APPENDIX TO ITEM 6
SETTLEMENT AND STANDSTILL AGREEMENT
THIS AGREEMENT, dated this 11th day of August, 1998 (the "Effective
Date"), by and between Ambanc Holding Co., Inc. ("Ambanc"), a Delaware
corporation, AFSALA Bancorp, Inc. ("AFSALA"), a Delaware corporation (together
with Ambanc, the "Companies") and the individuals and entities identified on
Exhibit A attached hereto (collectively, the "Group;" individually, a "Group
Member").
RECITALS
WHEREAS, on June 12, 1998 Ambanc held its reconvened annual meeting of
shareholders ("1998 Annual Meeting"); and
WHEREAS, Ambanc and AFSALA have entered into a Reorganization and
Merger Agreement dated April 23, 1998 (the "Merger Agreement") whereby AFSALA
would merge with and into Ambanc (the "Merger"); and
WHEREAS, the Group has filed a lawsuit captioned Xxxxxxx Xxxxxxxx v
Ambanc Holding Co., Inc., 3:98-CV-0816 in the United States District Court for
the Middle District of Pennsylvania, objecting to certain actions taken by
Ambanc, including the disclosure contained in the proxy statement and
supplemental proxy statement for the 1998 Annual Meeting; and
WHEREAS, the Group has filed a lawsuit captioned Xxxxxxx Xxxxxxxx v.
Ambanc holding Co., Inc., et al in the Philadelphia County Court of Common
Pleas, Trial Division, alleging certain defamation claims against Ambanc
(together with the litigation described above, the "Litigation"); and
WHEREAS, the Companies are in the process of soliciting proxies from
their respective shareholders to vote on the adoption of the Merger Agreement;
and
WHEREAS, the Group has indicated its opposition to the Merger and its
intention to oppose the adoption of the Merger Agreement; and
WHEREAS, the Companies have incurred, and are expected to continue to
incur, significant costs and expenses in connection with the Group's litigation
against Ambanc and opposition to the Merger; and
WHEREAS, the Group has incurred, and is expected to continue to incur,
significant costs and expenses in connection with the Group's litigation against
Ambanc and opposition to the Merger; and
WHEREAS, Ambanc desires to avoid the continuing costs and expenses of
its litigation with the Group and desires to obtain the approval of its
shareholders and the AFSALA shareholders for the adoption of the Merger
Agreement with the support of the Group; and
WHEREAS, AFSALA desires to avoid the continuing costs, expenses and
uncertainty of a proxy solicitation process which is opposed by the Group, as
well as any future litigation that may be filed against it by the Group; and
WHEREAS, the Group desires to be reimbursed by the Companies for a
portion of the costs and expenses it has incurred in connection with its
litigation with Ambanc and its opposition to the Merger Agreement; and
WHEREAS, the Group, in exchange for reimbursement by the Companies of a
portion of such expenses, the dismissal of its lawsuits and the taking by the
Companies of the other actions contemplated by this Agreement, is willing to
enter into this Agreement; and
WHEREAS, the Companies and the Group have agreed that it is in their
mutual interests to enter into this Agreement as hereinafter described.
NOW THEREFORE, in consideration of the Recitals and the
representations, warranties, covenants and agreements contained herein and other
good and valuable consideration, the parties hereto mutually agree as follows:
I. COVENANTS
1. On the Effective Date, the Group shall take all necessary steps to
dismiss, with prejudice, the Litigation. The Group shall not initiate, join or
encourage others to initiate or join any litigation against the Companies, their
directors, officers, employees, agents, representatives or affiliates arising
out of a) the 1998 Annual Meeting or the disclosure made pursuant to the Ambanc
proxy statement, supplemental proxy statement or otherwise which constituted
proxy soliciting material for that meeting; b) the proposed Merger, including
the proxy materials utilized by the Companies in connection with the proxy
solicitation in connection with the Merger; or c) any statements, oral or
written, by the Companies, their directors, officers, employees, agents,
representatives or affiliates regarding the Group or any of its members at any
time up to and including the Effective Date.
Through January 1, 2000, the Group shall not directly or indirectly
participate or act in concert with any affiliate, group or other person to
derivatively on behalf of the Companies, except for testimony which may be
required by law, and except as may occur in the ordinary course of business with
respect to any loan, deposit or other transaction where the Group Member or an
affiliate is dealing with the Companies as a customer.
2. On the Effective Date, the Group shall issue the press release
attached hereto as Exhibit B withdrawing its opposition to the Merger and
stating it fully supports the Merger.
3. Following the Effective Date, all statements, public or private, by
the Group shall be consistent with the press release attached as Exhibit B
hereto.
