PAGE
EXHIBIT 2
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REORGANIZATION AND MERGER AGREEMENT
By and Among
AMBANC HOLDING CO., INC.
AND
AMSTERDAM SAVINGS BANK, FSB
And
AFSALA BANCORP, INC.
AND
AMSTERDAM FEDERAL BANK
Dated as of April 23, 1998
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TABLE OF CONTENTS
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ARTICLE I THE MERGER AND RELATED MATTERS . . . . . . . 2
1.1 Merger: Surviving Institution . . . . . . . . 2
1.2 Effective Time of the Merger. . . . . . . . . 2
1.3 Conversion of Shares. . . . . . . . . . . . . 3
1.4 Surviving Corporation in the Acquisition Merger3
1.5 Authorization for Issuance of Ambanc Common Stock;
Exchange of Certificates. . . . . . . . . . . 5
1.6 No Fractional Shares. . . . . . . . . . . . . 6
1.7 Shareholders' Meeting . . . . . . . . . . . . 7
1.8 Company Stock Options . . . . . . . . . . . . 7
1.9 Registration Statement; Prospectus/Proxy Statement7
1.10 Cooperation; Regulatory Approvals . . . . . . 8
1.11 Closing . . . . . . . . . . . . . . . . . . . 9
1.12 Closing of Transfer Books . . . . . . . . . . 9
1.13 Bank Merger . . . . . . . . . . . . . . . . . 9
1.14 Option Agreement. . . . . . . . . . . . . . .10
ARTICLE II REPRESENTATIONS AND WARRANTIES OF COMPANY
AND SAVINGS. . . . . . . . . . . . . . . . . .10
2.1 Organization, Good Standing, Authority, Insurance, Etc10
2.2 Capitalization . . . . . . . . . . . . . . . .11
2.3 Ownership of Subsidiaries. . . . . . . . . . .11
2.4 Financial Statements and Reports . . . . . . .12
2.5 Absence of Changes . . . . . . . . . . . . . .13
2.6 Prospectus/Proxy Statement . . . . . . . . . .13
2.7 No Broker's or Finder's Fees . . . . . . . . .13
2.8 Litigation and Other Proceedings . . . . . . .14
2.9 Compliance with Law. . . . . . . . . . . . . .14
2.10 Corporate Actions. . . . . . . . . . . . . . .14
2.11 Authority. . . . . . . . . . . . . . . . . . .15
2.12 Employment Arrangements. . . . . . . . . . . .15
2.13 Employee Benefits. . . . . . . . . . . . . . .16
2.14 Information Furnished. . . . . . . . . . . . .17
2.15 Property and Assets. . . . . . . . . . . . . .18
2.16 Agreements and Instruments . . . . . . . . . .18
2.17 Material Contract Defaults . . . . . . . . . .18
2.18 Tax Matters. . . . . . . . . . . . . . . . . .19
2.19 Environmental Matters. . . . . . . . . . . . .19
2.20 Loan Portfolio: Portfolio Management. . . . .20
2.21 Real Estate Loans and Investments. . . . . . .20
2.22 Derivatives Contracts. . . . . . . . . . . . .20
2.23 Insurance. . . . . . . . . . . . . . . . . . .21
ARTICLE III REPRESENTATIONS AND WARRANTIES OF AMBANC AND
THE BANK . . . . . . . . . . . . . . . . . . .21
3.1 Organization, Good Standing, Authority, Insurance, Etc21
3.2 Capitalization . . . . . . . . . . . . . . . .22
3.3 Ownership of Subsidiaries. . . . . . . . . . .22
3.4 Financial Statements and Reports . . . . . . .22
3.5 Absence of Changes . . . . . . . . . . . . . .23
3.6 Prospectus/Proxy Statement . . . . . . . . . .24
3.7 No Broker's or Finder's Fees . . . . . . . . .24
3.8 Compliance With Law. . . . . . . . . . . . . .24
3.9 Corporate Actions. . . . . . . . . . . . . . .25
3.10 Authority. . . . . . . . . . . . . . . . . . .25
3.11 Information Furnished. . . . . . . . . . . . .25
3.12 Litigation and Other Proceedings . . . . . . .26
3.13 Agreements and Instruments . . . . . . . . . .26
3.14 Tax Matters. . . . . . . . . . . . . . . . . .26
3.15 Property and Assets. . . . . . . . . . . . . .26
3.16 Derivatives Contracts. . . . . . . . . . . . .26
3.17 Insurance. . . . . . . . . . . . . . . . . . .27
3.18 Employee Benefits. . . . . . . . . . . . . . .27
3.19 Material Contract Defaults . . . . . . . . . .28
3.20 Tax Matters. . . . . . . . . . . . . . . . . .28
3.21 Environmental Matters. . . . . . . . . . . . .28
3.22 Loan Portfolio: Portfolio Management. . . . .28
ARTICLE IV COVENANTS . . . . . . . . . . . . . . . . . . .29
4.1 Investigations; Access and Copies . . . . . . .29
4.2 Conduct of Business Prior to Closing. . . . . .29
4.3 No Solicitation . . . . . . . . . . . . . . . .31
4.4 Shareholder Approval. . . . . . . . . . . . . .31
4.5 Filing of Holding Company and Merger Applications32
4.6 Consents. . . . . . . . . . . . . . . . . . . .32
4.7 Resale Letter Agreements. . . . . . . . . . . .32
4.8 Publicity . . . . . . . . . . . . . . . . . . .32
4.9 Cooperation Generally . . . . . . . . . . . . .32
4.10 Additional Financial Statements and Reports . .32
4.11 Stock Listing . . . . . . . . . . . . . . . . .33
4.12 Allowance for Loan and Real Estate Owned Losses33
4.13 D&O Indemnification and Insurance . . . . . . .33
4.14 Tax Treatment . . . . . . . . . . . . . . . . .34
4.15 Update Disclosure . . . . . . . . . . . . . . .34
4.16 Company's Employee Plans and Benefit Arrangements34
4.17 Amendment of Savings' Federal Stock Charter . .35
4.18 Environmental Reports . . . . . . . . . . . . .35
4.19 Advisory Board of Directors . . . . . . . . . .36
4.20 Appointment of President and CEO. . . . . . . .36
4.21 Approvals and Registration. . . . . . . . . . .36
4.22 Notice of Adverse Changes . . . . . . . . . . .37
4.23 Further Actions . . . . . . . . . . . . . . . .37
4.24 Further Transactions. . . . . . . . . . . . . .38
ARTICLE V CONDITIONS TO THE MERGER; TERMINATION OF AGREEMENT38
5.1 General Conditions. . . . . . . . . . . . . . .38
5.2 Conditions to Obligations of Ambanc and Bank. .39
5.3 Conditions to Obligations of Company and Savings41
5.4 Termination of Agreement and Abandonment of Merger43
ARTICLE VI TERMINATION OF OBLIGATIONS; PAYMENT OF EXPENSES46
6.1 Termination; Lack of Survival of Representations
and Warranties. . . . . . . . . . . . . . . . .46
6.2 Payment of Expenses . . . . . . . . . . . . . .46
ARTICLE VII CERTAIN POST-MERGER AGREEMENTS . . . . . . . .46
7.1 Reports to the SEC. . . . . . . . . . . . . . .46
7.2 Employees.. . . . . . . . . . . . . . . . . . .46
ARTICLE VIII GENERAL . . . . . . . . . . . . . . . . . . .47
8.1 Amendments. . . . . . . . . . . . . . . . . . .47
8.2 Confidentiality . . . . . . . . . . . . . . . .47
8.3 Governing Law . . . . . . . . . . . . . . . . .47
8.4 Notices . . . . . . . . . . . . . . . . . . . .48
8.5 No Assignment . . . . . . . . . . . . . . . . .48
8.6 Headings. . . . . . . . . . . . . . . . . . . .49
8.7 Counterparts. . . . . . . . . . . . . . . . . .49
8.8 Construction and Interpretation . . . . . . . .49
8.9 Entire Agreement. . . . . . . . . . . . . . . .49
8.10 Severability. . . . . . . . . . . . . . . . . .49
8.11 No Third Party Beneficiaries. . . . . . . . . .49
8.12 Enforcement of Agreement. . . . . . . . . . . .49
Schedules:
Schedule I Disclosure Schedule for the Company and Savings
Schedule II Disclosure Schedule for Ambanc and the Bank
Schedule 4.2
Schedule 4.7
Schedule 4.16
Exhibits:
Exhibit 1.1(a) Bank Plan of Merger
Exhibit 1.14 Option Agreement
Exhibit 5.2(a) Form of Opinion of Counsel for the Company
Exhibit 5.3(a) Form of Opinion of Counsel for Ambanc
REORGANIZATION AND MERGER AGREEMENT
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THIS REORGANIZATION AND MERGER AGREEMENT ("Agreement") is dated as of
April 23, 1998, by and among AMBANC HOLDING CO., INC., a Delaware
corporation ("Ambanc"), and AMSTERDAM SAVINGS BANK, FSB, a Federally
chartered savings bank and wholly-owned subsidiary of Ambanc ("Bank"); and
AFSALA BANCORP, INC., a Delaware corporation ("Company"), and AMSTERDAM
FEDERAL BANK, a Federally chartered savings bank and wholly-owned
subsidiary of Company ("Savings").
WHEREAS, Ambanc, a unitary savings and loan holding company, with
principal offices in Amsterdam, New York, owns all of the issued and
outstanding capital stock of Bank, with its principal offices in
Amsterdam, New York.
WHEREAS, the Company, a non-diversified, unitary savings and loan
holding company, with its principal offices in Amsterdam, New York, owns
all of the issued and outstanding capital stock of Savings, with its
principal offices in Amsterdam, New York;
WHEREAS, Ambanc and the Company desire to combine their respective
holding companies through a tax-free exchange so that the respective
shareholders of both Ambanc and the Company will have an equity ownership
in the combined holding company;
WHEREAS, following the combination of Ambanc and the Company, it is
intended that Bank and Savings will be merged such that the resulting
holding company will retain the advantage of a unitary savings and loan
holding company status and that the resulting savings institution will
achieve certain economies of scale and efficiencies as a result of such
subsequent merger;
WHEREAS, it is intended that to accomplish this result, the Company
will be acquired by means of a merger (the "Acquisition Merger") of the
Company with and into Ambanc, followed by the merger of Savings with and
into the Bank (the "Bank Merger"). The Acquisition Merger and the Bank
Merger are collectively referred to as the "Merger";
WHEREAS, it is intended that for federal income tax purposes, the
Merger shall qualify as a reorganization within the meaning of Section 368
of the Internal Revenue Code of 1986, as amended (the "Code") and this
Agreement shall constitute a plan of reorganization pursuant to Section
368 of the Code;
WHEREAS, as an inducement to and condition of Ambanc's willingness to
enter into this Agreement, the Company will grant to Ambanc, on the date
after the date of this Agreement, an option pursuant to the Stock Option
Agreement, the form of which is attached hereto as Exhibit 1.14 (the
"Option Agreement"); and
WHEREAS, the Boards of Directors of Ambanc and the Company have
determined that this Agreement and the transactions contemplated hereby
are in the best interests of Ambanc and the Company, respectively, and
their respective Boards of Directors and have approved this Agreement and
the Option Agreement. Consummation of the Merger is subject to the prior
approval of the Office of Thrift Supervision ("OTS") and the approval of
this Agreement by the stockholders of Ambanc and the Company, among other
conditions specified herein.
NOW, THEREFORE, in consideration of the premises and mutual promises
hereinafter set forth, and of other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties
hereto, intending to be legally bound, do hereby agree as follows:
ARTICLE I
THE MERGER AND RELATED MATTERS
1.1 Merger: Surviving Institution. Subject to the terms and
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conditions of this Agreement, and pursuant to the provisions of the
Delaware General Corporation Law ("DGCL"), the Home Owners Loan Act, as
amended ("HOLA"), and the rules and regulations promulgated thereunder
(the "Thrift Regulations"), (a) at the Acquisition Merger Effective Time
(as hereinafter defined), the Company shall be merged with and into Ambanc
pursuant to the terms and conditions set forth herein, (b) the separate
corporate existence of the Company shall cease and Ambanc shall continue
as the surviving corporation (sometimes referred to herein as the
"Surviving Corporation"), and (c) thereafter, at the Bank Merger Effective
Time (as hereinafter defined) Savings shall be merged with and into the
Bank pursuant to the terms and conditions set forth herein and in a plan
of merger set forth in Exhibit 1.1(b) (the "Bank Plan of Merger"). The
Acquisition Merger shall have the effects specified in the DGCL and
Section 1.4(e) hereof. Upon consummation of the Bank Merger, the separate
existence of Savings shall cease and the Bank shall continue as the
surviving institution of the Bank Merger. The name of the Bank, as the
surviving institution of the Bank Merger, shall be mutually agreed upon.
From and after the Bank Merger Effective Time, the Bank, as the surviving
institution of the Bank Merger, shall possess all of the properties and
rights and be subject to all of the liabilities and obligations of the
Bank and Savings, all as more fully described in the Thrift Regulations,
Section 1.13 hereof and the Bank Plan of Merger. Ambanc may at any time
change the method of effecting the Merger if and to the extent it deems
such change to be necessary, provided, however, that no such change shall
(A) alter or change the amount or kind of consideration to be issued to
holders of Company common stock as provided for in this Agreement, (B)
adversely affect the tax treatment to Company shareholders as a result of
receiving the consideration described in Section 1.3 herein or (C)
materially impede or delay receipt of any approval referred to in Section
5.1 hereof or the consummation of the transactions contemplated by this
Agreement.
1.2 Effective Time of the Merger. As soon as practicable after
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each of the conditions set forth in Article V hereof have been satisfied
or waived, Ambanc and the Company will file, or cause to be filed, a
certificate of merger with appropriate authorities of Delaware for the
Acquisition Merger and articles of combination with the OTS for the Bank
Merger, which certificate of merger and articles of combination shall in
each case be in the form required by and executed in accordance with
applicable provisions of Delaware law and the Thrift Regulations,
respectively. The Acquisition Merger shall become effective at the time
the certificate of merger is filed with the appropriate authorities of
Delaware (the "Acquisition Merger Effective Time"), which shall be
immediately following the Closing (as defined in Section 1.11 herein) and
on the same day as the Closing if practicable. The Bank Merger shall
become effective at the time the articles of combination for such merger
are endorsed by the OTS pursuant to Section 552.13(k) of the Thrift
Regulations (the "Bank Merger Effective Time"). The parties shall cause
the Acquisition Merger to become effective prior to the Bank Merger.
1.3 Conversion of Shares.
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(a)(i) At the Acquisition Merger Effective Time, by virtue of
the Acquisition Merger and without any action on the part of Ambanc or the
Company or the holders of shares of Ambanc or Company common stock, each
outstanding share of Company common stock issued and outstanding
immediately prior to the Acquisition Merger Effective Time shall be
converted into and represent solely the right to receive without any
action by the holder, 1.07 shares of common stock, $.01 par value, of
Ambanc (the "Ambanc Common Stock") (the "Exchange Ratio"), subject to
adjustment as provided in clause (a)(iv) of this Section (the "Merger
Consideration").
(ii) Any shares of Company common stock which are owned or
held by the Company or any of its subsidiaries (except shares held in any
qualified plan of the Company or any of its subsidiaries or otherwise held
in a fiduciary capacity or in satisfaction of a debt previously
contracted) or by Ambanc or any of Ambanc's subsidiaries (other than in a
fiduciary capacity) at the Acquisition Merger Effective Time shall cease
to exist, and the certificates for such shares shall as promptly as
practicable be canceled and no shares of capital stock of Ambanc shall be
issued or exchanged therefor.
(iii) At the Acquisition Merger Effective Time, the
holders of certificates representing shares of the Company's common stock
(the "Company Common Stock") shall cease to have any rights as stockholders
of the Company, except the right to receive the Merger Consideration as
provided herein.
(iv) If the holders of Ambanc Common Stock shall have
received or shall have become entitled to receive, without payment
therefor, during the period commencing within five days prior to the date
hereof and ending with the Acquisition Merger Effective Time, additional
shares of common stock or other securities for their stock by way of a
stock split, stock dividend, reclassification, combination of shares,
spinoff or similar corporate rearrangement or Ambanc shall exchange Ambanc
Common Stock for a different number or kind of shares or securities
("Stock Adjustment"), then the amount of Ambanc Common Stock to be
exchanged at the Acquisition Merger Effective Time for Company Common
Stock shall be proportionately adjusted to take into account such Stock
Adjustment.
1.4 Surviving Corporation in the Acquisition Merger.
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(a) The name of the Surviving Corporation shall be Ambanc
Holding Co., Inc.
(b) The Certificate of Incorporation of Ambanc as in effect
immediately prior to the Acquisition Merger Effective Time shall be the
Certificate of Incorporation of the Surviving Corporation, until amended
as provided therein or by law.
(c) The bylaws of Ambanc as in effect immediately prior to
the Acquisition Merger Effective Time shall thereafter be the bylaws of
the Surviving Corporation, until amended as provided therein or by law.
(d) The directors and officers of Ambanc immediately prior
to the Acquisition Merger Effective Time shall be the directors and
officers, respectively, of the Surviving Corporation following the
Acquisition Merger, until their successors shall be duly elected and
qualified or otherwise duly selected. In addition, the Surviving
Corporation shall create four new positions on its Board of Directors, on
or prior to the Acquisition Merger Effective Time, and shall appoint those
four persons selected by the Company, in consultation with Ambanc, to the
Board of Directors of the Surviving Corporation, for terms of office to be
agreed upon, it being understood that at least one of the four persons
selected by the Company will include the Company's current President and
Chief Executive Officer. By January 1, 1999, or sooner by mutual consent,
Ambanc's Board of Directors shall appoint Xxxx X. Xxxxxxx as President and
Chief Executive Officer of Ambanc. In addition, Xxxxxxxx X. Xxxxxx and
Xxxxx X. Xxxxxxx shall become executive officers of the Surviving
Corporation with the titles, and under the terms and conditions, as set
forth in Section 4.16(d) of this Agreement.
(e) From and after the Acquisition Merger Effective Time:
(i) The Surviving Corporation shall possess all assets
and property of every description, and every interest in the assets and
property, wherever located, and the rights, privileges, immunities,
powers, franchises, and authority, of a public as well as of a private
nature, of each of Ambanc and the Company, and all obligations belonging
or due to each of Ambanc and Company, all of which are vested in the
Surviving Corporation without further act or deed. Title to any real
estate or any interest in the real estate vested in Ambanc or the Company
shall not revert or in any way be impaired by reason of the Acquisition
Merger.
