowledge" of a particular fact or other matter if any individual who is serving, or who has at any time served, as a director, officer, partner, executor, or trustee of such Person (or in any similar capacity) has, or at any time had, Knowledge of such fact or other matter.


(ee) "LEGAL REQUIREMENT"--any federal, state, local, municipal, foreign, international, multinational, or other administrative order, constitution, law, ordinance, principle of common law, regulation, statute, or treaty.


(ff) "NONSOLICITATION AGREEMENTS"--as defined in Section 2.4(a)(iv).


(gg) "OCCUPATIONAL SAFETY AND HEALTH LAW"--any Legal Requirement designed to provide safe and healthful working conditions and to reduce occupational safety and health hazards, and any program, whether governmental or private (including those promulgated or sponsored by industry associations and insurance companies), designed to provide safe and healthful working conditions.


(hh) "ORDER"--any award, decision, injunction, judgment, order, ruling, subpoena, or verdict entered, issued, made, or rendered by any court, administrative agency, or other Governmental Body or by any arbitrator.


(ii) "ORDINARY COURSE OF BUSINESS"--an action taken by a Person will be deemed to have been taken in the "Ordinary Course of Business" only if:


(i) such action is consistent with the past practices of
such Person and is taken in the ordinary course of the normal
day-to-day operations of such Person;


(ii) such action is not required to be authorized by the
board of directors of such Person (or by any Person or group of Persons
exercising similar authority) and is not required to be specifically
authorized by the parent company (if any) of such Person; and


(iii) such action is similar in nature and magnitude to
actions customarily taken, without any authorization by the board of
directors (or by any Person or group of Persons exercising similar
authority), in the ordinary course of the normal day-to-day operations
of other Persons that are in the same line of business as such Person.


(jj) "ORGANIZATIONAL DOCUMENTS"--(a) the certificate of incorporation and the bylaws of a corporation; (b) the partnership agreement and any statement of partnership of a general partnership; (c) the limited partnership agreement and the certificate of limited partnership of a limited partnership; (d) any charter or similar document adopted or filed in connection with the creation, formation, or organization of a Person; (e) the Articles of Organization and Operating Agreement for a Limited Liability Company; and (f) any amendment to any of the foregoing.


(kk) "PERSON"--any individual, corporation (including any non-profit corporation), general or limited partnership, limited liability company, joint venture, estate, trust, association, organization, labor union, or other entity or Governmental Body.


(ll) "PLAN"--as defined in Section 3.13.


(mm) "PROCEEDING"--any action, arbitration, audit, hearing, investigation, litigation, or suit (whether civil, criminal, administrative, investigative, or informal) commenced, brought, conducted, or heard by or before, or otherwise involving, any Governmental Body or arbitrator.


(nn) "RELATED PERSON"--with respect to a particular individual:


(i) each other member of such individual's Family;


(ii) any Person that is directly or indirectly controlled
by such individual or one or more members of such individual's Family;


(iii) any Person in which such individual or members of
such individual's Family hold (individually or in the aggregate) a
Material Interest; and


(iv) any Person with respect to which such individual or
one or more members of such individual's Family serves as a director,
officer, partner, executor, or trustee (or in a similar capacity).


With respect to a specified Person other than an individual:


(a) any Person that directly or indirectly controls, is directly or indirectly controlled by, or is directly or indirectly under common control with such specified Person;


(b) any Person that holds a Material Interest in such specified Person;


(c) each Person that serves as a director, officer, partner, executor, or trustee of such specified Person (or in a similar capacity);


(d) any Person in which such specified Person holds a Material Interest;


(e) any Person with respect to which such specified Person serves as a general partner or a trustee (or in a similar capacity); and


(f) any Related Person of any individual described in clause (b) or (c).


For purposes of this definition, (a) the "Family" of an individual includes (i) the individual, (ii) the individual's spouse and former spouses, (iii) any other natural person who is related to the individual or the individual's spouse within the second degree, and (iv) any other natural person who resides with such individual, and (b) "Material Interest" means direct or indirect beneficial ownership (as defined in Rule 13d-3 under the Securities Exchange Act of 1934) of voting securities or other voting interests representing at least twenty percent (20%) of the outstanding voting power of a Person or equity securities or other equity interests representing at least twenty percent (20%) of the outstanding equity securities or equity interests in a Person.


(oo) "RELEASE"--any spilling, leaking, emitting, discharging, depositing, escaping, leaching, dumping, or other releasing into the Environment, whether intentional or unintentional.


(pp) "REPRESENTATIVE"--with respect to a particular Person, any director, officer, employee, agent, consultant, advisor, or other representative of such Person, including legal counsel, accountants, and financial advisors.


(qq) "SECURITIES ACT"--the Securities Act of 1933 or any successor law, and regulations and rules issued pursuant to that Act or any successor law.


(rr) "SELLERS"--as defined in the first paragraph of this Agreement.


(ss) "SELLERS' RELEASES"--as defined in Section 2.4. (a)


(tt) "SHARES"--as defined in the Recitals of this Agreement.


(uu) "STOCK PURCHASE BALANCE SHEET" - as defined in Section 2.5.


(vv) "SUBSIDIARY"--with respect to any Person (the "Owner"), any corporation or other Person of which securities or other interests having the power to elect a majority of that corporation's or other Person's board of directors or similar governing body, or otherwise having the power to direct the business and policies of that corporation or other Person (other than securities or other interests having such power only upon the happening of a contingency that has not occurred) are held by the Owner or one or more of its Subsidiaries; when used without reference to a particular Person, "Subsidiary" means a Subsidiary of the Company. The Subsidiaries of the Company are Tappan & Sedlak, Inc. and Carpenter & Clark, Inc.