4. The Group shall vote all shares of stock of Ambanc and AFSALA owned
or controlled by it, now or after the Effective Date, in favor of the adoption
of the Merger Agreement. The Group, prior to the vote on the Merger by
shareholders of both companies, shall not transfer voting control of the shares
of Ambanc and AFSALA common stock currently owned or hereafter acquired by it
other than through a bona fide sale of 100% of its beneficial ownership interest
in the common stock.
5. At the annual meeting of stockholders of Ambanc to be held in 1999,
the Group shall vote any shares of Ambanc common stock then owned or controlled
by it as recommended by the board of directors of Ambanc on the election of
directors and the ratification of auditors. The Group will not seek to introduce
or introduce, directly or indirectly, any shareholder proposal at such meeting,
nor will the Group solicit proxies in opposition to or otherwise oppose any
management proposal or nominee at such meeting. The Group will not join with or
assist any person, directly or indirectly, in supporting or endorsing any
proposal submitted to a vote of Ambanc shareholders at the annual meeting of
stockholders to be held in 1999 that is opposed by Ambanc's board of directors.
6. The Group shall not provide, nor shall a Group Member act in concert
with any person to provide, any funds, services or facilities to any person in
support of any activity by such person that would be a violation of their
covenants under the provisions of paragraphs 1 through 5 above if undertaken by
any of them.
7. On the Effective Date Ambanc, with the written consent of AFSALA,
shall hire an investment banker to seek ways to maximize shareholder value,
including the possible merger of the combined Companies with a third party. The
Companies shall issue the press release attached hereto as Exhibit C on the
Effective Date announcing the same. A copy of the engagement letter with
Ambanc's investment banker has been provided to the Group prior to the Effective
Date.
8. If Ambanc has not entered into a merger or acquisition agreement
with a third party acquiror on or before April 1, 1999, or such a merger or
acquisition is not thereafter consummated, the Ambanc board of directors shall
appoint two persons from a list of at least four persons selected by the Group
to serve three year terms as Ambanc directors. The Ambanc board of directors
shall take all steps necessary to nominate or appoint such persons, including
expanding the number of members on the board of directors, if necessary.
9. On the Effective Date, the Companies agree to pay to the Group, or
its designee, $80,000 representing reimbursement of a portion of the Group's
expenses incurred in connection with these matters.
10. The Companies, the individual directors of Ambanc, the Chief
Financial Officer of Ambanc and the Chief Executive Officer of AFSALA shall not
initiate, join or encourage others to initiate or join any litigation against
the Group arising out of any actions taken or statements, oral or written,
made by the Group or any Group Member at any time up to and including
the Effective Date, nor shall they make any statements regarding the Group
or any Group Member inconsistent with the press release attached hereto as
Exhibit C.
II. REPRESENTATIONS AND WARRANTIES OF THE GROUP MEMBERS
The Group Members hereby represent and warrant to the Companies as
follows:
1. Exhibit A sets forth the number of shares of the capital stock of
the Companies which are beneficially owned by each Group Member on the date
hereof.
2. The Group Members have fully disclosed in Exhibit A the entire
number of shares of the capital stock of the Companies in which they have a
beneficial ownership and none of the Group Members has a right to vote any
shares of the capital stock of the Companies other than those in which such
Group Member has a beneficial ownership interest as disclosed in Exhibit A.
3. The Group Members have full and complete authority to enter into
this Agreement and to bind the entire number of shares of the capital stock of
the Companies in which they have a beneficial ownership interest to the terms of
this Agreement and this Agreement constitutes a valid and binding agreement of
the Group and each Group Member.
4. There are no arrangements, agreements or understandings between the
Group (or any Group Member) and the Companies with regard to the subject matter
of this Agreement other than as set forth in this Agreement.
III. REPRESENTATIONS AND WARRANTIES OF AMBANC
Ambanc hereby represents and warrants to the Group and to each Group
member as follows:
1. Ambanc has full power and authority to enter into and perform its
obligations under this Agreement, and the execution and delivery of this
Agreement by Ambanc regarding the consummation of the transactions contemplated
hereby has been duly authorized by the Board of Directors of Ambanc and requires
no other Board of Directors or stockholder action. This Agreement constitutes a
valid and binding obligation of Ambanc and the performance of its terms shall
not constitute a violation of its certificate of incorporation or by-laws.
2. There are no arrangements, agreements or understandings between the
Group (or any Group Member) and Ambanc other than as set forth in this
Agreement.