(ii) The Surviving Corporation shall be liable for all
the obligations of each of Ambanc and the Company. Any claim existing, or
action or proceeding pending, by or against the Company or Ambanc, may be
prosecuted to judgment, with right of appeal, as if the Acquisition Merger
had not taken place, or the Surviving Corporation may be substituted in
its place.
(iii) All the rights of creditors of each of the Company
and Ambanc are preserved unimpaired, and all liens upon the property of
the Company and Ambanc are preserved unimpaired, on only the property
affected by such liens immediately prior to the Acquisition Merger
Effective Time.
1.5 Authorization for Issuance of Ambanc Common Stock; Exchange
of Certificates.
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(a) Ambanc shall reserve or will at Closing have available
for issuance or reissuance a sufficient number of shares of the Ambanc
Common Stock for the purpose of issuing or reissuing its shares of Ambanc
Common Stock to the Company's shareholders in accordance with this Article
I, including Section 1.8. Immediately prior to the Acquisition Merger
Effective Time, Ambanc shall make available for exchange or conversion, by
transferring to an exchange agent appointed by Ambanc (the "Exchange
Agent") for the benefit of the holders of Company Common Stock: (i) such
number of whole shares of Ambanc Common Stock as shall be issuable or
reissuable in connection with the payment of the aggregate Merger
Consideration, and (ii) such funds as may be payable in lieu of fractional
shares of Ambanc Common Stock.
(b) After the Acquisition Merger Effective Time, holders of
certificates theretofore evidencing outstanding shares of Company Common
Stock (other than as provided in Section 1.3(a)(ii)), upon surrender of
such certificates to the Exchange Agent, shall be entitled to receive
certificates representing the number of whole shares of Ambanc Common
Stock into which shares of Company Common Stock theretofore represented by
the certificates so surrendered shall have been converted, as provided in
Section 1.3 hereof and cash payments in lieu of fractional shares as
provided in Section 1.6 hereof. As soon as practicable after the
Acquisition Merger Effective Time but not later than ten (10) business
days thereafter, the Exchange Agent will send a notice and transmittal
form to each Company shareholder of record at the Acquisition Merger
Effective Time whose Company Common Stock shall have been converted into
Ambanc Common Stock advising such shareholder of the effectiveness of the
Acquisition Merger and the procedure for surrendering to the Exchange
Agent outstanding certificates formerly evidencing Company Common Stock in
exchange for new certificates for Ambanc Common Stock and for cash in lieu
of any fractional interest. Upon surrender, each certificate evidencing
Company common stock shall be canceled.
(c) Until surrendered as provided in this Section 1.5, each
outstanding certificate which, prior to the Acquisition Merger Effective
Time, represented Company Common Stock (other than shares canceled at the
Acquisition Merger Effective Time pursuant to Section 1.3(a)(ii) hereof)
will
be deemed for all purposes to evidence ownership of the number of shares
of Ambanc Common Stock into which the shares of Company common stock
formerly represented thereby were converted and the right to receive cash
in lieu of any fractional interest. However, until such outstanding
certificates formerly representing Company common stock are so
surrendered, no dividend or distribution payable to holders of record of
Ambanc Common Stock shall be paid to any holder of such outstanding
certificates, but upon surrender of such outstanding certificates by such
holder there shall be paid to such holder the amount of any dividends or
distribution, without interest, theretofore paid with respect to such
whole shares of Ambanc Common Stock, but not paid to such holder, and
which dividends or distribution had a record date occurring on or
subsequent to the Acquisition Merger Effective Time and the amount of any
cash, without interest, payable to such holder in lieu of fractional
shares pursuant to Section 1.6 hereof. After the Acquisition Merger
Effective Time, there shall be no further registration of transfers on the
records of the Company of outstanding certificates formerly representing
shares of Company Common Stock and, if a certificate formerly representing
such shares is presented to Ambanc, it shall be forwarded to the Exchange
Agent for cancellation and exchanged for certificates representing shares
of Ambanc Common Stock as herein provided.
(d) All shares of Ambanc Common Stock and cash in lieu of
any fractional shares issued and paid upon the surrender for exchange of
Company Common Stock in accordance with the above terms and conditions
shall be deemed to have been issued in full satisfaction of all rights
pertaining to such shares of Company Common Stock.
(e) If any new certificate for Ambanc Common Stock is to be
issued in the name other than that in which the certificate surrendered in
exchange thereof is registered, it shall be a condition of the issuance
therefor that the certificate surrendered in exchange shall be properly
endorsed and otherwise in proper form for transfer and that the person
requesting such transfer pay to the Exchange Agent any transfer or other
taxes, if any, required by reason of the issuance of a new certificate for
shares of Ambanc Common Stock in any name other than that of the
registered holder of the certificate surrendered, or establish to the
satisfaction of the Exchange Agent that such tax has been paid or is not
payable.
(f) In the event any certificate for Company Common Stock
shall have been lost, stolen or destroyed, the Exchange Agent shall issue
in exchange for such lost, stolen or destroyed certificate, upon the
making of an affidavit of that fact by the holder thereof, such shares of
Ambanc Common Stock and cash in lieu of fractional shares, if any, as may
be required pursuant hereto; provided, however, that Ambanc may, in its
discretion and as a condition precedent to the issuance thereof, require
the owner of such lost, stolen or destroyed certificate to deliver a bond
in such sum as it may reasonably direct as indemnity against any claim
that may be made against Ambanc, the Company, the Exchange Agent or any
other party with respect to the certificate alleged to have been lost,
stolen or destroyed.
1.6 No Fractional Shares. Notwithstanding any term or provision
--------------------
hereof, no fractional shares of Ambanc Common Stock, and no certificates
or scrip therefor, or other evidence of ownership thereof, will be issued
in exchange for any shares of Company Common Stock; no dividend or
distribution with respect to Ambanc Common Stock shall be payable on or
with respect to any fractional share interests; and no such fractional
share interest shall entitle the owner thereof to vote or to any other
rights of a shareholder of Ambanc. In lieu of such fractional share
interest, any holder of Company common stock who would otherwise be
entitled to a fractional share of Ambanc Common Stock will, upon surrender
of his certificate or certificates representing Company Common Stock
outstanding immediately prior to the
Acquisition Merger Effective Time, be paid the applicable cash value of
such fractional share interest, which shall be equal to the product of the
fraction multiplied by the average closing price of the Ambanc Common
Stock as reported on the Nasdaq Stock Market for the five trading days
immediately preceding the Acquisition Merger Effective Time. For the
purposes of determining any such fractional share interests, all shares of
Company Common Stock owned by a Company shareholder shall be combined so
as to calculate the maximum number of whole shares of Ambanc Common Stock
issuable to such Company shareholder in the Acquisition Merger.
1.7 Shareholders' Meeting. The Company and Ambanc shall, at the
---------------------
earliest practicable date after the effectiveness of the Registration
Statement (as hereinafter defined), hold a meeting of their shareholders
(the "Company Shareholders' Meeting" and "Ambanc Shareholders' Meeting,"
respectively) to submit for shareholder adoption this Agreement. The
affirmative vote of the holders of at least a majority of the issued and
outstanding shares of Company Common Stock entitled to vote at the Company
Shareholders' Meeting and Ambanc Common Stock entitled to vote at the
Ambanc Shareholders' Meeting shall be required for adoption of the
Acquisition Merger and all such related matters.
1.8 Company Stock Options. At the Acquisition Merger Effective
---------------------
Time, each option outstanding under the Company's 1997 Stock Option Plan
(the "Company Option Plan"), whether or not then exercisable, shall
continue outstanding as an option to purchase, in place of the purchase of
each share of Company Common Stock, the number of shares (rounded to the
nearest whole share) of Ambanc Common Stock that would have been received
by the optionee in the Merger had the option been exercised in full
(without regard to any limitations contained therein on exercise) for
shares of Company Common Stock immediately prior to the Acquisition Merger
upon the same terms and conditions under the relevant option as were
applicable immediately prior to the Acquisition Merger Effective Time,
except for appropriate pro rata adjustments as to the relevant option
price for shares of Ambanc Common Stock substituted therefor so that the
aggregate option exercise price of shares subject to an option immediately
following the assumption and substitution shall be the same as the
aggregate option exercise price for such shares immediately prior to such
assumption and substitution. Ambanc shall assume at the Acquisition
Merger Effective Time each such option and the Company Option Plan. It is
intended that the foregoing assumption shall be undertaken consistent with
and in a manner that will not constitute a "modification" under Section
424 of the Code as to any stock option which is an "incentive stock
option." Ambanc and Company agree to take such actions as shall be
necessary to give effect to the foregoing.
At all times after the Acquisition Merger Effective Time, Ambanc
shall reserve for issuance such number of shares of Ambanc Common Stock as
are necessary so as to permit the exercise of options granted under the
Company Option Plan in the manner contemplated by this Agreement and the
instruments pursuant to which such options were granted. Ambanc shall
make all filings required under federal and state securities laws so as to
permit the exercise of such options and the sale of the shares received by
the option holder upon such exercise.
1.9 Registration Statement; Prospectus/Proxy Statement.
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(a) For the purposes (i) of registering the Ambanc Common
Stock to be issued to holders of Company Common Stock in connection with
the Merger and the shares issuable under the Company Option Plan pursuant
to Section 1.8 hereof with the Securities and Exchange Commission ("SEC")
and with applicable
state securities authorities, and (ii) of holding the Company
Shareholders' Meeting and the Ambanc Shareholders' Meeting, the parties
hereto shall cooperate in the preparation of an appropriate registration
statement (such registration statement, together with all and any
amendments and supplements thereto, being herein referred to as the
"Registration Statement"), including the prospectus/proxy statement
satisfying all applicable requirements of applicable state laws, and of
the Securities Act of 1933, as amended (the "1933 Act") and the Securities
Exchange Act of 1934, as amended (the "1934 Act") and the rules and
regulations thereunder (such prospectus/proxy statement, together with any
and all amendments or supplements thereto, being herein referred to as the
"Prospectus/Proxy Statement").
(b) Ambanc shall furnish such information concerning Ambanc
and the Ambanc Subsidiaries (as defined in Section 3.1 hereof) as is
necessary in order to cause the Prospectus/Proxy Statement, insofar as it
relates to such corporations, to comply with Section 1.9(a) hereof.
Ambanc agrees promptly to advise the Company if at any time prior to the
Company Shareholders' Meeting any information provided by Ambanc in the
Prospectus/Proxy Statement becomes incorrect or incomplete in any material
respect and to provide the information needed to correct such inaccuracy
or omission. Ambanc shall promptly file such supplemental information as
may be necessary in order to cause such Prospectus/Proxy Statement,
insofar as it relates to Ambanc and the Ambanc Subsidiaries, to comply
with Section 1.9(a).
(c) The Company shall furnish Ambanc with such information
concerning the Company and the Company Subsidiaries (as defined in Section
2.1 hereof) as is necessary in order to cause the Prospectus/Proxy
Statement, insofar as it relates to such corporations, to comply with
Section 1.9(a) hereof. The Company agrees promptly to advise Ambanc if at
any time prior to the Company Shareholders' Meeting and the Ambanc
Shareholders' Meeting any information provided by the Company in the
Prospectus/Proxy Statement becomes incorrect or incomplete in any material
respect and to provide Ambanc with the information needed to correct such
inaccuracy or omission. The Company shall furnish Ambanc with such
supplemental information as may be necessary in order to cause the
Prospectus/Proxy Statement, insofar as it relates to the Company and the
Company Subsidiaries, to comply with Section 1.9(a).
(d) Ambanc shall promptly file the Registration Statement
with the SEC and applicable state securities agencies. Ambanc shall use
all reasonable efforts to cause the Registration Statement to become
effective under the 1933 Act and applicable state securities laws at the
earliest practicable date. The Company authorizes Ambanc to utilize in
the Registration Statement the information concerning the Company and the
Company Subsidiaries provided to Ambanc for the purpose of inclusion in
the Prospectus/Proxy Statement. The Company shall promptly prepare its
proxy statement to be included in the Registration Statement of Ambanc.
Ambanc shall have the right to review and approve the form of proxy
statement included in the Registration Statement prior to its filing with
the SEC and prior to its mailing to Company shareholders. Ambanc shall
advise the Company promptly when the Registration Statement has become
effective and of any supplements or amendments thereto, and Ambanc shall
furnish Company with copies of all such documents. Prior to the
Acquisition Merger Effective Time or the termination of this Agreement,
each party shall consult with the other with respect to any material
(including the Prospectus/Proxy Statement) that might constitute a
"prospectus" relating to the Merger within the meaning of the 1933 Act.
1.10 Cooperation; Regulatory Approvals. The parties shall
---------------------------------
cooperate and use reasonable best efforts to complete the transactions
contemplated hereunder as soon as practicable. Each party shall cause
each of their affiliates and subsidiaries to cooperate in the preparation
and submission by them, as promptly as reasonably practicable, of such
applications, petitions, and other documents and materials as any of them
may reasonably deem necessary or desirable to the OTS, Federal Trade
Commission ("FTC"), Department of Justice ("DOJ"), SEC, applicable
Secretary of State, other regulatory authorities, holders of the voting
shares of Company Common Stock and Ambanc Common Stock and any other
persons for the purpose of obtaining any approvals or consents necessary
to consummate the transactions contemplated by this Agreement. At the
date hereof, none of the parties is aware of any reason that the
regulatory approvals required to be obtained by it would not be obtained.
1.11 Closing. If (i) this Agreement and the Acquisition Merger
-------
have been duly approved by the shareholders of the Company and Ambanc and
(ii) all relevant conditions of this Agreement have been satisfied or
waived, a closing (the "Closing") shall take place as promptly as
practicable thereafter at the principal office of Ambanc, or at such other
place as Ambanc and the Company shall agree, at which the parties hereto
will exchange certificates, opinions, letters and other documents as
required hereby and will make the filings described in Section 1.2 hereof.
Such Closing will take place as soon as practicable as agreed by the
parties, provided, however, that the Closing shall be no more than 30 days
after the satisfaction or waiver of all conditions and/or obligations
contained in Article V of this Agreement.
1.12 Closing of Transfer Books. At the Acquisition Merger
-------------------------
Effective Time, the transfer books for Company Common Stock shall be
closed, and no transfer of shares of Company Common Stock shall thereafter
be made on such books.
1.13 Bank Merger.
-----------
(a) At the Bank Merger Effective Time, each share of common
stock of Savings ("Savings Common Stock") issued and outstanding
immediately prior thereto shall, by virtue of the Bank Merger, be
canceled. No new shares of the capital stock or other securities or
obligations of the Bank shall be issued or be deemed issued with respect
to or in exchange for such canceled shares, and such canceled shares of
Savings Common Stock shall not be converted into any shares or other
securities or obligations of the Bank.
(b) The charter and bylaws of the Bank as in effect
immediately prior to the Bank Merger Effective Time shall be the charter
and bylaws of the Bank, as the surviving institution of the Bank Merger,
until amended as provided therein or by law. As soon as practicable
thereafter, the name of the Bank shall be changed to a mutually agreed
upon name reflecting the integration of Savings with Bank.
(c) Except as otherwise provided herein, the directors and
officers of the Bank immediately prior to the Bank Merger Effective Time
shall be the directors and officers of the Bank, as the surviving
institution of the Bank Merger, until their successors shall be duly
elected and qualified or otherwise duly selected. In addition the Bank,
as the surviving institution, shall create four new positions on its Board
of Directors and, on or prior to the Bank Merger Effective Time, shall
appoint those four persons selected by Savings, in consultation with the
Bank, to the Board of Directors of the surviving institution of the Bank
Merger, for terms of office to be agreed upon, it being understood that at
least one of the four persons selected by Savings will include Savings
current President and Chief Executive Officer. Immediately upon the Bank
Merger Effective Time, Xxxx X. Xxxxxxx shall become the President and
Chief Executive Officer of the Bank. In addition, Xxxxxxxx X. Xxxxxx and
Xxxxx X. Xxxxxxx shall become executive officers of the Bank, as the
surviving institution of the Bank Merger, with the titles, and under the
terms and conditions, as set forth in Section 4.16(d) of this Agreement.
(d) The liquidation account established by Savings pursuant
to the plan of conversion adopted in connection with its conversion from
mutual to stock form shall continue to be maintained by the Bank after the
Bank Merger Effective Time for the benefit of those persons and entities
who were savings account holders of Savings on the appropriate dates for
such conversion and who continue from time to time to have rights therein.
1.14 Option Agreement. In connection with the execution of this
Agreement by the parties, Ambanc and the Company will execute on the date
after the date of this Agreement the Option Agreement attached as Exhibit
1.14.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF COMPANY AND SAVINGS
The Company and Savings represent and warrant to Ambanc and the Bank
that, except as disclosed in Schedule I attached hereto and except that
Savings makes no representations or warranties regarding the Company:
2.1 Organization, Good Standing, Authority, Insurance, Etc. The
-------------------------------------------------------
Company is a corporation duly organized, validly existing and, in the case
of any Company Subsidiary which is a corporation, in good standing under
the laws of the state of their incorporation. Section 2.1 of Schedule I
lists each "subsidiary" of the Company and Savings (individually a
"Company Subsidiary" and collectively the "Company Subsidiaries") (unless
otherwise noted herein all references to a "Company Subsidiary" or to the
"Company Subsidiaries" shall include Savings). The word "Subsidiary" when
used with respect to any party means any bank, savings institution,
corporation, partnership, limited liability company or other organization,
whether incorporated or unincorporated, which is consolidated with such
party for financial reporting purposes. Each of the Company Subsidiaries
is duly organized, validly existing, and in good standing under the laws
of the respective jurisdiction under which it is organized, as set forth
in Section 2.1 of Schedule I. The Company and each Company Subsidiary has
all requisite power and authority and is duly qualified and licensed to
own, lease and operate its properties and conduct its business as it is
now being conducted. The Company has delivered to Ambanc a true, complete
and correct copy of the certificate of incorporation, charter, or other
organizing document and of the bylaws, as in effect on the date of this
Agreement, of Company and each Company Subsidiary. To the Company's
knowledge, the Company and each Company Subsidiary is qualified to do
business as a foreign corporation and is in good standing in each
jurisdiction in which qualification is necessary under applicable law,
except to the extent that any failures to so qualify would not, in the
aggregate, have a material adverse effect on the business, financial
condition or results of operations of the Company and the Company
Subsidiaries, taken as a whole. Savings is a member in good standing of
the Federal Home Loan Bank of New York and all eligible accounts issued by
Savings are insured by the Savings Association Insurance Fund ("SAIF") to
the maximum extent permitted under applicable law. Savings is a
"domestic building and loan association" as defined in Section 7701(a)(19)
of the Code and is a "qualified thrift lender" as defined in Section 10(m)
of the HOLA and the Thrift Regulations. The Company is registered as a
savings and loan holding company under the HOLA.