(ww) "TAX RETURN"--any return (including any information return), report, statement, schedule, notice, form, or other document or information filed with or submitted to, or required to be filed with or submitted to, any Governmental Body in connection with the determination, assessment, collection, or payment of any Tax or in connection with the administration, implementation, or enforcement of or compliance with any Legal Requirement relating to any Tax.


(xx) "THREAT OF RELEASE"--a substantial likelihood of a Release that may require action in order to prevent or mitigate damage to the Environment that may result from such Release.


(yy) "THREATENED"--a claim, Proceeding, dispute, action, or other matter will be deemed to have been "Threatened" if any demand or statement has been made (orally or in writing) or any notice has been given (orally or in writing), or if any other event has occurred or any other circumstances exist, that would lead a prudent Person to conclude that such a claim, Proceeding, dispute, action, or other matter is likely to be asserted, commenced, taken, or otherwise pursued in the future.


2. SALE AND TRANSFER OF SHARES; CLOSING


2.1 SHARES.


Subject to the terms and conditions of this Agreement, at the Closing, Sellers will sell and transfer the Shares to Buyer, and Buyer will purchase the Shares from Sellers.


2.2 PURCHASE PRICE


(a) The purchase price (the "Purchase Price") for the Shares will be One Million Six Hundred Twenty-One Thousand, Three Hundred Ninety-Five Dollars ($1,621,395.00). The Purchase Price will be allocated among the Sellers in proportion to their relative ownership of the Shares by bank cashiers check paid at Closing.


(b) (i) The purchase price for the Shares shall be
conditionally increased by the sum of Seven Hundred Seventy Thousand
Dollars ($770,000.00), paid in three (3) annual payments, by bank
cashiers check, in the amounts of Two Hundred Seventy Thousand Dollars
($270,000.00), Two Hundred Fifty Thousand Dollars ($250,000.00) and Two
Hundred Fifty Thousand Dollars ($250,000.00). These payments will be
made within sixty (60) days following the first three (3) anniversaries
of the Closing Date and are contingent upon the Company satisfying
annual EBITDA targets (which shall be calculated on a rolling twelve
(12) month basis from the anniversary of the Effective Date). These
targets and the related calculations are shown in Exhibit 2.2(b). These
conditional payments shall be allocated proportionately to the Sellers
in proportion to their relative ownership of Shares.


(ii) EBITDA shall be calculated in a manner consistent
with Exhibit 2.2(b) with the further provisos that (A) payments on any
liability included in the Stock Purchase Agreement Balance Sheet shall
not be a deduction from earnings, (B) earnings shall not be charged
with or reduced by any "home office", Buyer, parent or affiliate
administrative or other similar fee, (C) if any services or goods are
supplied to the Company by or through the Buyer or any affiliate of the
Buyer, earnings shall not be charged with or reduced by an amount equal
to the lesser of the contractual charge to the Company for the cost of
such goods or services which the Company would pay if the Company
acquired such goods or services from an independent third party vendor.


(iii) Concurrently with the making of the payments
described in (i) above, the Buyer shall deliver to Rowe the EBITDA
calculations on which the payment involved is based, together with
reasonable supporting documentation. If within thirty (30) days of the
date Rowe receives such payment, calculation and supporting
documentation, Rowe believes that the calculation contains a material
error (materiality for this purpose being deemed to be a change of more
than five percent (5%) in EBITDA, Rowe shall notify the buyer and
provide the documentation that serves as the basis for Rowe's belief
that the EBITDA calculation is incorrect. The Buyer shall then have
thirty (30) days from the receipt of the documentation from Rowe to
object to Rowe's calculation. If the Buyer agrees with Rowe's
calculation or if no objection is made by the Buyer then the adjustment
shall be made to EBITDA, and if the EBITDA adjustment requires a
further payment under this Agreement, such further payment shall be
made within ten (10) days after the end of such thirty (30) day period.


If the Buyer does provide notice of its objection to Rowe within the thirty (30) day period and Rowe disagrees, then the issues in dispute will be submitted to Dermody, Burke & Brown, certified public accountants, (the "Accountants"), for final resolution. Each party will provide to the Accountants such documents and information relative to the disputed issues as the Accountants may request and as are available to that party and each party shall be afforded the opportunity to present to the Accountants any material relating to the EBITDA determination and to discuss the same with the accountants. The determination of the Accountants on the issues involved will be binding and conclusive on the parties and Rowe and the Buyer will each pay fifty percent (50%) of the fees of the Accountants for such determination. Any change in the amount of the payment required to be made under this Section 2.2 shall be made within ten (10) days of the final determination by the Accountants.


2.3 CLOSING


The purchase and sale (the "Closing") provided for in this Agreement will take place at the offices of Buyer's counsel at 900 One Lincoln Center, Syracuse, New York 13202, on March 4, 2005 at 10:30 a.m. (local time), or at such other time and place as the parties may agree. The Closing shall be effective as of March 1, 2005. Subject to the provisions of Section 9, failure to consummate the purchase and sale provided for in this Agreement on the date and time and at the place determined pursuant to this Section 2.3 will not result in the termination of this Agreement and will not relieve any party of any obligation under this Agreement.


2.4 CLOSING OBLIGATIONS


At the Closing:


(a) Sellers will deliver to Buyer:


(i) certificates representing the Shares, duly
endorsed (or accompanied by duly executed stock powers), for transfer
to Buyer;


(ii) releases in the form of Exhibit 2.4(a)(ii)
executed by Sellers (collectively, "Sellers' Releases");


(iii) employment agreements in the form of Exhibit
2.4(a)(iii), executed by Sellers (collectively, "Employment
Agreements");


(iv) confidentiality and nonsolicitation
agreements in the form of Exhibit 2.4(a)(iv), executed by all of the
non-shareholder employees of the Company (collec ...