IV. REPRESENTATIONS AND WARRANTIES OF AFSALA
AFSALA hereby represents and warrants to the Group and to each Group
member as follows:
1. AFSALA has full power and authority to enter into and perform its
obligations under this Agreement, and the execution and delivery of this
Agreement by AFSALA regarding the consummation of the transactions contemplated
hereby has been duly authorized by the Board of Directors of AFSALA and requires
no other Board of Directors or stockholder action. This Agreement constitutes a
valid and binding obligation of AFSALA and the performance of its terms shall
not constitute a violation of its certificate of incorporation or by-laws.
2. There are no arrangements, agreements or understandings between the
Group (or any Group Member) and AFSALA other than as set forth in this
Agreement.
V. GENERAL
1. The Companies and the Group acknowledge and agree that a breach or
threatened breach by any party may give rise to irreparable injury inadequately
compensable in damages, and accordingly each party shall be entitled to
injunctive relief to prevent a breach of the provisions hereof and to enforce
having jurisdiction, in addition to any other remedy to which such aggrieved
party may be entitled at law or in equity. In the event any party institutes any
legal action to enforce such party's rights under, or recover damages for breach
of, this Agreement, the prevailing party or parties in such action shall be
entitled to recover from the other party or parties all costs and expenses,
including but not limited to reasonable attorneys' fees, court costs, witness
fees, disbursements and any other expenses of litigation or negotiation,
incurred by such prevailing party or parties. Each Group Member shall have the
right of contribution from the other Group Members for any damages paid or
expenses incurred (including reasonable attorneys' fees) pursuant to this
Article V.
2. This Agreement shall remain in effect until June 30, 2000 or until
such earlier time as Ambanc shall cease its separate corporate existence by
reason of merger, sale of assets, liquidation, exchange of shares, or otherwise.
3. Any press release or other publicity with respect to this Agreement,
or any provisions thereof, shall be prepared and issued by the Companies ,
except for Exhibit B attached hereto. During the term of this Agreement, no
Group Member shall cause, publicly discuss, cooperate in the preparation of or
otherwise aid in any press release or other publicity concerning the Companies
or their operations or the Merger to be created, issued or circulated without
prior approval of the Companies' management, except as may be consistent with
Exhibit B and the intent of this Agreement.
4. All notice requirements and other communications shall be deemed
given when delivered or on the third succeeding business day after being mailed
by registered or certified mail, return receipt requested, addressed to the
Group and the Companies below:
Group: Xx. Xxxxxxx Xxxxxxxx
c/o Jewelcor Companies
000 X. Xxxxxx-Xxxxx Xxxxxxxxx
Xxxxxx-Xxxxx, Xxxxxxxxxxxx 00000
With a copy to: Xxxxxxx Xxxxxxxxx, Esquire
Jewelcor Companies
000 X. Xxxxxx-Xxxxx Xxxxxxxxx
Xxxxxx-Xxxxx, Xxxxxxxxxxxx 00000
Ambanc: Xxxxxx X. Xxxxxxx, President
Ambanc Holding Co., Inc.
00 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxx 00000-0000
With a copy to: Xxxxx X. Xxxxxxxxx, P.C.
Silver, Xxxxxxxx & Xxxx, L.L.P.
0000 Xxx Xxxx Xxxxxx, X.X.
Seventh Floor, East Tower
Washington, D.C. 20005
AFSALA: Xxxx X. Xxxxxxx, President
AFSALA Bancorp, Inc.
000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxx 00000
With a copy to: Xxxx X. Spidi, Esquire
Xxxxxxx, Spidi, Sloane & Xxxxx, P.C.
0000 X Xxxxxx, X.X.
Xxxxx 000 Xxxx
Xxxxxxxxxx, X.X. 00000
5. Delaware law, unless applicable federal law or regulation is deemed
controlling, shall govern the construction and enforceability of this Agreement.
Any and all actions concerning any dispute arising hereunder shall be filed and
maintained in a state or federal court, as appropriate, sitting in the State of
Delaware.
6. If any term, provision, covenant or restriction of this Agreement is
held by the OTS or a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
7. This Agreement shall be binding upon and shall inure to the benefit
of and be enforceable by the heirs, administrators, successors and assigns and
transferees by operation of law of the parties. Except as otherwise expressly
provided for herein, this Agreement shall not inure to the benefit of, be
enforceable by or create any right or cause of action in any person, including
any shareowner of the Companies, other than the parties hereto.
8. All representations, warranties, covenants and agreements made
herein shall survive the execution and delivery of this Agreement.
9. This Agreement may not be modified, amended, altered or supplemented
except upon the execution and delivery of a written agreement executed by all of
the parties hereto.