The minute books of the Company and the Company's Subsidiaries
contain complete and accurate records of all meetings and other corporate
actions held or taken by their respective shareholders and Boards of
Directors (including the committees of such Boards).
2.2 Capitalization. The authorized capital stock of the Company
--------------
consists of (i) 3,000,000 shares of common stock, par value $.10 per
share, of which 1,378,440 shares were issued and outstanding as of the
date of this Agreement, and (ii) 500,000 shares of preferred stock, $.10
par value, of which no shares were outstanding as of the date of this
Agreement. All outstanding shares of Company common stock are duly
authorized, validly issued, fully paid, nonassessable and free of
preemptive rights. Except for outstanding options to purchase 145,468
shares of Company common stock under the Company Option Plan and the
option to be granted pursuant to the Option Agreement, as of the date of
this Agreement, there are no options, convertible securities, warrants, or
other rights (preemptive or otherwise) to purchase or acquire any of the
Company's capital stock from the Company and no oral or written agreement,
contract, arrangement, understanding, plan or instrument of any kind
(collectively, "Stock Contract") to which the Company or any of its
affiliates is subject with respect to the issuance, voting or sale of
issued or unissued shares of the Company's capital stock. A true and
complete copy of the Company Option Plan, as in effect on the date of this
Agreement, is attached as Section 2.2 of Schedule I.
2.3 Ownership of Subsidiaries. Except as set forth in Section
-------------------------
2.3 of Schedule I, all the outstanding shares of the capital stock of the
Company Subsidiaries are validly issued, fully paid, nonassessable and
owned beneficially and of record by the Company or a Company Subsidiary
free and clear of any lien, claim, charge, restriction or encumbrance
(collectively, "Encumbrance"). Except as set forth in Section 2.3 of
Schedule I, all of the outstanding capital stock or other ownership
interests in all of the Company Subsidiaries is owned either by the
Company or Savings. Except as set forth in Section 2.3 of Schedule I,
there are no options, convertible securities, warrants, or other rights
(preemptive or otherwise) to purchase or acquire any capital stock of any
Company Subsidiary and no contracts to which the Company or any of its
affiliates is subject with respect to the issuance, voting or sale of
issued or unissued shares of the capital stock of any of the Company
Subsidiaries. Neither the Company nor any Company Subsidiary owns any
material investment of the capital stock or other equity securities
(including securities convertible or exchangeable into such securities) of
or profit participations in any entity (other than Company Subsidiaries)
other than the Federal Home Loan Bank of New York or except as set forth
in Section 2.3 of Schedule I.
2.4 Financial Statements and Reports.
-------------------------------
(a) No registration statement, proxy statement, schedule or
report filed by the Company or any Company Subsidiary with the SEC or the
OTS under the 1933 Act or the 1934 Act ("SEC Reports"), on the date of
effectiveness in the case of such registration statements, or on the date
of filing in the case of such reports or schedules, or on the date of
mailing in the case of such proxy statements, contained any untrue
statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading. The
Company and the Company Subsidiaries have timely filed all reports and
documents required to be filed by them with the SEC, the OTS, or the
Federal Deposit Insurance Corporation (the "FDIC") under various
securities and banking laws and regulations for the last five years (or
such shorter period as they may have been subject to such filing
requirements), except to the extent that all failures to so file, in the
aggregate, would not have a material adverse effect on the business,
financial condition or results of operations of the Company and the
Company Subsidiaries, taken as a whole. All such documents, as finally
amended, complied in all material respects with applicable
requirements of law and, as of their respective date or the date as
amended and, with respect to the SEC Reports, did not contain any untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading and, with
respect to reports and documents filed with banking regulatory agencies,
were accurate in all material respects. Except to the extent stated
therein, all financial statements and schedules included in the documents
referred to in the preceding sentences (or to be included in similar
documents to be filed after the date hereof) (i) are or will be (with
respect to financial statements in respect of periods ending after
September 30, 1997) in accordance with the Company's books and records and
those of any of the Company Subsidiaries, and (ii) present (and in the
case of financial statements in respect of periods ending after September
30, 1997, will present) fairly the consolidated balance sheet and the
consolidated statements of income, changes in stockholders' equity and
cash flows of the Company and the Company Subsidiaries as of the dates and
for the periods indicated in accordance with generally accepted accounting
principles (except for the omission of notes to unaudited statements, year
end adjustments to interim results and changes to generally accepted
accounting principles). The audited consolidated financial statements of
the Company at September 30, 1997 and for the two years then ended and the
consolidated financial statements for all periods thereafter up to the
Closing reflect or will reflect, to the extent required by generally
accepted accounting principles, as the case may be, all liabilities
(whether accrued, absolute, contingent, unliquidated or otherwise, whether
due or to become due and regardless of when asserted), as of their
respective dates, of the Company and the Company Subsidiaries required to
be reflected in such financial statements according to generally accepted
accounting principles and contain or will contain, in the opinion of
management, adequate reserves for losses on loans and properties acquired
in settlement of loans, taxes and all other material accrued liabilities
and for all reasonably anticipated material losses, if any as of such
date. There exists no set of circumstances that could reasonably be
expected to result in any liability or obligation material to the Company
or the Company Subsidiaries, taken as a whole, except as disclosed in the
audited consolidated financial statements at September 30, 1997 or for
transactions effected, actions occurring or omitted to be taken, or claims
made after September 30, 1997 (i) in the ordinary course of business, or
(ii) as permitted by this Agreement.
(b) The Company has delivered to Ambanc each SEC Report
filed, used or circulated by it with respect to periods since September
30, 1997 through the date of this Agreement and will promptly deliver each
such SEC Report filed, used or circulated after the date hereof, each in
the form (including exhibits and any amendments thereto) filed with the
SEC or the OTS (or, if not so filed, in the form used or circulated),
including, without limitation, its Annual Reports on Form 10-K and its
Quarterly Reports on Form 10-Q.
2.5 Absence of Changes.
------------------
(a) Since September 30, 1997 there have been no material
adverse changes in the business, properties, financial condition,
operations or assets of the Company or any Company Subsidiary other than
changes attributable to or resulting from any change in law, regulation or
generally accepted accounting principles or regulatory accounting
principles, which impair both the Company and other comparably sized
thrift institutions in a substantially similar manner and other than
changes attributable to or resulting from changes in economic conditions
applicable to depository institutions generally or in general levels of
interest rates affecting both the Company and other comparably sized
thrift institutions to a similar extent and in a similar manner. Since
September 30, 1997 to the date hereof, there has been no occurrence, event
or development of any nature existing, or to the knowledge of the Company,
threatened, which is reasonably expected to result in such a change.
(b) Since September 30, 1997, each of the Company and the
Company Subsidiaries has owned and operated their respective assets,
properties and businesses in the ordinary course of business and
consistent with past practice.
2.6 Prospectus/Proxy Statement. At the time the Prospectus/
--------------------------
Proxy Statement is mailed to the shareholders of the Company for the
solicitation of proxies for the approvals referred to in Section 1.7
hereof and at all times subsequent to such mailing up to and including the
time of such approval, such Prospectus/Proxy Statement (including any
supplements thereto), with respect to all information set forth therein
relating to the Company (including the Company Subsidiaries), its
shareholders and representatives, Company common stock and all other
transactions contemplated hereby, will:
(a) Comply in all material respects with applicable
provisions of the 1934 Act and the rules and regulations under such Act;
and
(b) 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 contained therein, in light of the
circumstances under which it is made, not misleading.
2.7 No Broker's or Finder's Fees. Except as set forth at Section
----------------------------
2.7 of Schedule I, no agent, broker, investment banker, person or firm
acting on behalf or under authority of the Company or any of the Company
Subsidiaries is or will be entitled to any broker's or finder's fee or any
other commission or similar fee directly or indirectly in connection with
the Merger or any other transaction contemplated hereby, except the
Company has engaged FinPro, Inc. to provide financial advisory services
and to deliver an opinion to the effect that the consideration to be
received by the Company shareholders in the Merger is fair to the Company
shareholders from a financial point of view. A copy of the engagement
agreement with FinPro, Inc. is attached to Section 2.7 of Schedule I.
2.8 Litigation and Other Proceedings. Except as set forth in
--------------------------------
Section 2.8 of Schedule I and except for matters which would not have a
material adverse effect on the business, financial condition or results of
operations of the Company and the Company Subsidiaries taken as a whole,
neither the Company nor any Company Subsidiary is a defendant in, nor is
any of its property subject to, any pending, or, to the knowledge of the
management of the Company, threatened, claim, action, suit, investigation,
or proceeding, or subject to any judicial order, judgment or decree.
2.9 Compliance with Law.
-------------------
(a) To the knowledge of the Company, the Company and the
Company Subsidiaries are in compliance in all material respects with all
material laws and regulations applicable to their respective business or
operations or with respect to which compliance is a condition of engaging
in the business thereof, and neither the Company nor any Company
Subsidiary has received notice from any federal, state or local government
or governmental agency of any material violation of, and does not know of
any material violations of, any of the above.
(b) To the knowledge of the Company, the Company and each of
its Subsidiaries have all material permits, licenses, certificates of
authority, orders and approvals of, and have made all material filings,
applications and registrations with, all federal, state, local and foreign
governmental or regulatory bodies that are required in order to permit
them to carry on their respective business as they are presently
conducted.
2.10 Corporate Actions.
-----------------
(a) The Boards of Directors of the Company and Savings have
duly authorized their respective officers to execute and deliver (as
applicable) this Agreement, the Bank Plan of Merger and the Option
Agreement and to take all action necessary to consummate the Merger and
the other transactions contemplated hereby. The Board of Directors of the
Company has authorized and directed the submission for shareholders'
adoption of this Agreement, together with the Option Agreement and any
other action requiring such approvals. All corporate authorization by the
Board of Directors of the Company and Savings required for the
consummation of the Merger has been obtained or will be given when
required by applicable law.
(b) The Company's Board of Directors has taken all necessary
action to exempt this Agreement, the Bank Plan of Merger, the Option
Agreement and the transactions contemplated hereby and thereby from, (i)
any applicable state takeover laws, (ii) any Delaware laws limiting or
restricting the voting rights of shareholders, (iii) any Delaware laws
requiring a shareholder approval vote in excess of the vote normally
required in transactions of similar type not involving a "related person,"
"interested shareholder" or person or entity of similar type, and (iv) any
provision in its or any of the Company Subsidiaries' articles/certificate
of incorporation, charter or bylaws requiring a shareholder approval vote
in excess of the vote normally required in transactions of similar type
not involving a "related person," interested shareholder" or person or
entity of similar type.
2.11 Authority. The execution, delivery and performance by the
---------
Company and Savings of their obligations under this Agreement and by the
Company of its obligations under the Option Agreement does not violate any
of the provisions of, or constitute a default under or give any person the
right to terminate or accelerate payment or performance under (i) subject
to the effectiveness of the amendment to Savings' Federal Stock Charter
referred to in Section 4.17 hereof (the "Charter Amendment"), the articles
of incorporation or bylaws of the Company, the articles of incorporation,
charter or bylaws of any Company Subsidiary, (ii) any regulatory restraint
on the acquisition of the Company or Savings or control thereof, (iii) 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 Company Subsidiaries is subject or (iv) except as set forth in Section
2.11 of Schedule I, any other material agreement, material lease, material
contract, note, mortgage, indenture, arrangement or other obligation or
instrument ("Contract") to which the Company or any of the Company
Subsidiaries is a party or is subject or by which any of their properties
or assets is bound. The parties acknowledge that the consummation of the
Merger and the other transactions contemplated hereby is subject to
various regulatory approvals. Subject to the approval and effectiveness
of the Charter Amendment, the Company and Savings, as applicable, have all
requisite corporate power and authority to enter into this Agreement and
the Option Agreement and to perform their respective obligations hereunder
and thereunder, except, with respect to this Agreement, and the
Acquisition Merger, the approval of the Company's shareholders of this
Agreement and the Acquisition Merger required under applicable law and the
effectiveness of the Charter Amendment. Other than the receipt of
Governmental Approvals (as defined in Section 5.1(c)), the adoption
by shareholders of this Agreement and the consents specified in Section
2.11 or 2.15 of Schedule I with respect to the Contracts, no consents or
approvals are required on behalf of Company or Savings in connection with
the consummation of the transactions contemplated by this Agreement and
the Acquisition Merger, the Bank Plan of Merger and the Option Agreement.
This Agreement, the Bank Plan of Merger and the Option Agreement
constitute the valid and binding obligation of the Company and Savings, as
applicable, and each is enforceable in accordance with its terms, except
as enforceability may be limited by applicable laws relating to
bankruptcy, insolvency or creditors rights generally and general
principles of equity.
2.12 Employment Arrangements. Except as disclosed in Section
-----------------------
2.12 of Schedule I, there are no employment, severance or other
agreements, plans or arrangements with any current or former directors,
officers or employees of Company or any Company Subsidiary which may not
be terminated without penalty (including any augmentation or acceleration
of benefits) on 30 days or less notice to such person. Except as
disclosed in Section 2.12 of Schedule I, no payments to directors,
officers or employees of the Company or the Company Subsidiaries resulting
from the transactions contemplated hereby will cause the imposition of
excise taxes under Section 4999 of the Code or the disallowance of a
deduction to the Company or any Company Subsidiary pursuant to Sections
162 or 280G of the Code. No later than 30 days prior to consummation of
the Merger, the Company shall furnish Ambanc for its review (i) a
computation of the amounts expected to be payable under the employment and
severance agreements disclosed in Section 2.12 of Schedule I as a result
of the Merger, and (ii) a schedule reasonably satisfactory to Ambanc
demonstrating that no "disqualified individual" within the meaning of
Section 280G of the Code will be receiving payments in contravention of
the representation in the preceding sentence.
2.13 Employee Benefits.
-----------------
(a) Neither the Company nor any of the Company Subsidiaries
maintains any funded deferred compensation plans (including profit
sharing, pension, savings or stock bonus plans), unfunded deferred
compensation arrangements or employee benefit plans as defined in Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), other than any plans ("Employee Plans") set forth in Section
2.13 of Schedule I (true and correct copies of which have been delivered
to Ambanc). None of Company or any of the Company Subsidiaries has
incurred or reasonably expects to incur any liability to the Pension
Benefit Guaranty Corporation except for required premium payments which,
to the extent due and payable, have been paid. The Employee Plans
intended to be qualified under Section 401(a) of the Code are so
qualified, and Company is not aware of any fact which would adversely
affect the qualified status of such plans. Except as set forth in Section
2.13 of Schedule I, neither the Company nor any of the Company
Subsidiaries (a) provides health, medical, death or survivor benefits to
any former employee or beneficiary thereof, or (b) maintains any form of
current (exclusive of base salary and base wages) or deferred
compensation, bonus, stock option, stock appreciation right, benefit,
severance pay, retirement, incentive, group or individual health
insurance, welfare or similar plan or arrangement for the benefit of any
single or class of directors, officers or employees, whether active or
retired (collectively "Benefit Arrangements"). Neither the Company nor
any Company Subsidiary is a sponsor of or contributes to any qualified or
non-qualified defined benefit plan for employees, officers or directors.
No payments are more than 30 days past due on any Employee Plan or Benefit
Arrangement. With respect to each Employee Plan and Benefit Arrangement
of the Company or any Company Subsidiary, the Company will within 30 days
of the date of this Agreement furnish to Ambanc (i) the net fair market
value of the assets held in any Benefit Arrangement, and (ii) the amount
of any contribution or other obligation paid, accrued, or payable, or
reasonably expected to be payable between the date of this Agreement and
the
Closing, including contributions by Company to its Employee Stock
Ownership Plan to repay its loan and contributions to its 401(k) Plan in
accordance with past practices (pro rated through the Closing), subject to
applicable tax law limitations. Neither the Company nor any Company
Subsidiary will make any contribution, or undertake any obligation to
contribute any amount to any Employee Plan or Benefit Arrangement other
than the amounts which the Company shall set forth in Section 2.13 of
Schedule I and other than immaterial amounts in the ordinary course of
business and in accordance with past practice.
(b) Except as set forth in Section 2.13 of Schedule I, all
Employee Plans and Benefit Arrangements which are in effect were in effect
for substantially all of calendar year 1997 and there has been no material
amendment thereof (other than amendments required to comply with
applicable law) or no material increase in the cost thereof or benefits
payable thereunder on or after September 30, 1997.
(c) To the Company's knowledge, each Employee Plan and
Benefit Arrangement (i) has been administered to date, and will be
administered until the Closing, in accordance with their terms and in
compliance with the Code, ERISA, and all other applicable rules and
regulations, (ii) has, in a timely, accurate, and proper manner, both
filed all required government reports and made all required employee
communications, and (iii) between the date of this Agreement and the
Closing, will complete and file all such required reports. To the
Company's knowledge, no condition exists that could constitute grounds for
the termination of any Employee Plan under Section 4042 of ERISA; no
"prohibited transaction," as defined in Section 406 of ERISA and Section
4975 of the Code, has occurred with respect to any Employee Plan, or any
other employee benefit plan maintained by Company or any Company
Subsidiary which is covered by Title I of ERISA, which could subject any
person to liability under Title I of ERISA or to the imposition of any tax
under Section 4975 of the Code nor has any Employee Plan subject to Part
III of Subtitle B of Title I of ERISA or Section 412 of the Code, or both,
incurred any "accumulated funding deficiency," as defined in Section 412
of the Code, whether or not waived; nor has Company or any Company
Subsidiary failed to make any contribution or pay any amount due and owing
as required by the terms of any Employee Plan or Benefit Arrangement. To
the Company's knowledge, neither Company nor any Company Subsidiary has
incurred or expects to incur, directly or indirectly, any liability under
Title IV of ERISA arising in connection with the termination of, or a
complete or partial withdrawal from, any plan covered or previously
covered by Title IV of ERISA which could constitute a liability of Ambanc
or any of its affiliates at or after the Acquisition Merger Effective
Time.
(d) On or before the date of this Agreement, the Company
will provide Ambanc with true and complete copies of the following
documents where applicable to any Employee Plan or Benefit Arrangement:
(i) each plan document or agreement, and any amendments thereto, and
related trust agreements, insurance contracts and policies, annuity
contracts, and any other funding arrangement; (ii) the most recent summary
plan description and summary of material modifications; (iii) for the
three most recent plan years, Form 5500 Annual Return/Report and all
actuarial and financial reports and appraisals; and (iv) the most recent
determination letter received from the Internal Revenue Service, plus any
open requests and all other rulings received from any governmental agency.
Within 60 days of the date hereof, the Company or Savings shall provide
Ambanc with documentation, reasonably satisfactory to Ambanc,
demonstrating that the requirements of Sections 401(k), 401(m), 404, 410,
412, 415, and 416 of the Code have been satisfied by each Employee Plan
that is intended to qualify under Section 401 of the Code.
2.14 Information Furnished. Any schedule, certificate or other
---------------------
document furnished (whether prior to or subsequent to the date of this
Agreement) or to be furnished in writing by or on behalf of Company to
Ambanc
pursuant to this Agreement will be accurate in all material respects and
will not omit any information necessary to make the information provided
not misleading. No information material to the Merger and which is
necessary to make the representations and warranties true, knowingly has
been withheld from Ambanc.
2.15 Property and Assets. To the knowledge of the Company, the
-------------------
Company and the Company Subsidiaries have marketable title to all of their
real property reflected in the financial statements at September 30, 1997,
referred to in Section 2.4 hereof, or acquired subsequent thereto, free
and clear of all encumbrances, except for (a) such items shown in such
financial statements or in the notes thereto, (b) liens for current real
estate taxes not yet delinquent, (c) customary title exceptions that have
no material adverse effect upon the value of such property, (d) property
sold or transferred in the ordinary course of business since the date of
such financial statements, and (e) pledges or liens incurred in the
ordinary course of business. Company and the Company Subsidiaries enjoy
peaceful and undisturbed possession under all material leases for the use
of real property under which they are the lessee; all of such leases are
valid and binding and in full force and effect and neither Company nor any
Company Subsidiary is in default in any material respect under any such
lease. No consent of the lessor of any material real property or
material personal property lease is required for consummation of the
Merger except as set forth in Section 2.15 of Schedule I. There has been
no material physical loss, damage or destruction, whether or not covered
by insurance, affecting the real properties of Company and the Company
Subsidiaries since September 30, 1997, except such loss, damage or
destruction which does not have a material adverse effect on the Company
and the Company Subsidiaries, taken as a whole. All property and assets
material to their business and currently used by Company and the Company
Subsidiaries are, in all material respects, in good operating condition
and repair, normal wear and tear excepted.
2.16 Agreements and Instruments. Except as set forth in Section
--------------------------
2.16 of Schedule I or as reflected in the audited Company consolidated
financial statements as of September 30, 1997, neither the Company nor any
Company Subsidiary is a party to (a) any material agreement, arrangement
or commitment not made in the ordinary course of business, (b) any
agreement, indenture or other instrument relating to the borrowing of
money by the Company or any Company Subsidiary or the guarantee by the
Company or any Company Subsidiary of any such obligation (other than
Federal Home Loan Bank advances with a maturity of one year or less from
the date hereof), (c) any agreements to make loans or for the provision,
purchase or sale of goods, services or property between Company or any
Company Subsidiary and any director or officer of Company or Savings, or
any member of the immediate family or affiliate of any of the foregoing,
(d) any agreements with or concerning any labor or employee organization
to which Company or any Company Subsidiary is a party, (e) any agreements
between Company or any Company Subsidiary and any five percent or more
shareholder of Company, and (f) any agreements, directives, orders, or
similar arrangements between or involving the Company or any Company
Subsidiary and any state or federal savings institution regulatory
authority.
2.17 Material Contract Defaults. Neither the Company nor any
--------------------------
Company Subsidiary nor the other party thereto is in default in any
respect under any contract, agreement, commitment, arrangement, lease,
insurance policy, or other instrument to which the Company or a Company
Subsidiary is a party or by which its respective assets, business, or
operations may be bound or affected or under which it or its respective
assets, business, or operations receives benefits, and which default is
reasonably expected to have either individually or in the aggregate a
material adverse effect on the Company and any Company Subsidiary, taken
as a whole, and there has not occurred any event that, with
the lapse of time or the giving of notice or both, would constitute such
a default.
2.18 Tax Matters.
-----------
(a) The Company and each of the Company Subsidiaries have
duly and properly filed all federal, state, local and other tax returns
required to be filed by them and have made timely payments of all taxes
shown thereon to be due and payable, whether disputed or not; the current
status of audits of such returns by the Internal Revenue Service ("IRS")
and other applicable agencies is as set forth in Section 2.18 of Schedule
I; and there is no agreement by the Company or any Company Subsidiary for
the extension of time or for the assessment or payment of any taxes
payable. Neither the IRS nor, except as set forth in Section 2.18 of
Schedule I, any other taxing authority is now asserting or, to the
knowledge of Company, threatening to assert any deficiency or claim for
additional taxes (or interest thereon or penalties in connection
therewith), nor is the Company aware of any basis for any such assertion
or claim. The Company and each of the Company Subsidiaries have
complied in all material respects with applicable IRS backup withholding
requirements and have filed all appropriate information reporting returns
for all tax years for which the statute of limitations has not closed.
The Company and each Company Subsidiary have complied in all material
respects with all applicable state law sales and use tax collection and
reporting requirements.
(b) Adequate provision for any federal, state, local, or
foreign taxes due or to become due for the Company or any of the Company
Subsidiaries for any period or periods through and including September 30,
1997, has been made and is reflected on the September 30, 1997 audited
Company consolidated financial statements and has been or will be made in
accordance with generally accepted accounting principles with respect to
periods ending after September 30, 1997.
2.19 Environmental Matters. Except as set forth on Section 2.19
---------------------
of Schedule I, to the knowledge of the Company, neither the Company nor
any Company Subsidiary owns or leases any properties affected by toxic
waste, radon gas or other hazardous conditions or constructed in part with
the use of asbestos. Neither the Company nor any Company Subsidiary has
knowledge of, nor has the Company or any Company Subsidiary received
written notice from any governmental or regulatory body of, any
conditions, activities, practices or incidents which is reasonably likely
to interfere with or prevent compliance or continued compliance with
hazardous substance laws or any regulation, order, decree, judgment or
injunction, issued, entered, promulgated or approved thereunder, or which
may give rise to any common law or legal liability, or otherwise form the
basis of any claim, action, suit, proceeding, hearing or investigation
based on or related to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling, or the emission,
discharge, release or threatened release into the environment, of any
pollutant, contaminant or chemical, or industrial, toxic or hazardous
substance or waste. There is no civil, criminal or administrative claim,
action, suit, proceeding, hearing or investigation pending or, to
Company's knowledge, threatened against Company or any Company Subsidiary
relating in any way to such hazardous substance laws or any regulation,
order, decree, judgment or injunction issued, entered, promulgated or
approved thereunder.
2.20 Loan Portfolio: Portfolio Management.
-------------------------------------
(a) All evidences of indebtedness reflected as assets in the
consolidated balance sheet of the Company as of September 30, 1997, or
acquired since such date, are (except with respect to those assets which
are no longer assets of the Company or any Company Subsidiary) binding
obligations
of the respective obligors named therein except as enforcement may be
limited by bankruptcy, insolvency or other similar laws affecting the
enforcement of creditors rights generally, and except that the
availability of equitable remedies, including specific performance, is
subject to the discretion of the court before which any proceeding may be
brought, and the payment of no material amount thereof (either
individually or in the aggregate with other evidences of indebtedness) is
subject to any defenses which have been asserted or, to the knowledge of
the Company threatened, against the Company or any Company Subsidiary.
All such indebtedness which is secured by an interest in real property is,
to the Company's knowledge, secured by a valid and perfected mortgage lien
having the priority specified in the loan documents. All loans originated
or purchased by Savings were at the time entered into and at all times
since have been in compliance in all material respects with all applicable
laws (including, without limitation, all consumer protection laws) and
regulations. Savings administers its loan and investment portfolios
(including, but not limited to, adjustments to adjustable mortgage loans)
in all material respects in accordance with all applicable laws and
regulations and the terms of applicable instruments. The records of
Savings regarding all loans outstanding on its books are accurate in all
material respects and the risk classification system has been established
in accordance with the requirements of the OTS.
(b) Section 2.20 of Schedule I sets forth a list, accurate
and complete in all material respects, of the aggregate amounts of loans,
extensions of credit and other assets of Savings and its subsidiaries that
have been adversely designated, criticized or classified by it as of
December 31, 1997, separated by category of classification or criticism
(the "Asset Classification"); and no amounts of loans, extensions of
credit or other assets that have been adversely designated, classified or
criticized as of the date hereof by any representative of any government
entity as "Special Mention," "Substandard," "Doubtful," "Loss" or words of
similar import are excluded from the amounts disclosed in the Asset
Classification, other than amounts of loans, extensions of credit or other
assets that were charged off by it or any of the Company Subsidiaries
before the date hereof.
2.21 Real Estate Loans and Investments. Except for properties
---------------------------------
acquired in settlement of loans, there are no facts, circumstances or
contingencies known to the Company or any Company Subsidiary which exist
which would require a material reduction under generally accepted
accounting principles in the present carrying value of any of the real
estate investments, joint ventures, construction loans, other investments
or other loans of the Company or any Company Subsidiary (either
individually or in the aggregate with other loans and investments).
2.22 Derivatives Contracts. Neither the Company nor any of its
---------------------
Subsidiaries is a party to or has agreed to enter into an exchange-traded
or over-the-counter swap, forward, future, option, cap, floor or collar
financial contract or any other contract not included on its balance sheet
which is a derivatives contract (including various combinations thereof)
(each, a "Derivatives Contract") or owns securities that are identified in
Thrift Bulletin No. 65 or otherwise referred to as structured notes (each,
a "Structured Note"), except for those Derivatives Contracts and
Structured Notes set forth in Section 2.22 of Schedule I, including a
list, as applicable, of any of its or any of its Subsidiaries' assets
pledged as security for a Derivatives Contract.
2.23 Insurance. The Company and the Company Subsidiaries have in
---------
effect insurance coverage which, in respect to amounts, types and risks
insured, is reasonably adequate for the business in which the Company and
the Company Subsidiaries are engaged. A schedule of all insurance
policies in effect as to the Company and the Company Subsidiaries (the
"Insurance
Policies") is as set forth on Section 2.23 of Schedule I (other than
policies pertaining to mortgage loans made in the ordinary course of
business). All Insurance Policies are in full force and effect, all
premiums with respect thereto covering all periods up to and including the
date of this Agreement have been paid, such premiums covering all periods
from the date hereof up to and including the Acquisition Merger Effective
Date shall have been paid on or before the Acquisition Merger Effective
Date, to the extent then due and payable (other than retrospective
premiums which may be payable with respect to worker's compensation
insurance policies, adequate reserves for which are reflected in the
Company's financial statements). The Insurance Policies are valid,
outstanding and enforceable in accordance with their respective terms and
will not, except as set forth in Section 2.11 of Schedule I, in any way be
affected by, or terminated or lapsed solely by reason of, the transactions
contemplated by this Agreement. Neither the Company nor any Company
Subsidiary has been refused any insurance with respect to any material
properties, assets or operations, nor has any coverage been limited or
terminated by any insurance carrier to which it has applied for any such
insurance or with which it has carried insurance during the last three
years.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF AMBANC AND THE BANK
Ambanc and the Bank represent and warrant to Company and Savings
that, except as disclosed in Schedule II attached hereto, and except that
Bank makes no representations or warranties regarding Ambanc:
3.1 Organization, Good Standing, Authority, Insurance, Etc.
------------------------------------------------------
Ambanc is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Delaware. Each of the
subsidiaries of Ambanc (individually an "Ambanc Subsidiary" and
collectively the "Ambanc Subsidiaries") is duly organized, validly
existing, and in good standing under the laws of the respective
jurisdiction under which it is organized. Ambanc and each Ambanc
Subsidiary has all requisite power and authority and is duly qualified and
licensed to own, lease and operate its properties and conduct its business
as it is now being conducted. Ambanc has delivered to the Company a true,
complete and correct copy of the Certificate of Incorporation, charter, or
other organizing document and of the bylaws, as in effect on the date of
this Agreement, of Ambanc and each Ambanc Subsidiary. Ambanc and each
Ambanc Subsidiary is qualified to do business as a foreign corporation and
is in good standing in each jurisdiction in which qualification is
necessary under applicable law, except to the extent that any failures to
so qualify would not, in the aggregate, have a material adverse effect on
the business, financial condition or results of operations of Ambanc and
the Ambanc Subsidiaries, taken as a whole. The Bank is a member in good
standing of the Federal Home Loan Bank of New York, and all eligible
accounts issued by the Bank are insured by the BIF to the maximum extent
permitted under applicable law. The Bank is a "domestic building and loan
association" as defined in Section 7701(a)(19) of the Code, and is a
"qualified thrift lender" as defined in Section 10(m) of the HOLA and the
Thrift Regulations. Ambanc is duly registered as a savings and loan
holding company under the HOLA.
3.2 Capitalization. The authorized capital stock of Ambanc
--------------
consists of 15,000,000 shares of Ambanc common stock, par value $.01 per
share, of which 4,258,418 shares were issued and outstanding as of the
date of this Agreement and 5,000,000 shares of serial preferred stock, par
value of $.01 per share, of which no shares were outstanding as of the
date of this Agreement. All issued shares of the capital stock of Ambanc
and of each of the Ambanc Subsidiaries have been fully paid, were duly
authorized and validly issued, are non-assessable, have been issued
pursuant to an effective
registration statement and current prospectus under the 1933 Act, or an
appropriate exemption from registration under the 1933 Act and were not
issued in violation of the preemptive rights of any shareholder. Ambanc
is the holder and beneficial owner of all of the issued and outstanding
capital stock of the Bank. No options covering capital stock of Ambanc or
the Bank, warrants to purchase or contracts to issue capital stock of
Ambanc or the Bank, or any other contracts, rights (including preemptive
rights), commitments or convertible securities entitling anyone to acquire
from Ambanc or any of the Ambanc Subsidiaries or obligating them to issue
any capital stock, or securities convertible into or exchangeable for
shares of capital stock, of Ambanc or the Bank are outstanding, in
existence, or the subject of an agreement, except for Ambanc common stock
issuable upon the exercise of employee stock options granted under the
employee benefit plans of Ambanc. All capital stock of its direct and
indirect subsidiaries beneficially owned by Ambanc or an Ambanc Subsidiary
is held free and clear of any claims, liens, encumbrances or security
interests.
3.3 Ownership of Subsidiaries. All the outstanding shares of the
-------------------------
capital stock of the Ambanc Subsidiaries are validly issued, fully paid,
nonassessable and owned beneficially and of record by Ambanc or an Ambanc
Subsidiary free and clear of any Encumbrance. All of the outstanding
capital stock or other ownership interests in all of the Ambanc
Subsidiaries is owned either by Ambanc or the Bank. There are no options,
convertible securities, warrants, or other rights (preemptive or
otherwise) to purchase or acquire any capital stock of any Ambanc
Subsidiary and no contracts to which Ambanc or any of its affiliates is
subject with respect to the issuance, voting or sale of issued or unissued
shares of the capital stock of any of the Ambanc Subsidiaries.
3.4 Financial Statements and Reports.
--------------------------------
(a) No registration statement, proxy statement, schedule or
report filed by Ambanc or any Ambanc Subsidiary with the SEC or the OTS
under the 1933 Act, or the 1934 Act, on the date of effectiveness in the
case of such registration statements, or on the date of filing in the case
of such reports or schedules, or on the date of mailing in the case of
such proxy statements, contained any untrue statement of a material fact
or omitted to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading. For the past five years (or
such shorter period as they may have been subject to such filing
requirements), Ambanc and the Ambanc Subsidiaries have timely filed all
documents required to be filed by them with the SEC, the OTS, or the FDIC
under various securities and financial institution laws and regulations,
except to the extent that all failures to so file, in the aggregate, would
not have a material adverse effect on the business, financial condition or
results of operations of Ambanc and the Ambanc Subsidiaries, taken as a
whole; and all such documents, as finally amended, complied in all
material respects with applicable requirements of law and, as of their
respective date or the date as amended, did not contain any untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading. Except to
the extent stated therein, all financial statements and schedules included
in the documents referred to in the preceding sentences (or to be included
in similar documents to be filed after the date hereof) (i) are or will be
(with respect to financial statements in respect of periods ending after
December 31, 1997) in accordance with Ambanc's books and records and those
of any of its Subsidiaries, and (ii) present (and in the case of financial
statements in respect of periods ending after December 31, 1997 will
present) fairly the consolidated statement of financial condition and the
consolidated statements of operations, stockholders' equity and cash flows
of Ambanc and the Ambanc Subsidiaries as of the dates and for the periods
indicated in accordance with
generally accepted accounting principles (except for the omission of notes
to unaudited statements, year end adjustments to interim results and
changes in generally accepted accounting principles). The audited
consolidated financial statements of Ambanc as of December 31, 1997 and
for the three years then ended and the consolidated financial statements
for all periods thereafter up to the Closing disclose or will disclose, to
the extent required by generally accepted accounting principles, as the
case may be, all liabilities (whether accrued, absolute, contingent,
direct or indirect, unliquidated or otherwise, whether due or due to
become due and regardless of when asserted), as of their respective dates,
of Ambanc and the Ambanc Subsidiaries required to be reflected in such
financial statements according to generally accepted accounting
principles, other than liabilities which are not, in the aggregate,
material to Ambanc and the Ambanc Subsidiaries, taken as a whole, and
contain or will contain in the opinion of management adequate reserves for
losses on loans and properties acquired in settlement of loans, taxes and
all other material accrued liabilities and for all reasonably anticipated
material losses, if any as of such date. There exists no set of
circumstances that could reasonably be expected to result in any liability
or obligation material to Ambanc or the Ambanc Subsidiaries, taken as a
whole, except as disclosed in the audited consolidated financial
statements at December 31, 1997, or for transactions effected, actions
occurring or omitted to be taken, or claims made after December 31, 1997,
(i) in the ordinary course of business, or (ii) as permitted by this
Agreement.