10. This Agreement may be executed in counterparts, each of which shall
be an original, but each of which together shall constitute one and the same
agreement.
11. Each party agrees to execute any and all documents, and to do and
perform any and all acts and things necessary or proper to effectuate or further
evidence the terms and provisions of this Agreement.
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by duly authorized officers or members of the undersigned as of the day and year
first above written.
AMBANC HOLDING CO, INC.
a Delaware corporation
By:/s/ Xxxxxx X. Xxxxxxx
------------------------------------------
Xxxxxx X. Xxxxxxx, President
DIRECTORS AND OFFICERS OF AMBANC
/s/ Xxxxxx X. Xxxxxxx
------------------------------------------
Xxxxxx X. Xxxxxxx
/s/ Xxxxxx X. XxXxx
------------------------------------------
Xxxxxx X. XxXxx, Xx.
/s/ Xxxx X. Xxxx
------------------------------------------
Xxxx X. Xxxx
/s/ Xxxxxx X. Xxxxxxx
------------------------------------------
Xxxxxx X. Xxxxxxx
/s/ Xxxxxxx X. Xxxxx, Xx.
------------------------------------------
Xxxxxxx X. Xxxxx, Xx.
/s/ Xxxx X. Xxxxx
------------------------------------------
Xxxx X. Xxxxx
/s/ Xxxxxx X. Xxxxxxx, DDS
------------------------------------------
Xxxxxx X. Xxxxxxx, DDS
/s/ Xxxx X. Xxxxxxx, Xx.
------------------------------------------
Xxxx X. Xxxxxxx, Xx.
/s/ Xxxxxxx X. Xxxxxxxx
Xxxxxxx X. Xxxxxxxx
/s/ Xxxxxx X. Xxxxxxxx
------------------------------------------
Xxxxxx X. Xxxxxxxx
/s/ Xxxxxx X. Xxxxxx, Xx.
----------------------------------------
Xxxxxx X. Xxxxxx, Xx
Chief Financial Officer
AFSALA BANCORP, INC.
a Delaware corporation
By:/s/ Xxxx X. Xxxxxxx
-----------------------------------------
Xxxx X. Xxxxxxx, President
/s/ Xxxx X. Xxxxxxx
-----------------------------------------
Xxxx X. Xxxxxxx
Chief Executive Officer of AFSALA
GROUP MEMBERS:
/s/ Xxxxxxx Xxxxxxxx
------------------------------------------
Xxxxxxx Xxxxxxxx
/s/ Xxxxxx Xxxxxxxx
------------------------------------------
Xxxxxx Xxxxxxxx
/s/ Xxxxxxx Xxxxxxxx
------------------------------------------
Jewelcor Management, Inc.
By: Xxxxxxx Xxxxxxxx, President
/s/ Xxxxxxx Xxxxxxxx
------------------------------------------
S.H. Holdings, Inc.
By: Xxxxxxx Xxxxxxxx, President
/s/ Xxxxxxx Xxxxxxxx
------------------------------------------
Jewelcor Inc.
By: Xxxxxxx Xxxxxxxx, President
/s/ Xxxxxxx Xxxxxxxx Xxxxxx
------------------------------------------
Xxxxxxx Xxxxxxxx Xxxxxx
/s/ Xxxxxx Xxxxxxxx
------------------------------------------
Custodial Account F/B/O Xxxxxxx Xxxxxxxx Xxxxxx
/s/ Xxxxxx Xxxxxxxx
------------------------------------------
Custodial Account F/B/O Xxxxxxx Xxxxxxxx
/s/ Xxxxxxx Xxxxxxxx
------------------------------------------
Custodial Account F/B/O Xxxxxx Xxxxxx
/s/ Xxxxxxxx X. Xxxxx, Trustee
------------------------------------------
Trust F/B/O Xxxxxx Xxxxxxxx
EXHIBIT A
AFSALA BANCORP, INC. AMBANC HOLDING CO.,INC.