(b) Ambanc has delivered to the Company all periodic reports
filed with the SEC under the 1934 Act for periods since December 31, 1997
through the date hereof and will through Closing promptly deliver copies
of 1934 Act reports for future periods.
3.5 Absence of Changes. Since December 31, 1997, there have been
------------------
no material adverse changes in the business, properties, financial
condition, operations or assets of Ambanc or any Ambanc Subsidiary, other
than any changes attributable to or resulting from any change in law,
regulation or generally accepted accounting principles or regulatory
accounting principles, which impairs both Ambanc and other comparably
sized thrift institutions in a substantially similar manner and other than
changes attributable to or resulting from changes in economic conditions
applicable to depository institutions generally or in general levels of
interest rates affecting Ambanc and comparably sized thrift institutions
to a similar extent and in a similar manner. Since December 31, 1997 to
the date hereof, there has been no occurrence, event or development of any
nature existing, or to the knowledge of Ambanc, threatened, which is
reasonably expected to result in such a change.
Since December 31, 1997 and through the date hereof, each of
Ambanc and the Ambanc Subsidiaries has owned and operated their respective
assets, properties and businesses in the ordinary course of business and
consistent with past practice.
3.6 Prospectus/Proxy Statement. At the time the Registration
--------------------------
Statement becomes effective and at the time the Prospectus/Proxy Statement
is mailed to the shareholders of the Company and Ambanc for the
solicitation of proxies for the approvals referred to in Section 1.7
hereof and at all times subsequent to such mailings up to and including
the times of such approval, such Registration Statement and
Prospectus/Proxy Statement (including any amendments or supplements
thereto), with respect to all information set forth therein relating to
Ambanc (including the Ambanc Subsidiaries), its shareholders and
representatives, Ambanc Common Stock, this Agreement, the Merger and all
other transactions contemplated hereby, will:
(a) comply in all material respects with applicable
provisions of the 1933 Act, the 1934 Act and the rules and regulations
under such Acts; and
(b) 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 contained therein, in light of the
circumstances under which it is made, not misleading.
3.7 No Broker's or Finder's Fees. No agent, broker, investment
----------------------------
banker, person or firm acting on behalf or under authority of Ambanc or
any of the Ambanc Subsidiaries is or will be entitled to any broker's or
finder's fee or any other commission or similar fee directly or indirectly
in connection with the Merger or any other transaction contemplated
hereby, except Ambanc has engaged Sandler X'Xxxxx & Partners, L.P., an
investment banking firm, to provide financial advisory services to Ambanc.
3.8 Compliance With Law.
-------------------
(a) To the knowledge of Ambanc, Ambanc and the Ambanc
Subsidiaries are in compliance in all material respects with all material
laws and regulations applicable to their respective business or operations
or with respect to which compliance is a condition of engaging in the
business thereof, and neither Ambanc nor any Ambanc Subsidiary has
received notice from any federal, state or local government or
governmental agency of any material violation of, and does not know of any
material violations of, any of the above.
(b) To the knowledge of Ambanc, Ambanc and each of it
Subsidiaries have all material permits, licenses, certificates of
authority, orders and approvals of, and have made all material filings,
applications and registrations with, all federal, state, local and foreign
governmental or regulatory bodies that are required in order to permit it
to carry on its respective business as it is presently conducted.
3.9 Corporate Actions. The Boards of Directors of Ambanc and the
-----------------
Bank have duly authorized their respective officers to execute and deliver
(as applicable) this Agreement, the Bank Plan of Merger and the Option
Agreement and to take all action necessary to consummate the Merger and
the other transactions contemplated hereby. The Board of Directors of
Ambanc has authorized and directed the submission for shareholders'
adoption of this Agreement, together with the Option Agreement and any
other action requiring such approvals. All corporate authorizations by
the Boards of Directors of Ambanc and the Bank required for the
consummation of the Merger have been obtained, and no other corporate
action is required to be taken.
3.10 Authority. The execution, delivery and performance of this
---------
Agreement and the Option Agreement by Ambanc and the Bank does not violate
any of the provisions of, or constitute a default under or give any person
the right to terminate or accelerate payment or performance under (i) the
certificate of incorporation or bylaws of Ambanc, the charter or bylaws of
the Bank, or the articles of incorporation or bylaws of any other Ambanc
Subsidiary, (ii) any regulatory restraint on the acquisition of the
Company or Savings or control thereof, (iii) any law, rule, ordinance or
regulation or judgment, decree, order, award or governmental or non-
governmental permit or license to which Ambanc or any of the Ambanc
Subsidiaries is subject or (iv) any other Contract to which Ambanc or any
of the Ambanc Subsidiaries is a party or is subject to or by which any of
their properties or assets is bound which default, termination or
acceleration would have a material adverse effect on the financial
condition, business or results of operations of Ambanc
and the Ambanc Subsidiaries, taken as a whole. The parties acknowledge
that the consummation of the Merger and the other transactions
contemplated hereby is subject to various regulatory approvals. Ambanc
and the Bank have all requisite corporate power and authority to enter
into this Agreement and the Option Agreement and to perform their
obligations hereunder. Other than the receipt of Governmental Approvals
and shareholder approval, no consents or approvals are required on behalf
of Ambanc or any Ambanc Subsidiary in connection with the consummation of
the transactions contemplated by this Agreement, the Option Agreement or
the Bank Plan of Merger. This Agreement, the Option Agreement and the
Bank Plan of Merger constitute the valid and binding obligations of Ambanc
and the Bank, and are enforceable in accordance with their terms, except
as enforceability may be limited by applicable laws relating to
bankruptcy, insolvency or creditors' rights generally and general
principles of equity.
3.11 Information Furnished. Any schedule, certificate or other
---------------------
document furnished (whether prior to or subsequent to the date of this
Agreement) or to be furnished in writing by or on behalf of Ambanc to
Company pursuant to this Agreement will be accurate in all material
respects and will not omit any information necessary to make the
information provided not misleading. No information material to the
Merger and which is necessary to make the representations and warranties
true, knowingly has been withheld from the Company.
3.12 Litigation and Other Proceedings. Except for matters which
--------------------------------
would not have a material adverse effect on the business, financial
condition or results of operations of Ambanc and the Ambanc Subsidiaries
taken as a whole, neither Ambanc nor any Ambanc Subsidiary is a defendant
in, nor is any of its property subject to, any pending, or, to the
knowledge of the management of Ambanc, threatened, claim, action, suit,
investigation, or proceeding, or subject to any judicial order, judgment
or decree.
3.13 Agreements and Instruments. As of the date of this
--------------------------
Agreement, there are no agreements, directives, orders or similar
arrangements between or involving Ambanc or any Ambanc Subsidiary and any
state or federal savings institution regulatory authority.
3.14 Tax Matters. Ambanc and each of the Ambanc Subsidiaries
-----------
have duly and properly filed all federal, state, local and other tax
returns required to be filed by them and have made timely payments of all
taxes shown thereon to be due and payable, whether disputed or not; there
is no agreement by Ambanc or any Ambanc Subsidiary for the extension of
time or for the assessment or payment of any taxes payable. Neither the
IRS nor any other taxing authority is now asserting or, to the knowledge
of Ambanc, threatening to assert any deficiency or claim for additional
taxes (or interest thereon or penalties in connection therewith), nor is
Ambanc aware of any basis for any such assertion or claim. Ambanc and
each of the Ambanc Subsidiaries have complied in all material respects
with applicable IRS backup withholding requirements and have filed all
appropriate information reporting returns for all tax years for which the
statute of limitations has not closed. Ambanc and each Ambanc Subsidiary
have complied in all material respects with all applicable state law sales
and use tax collection and reporting requirements.
3.15 Property and Assets. To the knowledge of Ambanc, Ambanc and
-------------------
the Ambanc Subsidiaries have marketable title to all of their real
property reflected in the financial statements at December 31, 1997,
referred to in Section 3.4 hereof, or acquired subsequent thereto, free
and clear of all encumbrances, except for (a) such items shown in such
financial statements or in the notes thereto, (b) liens for current real
estate taxes not yet
delinquent, (c) customary title exceptions that have no material adverse
effect upon the value of such property, (d) property sold or transferred
in the ordinary course of business since the date of such financial
statements, and (e) pledges or liens incurred in the ordinary course of
business. Ambanc and the Ambanc Subsidiaries enjoy peaceful and
undisturbed possession under all material leases for the use of real
property under which they are the lessee; all of such leases are valid and
binding and in full force and effect and neither Ambanc nor any Ambanc
Subsidiary is in default in any material respect under any such lease.
There has been no material physical loss, damage or destruction, whether
or not covered by insurance, affecting the real properties of Ambanc and
the Ambanc Subsidiaries since December 31, 1997, except such loss, damage
or destruction which does not have a material adverse effect on Ambanc and
Ambanc Subsidiaries, taken as a whole. All property and assets material
to their business and currently used by Ambanc and Ambanc Subsidiaries
are, in all material respects, in good operating condition and repair,
normal wear and tear excepted.
3.16 Derivatives Contracts. Neither Ambanc nor any of the Ambanc
---------------------
Subsidiaries is a party to or has agreed to enter into an exchange-traded
or over-the-counter swap, forward, future, option, cap, floor or collar
financial contract or any other contract not included on its Balance Sheet
which is a derivatives contract (including various combinations thereof)
(each, a "Derivatives Contract") or owns securities that are identified in
Thrift Bulletin No. 65 or otherwise referred to as structured notes (each,
a "Structured Note"), except for those Derivatives Contracts and Structured
Notes set forth in Section 3.16 of Schedule II, including a list, as
applicable, of any of its or any of its Subsidiaries' assets pledged as
security for a Derivatives Contract.
3.17 Insurance. Ambanc and Ambanc Subsidiaries have in effect
---------
insurance coverage which, in respect to amounts, types and risks insured,
is reasonably adequate for the business in which Ambanc and Ambanc
Subsidiaries are engaged. All insurance policies in effect as to Ambanc
and the Ambanc Subsidiaries are in full force and effect, all premiums
with respect thereto covering all periods up to and including the date of
this Agreement have been paid, such premiums covering all periods from the
date hereof up to and including the Acquisition Merger Effective Date
shall have been paid on or before the Acquisition Merger Effective Date,
to the extent then due and payable (other than retrospective premiums
which may be payable with respect to workers' compensation insurance
policies, adequate reserves for which are reflected in Ambanc's financial
statements). The insurance policies are valid, outstanding and
enforceable in accordance with their respective terms and will not in any
way be affected by, or terminated or lapsed solely by reason of, the
transactions contemplated by this Agreement. Neither Ambanc nor any
Ambanc Subsidiary has been refused any insurance with respect to any
material properties, assets or operations, nor has any coverage been
limited or terminated by any insurance carrier to which it has applied for
any such insurance or with which it has carried insurance during the last
three years.
3.18 Employee Benefits. To Ambanc's knowledge, each Employee
-----------------
Plan and Benefit Arrangement (i) has been administered to date, and will
be administered until the Closing, in accordance with their terms and in
compliance with the Code, ERISA, and all other applicable rules and
regulations, (ii) has, in a timely, accurate, and proper manner, both
filed all required government reports and made all required employee
communications, and (iii) between the date of this Agreement and the
Closing, will complete and file all such required reports. To Ambanc's
knowledge, no condition exists that could constitute grounds for the
termination of any Employee Plan under Section 4042 of ERISA; no
"prohibited transaction," as defined in Section 406 of ERISA and Section
4975 of the Code, has occurred with respect
to any Employee Plan, or any other employee benefit plan maintained by
Ambanc or any Ambanc Subsidiary which is covered by Title I of ERISA,
which could subject any person to liability under Title I of ERISA or to
the imposition of any tax under Section 4975 of the Code nor has any
Employee Plan subject to Part III of Subtitle B of Title I of ERISA or
Section 412 of the Code, or both, incurred any "accumulated funding
deficiency," as defined in Section 412 of the Code, whether or not waived;
nor has Ambanc or any Ambanc Subsidiary failed to make any contribution or
pay any amount due and owing as required by the terms of any Employee Plan
or Benefit Arrangement. To Ambanc's knowledge, neither Ambanc nor any
Ambanc Subsidiary has incurred or expects to incur, directly or
indirectly, any liability under Title IV of ERISA arising in connection
with the termination of, or a complete or partial withdrawal from, any
plan covered or previously covered by Title IV of ERISA which could
constitute a liability of Ambanc or any of its affiliates at or after the
Acquisition Merger Effective Time.
3.19 Material Contract Defaults. Neither Ambanc nor any Ambanc
--------------------------
Subsidiary nor the other party thereto is in default in any respect under
any contract, agreement, commitment, arrangement, lease, insurance policy,
or other instrument to which Ambanc or an Ambanc Subsidiary is a party or
by which its respective assets, business, or operations may be bound or
affected or under which it or its respective assets, business, or
operations receives benefits, and which default is reasonably expected to
have either individually or in the aggregate a material adverse effect on
Ambanc and any Ambanc Subsidiary, taken as a whole, and there has not
occurred any event that, with the lapse of time or the giving of notice or
both, would constitute such a default.
3.20 Tax Matters. Adequate provision for any federal, state,
-----------
local, or foreign taxes due or to become due for Ambanc or any of the
Ambanc Subsidiaries for any period or periods through and including
December 31, 1997, has been made and is reflected on the December 31, 1997
audited Ambanc consolidated financial statements and has been or will be
made in accordance with generally accepted accounting principles with
respect to periods ending after December 31, 1997.
3.21 Environmental Matters. Except as set forth on Section 3.21
---------------------
of Schedule II, to the knowledge of Ambanc, neither Ambanc nor any Ambanc
Subsidiary owns or leases any properties affected by toxic waste, radon
gas or other hazardous conditions or constructed in part with the use of
asbestos. Neither Ambanc nor any Ambanc Subsidiary has knowledge of, nor
has Ambanc or any Ambanc Subsidiary received written notice from any
governmental or regulatory body of, any conditions, activities, practices
or incidents which is reasonably likely to interfere with or prevent
compliance or continued compliance with hazardous substance laws or any
regulation, order, decree, judgment or injunction, issued, entered,
promulgated or approved thereunder, or which may give rise to any common
law or legal liability, or otherwise form the basis of any claim, action,
suit, proceeding, hearing or investigation based on or related to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling, or the emission, discharge, release or threatened
release into the environment, of any pollutant, contaminant or chemical,
or industrial, toxic or hazardous substance or waste. There is no civil,
criminal or administrative claim, action, suit, proceeding, hearing or
investigation pending or, to Ambanc's knowledge, threatened against Ambanc
or any Ambanc Subsidiary relating in any way to such hazardous substance
laws or any regulation, order, decree, judgment or injunction issued,
entered, promulgated or approved thereunder.
3.22 Loan Portfolio: Portfolio Management. All evidences of
-------------------------------------
indebtedness reflected as assets in the consolidated balance sheet of
Ambanc as of December 31, 1997, or acquired since such date, are (except
with respect to those assets which are no longer assets of Ambanc or any
Ambanc Subsidiary) binding obligations of the respective obligors named
therein except as enforcement may be limited by bankruptcy, insolvency or
other similar laws affecting the enforcement of creditors rights
generally, and except that the availability of equitable remedies,
including specific performance, is subject to the discretion of the court
before which any proceeding may be brought, and the payment of no material
amount thereof (either individually or in the aggregate with other
evidences of indebtedness) is subject to any defenses which have been
asserted or, to the knowledge of Ambanc threatened, against Ambanc or any
Ambanc Subsidiary. All such indebtedness which is secured by an interest
in real property is, to Ambanc's knowledge, secured by a valid and
perfected mortgage lien having the priority specified in the loan
documents. All loans originated or purchased by Bank were at the time
entered into and at all times since have been in compliance in all
material respects with all applicable laws (including, without limitation,
all consumer protection laws) and regulations. Bank administers its loan
and investment portfolios (including, but not limited to, adjustments to
adjustable mortgage loans) in all material respects in accordance with all
applicable laws and regulations and the terms of applicable instruments.
The records of Bank regarding all loans outstanding on its books are
accurate in all material respects and the risk classification system has
been established in accordance with the requirements of the OTS.
ARTICLE IV
COVENANTS
4.1 Investigations; Access and Copies. Between the date of this
---------------------------------
Agreement and the Acquisition Merger Effective Time, each party agrees to
give to the other party and its respective representatives and agents full
access (to the extent lawful) to all of the premises, books, records and
employees of it and its subsidiaries at all reasonable times, upon not
less than three days' prior notice, and to furnish and cause its
subsidiaries to furnish to the other party and its respective agents or
representatives access to and true and complete copies of such financial
and operating data, all documents with respect to matters to which
reference is made in Articles II or III of this Agreement or on any list,
schedule or certificate delivered or to be delivered in connection
herewith, and such other documents, records, or information with respect
to the business and properties of it and its subsidiaries as the other
party or its respective agents or representative shall from time to time
reasonably request; provided, however, that any such inspection (a) shall
be conducted in such manner as not to interfere unreasonably with the
operation of the business of the entity inspected and (b) shall not affect
any of the representations and warranties hereunder. Each party will also
give prompt written notice to the other party of any event or development
(x) which, had it existed or been known on the date of this Agreement,
would have been required to be disclosed under this Agreement, (y) which
would cause any of its representations and warranties contained herein to
be inaccurate or otherwise materially misleading, or (z) which materially
relate to the satisfaction of the conditions set forth in Article V of
this Agreement.
4.2 Conduct of Business Prior to Closing. Between the date of
------------------------------------
this Agreement and the Acquisition Merger Effective Time, the parties
agree:
(a) That the Company and the Company Subsidiaries shall
conduct their business only in the ordinary course, and maintain their
books and records in accordance with past practices and not to take any
action that would (i) adversely affect the ability to obtain the
Governmental Approvals or (ii) adversely affect the Company's ability to
perform its obligations under this Agreement or the Option Agreement;
(b) That the Company shall not, without the prior written
consent of Ambanc: (i) declare, set aside or pay any dividend or make any
other distribution with respect to Company's capital stock, except for the
declaration and payment of regular quarterly cash dividends in an amount
not to exceed $.07 per share of Company common stock with respect to any
full calender quarter after the date hereof; (ii) reacquire any of
Company's outstanding shares of capital stock; (iii) except as set forth
at Schedule 4.2(c) hereof, issue or sell or buy any shares of capital
stock of the Company or any Company Subsidiary, except shares of Company
common stock issued pursuant to the Company Option Plan and the Option
Agreement; (iv) effect any stock split, stock dividend or other
reclassification of Company's common stock; or (v) grant any options or
issue any warrants exercisable for or securities convertible or
exchangeable into capital stock of Company or any Company Subsidiary or
grant any stock appreciation or other rights with respect to shares of
capital stock of Company or of any Company Subsidiary;
(c) That Company and the Company Subsidiaries shall not,
without the prior written consent of Ambanc: (i) except as set forth at
Schedule 4.2(c) hereof, sell or dispose of any significant assets of the
Company or of any Company Subsidiary other than in the ordinary course of
business consistent with past practices; (ii) merge or consolidate the
Company or any Company Subsidiary with or, except as set forth at Schedule
4.2(c) hereof, otherwise acquire any other entity, or file any
applications or make any contract with respect to branching by Savings
(whether de novo, purchase, sale or relocation) or acquire or construct,
or enter into any agreement to acquire or construct, any interest in real
property (other than with respect to security interests in properties
securing loans and properties acquired in settlement of loans in the
ordinary course) or improvements to real property in the aggregate in
excess of $50,000; (iii) change the articles or certificate of
incorporation, charter documents or other governing instruments of the
Company or any Company Subsidiary, except as provided in this Agreement or
as required by law; (iv) grant to any executive officer, director or
employee of the Company or any Company Subsidiary any increase in annual
compensation, or any bonus type payment except for normal individual
increases in compensation to employees in the ordinary course of business
consistent with past practice (including, but not limited to, the payment
of bonuses for which such expense has previously been accrued) and except
as set forth on Schedule 4.2(c); (v) adopt any new or amend or terminate
any existing Employee Plans or Benefit Arrangements of any type except as
contemplated herein or as set forth at Schedule 4.2(c); (vi) except as set
forth on Schedule 4.2(c) or Schedule 4.16(d) hereof, authorize severance
pay or other benefits for any officer, director or employee of Company or
any Company Subsidiary; (vii) incur any material indebtedness or
obligation or enter into or extend any material agreement or lease, except
in the ordinary course of business consistent with past practices; (viii)
engage in any lending activities other than in the ordinary course of
business consistent with past practices; (ix) except as set forth at
Schedule 4.2(c) hereof, form any new subsidiary or cause or permit a
material change in the activities presently conducted by any Company
Subsidiary or make additional investments in subsidiaries; (x) purchase
any debt securities or derivative securities, including CMO or REMIC
products, that are defined as "high risk mortgage securities" under OTS
Thrift Bulletin No. 52 dated January 10, 1992 as revised or purchase any
Derivatives Contracts or Structured Notes; (xi) except as set forth at
Schedule 4.2(c) hereof, purchase any equity securities other than Federal
Home Loan Bank stock; (xii) make any investment which would cause Savings
to not be a qualified thrift lender under Section 10(m) of the HOLA, or
not to be a "domestic building and loan association" as defined in Section
7701(a)(19) of the Code; (xiii) make any loan with a principal balance of
$500,000 or more; (xiv) authorize capital expenditures other than in the
ordinary course of business; (xv) adopt or implement any change in its
accounting principles, practices or methods other than as may be required
by generally accepted accounting principles or by a regulatory authority
or adopt or implement any change in its methods of accounting for Federal
income tax purposes; or (xvi) make any loan in which participation
interests therein are to be sold to
other persons or entities or acquire a participation interest in a loan
originated by another person or entity in excess of $250,000. The
limitations contained in this Section 4.2(c) shall also be deemed to
constitute limitations as to the making of any commitment with respect to
any of the matters set forth in this Section 4.2(c). Notwithstanding the
foregoing, Savings may engage in any of the foregoing activities
exclusively with the Bank.
4.3 No Solicitation. The Company will not authorize any officer,
---------------
director, employee, investment banker, financial consultant, attorney,
accountant or other representative of Company or any Company Subsidiary,
directly or indirectly, to initiate contact with any person or entity in
an effort to solicit, initiate or encourage any "Takeover Proposal" (as
such term is defined below). Except as the fiduciary duties of the
Company Board of Directors may otherwise require under applicable law (as
determined in consultation with Company legal counsel), the Company will
not authorize any officer, director, employee, investment banker,
financial consultant, attorney, accountant or other representative of the
Company or any Company Subsidiary, directly or indirectly, (A) to
cooperate with, or furnish or cause to be furnished any non-public
information concerning its business, properties or assets to, any person
or entity in connection with any Takeover Proposal; (B) to negotiate any
Takeover Proposal with any person or entity; or (C) to enter into any
agreement, letter of intent or agreement in principle as to any Takeover
Proposal. The Company will promptly give written notice to Ambanc upon
becoming aware of any Takeover Proposal, such notice to contain, at a
minimum, the identity of the persons submitting the Takeover Proposal, a
copy of any written inquiry or other communication, the terms of any
Takeover Proposal and any information requested or discussions sought to
be initiated. As used in this Agreement with respect to the Company,
"Takeover Proposal" shall mean any bona fide proposal, other than as
contemplated by this Agreement, for a merger or other business combination
involving the Company or Savings or for the acquisition of a 10% or
greater equity interest in Company or Savings, or for the acquisition of
a substantial portion of the assets of Company or Savings (other than
loans or securities sold in the ordinary course).
4.4 Shareholder Approval. Subject to Section 1.7 herein, the
--------------------
Company and Ambanc shall call the meeting of its shareholders to be held
for the purpose of adopting this Agreement, as referred to in Section 1.7
hereof, as soon as practicable, but in no event later than sixty (60) days
after the Registration Statement becomes effective under the 1933 Act. In
connection with such meeting, the Company Board of Directors and Ambanc
Board of Directors shall favorably recommend adoption of this Agreement,
except as the fiduciary duties of the Company's Board of Directors and
Ambanc's Board of Directors under applicable law may otherwise require or
unless the Company is unable to obtain the opinion set forth in Section
5.3(h) hereof. The Company shall use its best efforts to solicit from its
shareholders proxies in favor of approval and to take all other action
necessary or helpful to secure a vote of the holders of the shares of
Company common stock in favor of the Merger, except as the fiduciary
duties of the Boards of Directors under applicable law may otherwise
require.
4.5 Filing of Holding Company and Merger Applications. Ambanc
-------------------------------------------------
shall use its best efforts promptly to prepare, submit and file within 75
days of the date hereof a holding company application to the OTS pursuant
to 12 C.F.R. Section 574.3 for acquisition of control of Company and
Savings and a merger application to the OTS pursuant to the Bank Merger
Act and 12 C.F.R. 563.22(a) for the Bank Merger and any other applications
required to be filed in connection with the transactions contemplated
hereby.
4.6 Consents. Company and Savings will use their best efforts to
--------
obtain the consent or approval of each person whose consent or approval
shall be required in order to permit Company or Savings, as the case may
be, to consummate the Merger.
4.7 Resale Letter Agreements. After execution of this Agreement,
------------------------
(i) Company shall use its best efforts to cause to be delivered to Ambanc
from each person who may be deemed to be an "affiliate" of Company within
the meaning of Rule 145 under the 1933 Act, a written letter agreement in
the form attached at Schedule 4.7 regarding restrictions on resale of the
shares of Ambanc Common Stock received by such persons in the Merger and
upon exercise of options received under Section 1.8 hereof subsequent to
the Acquisition Merger Effective Time to ensure compliance with applicable
resale restrictions imposed under the federal securities laws and (ii)
neither Ambanc nor the Company (including the Company Subsidiaries) shall
take any action which would materially impede or delay consummation of the
Merger, or prevent the transactions contemplated hereby from qualifying as
a reorganization within the meaning of Section 368 of the Code; provided
that nothing hereunder shall limit the ability of Ambanc to exercise its
rights under the Option Agreement.
4.8 Publicity. Between the date of this Agreement and the
---------
Acquisition Merger Effective Time, neither Ambanc, Company or any of their
subsidiaries shall, without the prior approval of the other, issue or
make, or authorize any of its directors, employees, officers or agents to
issue or make, any press release, disclosure or statement to the press or
any third party with respect to the Merger or the transactions
contemplated hereby, except as required by law. The parties shall
cooperate when issuing or making any press release, disclosure or
statement with respect to Merger or the transactions contemplated hereby,
except as required by law or by applicable stock exchange rules.
4.9 Cooperation Generally. Except as otherwise contemplated
---------------------
hereby, between the date of this Agreement and the Acquisition Merger
Effective Time, Ambanc, Company and their subsidiaries shall use their
best efforts, and take all actions necessary or appropriate, to consummate
the Merger and the other transactions contemplated by this Agreement at
the earliest practicable date. Ambanc and the Bank, on one hand, and the
Company and the Company Subsidiaries, on the other hand, agree not to
knowingly take any action that would (i) adversely affect their respective
ability to obtain the Governmental Approvals or (ii) adversely affect
their respective ability to perform their obligations under this
Agreement.
4.10 Additional Financial Statements and Reports. As soon as
-------------------------------------------
reasonably practicable after they become publicly available, the Company
shall furnish to Ambanc and Ambanc shall furnish to the Company,
respectively, its balance sheet and related statements of operations, cash
flows and stockholders' equity for all periods prior to the Closing. Such
financial statements will be prepared in conformity with generally
accepted accounting principles applied on a consistent basis and fairly
present the financial condition, results of operations and cash flows of
the Company or Ambanc, as the case may be (subject, in the case of
unaudited financial statements, to (a) normal year-end audit adjustments,
(b) any other adjustments described therein and (c) the absence of notes
which, if presented, would not differ materially from those included in
its most recent audited consolidated balance sheet), and all of such
financial statements will be prepared in conformity with the requirements
of Form 10-Q or Form 10-K, as the case may be, under the 0000 Xxx.
4.11 Stock Listing. Ambanc agrees to use its best efforts to
-------------
cause to be listed on the Nasdaq Stock Market, subject to official notice
of issuance, the shares of Ambanc Common Stock to be issued in the Merger
and the shares issuable in accordance with Section 1.8 hereto.
4.12 Allowance for Loan and Real Estate Owned Losses. At the
-----------------------------------------------
request of Ambanc and in an amount specified by Ambanc, immediately prior
to the Acquisition Merger Effective Time, the Company and Savings shall
establish such additional provisions for loan and real estate owned losses
as may be necessary in the reasonable, good faith determination of Ambanc,
after consultation with the Company and Savings, to conform the Company's
and Savings' loan and real estate owned allowance practices and methods to
those of Ambanc and the Bank (as such practices and methods are to be
applied to Company and Savings from and after the Acquisition Merger
Effective Time); provided, however, that Company and Savings shall not be
required to take such action until: (i) Company and Savings provide to
Ambanc a written statement dated the date of Closing certified by the
Chairman of the Board, the President and the Chief Financial Officer of
the Company and Savings, that the conditions in Sections 5.1 and 5.2 to be
satisfied by the Company or Savings or both of them have been satisfied by
either or both of them or, alternatively, setting forth in detail the
circumstances that have prevented such conditions from being satisfied
(the "Reliance Certificate"), and Ambanc and Bank provide to Company and
Savings a Reliance Certificate relating to the satisfaction of the
conditions in Sections 5.1 and 5.3; and (ii) Ambanc and the Bank, after
reviewing the Reliance Certificate, provide the Company and Savings a
written waiver of any right either entity may have to terminate the
Agreement which waiver shall contain an express condition precedent that
Company and Savings have established such additional provisions for loan
and real estate losses as requested by Ambanc pursuant to this Section
4.12; and provided further that the Company shall not be required to take
any action that is not consistent with generally accepted accounting
principles and applicable SEC and OTS regulations. No additional
provision for loan and real estate owned losses taken by Savings pursuant
to this Section 4.12 shall be deemed in and of itself to be a breach or
violation of any representation, warranty, covenant, condition or other
provision of this Agreement.
4.13 D&O Indemnification and Insurance. For a period of six (6)
---------------------------------
years following the Acquisition Merger Effective Time Ambanc and Bank
shall indemnify, and advance expenses in matters that may be subject to
indemnification to, persons who served as directors and officers of
Company or Savings or any other Company Subsidiaries on or before the
Acquisition Merger Effective Time with respect to liabilities and claims
(and related expenses, including fees and disbursements of counsel) made
against them resulting from their service as such prior to the Acquisition
Merger Effective Time in accordance with and subject to the requirements
and other provisions of the Certificate of Incorporation or Charter and
Bylaws of Company and Savings as in effect on the date of this Agreement
and applicable provisions of law. Ambanc shall cause the persons serving
as officers and directors of the Company immediately prior to the
Acquisition Merger Effective Time to be covered for a period of 18 months
from the Acquisition Merger Effective Time by the directors' and officers'
liability insurance policy maintained by the Company (provided that Ambanc
may substitute therefor policies of at least the same coverage and amounts
containing terms and conditions which are not materially less advantageous
than such policy) with respect to acts or omissions occurring prior to the
Acquisition Merger Effective Time which were committed by such officers
and directors in their capacity as such; provided, however, that in no
event shall Ambanc be required to expend more than 150% of the amount
currently expended by the Company on an annual basis to maintain or
procure insurance coverage for such 18 month period pursuant hereto. This
Section 4.13 shall be construed as an agreement as to which the directors
and officers of Company and Savings referred to herein are intended to be
third party beneficiaries and shall be enforceable by such persons and
their heirs and representatives.
4.14 Tax Treatment. Ambanc and Company shall use their best
-------------
efforts to cause the Merger to qualify as a reorganization under Section
368(a)(1) of the Code. The Company agrees to consent to the form of
representation letter provided by Silver, Xxxxxxxx & Xxxx, L.L.P. or other
tax advisor for purposes of issuing its federal tax opinion pursuant to
Section 5.1(e) of this Agreement no later than thirty (30) days prior to
the Closing.
4.15 Update Disclosure. From and after the date hereof until the
-----------------
Acquisition Merger Effective Time, the parties hereto shall promptly
update Schedules I and II hereto by notice to the other party to reflect
any matters which have occurred from and after the date hereof which, if
existing on the date hereof, would have been required to be described
therein and which, in the case of all such updates other than the last
such update prior to the Acquisition Merger Effective Time, reflect a
material change from the information provided in Schedule I or Schedule
II, as applicable, as of the date hereof; provided, however, that no such
update shall affect the conditions to the obligation of either party to
consummate the transactions contemplated hereby, and any and all changes
reflected in any such update shall be considered in determining whether
such conditions have been satisfied.
4.16 Company's Employee Plans and Benefit Arrangements.
-------------------------------------------------
(a) Except as otherwise provided in this Section, if Ambanc
so requests, the Company and any Company Subsidiary shall develop a plan
and timetable for terminating each Employee Plan and Benefit Arrangement
as of the date of Closing. The Company shall be solely responsible for
all costs, expenses, and other obligations whatsoever arising out of or
resulting from termination of any Employee Plan or Benefit Arrangement.
Neither the Company nor any Company Subsidiary will establish any new
benefit plan or arrangement for directors, officers, or employees, or
amend any Employee Plan or Benefit Arrangement without Ambanc's prior
written approval, except as otherwise provided in this Agreement. In its
discretion, Ambanc may merge any of the Employee Plans or Benefit
Arrangements of the Company or any Company Subsidiary with similar plans
of Ambanc or the Bank, subject to Ambanc or the Bank complying with the
obligations set forth in subparagraphs (c), (d) and (e) below.
(b) With respect to any Employee Plan or Benefit Arrangement
that provides for vesting of benefits, there shall be no discretionary
acceleration of vesting, except as set forth at Section 4.2(c) of Schedule
I or Schedule 4.16(b), except in connection with the termination of any
Employee Plan or Benefit Arrangement.
(c) Ambanc shall assume the obligations of and honor the terms
of, and provide substantially identical benefits as set forth in, Savings
Restricted Stock Plan and, subject to the provisions of Section 1.8, the
Company Option Plan, and all provisions for vested benefits or other
vested amounts earned or accrued through the Acquisition Merger Effective
Time under the Employee Plans and Benefit Arrangements.
(d) Ambanc shall assume the obligations of and honor in
accordance with their terms, and provide substantially identical benefits
as set forth in, the employment, severance and supplemental retirement
plan agreements and policies set forth at Schedule 4.16(d). Alternatively
and at the sole election of Messrs. Lisicki, Xxxxxx and Xxxxxxx,
respectively, such persons may elect to waive their respective rights to
a termination payment as a result of a change in control under their
existing employment contracts and become a party to an employment contract
with Ambanc and/or the Bank in the form set forth at Schedule 4.16(d) and
with the titles and benefits set forth therein, which compensation and
benefits shall not be less than that payable
under such persons' current employment agreements. The supplemental
retirement plan for Messrs. Lisicki and Xxxxxx may be amended to permit
vesting of benefits on an annual basis.
(e) The Company's Employee Stock Ownership Plan (the "Company
ESOP") shall be terminated in accordance with its terms as of the
Acquisition Merger Effective Time.
(f) This Section 4.16(e) shall be construed as an agreement
as to which the officers and employees of Company and Savings referred to
herein are intended to be third party beneficiaries and shall be
enforceable by such persons and their heirs and representatives.
4.17 Amendment of Savings' Federal Stock Charter. Company and
--------------------------------------------
Savings will take all actions necessary to effectuate an amendment to
Section 8 of Savings' Federal Stock Charter to make inapplicable to Ambanc
and Bank the restrictions therein, provided that Company and Savings may
make such amendment contingent upon consummation of the Merger.