SHARES OF CAPITAL STOCK SHARES OF CAPITAL STOCK
OWNERNSHIP BENEFICIALLY OWNED BENEFICALLY OWNED
XXXXXXX XXXXXXXX 250 200
XXXXXX XXXXXXXX 0 0
XXXXXXX XXXXXXXX XXXXXX 500 1000
CUSTODIAL ACCOUNT
F/B/O XXXXXXX XXXXXXXX XXXXXX 350 1000
CUSTODIAL ACCOUNT
F/B/O XXXXXXX XXXXXXXX 500 0
CUSTODIAL ACCOUNT
F/B/O XXXXXX XXXXXX 150 0
TRUST F/B/O XXXXXX XXXXXXXX 150 0
JEWELCOR MANAGEMENT, INC. 122,000 159,200
S.H. HOLDINGS, INC. 0 0
JEWELCOR, INC. 0 0
______________ ____________
TOTAL 123,900 164,400
EXHIBIT B
XXXXXXXX REACHES SETTLEMENT WITH AMBANC AND AFSALA
Xxxxxx-Xxxxx, PA, August 12, 1998.....Xxxxxxx Xxxxxxxx announced today that an
agreement has been reached with Ambanc Holding Co., Inc. (NASDAQ - AHCI) and
AFSALA Bancorp, Inc. (NASDAQ - AFED), both located in Amsterdam, New York.
Xx. Xxxxxxxx, a large shareholder in both financial institutions has agreed to
drop all litigation against Ambanc, and fully support and vote for the pending
merger of Ambanc and AFSALA. He has further agreed to vote for Ambanc's
nominees for Directors.
In return, Ambanc has agreed to retain Sandler, X'Xxxxx & Partners,L.P. to seek
ways to maximize shareholder value following completion of the merger,including
the possible merger of the combined companies with a third party acquiror. If
Ambanc has not entered into such an agreement on or before April 1, 1999, or
such a merger or acquisition of the consolidated banks is not consummated,
Ambanc has agreed to appoint to its Board of Directors two persons selected by
Xx. Xxxxxxxx. Furthermore, Ambanc and AFSALA have agreed to reimburse Xx.
Xxxxxxxx $80,000 for a portion of his expenses incurred in the litigation with
Ambanc and his actions with respect to the merger.
Xx. Xxxxxxxx applauded the management of both Ambanc and AFSALA, and
particularly the new president of the combined companies, Xxxx Xxxxxxx.
Xx. Xxxxxxxx said, "Our ability to reconcile our differences will be meaningful
for all shareholders of both banks. I concur with Xxxx Xxxxxxx that the focus
should now be on achieving a cost savings which will benefit all shareholders.
Notwithstanding the fact that there were differences of opinion among all
parties, I am delighted with the decision that Ambanc and AFSALA made. I urge
all shareholders to vote favorably for this important matter."
EXHIBIT C
AMBANC AND AFSALA ANNOUNCE SETTLEMENT WITH XXXXXXXX
Amsterdam, New York. Ambanc Holding Co., Inc. (Nasdaq AHCI) and AFSALA
Bancorp, Inc. (Nasdaq AFED) announced today that they have reached an agreement
with Xxxxxxx Xxxxxxxx, a stockholder of both companies, regarding the pending
merger of the two companies.
Xx. Xxxxxxxx has agreed to drop all litigation against Ambanc, refrain
from any future litigation against both companies until at least January 1,
2000, fully support and vote for the pending merger of Ambanc and AFSALA and
vote for Ambanc's nominees for director and avoid becoming involved with any
other hostile action at the annual meeting of Ambanc stockholders to be held in
1999.
In return, Ambanc has agreed to retain Sandler, X'Xxxxx & Partners,
L.P., its regular investment banker, to seek ways to maximize shareholder value
following completion of the merger, including the possible merger of the
combined companies with a third party. If Ambanc has not entered into a merger
or acquisition agreement with a third party acquiror on or before April 1, 1999,
or a merger or acquisition is not consummated, Ambanc has agreed to appoint to
the Ambanc board two persons from a list of at least four persons selected by
Xx. Xxxxxxxx. Finally, Ambanc and AFSALA have agreed to reimburse Xx. Xxxxxxxx
$80,000 for a portion of his expenses incurred in the litigation with Ambanc and
his actions with respect to the merger.
Xxxxxx X. Xxxxxxx, acting President of Ambanc, stated: "We are very
pleased to have this expensive litigation behind us and to be working with Xx.
Xxxxxxxx in a cooperative fashion for the benefit of all the stockholders. We
believe that working together, and with the anticipated benefits of AFSALA
becoming part of our company and bringing with it superb management talent in
Xxxx Xxxxxxx, we can maximize the value of our shareholders' investment."
Xxxx X. Xxxxxxx, President of AFSALA, stated: "With this action today
we can focus on achieving the synergies and cost savings that make our pending
merger with Ambanc so attractive. Our focus will be on achieving the best
possible results for the shareholders of the combined institutions and we look
forward to working with Xx. Xxxxxxxx in a very constructive and positive way."
The special meetings of the shareholders of Ambanc and AFSALA will be
held on September 1 and September 3, respectively. Closing is expected to occur
early in the fourth quarter.