4.18 Environmental Reports. Ambanc, at its expense, shall
---------------------
undertake within 15 days of the date hereof to order, and shall within 40
days (subject to extension with the consent of the Company) after
ordering, receive, a Phase I Environmental Risk Report (as contemplated in
OTS Thrift Bulletin #16) ("Report") on (i) all commercial real estate owned
by, (ii) all offices and premises used as facilities by, and (iii) all
properties which serve as security for any commercial real estate loan
having an original principal balance of $500,000 or more of the Company
and Savings. Failure to order such Report on any particular properties
within such 15 day period shall constitute a waiver of such condition with
respect to such property. In the event that Ambanc believes in good faith
that such Report indicates a reasonable likelihood that the costs to
cleanup, remove, remediate, or take any other action necessary to bring
any such property or properties into material compliance with Company's or
any Company Subsidiary's obligations under any environmental laws exceed
$250,000 in the aggregate, Ambanc shall, within 15 days of its receipt of
such Report, provide Company with written notice to that effect. Ambanc
shall thereafter undertake to order within 15 days of receipt of such
Report and shall within 30 days of ordering receive a Phase II
Environmental Report (as contemplated in OTS Thrift Bulleting #16) to
confirm such belief. Failure to order such Phase II report ("Phase II
Report") on any particular properties within such 15 day period shall
constitute a waiver of such condition with respect to such property.
Ambanc shall within seven days of receipt of such Phase II Report either
deliver written notice to Company of its termination of this Agreement in
that the aggregate costs to cleanup, remove, remediate or take such other
action necessary to bring such properties into material compliance with
the Company's or any Company Subsidiary's obligations under any
environmental laws will exceed $250,000 determined in good faith and that
Ambanc shall elect to terminate this Agreement, or Ambanc shall deliver in
writing notice of its waiver of the condition contained at Section 5.2(i)
hereof. Failure to deliver such written notice of its termination of the
Agreement shall constitute waiver of this condition as provided at Section
5.2(i). Ambanc shall deliver complete copies of all Phase I and Phase II
reports to Company within five days of receipt of any such reports. The
contents of such reports shall remain confidential whether or not the
Merger is consummated.
4.19 Advisory Board of Directors. Promptly after the Acquisition
---------------------------
Merger Effective Time, the board of directors of Ambanc shall create a
special committee of the board for the purpose of providing an orderly
transition to a smaller board of directors. In addition, on or
immediately following the Acquisition Merger Effective Time, Ambanc shall
create an advisory board of
directors and shall appoint three persons selected by the Company, in
consultation with Ambanc, to the advisory board of directors. Advisory
directors shall be paid an advisory director board fee in an amount to be
determined.
4.20 Appointment of President and CEO. By January 1, 1999, or
--------------------------------
sooner by mutual consent, Ambanc's Board of Directors shall appoint Xxxx
X. Xxxxxxx as President and Chief Executive Officer of Ambanc, at no less
than the total value of the salary, board fees and other benefits he is
receiving from the Company and Savings as of the date of the Closing.
Additionally, immediately upon the Bank Merger Effective Time, Ambanc and
the Bank's Board of Directors shall appoint Xxxx X. Xxxxxxx as President
and Chief Executive officer of the Bank, as the surviving institution, at
no less than the total value of the salary, board fees and other benefits
he is receiving from the Company and Savings as of the date of the
Closing. Payment by Ambanc shall offset payment obligations by the Bank
and vice versa, such that the total payment due Xx. Xxxxxxx shall not be
less than his total salary, board fees and other benefits from the Company
and Savings as of the Closing. This Section 4.20 shall be construed as an
agreement as to which Xx. Xxxxxxx is intended to be a third party
beneficiary and shall be enforceable by such person and his heirs and
representatives.
4.21 Approvals and Registration. Ambanc will use its best
--------------------------
efforts to prepare and file (a) with the SEC, the Registration Statement,
(b) with the OTS, an application of Ambanc as a savings and loan holding
company to acquire Savings, and (c) with the Nasdaq Stock Market, an
application for the listing of the shares of Ambanc Common Stock issuable
upon the Acquisition Merger, subject to official notice of issuance.
Ambanc covenants and agrees that all information furnished by Ambanc for
inclusion in the Registration Statement, the Prospectus/Proxy Statement,
and all applications and submissions for the required consents and
approvals will comply in all material respects with the provisions of
applicable law, including the 1933 Act and 1934 Act and the rules and
regulations of the SEC and OTS, and will not contain any untrue statement
of a material fact and will not omit to state any material fact required
to be stated therein or necessary to make the statements contained
therein, in light of the circumstances under which they were made, not
misleading. Ambanc will furnish to the investment bankers advising the
Company such information as they may reasonably request for purposes of
the fairness opinion referred to in Section 5.3(h).
4.22 Notice of Adverse Changes. Ambanc will promptly advise the
-------------------------
Company in writing of (a) any event occurring subsequent to the date of
this Agreement which would render any representation or warranty of Ambanc
contained in this Agreement or the Ambanc Schedules, if made on or as of
the date of such event or the Closing Date, untrue or inaccurate in any
material respect, (b) any material adverse change in the financial
condition or results of operations of Ambanc or any Ambanc subsidiary, (c)
any inability or perceived inability of Ambanc to perform or comply with
the terms or conditions of this Agreement, (d) the institution or threat
of institution of material litigation or administrative proceeding
involving Ambanc or its assets which, if determined adversely to Ambanc,
would have a material adverse effect on Ambanc and Ambanc subsidiaries
taken as a whole or the Merger, (e) any governmental complaint,
investigation, or hearing or communication indicating that such litigation
or administrative proceeding is contemplated, (f) any written notice of,
or other communication relating to, a default or event which, with notice
or lapse of time or both, would become a default, received by Ambanc
subsequent to the date hereof and prior to the Acquisition Merger
Effective Time, under any agreement, indenture or instrument to which
Ambanc is a party or is subject and which is material to the business,
operation or condition (financial or otherwise) of Ambanc and the Ambanc
Subsidiaries taken as a whole, and (g) any written notice or other
communication from any third party alleging that the consent of such third
party is or may be required in connection with the transactions
contemplated by this Agreement including the Merger. Ambanc agrees that
the delivery of such notice shall not constitute a waiver by the Company
of any of the provisions of this Agreement.
4.23 Further Actions. Ambanc will: (a) execute and deliver such
---------------
instruments and take such other actions as the Company may reasonably
require to carry out the intent of this Agreement; (b) use all reasonable
efforts to obtain consents of all third parties and governmental bodies
necessary or reasonably desirable for the consummation of the transactions
contemplated by this Agreement; (c) diligently support this Agreement in
any proceeding before any regulatory authority whose approval of any of
the transactions contemplated hereby is required or reasonably desirable
or before any court in which litigation in respect thereof is pending; and
(d) use its best efforts so that the other conditions precedent to the
obligations of the Company and Savings set forth in Section 5.3 hereof are
satisfied.
4.24 Further Transactions.
--------------------
(a) Ambanc continually evaluates possible acquisitions and may,
prior to the Acquisition Merger Effective Time, enter into one or more
agreements providing for, and may consummate the acquisition by it of
another bank, association, bank holding company, savings and loan holding
company or other company (or the assets thereof) for consideration that
may include Ambanc Common Stock. In addition, prior to the Acquisition
Merger Effective Time, Ambanc may, depending on market conditions and
other factors, otherwise determine to issue equity-linked or other
securities for financing purposes. Notwithstanding the foregoing, Ambanc
will not take any action that would (i) prevent the transactions
contemplated hereby from qualifying as a reorganization within the meaning
of Section 368 of the Code or (ii) materially impede or delay receipt of
any required consent or approval or the consummation of the transactions
contemplated by this Agreement.
(b) If Ambanc or any of its successors or assigns (i) shall
consolidate with or merge into any other corporation or entity and shall
not be the continuing or surviving corporation or entity of such
consolidation or merger, or (ii) shall transfer all or substantially all
of its properties and assets to any individual, corporation or other
entity, then in each such case, Ambanc or such successor or assign shall
take such actions as shall be necessary for the successors or assigns of
Ambanc to assume the obligations of Ambanc set forth in this Article IV.
ARTICLE V
CONDITIONS TO THE MERGER; TERMINATION OF AGREEMENT
5.1 General Conditions. The obligations of Ambanc, the Bank, the
------------------
Company and Savings to effect the Acquisition Merger and the Bank Merger
shall be subject to the following conditions:
(a) Stockholder Approval and Effectiveness of Charter
-------------------------------------------------
Amendment. The holders of the outstanding shares of Company Common Stock
--------
and Ambanc Common Stock shall have approved this Agreement and the
Acquisition Merger as specified in Section 1.7 hereof or as otherwise
required by applicable law and the Charter Amendment shall be effective
under applicable law.
(b) No Proceedings. No order, decree or injunction shall
--------------
have been entered and remain in force restraining or prohibiting the
Merger in any legal, administrative, arbitration, investigatory or other
proceedings (collectively, "Proceedings").
(c) Government Approvals. To the extent required by
--------------------
applicable law or regulation, all approvals of or filings with any
governmental authority (collectively, "Governmental Approvals"), including
without limitation those of the OTS, the FDIC, the Federal Trade
Commission, DOJ, the SEC, and any state securities or Blue Sky
authorities, shall have been obtained or made and any waiting periods
shall have expired in connection with the consummation of the Merger. All
other statutory or regulatory requirements for the valid consummation of
the Merger and related transactions shall have been satisfied.
(d) Registration Statement. The Registration Statement
----------------------
shall have been declared effective and shall not be subject to a stop
order of the SEC and, if the offer and sale of Ambanc Common Stock in the
Merger pursuant to this Agreement is subject to the Blue Sky laws of any
state, shall not be subject to a stop order of any state securities
commissioner.
(e) Federal Tax Opinion. Receipt of an opinion of Silver,
-------------------
Xxxxxxxx & Taff, L.L.P., in form and content reasonably satisfactory to
Ambanc and the Company, to the effect that (i) the Acquisition Merger
will constitute a reorganization within the meaning of Section 368(a) of
the Code, (ii) the exchange in the Acquisition Merger of Company Common
Stock for Ambanc Common Stock will not give rise to gain or loss to
shareholders of the Company with respect to such exchange (except to the
extent of any cash received), (iii) neither the Company nor Ambanc will
recognize gain or loss as a consequence of the Acquisition Merger or the
Bank Merger, (iv) the basis of the Ambanc Common Stock (including any
fractional share for which cash is received) will equal the basis of the
Company Common Stock for which it is exchanged, and (v) the holding period
of such Ambanc Common Stock (including any fractional share for which cash
is received) will include the holding period of the Company Common Stock
for which it is exchanged, assuming that such Company Common Stock is a
capital asset in the hands of the holder thereof at the Acquisition Merger
Effective Time. In addition, no condition or set of facts or
circumstances shall exist at the Acquisition Merger Effective Time which
will either preclude any of the parties to this Agreement from satisfying
the terms or conditions of, or assumptions made in, the tax opinion
referred to in this Section 5.1(e), as the case may be, or result in any
of the factual assumptions contained in such tax opinion being untrue.
5.2 Conditions to Obligations of Ambanc and Bank. The
--------------------------------------------
obligations of Ambanc and Bank to effect the Merger and the transactions
contemplated herein shall be subject to the following additional
conditions to the extent not waived:
(a) Opinion of Counsel for Company. Ambanc shall have
------------------------------
received from Xxxxxxx, Spidi, Sloane & Xxxxx, P.C. an opinion dated as of
the Closing covering the matters to be set forth in Exhibit 5.2(a).
(b) Required Consents. In addition to Governmental
-----------------
Approvals, Company and Savings shall have obtained all necessary third
party consents or approvals required by or in connection with the Merger,
the absence of which would materially and adversely affect Company and the
Company Subsidiaries, taken as a whole. In this connection, the Company
and Savings shall use their reasonable best efforts to obtain consents
from all lessors to their respective real estate leases that may be
required for consummation of the Merger.
(c) Company Accountants' Letter. Ambanc at its expense
---------------------------
shall have received from KPMG Peat Marwick LLP letters dated the date of
mailing the Prospectus/Proxy Statement and the date of the Closing to the
effect that: (i) with respect to the Company they are independent
accountants within the meaning of the 1933 Act and 1934 Act and the
applicable rules and regulations thereunder, (ii) it is their opinion that
the audited consolidated financial statements of the Company included in
or incorporated by reference into the Prospectus/Proxy Statement comply as
to form in all material respects with the applicable accounting
requirements of the 1933 Act and 1934 Act and the applicable published
accounting rules and regulations thereunder, (iii) on the basis of such
procedures as are set forth therein but without performing an examination
in accordance with generally accepted auditing standards nothing has come
to their attention which would cause them to believe that (A) any
unaudited interim consolidated financial statements appearing in the
Prospectus/Proxy Statement do not comply as to form in all material
respects with the applicable accounting requirements of the 1933 Act and
1934 Act and the published rules and regulations thereunder; (B) said
unaudited interim consolidated financial statements are not stated on a
basis substantially consistent with that of the audited financial
statements; (C) (1) at the date of the latest available consolidated
financial statements of the Company and at a specific date not more than
five (5) business days prior to the date of each such letter there has
been, except as specified in such letter, any increase in the outstanding
capital stock, or indebtedness for borrowed money of the Company (other
than deposits and Federal Home Loan Bank advances with a maturity of one
year or less) or any decrease in the stockholders' equity thereof as
compared with amounts shown in the latest statement of consolidated
financial condition included in the Prospectus/Proxy Statement, or (2) for
the period from the date of the latest audited consolidated financial
statements of the Company included in or incorporated by reference into
the Prospectus/Proxy Statement to a specific date not more than five (5)
business days prior to the date of each such letter, there were, except as
specified in such letter, any decreases, as compared with the
corresponding period in the preceding year, in consolidated net income for
Company excluding expenses associated with the Merger, or any increase, as
compared with the corresponding period in the preceding year, in the
provision for loan losses for Company, (iv) they have performed certain
specific procedures as a result of which they determined that certain
information of an accounting, financial or statistical nature included in
the Prospectus/Proxy Statement and requested by Ambanc and agreed upon by
such accountants, which is expressed in dollars (or percentages obtained
from such dollar amounts) and obtained from accounting records of the
Company's accounting system or which has been derived directly from such
accounting records by analysis or computation is in agreement with such
records or computations made therefrom (excluding any questions of legal
interpretation), and (v) on the basis of such procedures as are set forth
in such letter, nothing came to their attention with respect to the
Company which would cause them to believe that the pro forma financial
statements had not been properly compiled on the pro forma basis described
therein.
(d) No Material Adverse Change. Between the date of this
--------------------------
Agreement and the date of Closing, there shall not have occurred any
material adverse change in the financial condition, business, results of
operations or assets of Company and the Company Subsidiaries, taken as a
whole, other than any such change attributable to or resulting from any
change in law, regulation or generally accepted accounting principles
which impairs both Savings and other comparably sized thrift institutions
in a substantially similar manner, and other than any such change
attributable to or resulting from changes in economic conditions
applicable to depository institutions generally or in general levels of
interest rates affecting both Savings and other comparably sized thrift
institutions to a similar extent and in a similar manner. No payments
made or expenses incurred in accordance with
Section 4.16 hereof or otherwise contemplated by this Agreement shall be
deemed to constitute a material adverse change under this Section 5.2(d).
(e) Representations and Warranties to be True; Fulfillment
------------------------------------------------------
of Covenants and Conditions. The representations and warranties of the
---------------------------
Company and Savings shall be true in all material respects at the
Acquisition Merger Effective Time with the same effect as though made at
the Acquisition Merger Effective Time (or on the date when made in the
case of any representation or warranty which specifically relates to an
earlier date) except for events or occurrences arising after the date of
this Agreement, which individually or collectively, are not reasonably
likely to result in a material adverse effect on the business, financial
condition or results of operations of the Company and the Company
Subsidiaries, taken as a whole; Company and Savings shall have performed
all obligations and complied with each covenant, in all material respects,
and all conditions under this Agreement on their parts to be performed or
complied with at or prior to the Acquisition Merger Effective Time; and
Company shall have delivered to Ambanc a certificate, dated the
Acquisition Merger Effective Time and signed by its chief executive
officer and chief financial officer, to such effect.
(f) No Litigation. Neither the Company nor any Company
-------------
Subsidiary shall be a party to any pending litigation, reasonably probable
of being determined adversely to the Company or any Company Subsidiary,
which would have a material adverse effect on the business, financial
condition or results of operations of the Company and the Company
Subsidiaries, taken as a whole.
(g) Regulatory Approval. All Governmental Approvals
-------------------
required hereunder to consummate the transactions contemplated hereby
shall have been obtained without the imposition of any conditions which
Ambanc reasonably and in good faith determine to be unduly burdensome upon
the conduct of the business of Ambanc or the Bank.
(h) Affiliates Letters. Ambanc shall have received the
------------------
letter agreements from all affiliates of the Company as contemplated in
Section 4.7(i) herein.
(i) Environmental Reports. Ambanc shall not have exercised
---------------------
its right to terminate this Agreement pursuant to Section 4.19.
(j) Execution of Option Agreement. Company shall have
-----------------------------
granted to Ambanc the option referred to in the Option Agreement not later
than April 22, 1998.
5.3 Conditions to Obligations of Company and Savings. The
------------------------------------------------
obligations of Company and Savings to effect the Acquisition Merger and
the transactions contemplated herein shall be subject to the following
additional conditions:
(a) Opinion of Counsel for Ambanc. The Company shall have
-----------------------------
received from Silver, Xxxxxxxx & Taff, L.L.P., special counsel to Ambanc,
an opinion dated as of the Closing covering the matters to be set forth in
Exhibit 5.3(a).
(b) Representations and Warranties to be True; Fulfillment
-------------------------------------------------------
of Covenants and Conditions. The representations and warranties of Ambanc
--------------------------
and the Bank shall be true in all material respects at the Acquisition
Merger Effective Time with the same effect as though made at the
Acquisition Merger Effective Time (or on the date when made in the case of
any representation or warranty which specifically relates to an earlier
date); Ambanc and the Bank shall have performed all obligations and
complied with each covenant, in all material respects, and all conditions
under this Agreement on their parts to be performed or complied with at
or prior to the Acquisition Merger Effective Time; and Ambanc shall have
delivered to Company a certificate, dated the Acquisition Merger Effective
Time and signed by its chief executive officer and chief financial
officer, to such effect.
(c) Ambanc Common Stock. A certificate or certificates for
-------------------
the required number of whole shares of Ambanc Common Stock, as determined
pursuant to Section 1.3 hereof, and cash for fractional share interests,
as so determined, shall have been delivered to the Exchange Agent.
(d) Required Consents. In addition to Governmental Approvals,
-----------------
Ambanc and the Bank shall have obtained all necessary third party consents
or approvals in connection with the Merger, the absence of which would
materially and adversely affect Ambanc and the Ambanc Subsidiaries, taken
as a whole.
(e) Nasdaq Stock Market Listing. The shares of Ambanc
---------------------------
Common Stock issuable pursuant to this Agreement shall have been approved
for listing on the Nasdaq Stock Market, subject to official notice of
issuance.
(f) No Material Adverse Change. Between the date of this
--------------------------
Agreement and the date of Closing, there shall not have occurred any
material adverse change in the financial condition, business, results of
operations or assets of Ambanc and the Ambanc Subsidiaries, taken as a
whole, other than any such change attributable to or resulting from any
change in law, regulation or generally accepted accounting principles
which impairs both the Bank and other comparably sized thrift institutions
in a substantially similar manner, other than any such change attributable
to or resulting from changes in economic conditions applicable to
depository institutions generally or in general levels of interest rates
affecting both the Bank and other comparably sized thrift institutions to
similar extent and in a similar manner.
(g) No Litigation. Neither Ambanc nor any Ambanc subsidiary
-------------
shall be a party to any pending litigation, reasonably probable of being
determined adversely to Ambanc or any Ambanc Subsidiary, which would have
a material adverse effect on the business, financial condition or results
of operations of Ambanc and the Ambanc Subsidiaries, taken as a whole.
(h) Fairness Opinion. The Company shall have received, as
----------------
of the date of Prospectus/Proxy Statement or as of a date not more than
five business days prior thereto, the favorable written opinion of its
investment banking firm regarding the fairness from a financial point of
view of the consideration to be received by the shareholders of the
Company in the Acquisition Merger.
(i) Absence of Regulatory Agreements. Neither Ambanc nor
--------------------------------
any of the Ambanc Subsidiaries, including the Bank, shall be a party to
any agreement or memorandum of understanding with, or commitment letter
to, or board of directors resolution submitted to or similar undertaking
made to, or be subject to any order or directive by, or be a recipient of
any supervisory letter from, any governmental authority which restricts
materially the conduct of Ambanc's business or has a material adverse
effect upon the Acquisition Merger or upon the financial condition of
Ambanc and the Ambanc Subsidiaries taken as a whole, and neither Ambanc
nor the Ambanc Subsidiaries shall have been advised by any governmental or
regulatory authority that such authority is contemplating issuing or
requesting, or considering the appropriateness of issuing or requesting,
any of the foregoing.
5.4 Termination of Agreement and Abandonment of Merger. This
--------------------------------------------------
Agreement may be terminated at any time before the Acquisition Merger
Effective Time, whether before or after approval thereof by shareholders
of Company and Ambanc, as provided below:
(a) Mutual Consent. By mutual consent of the parties,
--------------
evidenced by their written agreement.
(b) Closing Delay. At the election of either party,
-------------
evidenced by written notice, if the Closing shall not have occurred on or
before January 31, 1999, or such later date as shall have been agreed to
in writing by the parties; provided, however, that the right to terminate
under this Section 5.4(b) shall not be available to any party whose
failure to perform an obligation hereunder has been the cause of, or has
resulted in, the failure of the Closing to occur on or before such date.
(c) Conditions to Ambanc Performance Not Met. By Ambanc
----------------------------------------
upon delivery of written notice of termination to Company if any event
occurs which renders impossible the satisfaction in any material respect
one or more of the conditions to the obligations of Ambanc and the Bank to
effect the Merger set forth in Sections 5.1 and 5.2 and noncompliance is
not waived by Ambanc, provided, however, that the right to terminate under
this Section 5.4(c) shall not be available to Ambanc where Ambanc's or
Bank's failure to perform an obligation hereunder has been the cause of,
or has resulted in, the failure of the Closing to occur on or before such
date.
(d) Conditions to Company Performance Not Met. By the
-----------------------------------------
Company upon delivery of written notice of termination to Ambanc if any
event occurs which renders impossible of satisfaction in any material
respect one or more of the conditions to the obligations of Company and
Savings to effect the Merger set forth in Sections 5.1 and 5.3 and
noncompliance is not waived by Company, provided, however, that the right
to terminate under this Section 5.4(d) shall not be available to the
Company where the Company's or Savings' failure to perform an obligation
hereunder has been the cause of, or has resulted in, the failure of the
Closing to occur on or before such date.
(e) Decline in Stock Price. By the Company if it
----------------------
determines by a vote of the majority of the members of its Board of
Directors, and notifies Ambanc, at any time during the five (5) day period
commencing two (2) business days after the Determination Date and if both
of the following conditions are satisfied:
(i) the Average Closing Price of Ambanc Common Stock is less
than $15.70 (adjusted as set forth in the last sentence of this Section
5.4(e)); and
(ii) (x) the number obtained by dividing the Average
Closing Price on the Determination Date by the Starting Price (such number
being referred to herein as the "Ambanc Ratio") shall be less than (y) the
number obtained by dividing the Index Price on the Determination Date by
the Index Price on the Starting Date and subtracting 0.20 from the
quotient in this clause (ii)(y) (such number being referred to herein as
the "Index Ratio");
If the Company elects to terminate this Agreement pursuant to this
Section 5.4(e), it shall give notice to Ambanc within the aforementioned
five (5) day period, provided such notice may be withdrawn at any time.
During the five (5) day period commencing with its receipt of such notice,
Ambanc shall have the option of adjusting the Exchange Ratio to equal the
lesser of (i) a number equal to a quotient (rounded to the nearest one-
thousandth), the numerator of which is the product of $15.70 multiplied by
the Exchange Ratio (as then in effect) and the denominator of which is the
Average Closing Price, and (ii) a number equal to a quotient (rounded to
the nearest one-thousandth), the numerator of which is the Index Ratio
multiplied by the Exchange Ratio (as then in effect) and the denominator
of which is the Ambanc Ratio. If Ambanc makes an election contemplated by
the preceding sentence, within such five-day period, it shall give prompt
written notice to the Company of such election and the revised Exchange
Ratio, whereupon no termination shall have occurred pursuant to this
Section 5.4(e) and this Agreement shall remain in effect in accordance
with its terms (except as the Exchange Ratio shall have been so modified),
and any references in this Agreement to "Exchange Ratio" shall thereafter
be deemed to refer to the Exchange Ratio as adjusted pursuant to this
Section 5.4(e).
For purposes of this Section 5.4(e), the following terms shall have
the meaning indicated:
"Average Closing Price" shall mean the average of the per share
closing prices of the Ambanc Common Stock as reported on the NASDAQ
National Market for the 20 consecutive trading days ending on the
Determination Date as reported by The Wall Street Journal, expressed in
decimal figures carried to five figures.
"Determination Date" means the tenth (10th) trading day prior to the
Closing Date.
"Index Group" means the 19 financial institution companies listed
below, the common stock of all of which shall be publicly traded and as to
which there shall not have been a publicly announced proposal since the
Starting Date and before the Determination Date for any such company to be
acquired or for such company to acquire another company or companies in
transactions with a value exceeding 25% of the acquiror's market
capitalization. In the event that any such company is removed from the
Index Group, the weights (which shall be determined based upon the number
of outstanding shares of common stock) shall be redistributed
proportionately for purposes of determining the Index Price. The 19
financial institution companies and the weights attributed to them are as
follows:
Financial Institution Shares Outstanding Weighting %
Holding Company As of 12/31/97
Ameriana Bancorp 3,233,207 3.89%
Catskill Financial Corp. 4,775,732 5.75
First Defiance Financial 8,527,683 10.27
First Federal Bancshares of AR 4,896,063 5.89
FSF Financial Corp. 3,045,575 3.67
FFLC Bancorp Inc. 3,747,173 4.51
Fidelity Financial of Ohio 5,592,665 6.73
First Mutual Bancorp Inc. 3,507,070 4.22
Bayonne Bancshares Inc. 9,088,581 10.94
FirstSpartan Financial Corp. 4,430,000 5.33
Home Bancorp of Elgin Inc. 6,855,799 8.25
Home Bancorp 2,385,325 2.87
Monterey Bay Bancorp Inc. 3,229,679 3.89
Peekskill Financial Corp. 3,126,915 3.76
SFS Bancorp Inc. 1,208,472 1.45
Teche Holding Co. 3,437,530 4.14
Western Ohio Financial Corp. 2,352,236 2.83
Warwick Community Bancorp 6,606,548 7.95
Yonkers Financial Corp. 3,020,763 3.64
-------
100.00%
"Index Price," on a given date, means the weighted average
(weighted in accordance with the Weighing Factors above, which were
calculated with reference to the outstanding shares listed above) of the
closing prices on such date of the common stock of the companies
comprising the Index Group.
"Starting Date" means April 22, 1998.
"Starting Price" means $19.625 per share.
If Ambanc or any company belonging to the Index Group declares or
effects a stock dividend, reclassification, recapitalization, split-up,
combination, exchange of shares or similar transaction between the
Starting Date and the Determination Date, the prices for the common stock
of such company shall be appropriately adjusted for the purposes of
applying this Section 5.4(e).
ARTICLE VI
TERMINATION OF OBLIGATIONS; PAYMENT OF EXPENSES
6.1 Termination; Lack of Survival of Representations and
----------------------------------------------------
Warranties. In the event of the termination and abandonment of this
----------
Agreement pursuant to Sections 5.1, 5.2, 5.3 or 5.4 of this Agreement,
this Agreement shall become void and have no effect, except that (i) the
provisions of Sections 2.7 and 3.7 (Brokers and Finders), 4.8 (Publicity),
this Section 6.1, 6.2 (Expenses) and 8.2 (Confidentiality) of this
Agreement shall survive any such termination and abandonment, and (ii) a
termination pursuant to Sections 5.4(c) or 5.4(d) of this Agreement shall
not relieve the breaching party from liability for an uncured intentional
and willful breach of a representation, warranty, covenant, or agreement
giving rise to such termination.
The representations, warranties, covenants and agreements of the
parties set forth in this Agreement shall not survive the Acquisition
Merger Effective Time, and shall be terminated and extinguished at the
Acquisition Merger Effective Time, and from and after the Acquisition
Merger Effective Time none of the parties hereto shall have any liability
to the other on account of any breach or failure of any of those
representations, warranties and agreements; provided, however, that the
foregoing clause shall not (i) apply to agreements and covenants of the
parties which by their terms are intended to be performed after the
Acquisition Merger Effective Time, and (ii) shall not relieve any person
of liability for fraud, deception or intentional misrepresentation.
6.2 Payment of Expenses. 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.
ARTICLE VII
CERTAIN POST-MERGER AGREEMENTS
7.1 Reports to the SEC. Ambanc shall continue to file all
------------------
reports and data with the SEC necessary to permit the shareholders of
Company who may be deemed "underwriters" (within the meaning of Rule 145
under the 0000 Xxx) of Company Common Stock to sell the Ambanc Common
Stock received by them in connection with the Merger pursuant to Rules 144
and 145(d) under such Act if they would otherwise be so entitled.
7.2 Employees. Employees of the Company and the Company
---------
Subsidiaries who become employees of Ambanc or an Ambanc Subsidiary after
the Acquisition Merger Effective Time shall be eligible to participate in
all benefit plans sponsored by Ambanc or any Ambanc Subsidiary to the same
extent as other similarly situated Ambanc or any Ambanc Subsidiary
employees, (i) with full credit for prior service with the Company or
Company Subsidiaries for purposes of vesting, eligibility for
participation and other purposes other than determining the amount of
benefit accruals under any defined benefit plan, (ii) without any waiting
periods, evidence of insurability, or application of any pre-existing
condition limitations, and (iii) with full credit for claims arising prior
to the Acquisition Merger Effective Time for purposes of deductibles, out-
of-pocket maximums, benefit maximums and all other similar limitations for
the applicable plan year during which the Merger is consummated. Ambanc
shall honor all accrued vacation leave for the employees of Company and
the Company Subsidiaries following the Acquisition Merger Effective Time.
Except as otherwise provided herein, the Company's health and dental
insurance plans shall not be terminated by reason of the Merger but shall
continue thereafter as plans of the Surviving Corporation until such time
as the employees of the Company and the Company Subsidiaries are
integrated into Ambanc's or other applicable Ambanc Subsidiary's health
and dental insurance plans. Ambanc and the Ambanc Subsidiaries shall take
such steps as are necessary or required to integrate the employees of the
Company and the Company Subsidiaries in such plans as soon as practicable
after the Acquisition Merger Effective Time.
ARTICLE VIII
GENERAL
8.1 Amendments. Subject to applicable law, this Agreement may be
----------
amended, whether before or after any relevant approval of shareholders, by
an agreement in writing executed in the same manner as this Agreement and
authorized or ratified by the Boards of Directors of the parties hereto,
provided that, after the adoption of the Agreement by the shareholders of
the Company, no such amendment without further shareholder approval may
reduce the amount or change the form of the consideration to be received
by the Company shareholders in the Merger.
8.2 Confidentiality. All information disclosed hereafter by any
---------------
party to this Agreement to any other party to this Agreement, including,
without limitation, any information obtained pursuant to Section 4.1
hereof, shall be kept confidential by such other party and shall not be
used by such other party otherwise than as herein contemplated except to
the extent that (i) it was known by such other party when received, (ii)
it is or hereafter becomes lawfully obtainable from other sources, (iii)
it is necessary or appropriate to disclose to the OTS, the FDIC or any
other regulatory authority having jurisdiction over the parties or their
subsidiaries or as may otherwise be required by law, or (iv) to the extent
such duty as to confidentiality is waived by the other party. In the
event of the termination of this Agreement, each party shall use all
reasonable efforts to return upon request to the other parties all
documents (and reproductions thereof) received from such other parties
(and, in the case of reproductions, all such reproductions made by the
receiving party) that include information not within the exceptions
contained in the first sentence of this Section 8.2.
8.3 Governing Law. This Agreement and the legal relations
-------------
between the parties shall be governed by and construed in accordance with
the laws of the State of Delaware without taking into account a provision
regarding choice of law, except to the extent certain matters may be
governed by federal law by reason of preemption.
8.4 Notices. Any notices or other communications required or
-------
permitted hereunder shall be sufficiently given if sent by registered mail
or certified mail, postage prepaid, addressed, if to Ambanc or Bank, to
Ambanc Holding Co., Inc.
00 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxx X. Xxxxxxxx
President and Chief Executive Officer
with a copy to:
Silver, Xxxxxxxx & Taff, L.L.P.
0000 Xxx Xxxx Xxxxxx, X.X.
Xxxxx 000 X
Xxxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxxx, P.C.
and if to Company or Savings, to
AFSALA Bancorp, Inc.
000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxxx
President and Chief Executive Officer
with a copy to:
Xxxxxxx, Spidi, Sloane & Xxxxx, P.C.
0000 X Xxxxxx, X.X.
Xxxxx 000 Xxxx
Xxxxxxxxxx, X.X. 00000
Attention: Xxxx X. Spidi
or such other address as shall be furnished in writing by any such party,
and any such notice or communication shall be deemed to have been given
two business days after the date of such mailing (except that the notice
of change of address shall not be deemed to have been given until received
by the addressee). Notices may also be sent by telegram, telex, facsimile
transmission or hand delivery and in such event shall be deemed to have
been given as of the date received.
8.5 No Assignment. This Agreement may not be assigned by any of
-------------
the parties hereto, by operation of law or otherwise, without the prior
written consent of the other parties. Subject to the preceding sentence,
this Agreement will be binding upon, inure to the benefit of and be
enforceable by the parties and their respective successors and assigns.
8.6 Headings. The description heading of the several Articles
--------
and Sections of this Agreement are inserted for convenience only and do
not constitute a part of this Agreement.
8.7 Counterparts. This Agreement may be extended in one or more
------------
counterparts, all of which shall be considered one and the same agreement
and shall become effective when one or more counterparts have been signed
by each of the parties hereto and delivered to each of the other parties
hereto.
8.8 Construction and Interpretation. Except as the context
-------------------------------
otherwise requires, (a) all references herein to any state or federal
regulatory agency shall also be deemed to refer to any predecessor or
successor agency, and (b) all references to state and federal statutes or
regulations shall also be deemed to refer to any successor statute or
regulation.
8.9 Entire Agreement. This Agreement, together with the
----------------
schedules, lists, exhibits and certificates required to be delivered
hereunder, and any amendment hereafter executed and delivered in
accordance with Section 8.1, constitutes the entire agreement of the
parties, and supersedes any prior written or oral agreement or
understanding among any of the parties hereto pertaining to the Merger,
except for the Confidentiality and Non-Disclosure Agreement between the
Company and Ambanc dated February 12, 1998, which shall remain in full
force and effect. This Agreement is not intended to confer upon any other
persons any rights or remedies hereunder except as expressly set forth
herein.
8.10 Severability. Whenever possible, each provision of this
------------
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
prohibited by or invalid under applicable law, such provision will be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions
of the Agreement.
8.11 No Third Party Beneficiaries. Nothing in this Agreement
----------------------------
shall entitle any person (other than the Company, Savings, Ambanc or the
Bank and their respective successors and assigns permitted hereby) to any
claim, cause of action, remedy or right of any kind, except as otherwise
expressly provided herein.
8.12 Enforcement of Agreement. The parties hereto agree that
------------------------
irreparable damage would occur in the event that any of the provisions of
this Agreement was not performed in accordance with its specific terms or
was otherwise breached. It is accordingly agreed that the parties 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, this
being in addition to any other remedy to which they are entitled at law or
in equity.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to
be executed on its behalf by its officers thereunder duly authorized, all
as of the date set forth above.
AMBANC HOLDING CO., INC. AFSALA BANCORP, INC.
By: /s/ Xxxxxx X. Xxxxxxxx By: /s/ Xxxx X. Liscki
------------------------ ------------------------------
Name: Xxxxxx X. Xxxxxxxx Name: Xxxx X. Xxxxxxx
Title: President and Chief Title: President and Chief
Executive Officer Executive Officer
AMSTERDAM SAVINGS BANK, FSB AMSTERDAM FEDERAL BANK
By: /s/ Xxxxxx X. Xxxxxxxx By: /s/ Xxxx X. Liscki
------------------------ --------------------------
Name: Xxxxxx X. Xxxxxxxx Name: Xxxx X. Xxxxxxx
Title: President and Chief Title: President and Chief
Executive Officer Executive Officer
